Size vs Speed

Size vs Speed

By Federico Heitz, CEO


You have probably heard this statement: Years ago big companies used to eat small companies. Today fast companies eat slow companies.

Well, now that I think of it this is not really a recent fact, it all started in the Valley of Elah 27 centuries ago when the underdog David defeated the colossus Goliath. Malcolm Gladwell, one of my favourite authors, wrote a whole book explaining that it was actually inevitable that David would win that battle. Yes, David had all the tools and skills he needed to defeat Goliath.

So this has been going on forever, it is just that now with the speed of change the advantages of the Davids of today´s world become more and more obvious. Examples of these Goliaths that don´t end up well become more and more frequent, Kodak, Blockbusters, Barnes & Noble, Blackberry, and yes, even the almighty Nokia that only 10 years ago was the "cell phone king" according to Forbes.

Common knowledge says that the bigger and more financially resourceful a company is, the more chances it has to win in the competitive battle. We tend to think of things as helpful that actually aren´t and think of other things as unhelpful that in reality leave us stronger and wiser. Perfect example of this are the studies that show that bootstrapped startups have more chances of survival than funded ones.

So why is this happening?

  • Material advantages limit our options. The same qualities that appear to give them strength are often the sources of great weakness. Any fool can spend money, but when your resources are limited, you must become resourceful. By the way, this doesn´t go just for companies, but also for countries. Look at the current state of “rich” (in natural resources) countries like Venezuela or Angola, vs “poor” countries like Switzerland or Japan. Being an underdog gives you the freedom to try things no one else even dreamt of.

  • A large workforce can become a ballast that reduces maneuverability and slows you down. In a world of constant change, speed and flexibility are of prime importance. In an information enabled business, a large internal staff seems increasingly unnecessary, counterproductive and expensive. No matter how talented your employees are, chances are that most of them are becoming obsolete and uncompetitive right before your eyes unless you invest in training and establish a culture of kaizen (more on this in a future article). Darwin explained it well when he described the process of natural selection: “It is not the strongest species that survive, nor the most intelligent, but the ones most responsive to change.”

  • The #1 reason a customer walks away from your company: you lost your hunger and passion for delighting them. Arrogance kills companies. And many big corporations become arrogant because they are used to have a dominant market position, especially in situations of (sometimes apparent) oligopoly. For a great example of arrogance, just see Steve Ballmer, CEO of Microsoft, laughing at the iphone in 2007 here.

  • Keeping the organization lean, flexible, able to adapt to change and customer obsessed is the best recipe for success, keep it in mind even if you are a Goliath.

    To learn more:

    David and Goliath: Underdogs, Misfits, and the Art of Battling Giants. Malcolm Gladwell

    Exponential Organizations: Why new organizations are ten times better, faster, and cheaper than yours (and what to do about it)