Traps of

growing big
And some questions / ideas of what to do.
Trap # 1
Big things grow slower
http://blogs.wsj.com/management/2009/06/01/why-companies-fail-part-i/
In business as in biology,
big things grow slower.
For a $40 million company to grow 25%, it
needs to find $10 million in new business
the next year.
But a $40 billion company needs to find
$10 billion in new business the next year to
grow at that same rate.
http://hbr.org/2000/03/meeting-the-challenge-of-disruptive-change/ar/3
http://blogs.hbr.org/2013/06/why-successful-companies-stop/
Rabbit.
Need to reevaluate.
Tortoise.
Need to break through.
Small
company
Jaguar.
Need to be alert.
Elephant.
Need to step up.
Large
company
High speed
Low speed
http://blogs.hbr.org/cs/2013/04/finding_your_place_in_the_comp.html
If you were an animal, which one would you be?
http://www.pinterest.com/frankcalberg/beautiful-animals/
Trap # 2
Hold on to old products
http://www.slideshare.net/lionzshare/vijay-govindarajan-world-innovation-forum
http://blogs.hbr.org/cs/2010/04/what_can_hinduism_teach_us_abo.html
Market share
Cash cows
Look out for new “question
marks” to invest in.
Poor dogs
Fix, sell, or close down.
Stars
Develop great concept
further.
Question marks
Try out ideas with
growth potential.
Market
growth
Adapted from the bcg matrix.
3 reasons why managers hold on to things that bring little value to users
Reason # 1
Being on committees is a source of prestige.
Reason # 2
Some managers don’t want to admit they are doing low-value work.
Reason # 3
Managers become emotionally attached to whatever they do.
http://blogs.hbr.org/2013/03/why-organizations-are-so-afraid-to-simplify/
Like trees that get too spindly, organizations
also grow unnecessary branches that
reduce the health of the overall enterprise.
These need to be cut back in order to allow
new shoots to have the resources to flourish.
http://blogs.hbr.org/2013/06/why-successful-companies-stop/
In a bureaucracy, it’s easier to make a
process more complex than to make
it simpler, and easier to create a new
burden than kill an old one.
http://www.shirky.com/weblog/2010/04/the-collapse-of-complex-business-models/
When the big company neglects to pursue longterm opportunities,
the company’s focus becomes increasingly short term
http://www.adizes.com/corporate_lifecycle.html
Further inspiration
http://www.slideshare.net/frankcalberg/tips-to-help-a-person-through-a-change
http://www.slideshare.net/frankcalberg/learning-strategies-11478939
Trap # 3
Success
I bet the fact that they [BP] had been
successful so many times before, and
because the financial pressures were
so intense (the rig alone cost about
$1,000,000 a day) that they
compromised some on a lot of things,
which lead to tragedy.
http://www.sviokla.com/innovation/bp-misery-innovation/
Three factors eventually turn the
lifecycle for organizations into
a death cycle: Size, age, and success.
Success is the most dangerous factor, because
success inevitably leads to self-satisfaction. The
more successful organizations become, the happier
they are with the way they currently do things.
Sources
Kolind, Lars: The Second Cycle, p. 8-10.
http://kolindkuren.dk/fra-bureaukrati-til-vaekst/
https://twitter.com/claychristensen/status/250880657352429568
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The success of their [disk drive
companies’] past practices
made it difficult to react
effectively to new disruptive
competitors.
http://www.strategy-business.com/article/00170?pg=all
Clayton Christensen
Further inspiration
http://www.slideshare.net/frankcalberg/power-to-the-people-34722633
http://www.scribd.com/doc/32211076/Power-distance
Trap # 4
From generalization
to
spezialization
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Growth [at Nissan] also greatly increased
specialization and departmentalization,
which encouraged sectionalism and parochial
decision making.
Kotter, John P.: ”Corporate culture and performance”, location 2125.
3 consequences of spezialization / silos
# 1: Distrust
People in 1 silo start distrusting people in other silos.
# 2: Lack of communication
People only communicate with the people directly around
themselves or those at the same level.
# 3: Complacency
When people have little contact with people in other silos, they
become inwardly focused and complacent with the status quo.
http://blogs.forbes.com/johnkotter/2011/05/03/breaking-down-silos/
Further inspiration
http://www.slideshare.net/frankcalberg/3-ways-of-organizing
Trap # 5
From creativity
to
efficiency
Fact is, most businesses were never built to
change - they were built to do one
thing exceedingly well and highly
efficiently - forever.
That’s why entire industries can get caught
out by change - industries like big pharma,
publishing, recorded music and the major
U.S. airlines.
http://blogs.wsj.com/management/2009/06/01/why-companies-fail-part-i/
Gary Hamel
Large organizations tend to make life
uncomfortable for activists and rabble-
rousers – however constructive they
may be.
In contrast, online communities
frequently embrace those with strong
anti-authoritarian views.
Gary Hamel
http://www.managementexchange.com/blog/facebook-generation-vs-fortune-500
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6
To be creative To be efficient
Think outside the box. Stick to your knitting.
Explore what you don’t know. Exploit what you know.
Anticipate future customer needs. Meet current customer needs.
Allow freedom and flexibility. Demand accountability.
Let things emerge. Plan.
Avoid process and encourage
unstructured interaction.
Impose process and structure.
Govindarajan, Vijay & Trimble, Chris: 10 Rules for Strategic Innovators, p. 3-5.
