Dr Andrew Taylor, Senior Lecturer, staffordshire business school
During disruptive times small scale can be a key advantage. The management writer Mintzberg (1989) describes most small companies as either simple structures or adhocracies. My research (Taylor 2013, 2019) indicates that in both cases innovation is central to their mission and survival. The strength and the weakness of simple structures is that they are driven by one or two key individuals. This both makes decision-making fast and flexible. Adhocracies are project based, mission driven places, with little respect for traditional idea’s of good management practice, where inefficiencies are the price of high growth. There is often a tendency, in both cases, as they grow, to define becoming professional as having more formal and robust processes. The trouble is that as they seek order and stability, innovation and commitment often crashes as resent a perceived loss of purpose or human commitment.
During disruptive times it is often better to leverage the flexibility and commitment of peoples in smaller scale organisations to adapt, rather than seek to optimise. Small companies, like speedboats, are fast and nimble compared to the large oil tankers of corporate business,. Asking what are the right things, rather than how do I do things right Argyris (1991) is easier where best practices are less defined bureaucratically.
Small companies can most effectively do this through identifying their core competencies (Prahalad & Hamel 1990) . Core competencies are the source of how you create value – those things that you do for your customers better than your competitors. They:
- Provide access to a wide variety of markets
- Should make a significant contribution to the perceived customer benefits of the end product
- Should be difficult for competitors to imitate.
Knowing these allows you to ask yourselves how they could, using what Gavetti (2011) calls associative thinking, be transferred into new, more distant, marketplaces. Managers are good at identifying opportunities that are cognitively close to their business, but need to learn to recognise similar underlying patterns in distant markets and make the cognitive leap.
Organisations, that we are familiar with, successfully doing this include Fuji-Film, Honda, Danone, Dyson and Virgin.
Often leaders of small companies familiar with doing this as anyway as a matter of survival. Learning to use such knowledge to leverage the strength of organisation and its people, in a joined-up way, can, however, both transform the effectiveness and legitimise existing practices, such that small companies can harness their scale and people to flourish.
Argyris C. (1991), ‘Teaching Smart People to Learn’, Harvard Business Review, May – June.
Gavetti, G. (2011), ‘The New Psychology of Strategic Leadership’, Harvard Business Review, July -Aug.
Mintzberg, H. (1989), Mintzberg on Management: Inside Our Strange World of Organizations, New York, The Free Press.
Prahalad, C. K. & Hamel, G. (1990), ‘The Core Competence of the Corporation’, Harvard Business Review, May-June.
Taylor, A. & Krouwel W. (2013), Taking Care of Business: Innovation, Ethics & Sustainability, Cluj-Napoca (Romania), Risoprint.
Taylor A. & Bronstone A. (2019), People, Place & Global Order: Foundations of a Networked Political Economy. London, Routledge.