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Business Insights from Andrea Hill

Small businesses have a distinct advantage that large businesses do not have, and one of the things we must do is exploit this advantage to the maximum extent. What is it? Our ability to be flat, networked, and flexible.

Cinderella Teams and Giant Killers

Originally Published: 05 December 2007
Last Updated: 29 October 2020

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One of the challenges small business owners face is going up against larger competitors with more resources at their disposal. Not just capital – though competing against highly funded corporations is certainly daunting. But people resources and all of the ideas, creativity, organization, and administration that employees provide. I’m acutely aware of this right now, going as I have from running a business with hundreds of employees to owning a business with less than 10 employees.

But small businesses have a distinct advantage that large businesses do not have, and one of the things we must do is exploit this advantage to the maximum extent. What is it? Our ability to be flat, networked, and flexible.

Walk into any large corporate HR department and those three words – flat/networked/flexible – are on the lips of every MBA’d industrial psychologist. Why are these words so important? Because the nature of the business game has changed. Competitive strength used to come from a combination of first-mover advantage, access to capital markets, and the ability to outspend the competition. But the rules are changing (or have they changed already?). Today’s competitive companies are able to run faster than the competition and at least stay in step with, if not ahead of, the changes taking place in the world. They know how to use relevant technology to their advantage, they are able to take concepts from idea to implementation faster, they are more courageous about killing weak ideas and going on to the next one, and they harness human creativity, enthusiasm, intelligence and will to catapult them past their competitors.

Speaking of competitors – those rules have changed too. Leaders who know how to collaborate with sometime competitors while maintaining independence and brand identity take their organizations into new markets, new products, and new economic opportunities.

So just where does a small business get the advantage? After all, the large corporations can employ legions of McKinsey and Mercer specialists who will show them how to flatten their hierarchies, increase lateral communication, deploy technology to effectively enable teams, and engage their employees in ever-shifting flexible organizations (can you count the buzzwords I just used in that paragraph?). Small businesses don’t have large consulting budgets. Heck, most small businesses don’t have any consulting budget.

But in the area of being flat, networked and flexible, small businesses don’t need consultants. They don’t have the stultifying hierarchies and corporate structures that keep the large competitors from being flexible, flat and networked. There is nothing to undo to achieve the fleet-footedness and creativity that larger organizations crave. But small business owners aren’t capitalizing on this advantage, and that’s unfortunate. Too many small business owners start creating the organizational boxes and policies (the ones big businesses are trying to eliminate) the moment they start hiring staff. After all, creating departments and management layers is a sign of success, right? Well, if it ever was, it’s not any more.

A primary small business weakness is the failure to harness technology effectively. Today’s technology makes it possible for small businesses to look big, big businesses to communicate on an individual level, and for all businesses to create the image they want at relatively low costs. Gone are the days when only big companies could produce classy, persuasive advertising materials and marketing promotions. Technology also makes it possible for people in far flung locations to work together as if they were in one office.
There was a time when acquiring good business advice required access to a fantastic public or university library or the luck of having a competent local SBA. These days there is a wealth of business advice available for free or for nominal fees. Yes, you have to do some work to determine the quality of the advice, but it’s out there.

Small businesses are also failing to capitalize on the collaborative opportunities that exist in their own communities. If we can get out of our mental cubby-holes what we find is an abundance of opportunity to trade services, share services, barter for skills, get free advice, co-develop products, open markets, co-market, and even drum up cash. The big businesses are investing heavily in learning how to form and manage teams, how to stop squashing creativity, and how to get ideas from everywhere in their organization. It’s not impossible to do in a large company, but it’s a lot of work. There are a lot of people who are vested in maintaining the status quo, for their own comfort, job security, or lack of imagination. For a large business, creating these types of teams is an uphill battle.

Small business owners can form themselves into teams any time they want, without having to sell the idea to management, get buy-in, share the vision, create new mission statements, or launch a new initiative (yay, more buzzwords). According to the NFIB, there is a list of over 40 issues that are troubling to small business owners (the number of issues related to taxation and federal government regulation is disheartening, but that’s a conversation for another day). A number of the issues on that list could benefit directly from small business owners teaming up in creative ways, including:

1. Cost of Health Insurance
2. Locating Qualified Employees (skilled AND unskilled)
3. Cost and Availability of Liability Insurance
4. Rent/Property Taxes – Physical Facility Costs
5. Utility costs
6. Telephone Costs and Service
7. Keeping Skilled Employees
8. Cost of Outside Business Help
9. Fixed Costs Too High
10. Controlling My Own Time
11. Projecting Future Sales Changes
12. Finding Out About Regulatory Requirements
13. Ability to Cost-Effectively Advertise
14. Locating Business Help When Needed
15. Pricing My Goods/Services
16. Training Employees
17. Environmental Regulations
18. Keeping Up on Business and Market Developments
19. Purchasing and Using Computers and Technology Effectively
20. Sales Too Dependent on Health of One Business or Industry
21. Employee Turnover

Whether the teaming up is as simple as sharing information, or as creative as sharing space, services, or hosted technology, small business owners could be using one another’s support far more effectively than is currently being done.

All joking about buzzwords aside, imagine for a moment you live in India, China, or any one of the dozens of countries emerging into this century with access to technology and therefore the business opportunities of the developed world. Imagine you have an opportunity to do significantly better than your parents and grandparents, even lift yourself out of poverty. How hungry would you be? How creative would you be in seeking business partners? How unselfconscious would you be about asking for help, advice, for something free? How great would it be to have no prior impression about how business should be, only the sense of tremendous opportunity? Big business feels this pressure already, and they’re trying to figure out how to get flat, flexible, and networked enough to stay ahead. They know they are competing with a burgeoning world filled with people for whom taking risk is positive, because it represents food, shelter, and the prospect of some and security. Not just figurative hunger, but real hunger.

For too many of us, risk represents the specter of losing what we already have. That means we aren’t as hungry as those who haven’t had it yet. So the world keeps surging, big business is trying to figure out how to get in the new groove, and here you sit in the catbird seat, small business owner. Flat, flexible, and as networked as you wanna be. How hungry are you?

(c) 2007, Andrea M. Hill