Op-Ed: Startup Advantage: Will ‘Small Fish’ Rule the Oceans?

For instance, small businesses do not have multiple bureaucratic layers like large organizations. Once they stumble upon an idea, decision making is quick. Also, often being cash strapped makes startups extremely cost-conscious. Several startup entrepreneurs operate from home or garage offices and save on rentals, many of them crowdsource ideas and hire freelancers thereby saving on fixed salary costs, and most of them leverage new and disruptive technologies like the cloud to limit their technology spend.

Besides, today’s digital platforms enable startups to reach out to the global consumer in a cost-effective manner. Agility is also one of the strong points of startups making them highly adaptive and willing to change their business model when required. I recall reading about startups adopting the lean startup model, a model that encourages experimentation, customer feedback, and iterative design.

[pullquote]”While small businesses may not be able to compete with large enterprises in terms of scale, they are definitely poised to give them a run for their money in terms of innovative and personalized ideas, products, and services.”[/pullquote]While small businesses may not be able to compete with large enterprises in terms of scale, they are definitely poised to give them a run for their money in terms of innovative and personalized ideas, products, and services. Already we see that well-established banks are facing a challenge from small payment service providers who have usurped chunks of their business. Payments is now one of the biggest priority areas on a bank’s agenda. While large retailers are seeing their customers whisked away by boutique online stores that offer customized service experiences.

Threatened by smaller fish venturing out in the open seas, larger fish find that a predatory nature is their first recourse — feeding on their smaller counterparts. One of the ways large companies deal with competitive innovation of smaller rivals is to acquire them. But merging these startups with the existing infrastructure yields tremendous losses in innovation. Inevitably many acquisitions fall prey to the enterprise labyrinth where creativity gives way to process, differentiation gives way to standardization, and agility dies under red tape.

But some companies have found solid ground. For instance, smart companies are investing minority stakes in these innovation hubs. While they have a vested stake in the company, they do not integrate decision making and innovation in the mainstream organization and let the smaller arm work at its own pace that helps the larger organization leapfrog innovations.

While it’s yet to be seen if smaller fish will rule the oceans, it’s clear that these innovative startups will fuel the business landscape of tomorrow. And instead of being threatened by them, larger organizations need to leverage partnership models to collaborate for the benefit of the entire ecosystem.

This article has been edited and condensed.

Supriya Jain is the Head of Thought Leadership Marketing at Wipro Ltd. Jain is a marketer with close to 7 years of experience in Insurance and IT industries. She joined Strategic Marketing at Wipro in 2011. In her tenure at Wipro she has successfully revamped Wipro’s content strategy, revitalized social presence, and contextualized Wipro’s point of view for Wipro’s target audience by institutionalizing experiential and real time thought leadership. Connect with @jainsupriya on Twitter.