Why Big Companies Play Catch-Up

This article about Blockbuster Video closing shop on upward of 900 locations, and ramping up their kiosk capability got me thinking:

Why is it so hard for large organizations to be the first to capitalize on industry innovations?

Two Companies In One

I have no inside information of the Blockbuster Corporate culture. But, it seems that there are two conflicting factions in most large organizations. One side wants to completely optimize the current business model, to maximize revenues from current and future customers as their needs evolve related to what the business is doing today. With Blockbuster, this meant moving from VHS to DVD while continuing to meet customer needs. It also meant ramping up a game rental capability as demand for that service increased.

Anything that happens inside the traditional store itself is this group’s primary concern.

The other faction wants to uncover parallel business models that make things easier for current and future customers, and open up new revenue streams for the core business. With Blockbuster, this meant moving to mail order, moving to kiosks and and moving to on-line / on-demand rentals.

Anything that happens outside of the traditional store itself is this group’s primary concern.

Where Is The Happy Medium?

From most accounts, Blockbuster has done an admirable job of fighting through the adversity it has faced to date. Who knew the movie rental business was so cut throat? But they have been late to market in three key movie rental innovations: mail order, kiosk delivery, and streaming video.

I’m just asking why?

Why is it so hard for large organizations to turn on a dime? Why are most large organizations playing catch-up to start-ups, when they have massive resources behind them to finance start-ups that can become the next big thing first? What processes and tools are needed to level the nimbleness playing field for large organizations?

decentralization I would argue that the top down hierarchical organizational structure is a hindrance to any large organization that wants to be agile. A decentralized reporting structure is needed in large organizations to truly tap into the brain power of their individual employees. Processes are a necessity, but not when they get in the way of progress. Establishing a vision, and trusting groups of employees to carry out that vision with minimal supervision is necessary in order to stay in front of emerging competitors.

collaboration A culture of sharing is definitely needed in any decentralized organization. There has to be something that connects people and ideas within the walls of the organization, to ensure a collective movement in a singular direction. I’m here to tell you that something isn’t an org chart. It is a culture of collaboration. People who openly share with one another, allow the decentralized structure to work as it is designed.

tools If you want decentralized groups to collaborate, then making collaboration easy for them is a must. A lot of people I know like to downplay the tools used by the organization. I understand their point, tools by themselves are just instruments of implementation. However, I also know that when business critical tasks are engineered to be easy, they have a higher probability of being done right. Collaboration in a decentralized work space is a business critical task, therefore the tools used to collaborate are rather important.

What Do You Think?

Can a decentralized culture of collaboration exist in a large organization? Or is that just one corporate zombie’s (me) pipedream? I’m interested in understanding your point of view in the comments below.