The Challenge for Big Companies Is Not to Be Slow! That Is the Opportunity for Entrepreneurs

by: Geoff Ficke

The Challenge for Big Companies Is Not to Be Slow!
That Is the Opportunity for Entrepreneurs

Louis B. Gerstner, the famous business executive who ran International Business Machines (IBM) once famously quipped, “I’ve never seen a small company that did not want to be a big one. The challenge is being big without being slow”. Mr. Gerstner identified the biggest obstacle that confronts large institutions in their effort to stay on top. Inadvertently he also identifies the opportunity that all inventors, entrepreneurs and small businesses enjoy as they attempt to steal market share and grow into more substantial commercial entities.

Huge businesses tend to be slower to innovate, take risks, consider outside ideas and think beyond the successful boxes they have created to shroud their enterprises than do start-up companies. As they grow larger they often become more concerned with protecting their space and market share than accelerating growth. All forms of bureaucracies confront this dilemma.

An obvious success at overcoming this tendency is the hugely successful Procter & Gamble, the consumer product, cosmetic and fragrance behemoth. For decades Procter & Gamble operated under a strict brand management system that did not encourage outside innovation. The Company began to stagnate and evolved into a hodge-podge of slow growth, lower margin food and commodity product brands.

15 years ago new management took over the famed Cincinnati-based P&G. The business model was redesigned to encourage the acquisition and licensing of outside ideas and products with a stated goal of 40% projected growth to come from new initiatives that originated outside the Company. The Spin Brush toothbrush was purchased and re-energized the Crest Oral Care brand. The acquisition of Cover Girl boosted the cosmetic division. Hugo Boss, The Art of Shaving and Giorgio pumped up the prestige beauty product category. Gillette Shaving and Wella hair care stoked the mass market health and beauty aid group.

By any measure 150 year old P&G and tech giant IBM are successful and great size has been an asset. Consider, however, how many other formerly great brands have fallen, often expiring as smaller, more nimble competitors have entered the scene. The formerly dominant cosmetic and fragrance colossus Revlon is a shell of its mid-20th century greatness. Estee Lauder has greatly eclipsed Revlon after facing and overcoming the stiff headwinds that all startups must confront. The world’s first mega-retailer Sears Roebuck is now but an echo of its former self and has been surpassed by much younger Wal-Mart, Kohl’s and The Limited Stores. The first national supermarket chain The Great Atlantic & Pacific Tea Company (A&P) is no more while Kroger has become the prototype of a successful national purveyor of food and general merchandise.

Specialty drinks brands such as Red Bull, Vitamin Water and Snapple have stolen huge market share from lumbering Coca-Cola and Pepsi. Small Japanese automakers arose from the destruction of their home country in World War II to pierce and conquer the North American vehicle market while Detroit fell asleep and squandered a century’s head start. Southwest Airlines, Frontier, Jet-Blue and Ryan Air have reinvented the aviation industry while legacy carriers such as Iberia, Pan Am, TWA and Eastern have either gone the way of the dodo bird or been relegated to obscurity.

The opportunity for entrepreneurs to join Herb Kelleher (Southwest Airlines founder), Leslie Wexner (The Limited Stores founder), Estee and Joe Lauder, and hundreds of other successful innovators is limited solely by a lack of courage. Taking an idea and turning it into a successful enterprise is not easy, but it is not impossible. The difference maker is vision. Seeing an opportunity and having the drive to execute toward a successful conclusion is what separates the successful from the conformist. You cannot get into the game, and can never be successful if you are slow. The bigger the competitor, the slower they will be to innovate and that is always the visionary’s trump card.