Further inspiration
http://www.slideshare.net/frankcalberg/creativity-exercises
Trap # 6
From task focus
to
rule focus
Hierarchies and standard managerial processes are risk-averse
and resistant to change. Part of the problem is political:
Managers are loath to take chances without permission from
superiors. Part of the problem is cultural: People cling to their
habits and fear loss of power and stature - two essential
elements of hierarchies.
And part of the problem is that all hierarchies, with their
specialized units, rules, and optimized processes,
crave stability and default to doing what they already know
how to do.
http://hbr.org/2012/11/accelerate/ar/2
To keep the increasingly large organization
under control, the personnel department
came up with elaborate rules and regulations,
which buried employees in an organizational
structure that often drained their willingness
and readiness to work hard.
Source
Kotter, John P.: ”Corporate culture and performance”, location 2125.
Further inspiration
http://www.scribd.com/doc/35046140/How-do-people-handle-the-unknown
Trap # 7
From curiosity
to
complacency
We are wired to follow routines.
When something is working for
us, we will continue to do it.
http://www.mixhackathon.org/hackathon/contribution/habits-0
http://www.mixhackathon.org/hackathon/contribution/12-enemies-organizational-adaptability
Deb Seidmann
In most systems (societies, corporations, whatever)
needing renewal, people are satisfied with things
as they are, and the leaders are satisfied too.
Gardner, John W.: On leadership, p. 126.
Once a company becomes an
industry leader, its employees,
from top to bottom, start
thinking defensively.
Gary Hamel
http://blogs.wsj.com/management/2009/06/08/why-success-often-sows-the-seeds-of-failure/
Start-ups hire A-type personalities where entrepreneurship and risk taking
is wired into their DNA. But, as companies get bigger, they build more
formal human resources departments. Human resources directors are
typically risk averse in their hiring practices. There tends to be a “shift
towards the middle,” hiring people that won’t “ruffle a lot of feathers”
within the organization.
This creates two problems
1. you typically lose a lot of the A-type personalities who are more
innovative leaders.
2. you hire a bunch of people who all think and act exactly the same, with
people not encouraged or rewarded for thinking outside the box.
http://thenextweb.com/entrepreneur/2014/08/22/big-companies-struggle-innovation/
Stage # 1
Failure to anticipate a problembefore it arrives.
Stage # 2
Failure to perceive a problemafter it arrives, for example because
managers are too far away to detect signals, or because of ”creeping
normalcy” that makes the problem seem like ”the new norm.”
Stage # 3
Failure to attempt to solve a problemafter becoming aware of it,
for example because of groupthink and broad denial.
3 stages of collapse
http://rulesofthumbbook.blogspot.com/2012/01/jared-diamonds-stages-of-collapse.html
http://youtu.be/ryK8BpX4zSo
5 stages of
falling
Stage # 1
Hubris. Success leads to arrogance.
Stage # 2
Undisciplined pursuit of more.
Stage # 3
Denial of risk.
Stage # 4
Grasping for salvation.
Stage # 5
Capitulation. Irrelevance.
The Titanic received 6 warnings of ice on the
day of the collision. They were all ignored by
the wireless operator, who was preoccupied
with transmitting passenger messages and by
the crew, who were focused on breaking the
speed record.
http://blogs.hbr.org/cs/2012/04/3d_business_lessons_from_the_t.html
http://www.imagebase.net/Concept/IMG_5231-copy
A management-driven hierarchy, built for reliability and
efficiency now, leans against significant change because
its silos, levels, rules, short-term plans, and narrow jobs
systematically create complacency.
Complacent people see no reason why they
should do anything much different.
John Kotter: Accelerate: Building strategic agility for a faster moving world, chapter 6.
Further inspiration
http://www.slideshare.net/frankcalberg/5-reasons-why-people-resist-change
http://www.slideshare.net/frankcalberg/rethinking-recruitment-8077077
Trap # 8
From external focus
to
internal focus
GrahamDuncan
You indicate that small and large corporations have
different motivations for using social media. Why is big
business so slow to catch on to social media?
Paul Gillin
There are lots of reasons, including bureaucracy,
conservatism, shareholder pressure, regulatory
requirements, legal concerns, internal politics, and
brand equity.
http://www.ideaconnection.com/articles/00121-Influencing-Innovation.html?ref=nl060909
As a company matures, executives often end
up focusing more on internal needs than
on those of the market.
Before long, that focus can turn a
corporation into its own worst enemy.
http://www.businessweek.com/innovate/content/jun2010/id2010063_908184.htm
Further inspiration
http://www.slideshare.net/frankcalberg/pestel
http://www.slideshare.net/frankcalberg/customer-needs
Trap # 9
From helping each other
to
central control
http://blogs.wsj.com/management/2009/03/24/the-facebook-generation-vs-the-fortune-500/
In large organizations, resources
get allocated top-down, in a
politicized, Soviet-style budget
wrangle.
Gary Hamel
Dynamic
environ-
ment
Stable
environ-
ment
Complex
environment
Low complex
environment
Machine
Bureaucracy
Business
environment
today
As the firm’s [Nissan’s] extraordinary growth continued
in the 1970’s, it began to suffer from what future Nissan
President Yutaka Kume has called ”the big corporation
disease”.
With growth came additional layers in the chain of
command which prevented issues from coming to the
attention of top management quickly and efficiently.
This reduced the efficiency and accuracy of decision
making at the board level.
Kotter, John P.: Corporate culture and performance, location 2125.
Thank you for your interest. For further inspiration
and personalized services, feel welcome to visit
http://frankcalberg.com/
Have a great day.

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