Friday, February 24, 2012

Elephant, Meet Mouse.

It's a jungle out there, Jane.  The fact is that even in the jungle, elephants are plausibly afraid of mice, at least according to Myth Busters: Are Elephants afraid of Mice? 

I am not expert in elephant behavior, but I can only imagine that over time and evolution, many an elephant has fallen to a mouse, so the elephant has become aware and adjusted. And while we assume the elephant is afraid, I wonder if it is not fear of the mouse, but fear of falling.  On the other hand, the mouse is likely afraid of being crushed.

So I wonder about the business jungle, and whether this evolutionary trend applies, or if the elephant's appreciation of the mouse has evolved as it has in the jungle.  I wonder if large organizations (the elephant in this scenario) that dominate by virtue of resources such as money, people and systems respect the mouse (small business) and its possibilities.

Lately I have encountered small entrepreneurial market changing organizations that threaten the status quo created by the elephants.  These new comers question the very models that have created and defined success.  But like all things, evolution happens, and size is not necessarily the winning factor. Consider the plight of the dinosaur.

From a mouse's perspective, large organizations seem to have an advantage. They have larger marketing and operating budgets, well defined management systems and processes, and years of experience in building their business and reputation. They attract employees who are looking for stability, benefits and that sense of belonging.

But the larger organizations tend to be more institutional and complex, with multiple stakeholders to manage. Their size alone makes it difficult to respond to the market in a timely manner, which is why they need complex and integrated strategic planning, enterprise risk management, reporting and communications processes, with executives leading each.  The price tag for such a model can be at least $1 million / year.  With overhead costs like that, large organizations are under pressure to reduce costs by way of efficiency programs. Inevitably, these costs are passed on to their customers in some shape or form.

Large organizations also struggle with innovation and relevance, as do smaller organizations.  Large companies may have the tools to invest in these programs, such as employee incentives and customer loyalty programs, but they sometimes lack the heart, soul and competitive speed of their smaller counter part.  After all, when you consider who has more on the line, the mouse or the elephant, hands down, it is the mouse that stands to be crushed, so he has to be quick on his feet.

Despite large budgets and infrastructure, elephants do fall. Think about Eatons. "There is always be an Eatons". There isn't.

Smaller business faces the reality of capacity constraints every day so they tend to make trade offs in their marketing, management services, and product development. This, by definition, affects their ability to effectively compete with larger organizations to reach their customers. Therefore, small businesses must find a way to create the capacity they need to be competitive without creating excessive overhead / service costs.

What I observe is small business attempting to do business the way big business does business.  Essentially, mice walking around like elephants. For example, there is a tendancy toward exclusivity where each small and large company is out there to outrun or crush their "competitors". I attended a business group that was attempting to work together, but has a practice to exclude others who may have similar businesses. Again, I ask, can this market place sustain such closed door thinking?

In a market like ours (we just cheerfully broke 1 million), if we are serious about creating new wealth, then we would be serious about creating possibility and growth. I wonder if we can afford exclusionary thinking if we truly want to become a "have" province that is attractive as a place to live, work and do business? Maybe it's my cooperative roots, but I believe there is a better way.

We can work together in a respectful and relevant way.  By working together, small business can compete and win in the market place with cooperation, collaboration and organization.

Consider the credit union system model. The key to its success is a common desire to get somewhere, together.  There are rules of engagement. In fact, according to the cooperative principles, products and services providers must have a commitment to member participation and value, quality, efficiency and democracy.

If we were to change our own rules, small business could afford the products, services and tools they need to be competitive, the economy would grow, unemployement would decline, and new wealth and ideas would be created to improve our social and economic health.

It seems to me that we need to be aware of the scenarios that have played themselves out in the business ecosystems before us:  that being nimble is to be efficient, price competitive and customer responsive and continuously evolving, and that size is only one factor, but not the factor.

Yes, elephants are powerful, but emerging innovators, creators, and people who have the courage to pursue evolution can realize collective competitive strength.  We can change the DNA of our past practices and thinking, we can work together and we can differentiate.

- The Mouse.

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