Opinion

Big and small businesses need to work together

6 min read

29 October 2013

Serial entrepreneur Martin Leuw says that large firms are waking up to the benefits of collaboration with their smaller, more dynamic rivals.

In a business context, the story of David and Goliath is often used as a classic case of conflict, with the little guy beating the giant through intellect rather than brawn. So now let’s imagine if we wrote a different, even happier ending, where they recognised their complementary skills and combined forces? I believe that to turbo charge our economic growth, we need our Davids and Goliaths to think and act differently.

I’m one of those people who, when told they can’t do something because it’s impossible or not allowed, see it both as a red flag and an entertaining challenge to find a way to get it done. Early on, I worked for a couple of big Goliath organisations and realised pretty quickly that at heart I was a David. 

Nothing like a bit of severe frustration with too many processes to get me to realise that it was “easier to ask for forgiveness than permission” and to let people know that I would be taking a course of action by a specific date unless I heard otherwise. This seemed to allow me to just get things done, but it wasn’t long before I broke free, first with a corporate venture and then out into the world of entrepreneurship.

Large corporates generally have the major advantages of resources (people, cash, brand, distribution networks etc.) but too often many don’t fulfil their true potential because they are weighed down by processes and people and scale which has pushed them into maintenance rather than creation mode. 

My early experience of running a small business and trying to partner with a large one was that it could be like “swimming in treacle” characterised by way too many nice “cappuccino” meetings that are all froth and no substance. 

It takes real experience and a few scars to work out when to persevere and when to abandon ship as the corporate can easily submerge the entrepreneurial SME. Yet, in spite of this, perseverance can also really pay off for a small business, especially when you have a loyal internal sponsor, preferably at a senior level.

Yet, I realise now I was perhaps too dismissive of the large corporate Goliaths and it was only when the small business I was leading became a lot larger, that I started to empathise a lot more with why businesses often slow down as they get bigger. It takes real effort from the top, both culturally and structurally, to prevent that happening.

In some industries, particularly pharmaceuticals, they realised some time ago that a key way to innovate was to build an ecosystem cluster of small entrepreneurial businesses that could create the new products and services to flow down their distribution pipes. 

At long last, perhaps with a recession acting as a catalyst, this approach does seem to be catching on more in other industries as the smarter large corporates realise that the vision, drive, ambition and “can do” attitude of the small entrepreneurial businesses can cut through their self-induced red tape and help them compete more effectively in a rapidly changing global economy. Procurement can drive down costs but partnership drives revenue growth, so keep the two functions away from each other.

Technology is turning the world upside down, with innovation flowing from small to large businesses and disrupting industries in a myriad of positive ways; so if you can’t beat them, join them.

The mature businesses that want to re-invent themselves are injecting entrepreneurial talent to try and create the type of businesses that could disrupt their marketplaces for themselves, so they have a stake in the future rather than being disrupted. 

The biggest challenge of all is a cultural one as Davids and Goliaths are different for a reason. In my mind, the best way to get this transition to work is for more large corporates to find roles for an “entrepreneur in residence” with a high degree of autonomy, to help them navigate this new and changing terrain. If we can get it to work, the benefits will be phenomenal.