Bigger company lower efficiency?

As an entrepreneur, we move ourselves over several fears starting from “Is it just my ego, or is there really a need for my skills?” to “How can a small start-up like mine compete with the large pocketed companies that have stood the strength of time!”

large-companyMost entrepreneurs will tell you that trying to beat a large firm, is not the job of an entrepreneur, his/her job is to find a business need and fulfil it. As true as this definition may be, at some point in our journey we tend to stand in front of a large firm or a few large firms that may create an impregnable resistance to new entrants.

When faced with a large problem, it is prudent to ask the most rudimentary questions.

  • Why would most successful entrepreneurs leave large firms to start on their own?
  • Why would a large firm try to stop a firm like mine from entering an area that is large enough to fulfil both our needs?
  • Why is the client speaking to me when there exists a larger service provider or manufacturer?

bouncersThese questions might throw light on the motivation that entrepreneurs work with. I believe the answer to the first question answers the rest. I worked for one of the largest brands in the world and yet kept moving towards entrepreneurship. I always believed that the least moving parts bring about the best efficiency or in Peter Drucker’s words, “Efficiency is doing things right, effectiveness is doing the right things ”

Sounds confusing? Let me disambiguate; if you have the least number of people doing a task, efficiency or getting the job done right is more easily achieved resulting in effectiveness as few people can move more easily towards a common goal.

In a large company, there are several departments doing similar tasks and attempting to achieve the same results through a larger number of people than a start-up. The mathematics is simple. More people = more errors. When entrepreneurs see the errors that large companies tend to make or opportunities they miss due to resulting low effectiveness, they move towards the larger picture.

coworkers-networking-300x300Hence, bigger companies end up with lower efficiencies. This leads to larger companies being formed that help these companies overcome their troubles. Hence if you are an entrepreneur, opportunities are around the corner and your largest competitor might just end up being your client!

Please do add to the above topic with your own experiences. It would be great to hear from entrepreneurs and employees who may have a different view.

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