Can A Tiny Company Compete With A Huge One?

I spent the first sixteen years of my career working for Polaroid Corporation starting out as a design engineer. It was one of the most progressive and technology-aware companies of the time. It was a wonderful place to develop a strong foundation, working with smart people, strong support and plenty of money to do things right. I had access to designers, quality and manufacturing experts, patent attorneys, model shops and market research, not to mention a great brand name and the excellent benefits that provided lots of stability.

When I moved to Silicon Valley and went to work for a number of small startups my first reaction was wondering how these tiny companies had any chance of competing with large companies with resources such as Polaroid. But after working for and as a consultant with dozens of companies large and small, my opinion has changed radically. I now believe an entrepreneur with a small team can often compete successfully against a huge corporation.

Why? In these times where innovation and fast-to-market are paramount, employees in many large companies are still risk-adverse. They value stability, and not rocking the boat. That’s what the companies value and those traits often permeate the company. Those that buck the system are often thought of as troublemakers, not valued for their independence, and wanting to do things in a different way and eventually leave. As a result, there are fewer long time employees at large companies that are highly entrepreneurial.

Of course there are exceptions. I’ve seen a few people in large companies become a strong product champion, put together a team on their own initiative to do what they thought needed to be done without asking for permission – just like working as a small company! Some companies now go out of the way to encourage this, setting up special teams and clear the way for important initiatives. But it’s uncommon.

Large companies tend to be less successful in creating breakthrough products or even products that might compete with their existing ones. The thinking is that would cannibalize their own line, not thinking that it would be worse for a competitor to do it. That happened with Polaroid and almost with Kodak with the invention of digital imaging.

Large companies often develop silos with members vested in the perpetuation of their products or divisions They don’t think of what’s best for the company, they think of what’s best for their silo and their own career. I’ve seen some organizations try to derail others in their company working on a product that competes with theirs. Sometimes they forget who the competition is.

The best type of organization to get a product from concept to the consumer is a small, focused team made up of diverse skills. But most large organizations are organized functionally, making it difficult to move quickly, create a small team, and delegate decision making to it.

Large companies often prefer to not take risks, because failing is embarrassing to them. It creates news, requires a PR effort to counter it, and puts management at risk. The financial market is still focused on quarterly profits and when there’s a stumble at a big company it makes big news.

But in fairness, large companies sometimes need to be more careful and methodical in making decisions. They’re more susceptible to being sued by employees and outsiders, are responsible for the behavior of all of their employees, and are protective of a brand that may have taken decades to build up. That’s why they’ve developed policies and procedures, created HR and legal departments. But when someone wants to take on a risky project to bring a product from concept to market quickly, they need to cut through this bureaucracy. Roadblocks suddenly appear everywhere from those parts of the organization that want to take the more methodical approach.

Small companies, on the other hand, are much more flexible. They can turn on a dime, reorganize, hire, fire and make decisions in hours and not require the escalation required in large ones. Small organizations are more likely to think out of the box. If one thing doesn’t work they’ll try something else. They are not fighting the established ways of doing things that large companies often have institutionalized.

One of the biggest advantages large companies have is access to the sales and distribution channels. That can be huge. But small companies can sometimes tap into these by using the large companies to sell their product. Small companies can also make use of the increasing ability to sell over the Web where they can be nearly as effective as large corporations.
So the bottom line is not to be intimidated by being a lone entrepreneur or a small organization. You may wish you could have the resources of a huge corporation, but be careful what you wish for!

Editorial: Phil Baker

Phil Baker is a product development consultant in Solana Beach, CA. He’s worked for numerous product companies including Polaroid, Apple, and Seiko. He’s an Ernst and Young Entrepreneur of the Year, holds 30 patents, a technology columnist for the San Diego Transcript and author of “From Concept to Consumer: How to turn ideas into money”. His blog is and his email is [email protected].