The Linchpin & the Entrepreneur

Entrepreneurship and the Big Company Mindset

“Many entrepreneurs are sworn enemies of large corporations, and many policymakers measure entrepreneurship by the number of small-business start-ups.” This quote comes from an article published in the Economist, March 2009. Today, in the Wall Street Journal, guest contributor, Irving Wladawsky-Berger writes about disruptive technology and entrepreneurship in larger corporations – the need for innovation in these larger companies. As I read this, I am convinced that IT personnel cannot really fill the role described by Wladawsky-Berger; this kind of thinking requires outside expertise from strategic partners. Can you firm play at this level?

The Economist defined the entrepreneur as, “somebody who offers an innovative solution to a (frequently unrecognized) problem.” Wladawsky-Berger comments, “…The defining characteristic of entrepreneurship, then, is not the size of the company but the act of innovation.” This sounds a lot like Seth Godin’s comments in his book, Linchpin. If you have not read it, you should. Today’s employees seem to be stuck in a rut of being average. Innovation requires getting out of the rut. But can IT actually get out of the rut of daily operations? I don’t think so. Having worked for two very large firms, one a bank, the other pharmaceuticals, the daily grind of IT, with it repressive, bureaucratic management and lack of leading edge training, makes it a place where innovators may enter, but policy eventually destroys. Those coming out of IT generally have little ambition or innovation. They have succumb to a life of mediocrity.

What do Big Companies Need?

In today’s article, Wladawsky-Berger compares the small start-up to the large company with it’s complex (what I would call sluggish), collection of processes and systems – and people dedicated to keeping things going. In my opinion, some are investing in continuous improvement, however many are just doing whatever they can to stay alive. My clients are getting first-hand exposure to unprecedented financial pressures inside these larger companies.

Wladawsky-Berger writes, “For a startup, a disruptive innovation is an opportunity to take on established companies with new products that offer significantly better capabilities and/or lower costs.” We certainly see this in the technology business. Large companies with their end-to-end solution, competing with single product start-ups offering best-of-breed point solutions. He describes the large company reacting to innovation as if they are being attacked. Wladawsky-Berger calls this a big mistake. I have summarized his recommendation on what big companies need:

1. First, realize that the company with larger companies have several years before the start-up really has something. But you can’t ignore the small company’s innovations – early recognition is key.

2. Get a plan together to compete – change and innovation is inevitable, so get ready. Denial will kill these large companies. (What if US auto manufacturers had done this a few years back?)

3. Consider how to integrate new innovations into the already-existing bigger solution. I just got off the phone with the president of a technology company that offers a comprehensive MSP platform. He admitted that he can’t keep up with all of the security product innovation out there, so instead, he has developed a simple way to integrate their new developments into his architecture. This sound like a Ray Norda comment – if you remember Novell and Ray’s frequent comments about co-opertition.

4. At this point, the larger company may either help that start-up bring their product to market, or acquire them, making them part of the larger solution.

His conclusion on this: “With few exceptions, the assets that have made a company successful over the years are invaluable if properly deployed – from their products, services and loyal customer base to their brand reputation and financial strength.” By leveraging these, the larger company can hold their position as they partner with the smaller firms.

Where Are They Going to Get It?

Part of the discussion here points to a flexible IT architecture that allows the larger company to take advantage of the innovations coming out of these small start-ups. Solution providers have a unique position here, acting as a strategist and IT adviser to the CIO who must provide the infrastructure for change, but who does not have the time or ability to stay on top of new technology developments. Some companies, like Cisco and Oracle, have recently announced changes to their IT direction to provide a more responsive IT organization at the field level, but most are not doing this.

In the mid-market and down, IT people don’t have the skills or experience to contribute anything at a strategic level. As you move up to the enterprise, there may be some higher-level skills, but the bureaucracy of that organization has built a wall, blocking any meaningful contributions from IT.

As a solution provider, selling or marketing, or perhaps providing that presales consultant aspect, you have an opportunity to be that strategic adviser. All it takes is a passion for doing it – enough interest to read, study, ask questions, listen to answers; Followed by the confidence in yourself and the team behind you, to make your way into the board room with answers.