Why small works big: You should get fired for hiring IBM (only)

A guest post from Steve Wood, ManyWho

I run a small company. I work with big companies. Big companies think working with small companies is a risk. Not true, here’s why.

I get that big companies like working with big companies. It’s familiar. It’s easy. It’s comfortable. You know what you’re going to get… exactly what you asked for. And when you don’t… you get exactly what you asked for. And that’s good if you know exactly what you want.

However, like all big companies, innovation is a challenge. Operations are mature, delivery solid, customer service fine (but not great) and employees are not really paid to “take risks” on innovation. I mean why?

The trouble starts when big companies go to the big companies to help deliver innovation. The trouble starts because big companies are not set up to manage innovation. They’re set up to manage what they know. Every system, every employee, every bone of what made them the big company they are now, is hard coded to remove “unknowns” and stay firmly in the “knowns” — I mean, it’s the formula that got them to the top right?

Big company + Big company = operations & logistics delivered

So if you’re a big company looking to roll out a major ERP system, call IBM or SAP or Oracle. You’ll get what you pay for — it’ll work… eventually.

But what about innovation? In the slightly modified words of Obi-Wan Kenobi, “These are not the suppliers you’re looking for…”

Think different. Bear with me…

If you want a great car, buy a Ford, Toyota or Land Rover. Build quality is fantastic. Works all the time. You’ll like the car, guaranteed (but you probably won’t love it). That’s because they make thousands of cars a day to the same template — they know what the majority wants.

That’s big company.

If you want to experience the ultimate car, buy Aston Martin, Hennessey, Koenigsegg, SCC, Caterham, Orca, or Beck. Never heard of some of those? That’s because they’re small. They’re innovators, craftsmen, passionate, obsessive, creative, relentless.

But don’t get me wrong — you don’t pull up to the local Safeway (or even Whole Foods) in a Hennessey Venom GT. You reserve that for the times when you need a supercharged experience – when you want to change the game.

And it’s not all upside. As much as I love super cars (and hope one day to own one or two), they’re a little buggy, a little impractical at times, and even a little temperamental. You also want to pick your car carefully — a Caterham is no Koenigsegg — they appeal to different tastes.

That’s startup.

When big companies think about their projects, they need to think about them in different ways. Work with a big company and you get predictable results. Work with a small company and you get innovative results. There’s a role for both, but neither is a substitute for the other.

If you don’t have both, you don’t have both.

Big companies that foster good relationships and engagement models with small companies will be the ultimate winners (just ask Gartner). They will be the innovators and leaders because they fuel their growth through operations & logistics but also cutting edge innovation bubbling in the start-up ecosystem.

Here’s a quick set of recommendations on how, as a big company, to work with a small company:

DO:

• Make sure you have spoken with the management team (usually the founders). Get a sense of their competency, capability and ethos. You should feel good about them.
• Test the small company in pre-sales. Give them something to do that tests their responsiveness, their technology and their story. Small companies should be fast off the mark and over deliver to your expectations.
• Do something small with a small budget to test the working relationship and ramp up on the basis of success. Get the gears turning on a real project that has minimal financial risk to you.

DON‘T:

• Put the company through heavy due diligence processes. It’s a small company, get over it. There’s risk involved in them going under, not functioning, not working. That’s why you should get to know the management team.
• Expect them to have everything you’d expect. Their product is new, it’s going to have holes, rough edges and missing parts. But you can bet your bottom dollar they’ll fill the gaps to make you successful. Remember — start-ups “care” deeply and they know how to manage rapid change and innovation. That’s why you should test them in pre-sales.
• Over optimize on pricing. Unlike a large company, the small company will be using your money to deliver your project. Shrink the budget and you shrink their ability to make you successful. Small companies don’t have spare budget capacity like big ones. That’s why you should give them smaller projects to start.

That’s my experience from sitting on both sides of the table. Do this right and you’ll be a rock star in your organization.

Back to my car analogy. Think about it this way: if you’re in a race to win, which car would you drive? The Hennessey or the Toyota? Depends on the race…

Steve Wood is the co-founder of ManyWho, a platform for building custom Salesforce mobile apps. Self-described as “Dad, entrepreneur, platform geek, guitar player, executive.” This article originally appeared in Medium 

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