factor 1: Act like a small company
Arrogance often comes with increased size. Whether it is the product of latent “bullying” tendencies or the ability to exert substantial influence through sheer mass, growth often causes resentment toward the market leader from its customer base. This may happenbecause the market leader becomes increasingly inflexible or unresponsive to client requests or needs. The market leader may require the client to be more adaptable to fit the leader’s needs rather than the leader adapting to the client’s needs. The personal attention offered when the company was smaller or the client was new may have faded. Customization or new features may take longer because of an increased backlog or heightened pressure to standardize processes in the name of efficiency. For example, the huge changes in market leadership in the personal computer industry during recent years are direct consequences of the companier’ ability or inability to listen to customers and to quickly and effectively introduce new products and services to satisfy changing customer needs.
Through our vision, “ Every client recommends FDC” we recognize that the loyalty and retention of current clients are the cornerstones of our continued viability as a market leader. None of the characteristics of”big-ness” described above would lead to client recommendation. In the future, if not today, organizational flexibility will beat organizational muscle. Yet a flexible big company is currently an oxymoron in many quarters, likened to the challenge of turning a battleship around in a bathtub
“Acting small” means behaving like a small company that needs to satisfy its clients and retain them in order to survive. In the language of the service-profit chain, it means managing the business for zero defection. So, how does a market-leading big company act like a small company in the future? Here are some thoughts:
1.Organize by product or service, not size. If anything, a consequence of bigness is an inability to deal with customers individually. Large organization often organize the client service function by client size ( volume of business done with the company ) more than by client’s products and services(and how the company can add value to the client’s business). Big organizations often lump revenues and expenses in lager buckets, thus making it next to impossible to determine the profitability of individual accounts and blurring the company’s ability to make prudent investment decision on new products or services. We need to focus as obsessively on why client defect as on attracting new clients. You know your organization is too large if losing a client doesn’t bother you (or worse, if you don’t know you’ve lost a client).
2.Develop a deep and trusting relationship with the current client base. The ability to add ongoing value to current client is critical for their long-term satisfaction, retention, and recommendation. Listening to current clients represents perhaps the best source for developing and testing new products and services. Dedicating resources to individual clients or client families(rather than following the current trend toward centralizing client services and depersonalizing client contact) represents a tremendous opportunity to “act small” in a high-payoff way. Clients buy more, and more quickly, from suppliers who know them well and whom they trust. A “high-tech, high-touch” perspective with current clients not only should benefit the clients, but should produce more highly satisfied internal employees who truly find rewards in the ability to add value to individual clients and to develop meaningful relationships with them.
3. Get back in the mindset and habit of making things yourself. Small entrepreneurial companies typically are highly dependent on individual creativity and internal development of ideas. This stems in part from their desire for a competitive advantage and in part from the reality of scare resources. Big companies often strategies. Unfortunately, this can become the norm for development, and it often results in clumsy attempts to make acquired products “fit” client needs. Thus, the big company quickly gets out of practice in making client-based changes occur and is viewed as slow or unresponsive.
Although these attributes may help FDC and other companies ”act small” we and other big companies are considering some specific changes to ensure a smaller mindset:
1.Put a governor on the size of individual businesses and split them out as separate P & L’s as they grow. We have noted the success of big “small” companies, like Asea Brown Boveri, corning, and 3M, who insist on using small operating units. An additional benefit of this policy is the required development of a broader cadre of management talent, because the number of managers with direct P&L responsibility increases substantially.
2. Place revenue goals on the development of new products or services. For example,3M requires that 25 percent of total revenue be generated from products developed within the past five yeare.3M can do this because of its institutional mandate to “think small” with respect to client, organizational structure, and product development. More big companies, including FDC, need to stretch themselves in generating new revenue streams. The safest way to do so is to listen closely to current clients and bring an increased focus on helping them succeed in their markets.
