New Delhi Times - Gaurav Bhatnagar reporting from New Delhi, India

It is conventional wisdom that bigger companies move slowly compared to smaller ones. Often, large successful companies completely miss out on an upcoming industry trend or opportunity. Consider the example of Microsoft in the mid-90s. For a while, they totally didn't see the internet coming and it took Bill Gates himself to shake up the company and change course mid way. Similarly, when Google came out with its search engine, there were larger players already in that space. Obviously, by definition, big companies have the resources to put behind a new idea. They commission tons of market research so it is also not possible that they don't know about the upcoming trends. They definitely have the money to hire the best and the brightest. So why is that many times we see a small little startup cause a disruption which in all likelihood should have come from the big industry leader who has been in that business for decades?

Busy protecting old turf

I think there are several reasons why this phenomenon happens. The first and foremost reason being that success is a very limiting thing. Most big companies grew big because they knew how to do one or two things very well and created a cash cow which sustained rapid growth. But having grown from the position of an upcoming challenger to the position of dominance, they now themselves had a turf to defend from even newer entrants. So as a company grows big, it spends more and more time in defending what it already has rather than building something new. Microsoft has fought hardest to fend off the threat from Linux or Open Office because Windows and Office are their two cash cows which they can't afford to lose. Similarly, Google spends bulk of its efforts behind its contextual ads system. Closer home, Infosys works hard to continually improve its existing services business rather than venturing out in building packaged products. So, when a company wins in one game, it is forced to constantly continue to win against new challengers. It simply cannot afford to lose its position of dominance - even if it means not trying hard enough to win another battle elsewhere!

Short term focus - living quarter to quarter

Many large companies are publicly listed. Public listing is a great way to raise money for the business and provide liquidity to share holders. However, it also means that a company's performance is monitored on a quarterly basis. Public companies must provide guidance on what results they hope to achieve in the next quarter. And if they miss their targets, it affects their stock price. Any piece of slightly negative news about the company can cause the stock price to fall. In such circumstances, it is natural that for publicly listed companies, a large amount of energy and effort goes in meeting quarterly targets and keeping the stock price healthy. In such circumstances, focusing on new opportunities which much might not yield any (or worse negative) results in the short to mid term is hard. This of course leaves the door open for smaller companies to come in and take the lead in a smaller niche within a big segment.

Lack of entrepreneurial drive

One might argue that even if it is true that large companies are busy defending what they already have and focused on short term targets, most of them still have enough resources to dedicate to new projects as well. In fact, they do often deploy several times more money and people on new ventures than what their startup challengers can. Starting a new greenfield project even within a big company is very much like doing a startup (albeit, a well funded one). And success of most startup ventures depends on the capabilities of the founders. When an entrepreneur is running a startup independently, she is likely to be really passionate about what she is doing and would have a very deep understanding of that space. In all probability, she must have given lot of thought to the venture before jumping in to it. Consider, on the other hand, how a new project would get staffed in a big company. The mandate for go or no-go on a new project would likely come from the top management or the board. Next, with a budget allocated to the project, the hiring exercise would begin. In such situations, often a successful manager from another part of company is deputed to lead the new effort. Or a key exec from a competitor might be pulled in. In either case, basically a job opening - likely with a fat pay check - is filled in. It’s not hard to see that the entrepreneur stands a fair chance against the big company in such situations. The entrepreneur has everything at stake as compared to a business head in a big company who could always move on to the next job. The entrepreneur is also doing what she is doing out of passion and genuinely belief in the opportunity as against the big company guy who might have been influenced by extraneous factors like pay package or company brand name.

I have made some obvious generalizations here. There are many large companies which are nimble and continue to succeed in many diverse territories. But no company every succeeded in everything that they did and smaller companies will always continue to challenge larger players. So if you have held back on implementing your ideas only because "a Google could also do it", its time to give it another thought!