As a futurist, I am often asked what strategic action organizations must take in order to create a long-term viable future. As our economic, social, and political environment becomes increasingly volatile and uncertain, organizations are searching for more creative and adaptive solutions. For so long the gold standard of a strong company was growth. “Bigger is better” was the mantra of the 20th century and much of that ideology has carried over into the 21st century. Concepts like, “too big to fail,” have left some to believe that the larger the organization, the safer the organization. This of course is ridiculous. The external environment will always be bigger than your organization. That reality means that no matter what the size, organizations must adopt a framework of adaptive and resilient behavior.
The solution for some has been the big company/small company hybrid, wherein larger companies combine their resources and reach with the organic and flexible characteristics of small companies. Both large and small companies carry strategic advantage and vulnerability. Small companies can respond and react more quickly than larger companies because:
Larger organizations have a strategic advantage due to their ability to leverage capital, influence public policy, and create broad sweeping initiatives with far greater impact. The concept of a hybrid organization sounds great, but can it work in the long run?
Consider the changes the U.S. Military has made over the past decade. Prior to 9/11 there were several DOD initiatives to increase capabilities for large-scale ground, sea, and air combat. That all changed over night and the military’s strategy went from “shock and awe” to covert, special operations, and unmanned drone strikes. As a result, the U.S. Military continues to increase the size of special operations units in order to adapt to changing dynamics on the battlefield. This may seem logical as it applies to the “bigger is better” principle. However, this creates a fundamental problem in the organization. One of the greatest complaints from existing special operators is that standards for selection have drastically declined and the influx of new lower caliber operators is causing more problems and diminishing the efficiency and effectiveness of elite operations.
We see this happening in business as well. Companies are faced with a global competitive market where size is no longer king. Take for example, the two man design firm, Barber-Osgerby, that designed the 2012 Olympic torch. This small team beat out over a thousand other entrants, several of which were large established firms. In an interview with Inc. Magazine, Jay Osgerby stated that, “We were up against large firms that had been around for 50-plus years. We knew that we would be perceived as somewhat of a risky choice.” It’s certain that the bigger and better connected firms were baffled when they lost the bid to a relatively young and small design firm. When asked why he thought they were chosen, Osgerby noted that, “Some might feel a bigger, more experienced firm may have done better work. But often the best projects come from the naiveté of the approach. We’re not experts at everything. We were just nimble, passionate, and had a lot more to lose (Carter, 20121).”
So can a hybrid organization work in the long run? Unlikely. At least in its current state although it’s a good start. The solution is not a large company emulating a small company or vice versa, but rather a shift in priority and focus. Where the company hybrid model falls short is in the assumption that larger organizations must adopt smaller organizational strategy. Smaller organizations fall short when they try to instill large organizational structures of hierarchy and bureaucracy.
So what’s the solution? To start, large companies need to create small elite units in their organizations that operate autonomously from the day-to-day bureaucracy. Small companies must focus on depth of knowledge and talent acquisition rather than increasing the size of their personnel and physical location. Rapid change and continued uncertainty will require organizations to adopt a strategy of movement rather than a strategy of position.
Where is your organization today? What meaningful actions are you taking to ensure a long-term and viable future?