I spent seventeen of my nineteen professional years working for companies that sold at least a billion dollars of merchandise on an annual basis. As a result, I am probably a 'big company guy'.
Back in 2000, I spent ten months working at an internet advertising startup called 'Avenue A' (now called aQuantive). Within two week of being hired, I worked on a small team of four people. We created a product that we took to market just six weeks later. No red tape, no approvals, just a small company allowing a small group of individuals to use their experience and best judgement.
Compare that experience to things that happen in large companies.
During my time at Eddie Bauer, I was Director of Circulation. This meant I was theoretically responsible for determining the best way to determine how to mail customers catalogs. My job was to maximize sales and profit by determining an optimal catalog contact strategy.
In 1998, I wanted to add a catalog to our contact strategy. I determined who the target audience would be in this additional catalog mailing. I determined how many pages should be in the catalog. I determined the merchandise composition of the catalog. I determined the in-home date for the catalog. I calculated the expected net sales, profit, and ROI of this endeavor.
To get this decision approved, I had to do the following:
- My boss, the Divisional Vice President of Marketing, had to approve of my idea. He could alter the page count, merchandise composition, or in-home date. He could approve, alter or kill the idea.
- If approved, the Sr. Vice President of Marketing had to approve of my idea. He could alter the page count, merchandise composition, or in-home date. He could approve, alter or kill the idea.
- If approved, the Executive Vice President of Global Brand Direction had to approve of my idea. He could alter page count, merchandise composition, in-home date, and suggested creative presentation. He could approve, alter or kill the idea.
- If approved, I had to pass the idea past the Director of Inventory Management. She had to support the sales plan by making sure that merchandise would be available. She could alter page count, merchandise composition and page count. She could alter or kill the idea.
- If approved, I had to pass the idea past a team that I participated on, a team that focused on maximizing the catalog strategy. Our internet marketing leader, finance leader, operations leader, creative leader, and inventory leader could all alter the page count, merchandise composition, page count, in-home date, or creative execution. This team could approve, alter or kill the idea.
- If approved, I had to pass the idea past the Executive Management team --- a team of Executive Vice Presidents, and our President/CEO. This team could alter page count, merchandise composition, in-home date, and suggested creative presentation. This team could approve, alter or kill the idea.
Policy meant that many employees learned this idea was likely to happen. If powerful employees were opposed to the idea, they could lob the project back to any of a number of executives, who could begin the approval discussion process anew.
This process of iteration either resulted in a final decision, or resulted in the death of the project. Occasionally, there was not enough time to implement the idea, resulting in the death of the project.
Many big companies have better decision making processes than this. Many big companies have sub-standard decision making processes.
We wonder how big companies like JetBlue can completely ruin seven spotless years of brand equity with one day of bad mistakes. We wonder how Microsoft fails to compete with Google, or Apple, or a myriad of competitors. We wonder how Ford and Chevy implode when faced with foreign competition. We question why Dell plunders its brand heritage at a time when it needs to consider a viable online strategy amid significant competition. We wonder why record labels are busy destroying the music industry.
I have yet to work for a company led by 'dumb people'. It seems that problems occur when a bunch of smart, strong business leaders experience conflict, and are required to maintain sales and profit growth.
The self-organizing processes that occur when decisions need to be made become part of the culture of a large organization. Eventually, the culture becomes inflexible. The business struggles to be able to right itself, and focus on the change needed to survive.
I cringe when a pundit suggests that companies don't have the guts to ask questions. I have yet to work for a business that didn't have the guts to ask tough questions, or to make changes. That being said, every big company struggles to overcome a culture that formed over a long series of good decisions that led to successful business results.
Do you work at a large company, or a small company? Have you experienced the challenges I described in this article? What have you done to overcome these challenges?
You have eloquently explained why I prefer working at small companies rather than large ones. I have worked at both, and I have found that I spend 90% of my time at a small company driving the business forward. At a large company, I spend 25% of my time driving the business forward, 50% negotiating for resources and approvals, and 25% reforecasting plans.
ReplyDeleteAnonymous --- thanks for your insight. It would be interesting to study how much time the average large-company person spends navigating internal politics. You always wonder how companies can downsize, when business is challenged. Maybe businesses can downsize because the 75% you talk about has to be eliminated, when business is bad.
ReplyDeleteJeff --- I agree, big companies require an employee to develop a discipline-based skillset. I think the big company employee could have success elsewhere because s/he has had to defend arguments and learn to communicate well.
Lots of pros and cons to big & small companies.
Kevin,
ReplyDeleteExcellent post and comments above. While Jeff has a valid point about large companies and negotiating skills, I side with anonymous that it is more productive--and more fun-- to work at a small company. Internal politics exist at both levels, but at a smaller company, employees are motivated to keep their job, so even when there is a conflict, those feelings are usually squashed to get job done, while at a larger company, no matter how good a negotiator you are, someone at any level, motivated by a personal jealousy or petty emotion or bad hair day, can kill a project just by delaying approval.
Other advantages of smaller companies include:
1. Ability to learn more. You mentioned in your earlier post about data analysts not being good at marketing or pigeonholed into "fetch data, boy(or girl)". At a smaller company one is able to learn a variety of skillsets and in process, grow as a person. So the data analyst learns how to apply that data, to come up with marketing ideas, production ideas, that are listened to, and acted on.
2. Easily implement changes. Yes, it is good to have checks and balances at any business; however, that being said, the ability to push a project through on personal responsibility alone, enables a small company to have an advantage the larger ones are unable to compete with. I deal with large retailers every day, and in some cases large suppliers who compete with us ordinarily. At one company, working on setting up a trading partnership I worked with 25 different people on their side, and on my end there only needed to be 3 signatures. As you can imagine, with that many people, waiting for email and voice responses, the project took 10 weeks. With a small to medium size retailer(80 or less stores), the time to set up is a fraction of that. At one large company we were held up for three months because two of their high-level employees from different departments disagreed with each other(perhaps personal as well) and for an essential packaging requirement they provided us not only with conflicting information which cost us money, but embarrassing gossip about the other person! Fortunately one was promoted to another department.
3. At a small company, incompetence does not stick around. You have to be good, motivated, dedicated, and friendly. At a larger company, incompetence can be hidden by "that's not my responsibility" or worse yet, the Peter Principle.
There are other advantages but those are best above.
The disadvantages of a small company include workload, very little depth for employee emergencies, and in some situations, smaller budget.
Best to start with large company and work your way into your own business! :-)
Good feedback, Anonymous --- thanks for sharing.
ReplyDeleteThis "running your own business" sounds better and better with each passing day!