It's a familiar story. A small start up company makes a name for itself. It grows rapidly over the years, increases market share, and feels invincible. Time passes and as it does, something strange happens. That company, once fast, nimble and responsive, gets sluggish. It gets set in its ways. It becomes mired in its own processes and procedures. It isn't long before some new start up comes along and starts running rings around the old start up, and so the cycle continues.
Why does this happen, and is there any way to combat it?
The answer to the second question is a resounding 'yes!' The answer to the first is a little more complex, and will be the subject of the rest of this article.
In brief, sooner or later, all companies ultimately fall victim to their own success. This can happen in a number of ways, but regardless of the specific reasons, the results always play out the same way, with loss of market share to a young, exciting, rival upstart.
To see it in action in compressed form, imagine a company that builds personal computers, they're fantastic, well designed and intuitive to use, they're perfect for the consumer market, and they sell like wildfire.
The company grows and expands beyond the founder's wildest dreams, but the founder is obsessive. He insists that the company continue to use the same methodologies they used when they were garage sized to try and service a growing global market. Among other things, that means making everything in house, thus refusing to license the technology or work with “clone” Vendors.
Along comes an upstart with no such compunctions. True, the upstart's personal computers aren't quite as cool, not nearly as glitzy or intuitive, but because they're built on licensed technology and serviced by a ton of “clone” vendors, they're a lot more accessible. This means there are more of them, and they're cheaper.
Guess what happens?
The first guy with the awesome computers loses market share to the upstart who embraced a new way of thinking. Think Apple and Microsoft in the early days of both companies.
Scale matters. What worked when you were small and just getting started may not work when you get bigger and/or more mature. Your company needs to think like a start up, from the top down. from the CEO to your lowest ranking employee. If someone has an idea for how the company could do something better, faster, easier, and if that idea can improve your bottom line or make you stand out from your competition, that idea needs to be developed, then put into practice.
Culture matters. Often times, companies become a kind of “cult of personality,” where the founder casts such a huge shadow over the operation that no one feels able to present an alternate point of view. That's dangerous because the bottom line is that the company's founder, while undeniably a great guy and creative thinker, doesn't have all the answers, isn't always right, and can't always think of everything. Other points of view are not only necessary; they are essential to the company's long-term survival. Start-ups know this. Established companies tend to forget.
Then there's the territorial thing, who hasn't seen or been in a company where this has happened? Two department heads, one idea that everybody agrees is probably a good one, but everybody's territorial nature comes out and proceeds to get in the way. This division can't talk to that division, because the other guy won't free up any of his people, to put time into the project, to give it legs, unless he gets all the credit. The manager from the other group refuses to talk to another manager he's supposed to be working with because at last year's Christmas party....
There are a million excuses why it happens, but it always comes down to the same thing, and honestly, it (the senseless territorial behavior) gets in the way. You never see that in start-ups, and do you know why? It’s because they haven't been around long enough to get caught up in all of it. The point is, when you do see it, squash it. Permanently. Use technology to help. If it's easier to “meet” and get around the territorial stuff virtually, then do that. Use Net Meeting, Skype Video, whatever technology makes it easy.
In fact, technology makes finding your dancing shoes easy, no matter what has caused you to stumble. If the boss' personality is overshadowing everyone, make a company discussion forum and don't invite the boss in. Make it anonymous, so that everybody is free to just speak their mind and let the ideas flow.
If it's a question of keeping up with best practices and failing to embrace new business ideas to stay nimble, create a small team dedicated to ferreting out ideas and bringing them up at regular intervals (assign people from Business Development to manage this).
You don't have to be a lumbering dinosaur, even if you've been in the game a while. Don't let your established practices blind you or cause you to miss opportunities. Show those young upstarts that you remember how the game is played, and use your years of experience to beat them!
