Most big companies want creativity and innovation, but these attributes require a structure that allows them to thrive. Corporate structure itself may be the biggest impediment to out-of-the-box thinking. It’s hard to find the race horse in the twenty-mule team. In large corporations’ desire to get the job done and be more efficient, they can take the division of labor concept too far. They can get siloed to a point that information gets lost in the shuffle. Good ideas have to go up, over, and down, and may get lost in translation – or worse, actually suppressed at lower levels in the name of job security. Small companies are willing to sacrifice that strict division of labor, making way for growth and innovation. So, how can big companies become more entrepreneurial? In our last post we discussed the first of our 7 suggestions: Cutting the Budget. Here is our second suggestion:
2. Change the Structure. Structure evolves in big companies to protect owners, presidents and vice presidents from the day-to-day details required get the job done. Mid- and lower-level managers handle the details. This allows upper-level staff to concern themselves with the big picture, reviewing reports, and making the major decisions. All is well until you realize how many good ideas never get to those decision makers. The structure itself demands summaries, generalities, and simplified answers as information moves up, but some gems can fall through the cracks in an effort to ‘boil it down to the one thing’ at its essence. Middle and upper level managers may not interpret the information properly since they may be isolated and insulated from the actual problem. Small businesses share more information and welcome suggestions from anyone.
Here are some suggestions for big business to get out from under their pyramids:
a. Permeability. Identify the areas of interdependence between departments and knock some holes in the silo walls so folks can communicate directly through to their counterparts. In smaller companies, ideas can bounce back and forth between different skill sets resulting in some truly innovative ideas.
b. Ombudsmen. Reduce your mid- and upper-level management and repurpose some as ombudsmen. Make them go-betweens to work with your sales people and your marketing people, your customer service people and your production people. Their job is to understand the challenges to sales and distribution, and share that with the entire team. They become the repository for the proposed solutions and take them to the top.
c. Pancake it. By flattening out your pyramid, you increase access to top-level managers and owners. This way, good ideas are less likely to be muffled, misstated, or dropped. Owners would do well to pepper the organization with equity holders who have a financial interest in discovering innovation.
d. Go Sideways. Unlike small companies that focus on one major idea or brand, big companies have many initiatives going on simultaneously. In the process, they can lose creativity because its people see only limited aspects of the product or service rather than the whole picture. Try creating lines of communication that cut across divisional boundaries, and focus on a program rather than a division of labor.
The pyramid structure itself can stifle creativity. By being resourceful with your structure, you will be more likely to get creativity from your people.
Next time we will explore how elements of progressive small business company culture can help big companies become more entrepreneurial.
Who Are We.
Having built and sold a bestselling national brand, we appreciate the value of brands and everything it takes to make them successful. Companies are valued by their brand equity. Achieving and maximizing brand equity requires tremendous respect for all your customers, from your wholesaler to your end user.
Starting in our laundry room with no money and no knowledge of the industry, we built the famous Barefoot Wine brand. We learned a lot they don’t teach in school and much of it the hard way. Although our success was in consumer products, our real world experience will be helpful to anyone looking for information and advice about brands.
We have written the New York Times Bestselling Business Book, The Barefoot Spirit: How Hardship, Hustle and Heart Built America’s #1 Wine Brand, which chronicles the history of the famous brand from its inception through its acquisition. Our book is now required reading in schools of entrepreneurship across the country. We hope this book will provide inspiration and encouragement for all those contemplating starting a brand or wanting to improve their existing brand.
Michael Houlihan and Bonnie Harvey
-Barefoot Wine Founders