Showing the Big Guys How to think small

I mentioned last week that a number of CEOs from large companies are worried about competition from startups and other smaller businesses that are more innovative and entrepreneurial in spirit, according to a study from The Conference Board. Let me remind you that in 2004, 87% of the 540 worldwide organizations questioned by The Conference Board's CEO Challenge identified innovation and supporting entrepreneurship as priorities for their companies. Among these, 31% ranked these issues as "greatest concern."

These CEOs have come to terms with the fact that being a large corporation is no longer a surefire way to secure contracts and maintain market share. Small enterprises that started out in garages, kitchens, or cramped rented offices pose a bigger threat to their organizations than their larger rivals' boardrooms.

Companies on a smaller scale are inherently better able to think outside the box, adapt quickly to changing circumstances, make quick decisions, and innovate than their larger counterparts, which are sunk in bureaucracy and operating procedures. The decision-making process at small businesses is usually not dictated by professional executives who insist on endless meetings and piles of paperwork. Many small businesses are still run by the original owners, who often hail from an entrepreneurial family with a long history of success. When a startup reaches a certain size, the founder must hand over control to more experienced managers. At that time, the company's innovative spirit and entrepreneurial spirit begin to wane.

When compared to smaller businesses, major corporations clearly have the upper hand, particularly in terms of financial backing and available resources. In spite of the difficulty, it is possible for a corporation to transform a Goliath into a roaring horde of Davids by committing the necessary resources (time, money, and people) and altering its internal processes and attitudes.

What can big organizations do to become more entrepreneurial and inventive now that size and years in business aren't differentiators in the competitive marketplace? They need to start by reducing the process time, eliminating unnecessary red tape, and encouraging entrepreneurial and inventive thinking from the top down. There will be no success in transforming the firm unless everyone involved—the board, the CEO, the executives, the managers, the supervisors, and the employees—is fully committed to the task.

Cut down on processing time.

In big corporations, everything is done in accordance with the established norms and protocols. In my experience, the "multiples of M" are essential for major corporations to accomplish anything. There will be several meetings to go over the issue, many memos to restate it, and many signatures from management to finalize it. If huge corporations want to foster an environment that is more creative and entrepreneurial, they need to reduce decision-making to the two M's: move on or make it happen.

Eliminate Duplicate Steps

An actual incident from my time working in an office serves to demonstrate how bureaucracy and rules impede effective workflow. My workplace was rocked when one of our fluorescent light bulbs went out, sending the other lamp whirling around like a disco strobe light and triggering memories we won't talk about. I thought reporting the problem and getting a replacement bulb would be as easy as picking up the phone and dialing the facility office number. I was incorrect in my assumption. My supervisor insisted on peeking into my office to make sure the light was out before signing a facilities request form, so I had to make the trek to the facilities office—a separate building two miles away—to fill out the paperwork. It seems like they wanted to make sure I wasn't attempting to sneak a light bulb.

I returned to the facilities office with the form after my supervisor signed it, naively believing that they would provide me with a replacement bulb to bring back to my desk. However, they only gave me the paperwork. That was way too easy, I'm afraid. After the facilities manager reviewed my request, I was informed that someone would come to my office to change the light bulb. Fantastic! I exclaimed. At what point will that take place?

The worker at the facilities desk responded, "I can send someone over there on Tuesday between noon and 5 p.m." Last week. My mind wandered to the days of interacting with the cable company. To change a light bulb, how many workers do you need at a large corporation? At four, I lost track.

Promote a spirit of innovation and entrepreneurship.

The next step is to foster an atmosphere that values and rewards initiative and creative problem-solving. Workers will go elsewhere to voice their opinions if they believe their ideas, thoughts, and feedback are unvalued by you.

Again, speaking from my experience, I can say that innovation, particularly innovation at lower levels of management, is frequently disregarded, mocked, and even used as a justification by fire workers. "Knox, you think too much." This happened exactly when I approached my manager with a suggestion for enhancing an internal system. I didn't expect this one. Never before had anyone accused me of thinking excessively; instead, they had accused me of thinking too little or not thinking at all. "Son, you'd be dangerous if you had a brain," my dad warned me when I was a kid. My boss was probably just attempting to say the same thing. "Before you irritate me and get spanked or fired, be quiet and go to your room or cubicle like a good little boy or company drone." After only a short time, I made up my mind to put my restless mind to use. I believe I made the correct choice after ten fruitful years in business.

Large corporations may do more to foster an entrepreneurial spirit by urging their employees to adopt an entrepreneurial mindset. Establish as an organization policy the need for, expectation of, and reward for such thought. Inquire about the following: (1) How can we enhance our present offerings? (2) What other ways can we put our current products and services to use? (3) What new products and services could we introduce to complement our current ones or even start a whole new line? (4) What fresh market opportunities do you perceive that could be worth pursuing?

Seek assistance from others.

The lack of commitment from most large firms to invest the necessary time and money makes innovation planning and execution a daunting task. Also, most CEOs don't know what it takes to inspire entrepreneurial spirit among their employees, as they themselves have never been business owners. Hire an outsider to oversee and guide your company's innovation and entrepreneurship initiatives if you feel like you need some assistance.