Change Agent - Issue 34

It used to be that it took years for a customer to fade away. But today, increasingly fickle consumers are happy to change banks, insurance brokers, and airlines at the drop of a hat. And what's true for individuals also applies to business-to-business relationships.

Employees. Two rifts in our workplace mean that employees can do much better at a small company. The first is stock options. Wal-Mart, the New York Times, Macy's -- those big companies can no longer offer their employees meaningful stock options. So, instead, they create tracking stocks, or they spin off assets. Those are fine short-term responses, but they're not solutions. New companies -- the "infidels" -- can make the kinds of offers that any industry leader would be hard-pressed to match. As a result, the cost of keeping great people at old companies is skyrocketing.

The second rift is the technology that enables Free Agent Nation. The number of people who work from home or from a small office continues to grow. Why? Because a computer, a Kinko's, and a voice-mail service are all that an employee needs to do great work. Why let an employer pocket the profits, when you can hire yourself out to the highest bidder? The rise of Free Agent Nation means that big companies no longer have an advantage over smaller ones when it comes to getting the best talent.

Want to hire the very best headhunter, lawyer, graphic designer, musician, or plant manager? Many free agents would be happy to do the work -- and then to move on once the project is done.

At the same time that these five changes are threatening the stability that businesses used to count on, there are seven other factors that favor small businesses. If you've been thinking about taking the entrepreneurial plunge, here are a few reasons why your new business will probably do well (and why big companies should be shaking in their boots).

You've got nothing to lose. If you fail, it's no big deal! Just start over. But when the big boys at ABC, CBS, or NBC make a big mistake, everybody notices. Here's what you big-company types need to understand: The folks who are gunning for your company are on a suicide mission, and they couldn't care less about whom they might bring down with them.

You're a small fish, but even small fish are a good catch. Customers who aren't worth Cisco Systems's time, or AT&T's, or McKinsey & Co.'s, are fair game for you. Those big companies are like huge trawlers equipped with massive nets: If they don't land a big haul, they'll be in a big hole. But a lone fisherman who hangs out on a little boat calls it a good day when a day's work nets six pounds of bass. By focusing on small businesses and small opportunities -- which happen to be growing fast -- you can thrive amid the (much bigger) competition.

You're the president of the company. As the president of the company, you're the smartest person there, and you're going to be a part of every single decision that your company makes. Which means that you won't allow the kinds of stupid things to happen that go on every day inside big companies. Here's a true story: There's a big company that sells lots of music on the Internet. A friend of mine ordered something, and it didn't come. And it didn't come. And it didn't come. She sent a note to the company asking, "Where's my stuff?" No one even bothered to write back.

She sent another note to the company, and again no one wrote back. Finally, she sent a third note, and this time she received a three-word response: "Get a life."

If you were president of a small company, one that valued every customer, there's no way that anyone there would write such a note. There's no way that you would burn an asset like that. But big companies can't always pay as much attention as the little ones can.

You'll have the opportunity to do rapid R&D. The Internet is moving too fast for all of the meetings and studies that big companies insist on. I got a letter the other day from Johnson & Johnson. It said -- I'm paraphrasing -- "Could we call you on October 18 to interview you about where the Internet will be in three years?" While J&J is putting together its task force and interviewing people, spending years to get stuff out the door, your small company can try different methods -- real tests with real customers that yield real market information. Because, after all, what have you got to lose?

You're the underdog, and people like underdogs. Customers know that you're going to try a little harder, work a little longer, and value them a little more. You'll have a better attitude, and nobody will choose to do business with big, arrogant companies when there's an alternative.

You have low overhead. In fact, you don't have any overhead. The expensive trappings that big companies inevitably embrace are irrelevant to small companies itching to nail the big guys.