Are large organisations good for business?

Are we stifling creativity and innovation by the internally focused bias of working in large organisations? Do structures and hierarchy inhibit opportunities to develop needed products or solve problems for potential customers?  Do large companies encourage employees to connect externally as a way to learn, share and drive innovation?

One of the biggest concerns that large/multinational sized companies identify, is the ability to stay connected with their customers and overcome an excessive internal focus that drives complexity. Having worked in a large multinational for many years I understand the tendency for employees in large organisations to be internally focussed. What can you expect when the largest part of the population, from middle management down, connect on a daily basis mainly with people from within the company – where generally, it is the senior/executive levels that connect externally more regularly?

The spirit of entrepreneurialism is seen as the lifeblood for growth in our economy, and when you examine the behaviours of entrepreneurs/innovators/business makers, it is that consistent external focus that makes them successful. This group of people network through every stage of their idea/business growth and this is a tendency borne out of necessity. They need to connect with potential investors, apply for grant aid/funding schemes, assess what competitors are out there, identify and connect with potential customers, look out for talent they may need to hire, satisfy existing customers. They are opened to a multitude of possibilities because the entire world is open to them to communicate with.

I was recently at a number of events where there was a mix of large/small companies and start-ups in attendance. My conversations with some of the people from large organisations was vastly different from the smaller companies/start-ups. The people from large organisations all remarked on how good it was to see what is going on in the ‘real world’, they relished the opportunity to connect and share ideas with people from outside of their company. They talked about the ‘cocoon’ effect that there is from being in a large company, that they are insulated from what is going on around them. In some ways they felt that insulation was good in that there was a greater sense of security – they still need to perform a function despite the potential downturn in the broader business. On another hand the insulation added to a sense of them being out touch with reality, they were surprised with the disruptive innovations that smaller companies were making, how they were able to collaborate with others to solve problems quickly, and uncomfortable in networking/connecting with people outside of their company, as they didn’t have a purpose to connect, whereas people in smaller companies/start-ups clearly had an aim in their networking. Some admitted to feeling like a ‘fish out of water’.

Of course every large company had it’s origins as a start-up and all those externally focused behaviours existed – but there is a tipping point when internal vs. external focus becomes equal and another tipping point when internal outweighs external focus. This is a sign of success and growth, as internal processes and systems need to be developed in order to service customers efficiently with high quality products, but there clearly is a danger in balancing growth with continuing to connect effectively externally.  This danger is more prevalent in 2^nd or 3^rd generation companies, where the founders are no longer around, or where a small company is acquired by a large company because that ‘reason for being’ or ’mission’ is never translated as clearly throughout an organisation as by the person(s) who started it.

There is huge value to be gained by understanding and connecting across the environment outside a company; uncovering new/disruptive technologies and potential market opportunities, learning new ways of doing things, collaborating to innovate. Large companies generally gravitate towards in house development or acquire companies that complement their needs, as a result many employees have little need to ‘go outside’, to network or collaborate externally in order to achieve their objectives. I believe having an external viewpoint is imperative for success of the individual and the business. Large companies need to be internally disruptive in order to stay ahead of the game.

Now more than ever – companies need to encourage employees to be aware of new developments that can impact their work, develop networks and collaborations to drive new opportunities. Repeatedly, we’re seeing the ‘small guy’ overtaking the ‘big guy’ because they are in touch with what people want, need and can figure out a more effective way of delivering it.

Now more than ever – individuals need to take personal responsibility to make sure they are never ‘a fish out of water’ in the ‘real world’ because that real world moves on and you cannot rely on a company to tune you into each new reality as it develops.