Bigger is not better… and here’s why.
Back in the 20th century, Big was a good thing. Economies of scale meant that Big could produce things faster and cheaper. Big used to mean stable, reliable, bulletproof, Indestructible. All of the best thinkers and innovators worked for Big. If the big guys were doing it, it meant that it was the right thing to do. If small businesses wanted to compete, they needed to emulate as much of the Big business model as they could.
If we’ve learned anything from the “Great Recession”, it is that this is no longer the case. The “Big” of the 21st century now means fallible, inflexible, hierarchical, slow to react, and expensive.
The economies of scale have largely been done away with in the information age. Small has access to the same tools and information that Big does. Small is more agile, proactive, faster to market, more cutting edge and more cost-effective. Doing business with Small gives you these advantages:
- Small not only wants to do business with you, they need to do business with you, meaning more advantageous contract terms.
- Small now has the best thinkers and innovators.
- Small business can better meet your needs quickly with customized solutions.
- Small often has better customer service than Big (See first bullet).
- Small cares more about your business than Big does.
- Small can do things that Big can’t, because they are small.
- Small costs less than Big does… without a sacrifice in quality.
The not so big secret is that in order to compete in the 21st century, Big is getting smaller. Big has split off whole divisions into independent businesses, or has at least thought about it (IBM and HP personal computing – IBM sold to Lenovo, HP was looking for a buyer). They outsource everything they can to smaller companies, nowhere is this seen more than in IT. Independent consulting (i.e. not an employee, but the smallest unit of a small business) is thriving. Companies are using hosted software and cloud computing to “downsize” their own data centers. Companies of all sizes are now looking more and more for Expertise-as-a-Service (EaaS) to enable big companies to get smaller, and for small companies to have the same tools and expertise as the big guys.
Faster, better, more cost-effective, customizable, higher value, flexible, cutting edge. No matter how you look at it, doing business with small companies brings great competitive advantage, where in the last century, the opposite was the case.
In other words, Small is the new Big.