November 23, 2005
Attenuate Goliath’s Management and Employee Strength
additional note to my ealier post: this post is a subpoint to my post on “How Can David Beat Goliat?-Strategy #7: Attenuate Goliath’s strengths!”
I have found that adding only one great leader to an emerging growth company significantly changes the outcome, and multiple great leaders working together is one of the largest ingredients for success for all companies.
Well-run large companies have great senior managers and employees at all levels and they generally have recruited and trained a large bench over the years. This is a tremendous strength for them. How can emerging growth companies minimize this strength and, perhaps, even gain an edge?
Attenuating the large company strength…
At the senior manager level, it is true that some of the best senior managers are at the well-run large companies (I have not met anyone more impressive than Steve Ballmer, CEO of Microsoft, for example), but the amount of time the senior managers can spend on a given product market is very small as they have too much to do (see my prior posts on the information advantage and the time advantage, for example); therefore, the senior manager advantage is more perceived than real for an emerging growth company in a given product market (As you become large and gain more of the senior manager’s focus, this will become more of an issue…it will also be a great “problem” to have!).
Below the senior manager level there is more of an issue. The well-run larger companies have some great mid-level managers (corporate officers) and have established solid operating processes. The advantage that large companies have is that emerging growth companies need to both compete with the quality of the managers and the quality of the processes. (As an aside, this is particularly important as emerging growth companies grow through the expansion stage and need to establish more formal processes. They do not need or want these processes at the earlier stages of company development. But, as companies grow, the multiple phase changes in both organizational structure and formality of process are highly important to successfully growing the emerging growth companies…candidates who have these tools add much more value than people who have not been exposed to these tools).
The best way to attenuate the strength (as well as possibly create an advantage) with respect to the other employees is to hire a very talented “A” caliber staff into your company that know how to establish the processes you need. Some thoughts:
- As I have written about previously, there is a large set of “A” caliber people who will not fit into large company culture or who are looking for stock-based compensation and opportunities for capital gains (with great risk-reward characteristics) that they can’t get at the large company. This set of people is uniquely suited for the emerging growth company experience and will not want to work for the large company. Many of these people are as good or better than the staff that fits into the large company (they are more risk-seeking and hands-on, for example). You should work on getting more than your fair share from this group! (Note: these people may have less understanding of the formal processes that you need, but they will still be a great addition and you won’t be competing against the large companies for them).
- For any top prospect that you want to bring into the company, especially if you are recruiting them away from a well-run large company, you need to give them a great sense that the company has a high probability of success and that they will succeed along with the company. Some approaches to do this:
- Outline a vision for the company that is both achievable and interesting. (This is not fluff stuff, but rather what customer segment are you attacking, what is your approach, and why will it win relative to others?)
- Demonstrate some progress against your vision. The more progress the better, especially for the more risk-averse candidates. The better the product and the more happy customers, the better you will show.
- Make sure that they know you have appropriate funding. If you are profitable, it is easy to show. If you lack profits, make sure that they know your funding source and have the funding source give them confidence that they are behind the company.
- Make sure that you give them exposure to your very good (and impressive) advisors. You need to both surround your company with great advisors (board members, advisory board members, Angel Investors, VCs, etc.) and give your candidates access to them. Also, the better your vision and the more they are aligned when the candidate talks to them, the better. This is pretty important for many of your more senior candidates, as it will leave the impression of a more substantial company (some very good people are involved!). This point is even more important if the large company senior managers are “wining and dining” your candidates!
There is no magic here, but it is important to get the right, competitive, staff at your company…and it will help attenuate Goliath’s Management and Employee Strength!