3.Develop metrics around agility and responsiveness, as judged by your clients. We need to zero in on what the key measures of “acting small” are and drive ourselves to achieve them with our client base. Major weapons used by smaller or “boutique” competitors are agility, flexibility, responsiveness, and attention, some of the benefits of being small. The big company that can compete on these terms is far better positioned for sustainable growth than one that cannot.
factor 1: Act like a small company
Arrogance often comes with increased size. Whether it is the product of latent “bullying” tendencies or the ability to exert substantial influence through sheer mass, growth often causes resentment toward the market leader from its customer base. This may happenbecause the market leader becomes increasingly inflexible or unresponsive to client requests or needs. The market leader may require the client to be more adaptable to fit the leader’s needs rather than the leader adapting to the client’s needs. The personal attention offered when the company was smaller or the client was new may have faded. Customization or new features may take longer because of an increased backlog or heightened pressure to standardize processes in the name of efficiency. For example, the huge changes in market leadership in the personal computer industry during recent years are direct consequences of the companier’ ability or inability to listen to customers and to quickly and effectively introduce new products and services to satisfy changing customer needs.
Through our vision, “ Every client recommends FDC” we recognize that the loyalty and retention of current clients are the cornerstones of our continued viability as a market leader. None of the characteristics of”big-ness” described above would lead to client recommendation. In the future, if not today, organizational flexibility will beat organizational muscle. Yet a flexible big company is currently an oxymoron in many quarters, likened to the challenge of turning a battleship around in a bathtub
“Acting small” means behaving like a small company that needs to satisfy its clients and retain them in order to survive. In the language of the service-profit chain, it means managing the business for zero defection. So, how does a market-leading big company act like a small company in the future? Here are some thoughts:
1.Organize by product or service, not size. If anything, a consequence of bigness is an inability to deal with customers individually. Large organization often organize the client service function by client size ( volume of business done with the company ) more than by client’s products and services(and how the company can add value to the client’s business). Big organizations often lump revenues and expenses in lager buckets, thus making it next to impossible to determine the profitability of individual accounts and blurring the company’s ability to make prudent investment decision on new products or services. We need to focus as obsessively on why client defect as on attracting new clients. You know your organization is too large if losing a client doesn’t bother you (or worse, if you don’t know you’ve lost a client).
2.Develop a deep and trusting relationship with the current client base. The ability to add ongoing value to current client is critical for their long-term satisfaction, retention, and recommendation. Listening to current clients represents perhaps the best source for developing and testing new products and services. Dedicating resources to individual clients or client families(rather than following the current trend toward centralizing client services and depersonalizing client contact) represents a tremendous opportunity to “act small” in a high-payoff way. Clients buy more, and more quickly, from suppliers who know them well and whom they trust. A “high-tech, high-touch” perspective with current clients not only should benefit the clients, but should produce more highly satisfied internal employees who truly find rewards in the ability to add value to individual clients and to develop meaningful relationships with them.
3. Get back in the mindset and habit of making things yourself. Small entrepreneurial companies typically are highly dependent on individual creativity and internal development of ideas. This stems in part from their desire for a competitive advantage and in part from the reality of scare resources. Big companies often strategies. Unfortunately, this can become the norm for development, and it often results in clumsy attempts to make acquired products “fit” client needs. Thus, the big company quickly gets out of practice in making client-based changes occur and is viewed as slow or unresponsive.
Although these attributes may help FDC and other companies ”act small” we and other big companies are considering some specific changes to ensure a smaller mindset:
1.Put a governor on the size of individual businesses and split them out as separate P & L’s as they grow. We have noted the success of big “small” companies, like Asea Brown Boveri, corning, and 3M, who insist on using small operating units. An additional benefit of this policy is the required development of a broader cadre of management talent, because the number of managers with direct P&L responsibility increases substantially.
2. Place revenue goals on the development of new products or services. For example,3M requires that 25 percent of total revenue be generated from products developed within the past five yeare.3M can do this because of its institutional mandate to “think small” with respect to client, organizational structure, and product development. More big companies, including FDC, need to stretch themselves in generating new revenue streams. The safest way to do so is to listen closely to current clients and bring an increased focus on helping them succeed in their markets.
3.Develop metrics around agility and responsiveness, as judged by your clients. We need to zero in on what the key measures of “acting small” are and drive ourselves to achieve them with our client base. Major weapons used by smaller or “boutique” competitors are agility, flexibility, responsiveness, and attention, some of the benefits of being small. The big company that can compete on these terms is far better positioned for sustainable growth than one that cannot.
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