Small just got a lot more beautiful. In a world where a 13-employee startup like Instagram can sell to Facebook for a billion dollars -- that's a mere $77 million (?49 million) per worker -- you know that success and business scale are no longer synonymous. Sure, its cosy family of 2.1 million employees keeps Walmart delivering the retail profits, and Indian Railways keep the trains moving thanks to 1.4 million pairs of form-filling hands. But in an era of low-cost, democratised and networked computing, it doesn't take much for even the littlest businesses to access the tools that help them perform like the biggest. Here are eight lessons from the nimble tech-startup world that will give your small business the power of a global giant.
Hire the world's biggest IT department: Face it, the old power structures have crumbled. "I see the elimination of gatekeepers everywhere," Amazon founder Jeff Bezos told the New York Times recently -- before pointing out that 16 out of the top Kindle bestsellers that day had been self-published. So why not take advantage of Mr Bezos's own facilities to eliminate gatekeepers in whichever sector you happen to compete? Thanks to low-cost cloud-computing services offered by Amazon and other providers, you can rent the world's most powerful servers and processors by the hour at a reasonable price -- with none of the set-up or maintenance costs of a conventional firm's IT system. That's what we used to call a level playing field.
Outsource your innovation: As Sun Microsystems co-founder Bill Joy once said, "There are always more smart people outside your company than within it." Which means that even a ten-person operation can tap into the biggest brains on the planet when it comes to problem-solving. Want to scale a mountain of big data? Offer a small cash prize to the mathematics geniuses competing to crack the challenges set on a site such as Kaggle.com. Need to solve an R&D or engineering or even life-sciences problem? Put it to the experts at an open-innovation hub such as InnoCentive. You've heard about Procter & Gamble using the network to source new products such as the Swiffer cleaning brush -- so why shouldn't you use similar tactics to refine the product that could just make you a billionaire?
Always be in beta: For years you were using Gmail without even noticing the "Beta" label on the home page -- giving Sergey and Larry a get-out clause if anything went wrong, but also providing valuable feedback as they iterated in real time. Just as software is preferable when it is "agile" rather than perfect, you should see your company's not-fully-refined product as good enough to put on to the market to await improvements. Unlike a giant business, you can respond nimbly and quickly to feedback and problems -- and that flexibility gives you a massive market advantage. Remember when Nokia was valued a couple of years ago at $200 billion (?128 billion)? It turned out to be too big to move quickly to where the smartphone-hungry customers were -- and promptly fell to a mere $6 billion (?3.8 billion).
Learn from behavioural economics: It doesn't take a giant to hack the human mind. So take some lessons from behavioural psychologists and economists such as Dan Ariely, Daniel Kahneman and Robert Thaler in using small nudges to change the motivation of both customers and staff. Daniel Pink, for instance, the author of Drive: The Surprising Truth About What Motivates Us, found strong evidence that giving your employees extra financial incentives can actually be counterproductive unless they were doing dull jobs such as sitting at supermarket checkouts. Instead, the studies show that workers perform better when given autonomy over their tasks, the chance to learn, and a wider sense of purpose. I'll give you that tip for free.
Know your values: Startup culture is also teaching that this "wider sense of purpose" can make small companies not only immensely attractive place for talented people to work, but can also serve as a powerful marketing tool that builds customer loyalty. It's always inspiring to read examples such as Zappos, focused entirely on customer service (read founder Tony Hsieh's Delivering Happiness: A Path to Profits, Passion, and Purpose), or Patagonia, dedicated to cutting over-consumption by offering quality outdoor clothing that will last a lifetime (and read founder Yvon Chouinard's Let My People Go Surfing: The Education of a Reluctant Businessman). My favourite recent example: software company Treehouse wants to "bring affordable technology education to people everywhere" by attracting strongly motivated and talented staff. So they work a four-day week at full pay -- which boosts morale, staff retention, and recruitment quality. The firm recently raised ?3 million.
Go viral: It's not just marketing that can prosper today through social networks (though, naturally, you should be humanising your business by connecting directly with customers on Twitter and Facebook). You can also use online platforms to generate funding, build customer feedback, and improve your product -- all in one, without any significant upfront investment. Crowdfunding services such as Kickstarter and Indiegogo let small teams take big products to market in an entirely new way -- most famously design-led items such as the Pebble and TikTok watches, which raised millions of pounds from Kickstarter users eager to be early customers. It's an R&D lab, marketing channel and customer-acquisition tool all in one.
Be downloadable: Barriers to market are quickly shrinking in the mobile-internet age -- and that means you don't need to spend thousands on having a fancy agency design your smartphone app. There are now dozens of services that will let you build, host or monetise your app at low or zero cost. So you can use App Press or AppBreeder or AppMakr to build an app without needing to write code; BetaBait to find early users and testers; Mopapp to find out exactly who is using your app. And on the mobile internet, no one know you're a tiny operation if you're delivering something a global customer base wants.
Be the disruptor: As the Cluetrain Manifesto famously posited, "Hyperlinks subvert hierarchy". In a hyperconnected world, you don't need the authority of scale or heritage to build a fast-growing business. You just need adaptability and speed. With technology commoditising pretty much everything the internet can deliver, from media to mobile payments, you have an advantage over established corporates in that you can make bold changes in response to new circumstances.
And why shouldn't David do this more nimbly than Goliath?
David Rowan is editor of WIRED magazine. This blog post was written for the latest issue of Journal, the magazine of Clydesdale and Yorkshire Banks.
Image: david drexler/Flickr/CC
Source: http://www.wired.co.uk/news/archive/2013-02/12/lessons-for-small-businesses
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