There is a whole world out there, not understood, and catered to yet.

I could not help but see the contrast. Listening to speakers from large companies talk about systems, processes, mission statements and listening to entrepreneurs talk about the chaos they operate in.

Is there really any difference between managing a small company vs. managing a big team? Management is management is it not? I think there is a lot of difference. For instance when recruiting in a large organisation, the HR department, has a policy, and defined KRAs. An internal client gives a request, in a standard format, a recruitment process is defined, placement companies are sent, the requirement or an advertisement is placed, and the recruitment takes place as per the defined process.

Most often several candidates are recruited for similar roles. One can therefore have a very well defined job profile for a particular designation, and this can hold good for quite a few years. Now in a smaller set up or a start-up the entrepreneur has an idea of the kind of tasks he needs to accomplish, goes all over the place, to friends, relatives, placement agencies (last resort since he has small budgets) and talks about his idea and some converts join him. He then figures out who in the team can do which task and assigns the same. If he finds a willing candidate with a 60% fit to what he was looking for, he hires and figures out how best to use the person and who else in the team can fill in the gap. No process, no document, no orientation programme, and no standard job description.  Though he might pretend to have these documentation, they do not serve the same utility as in a large company.

Let's look at another function say marketing. For a large company aspects like how the industry is growing and factors which affect the industry matters a lot. For instance the latest budget has increased the spending power of tax payers, and this has an impact on consumer durable companies. The marketing departments in these companies need to factor these into their marketing plans. Aspects like market share and size of market plays an important part. What impact does market share have for a 20 man consultancy company? Zilch.

A small company, need not really be bothered about such "macro data" things like how good the relationships are with clients and what else can be provided to them become the focus area. The consumer trends and behaviour watched so closely in large companies simply become "talk to your customers" in a small company. After all, the 50 or so clients need not represent a broad trend in the economy.

The two therefore operate in different paradigms and this brings to mind a similar situation in Physics, the difference between Quantum Mechanics and Newtonian Physics.  I think the large companies operate in the Newtonian world and the startup companies operate in the Quantum world. The Newtonian world is defined, predictable and easy to measure. The quantum world to put it simply is "chaotic".  "Activity in one area affects other areas" to play on, Heisenberg's Uncertainty principle in physics which is, "The more precisely the position is determined, the less precisely the momentum is known in this instant, and vice versa."

Most management books are written with the large multinational corporations in mind. (Research and consultancy on these companies pay) It is not right to apply these Newtonian laws to the quantum world of small organisations. No wonder "What they don't teach you in xx B-Shcool" kind of articles and books are so popular. 

B-schools also I guess know this difference and have special courses for startup management and entrepreneurship but the chasm is much more than can be easily comprehended. Perhaps this is the reason why venture capitalists often ease out the entrepreneurs who founded the company and get an experienced management team to take the enterprise to the next stage. The vocabulary and the language used in a larger team context is very different.  A lot of small companies in their journey to become big face a wall.

The same kind of differences occur in all spheres which affect an organisation, be it in dealing with employees, customers, vendors, investors, internal communication or the immediate environment. For instance, a common issue like power problem can easily be handled in a large campus like that of Wipro by having "backup power for backup power".  I hear that some of these campuses do not even use the electricity board power. But for a smaller office it is just not possible. Poor infrastructure affects business performance directly. So do frequent changes in tax laws or cumbersome documentation.

What are the implications of this? Well if you have been bred in one world, you need to make a lot of changes to get into the other. Unlearn and relearn.  Interested parties must also treat these two worlds differently, for instance large businesses normally lobby for protection and tax breaks, small businesses instead need less red tape, less documentation, less transaction costs and no harassment. However, governments of the day think that by giving tax breaks and protection they actually help small business, instead what actually might be required is less government.

More interestingly however is that this implies a large business opportunity. Management guru C.K. Prahalad talks about the business opportunity in bottom of the pyramid-  low cost housing, micro finance and so on. A  similar opportunity might well exist in the small business space as well. Rajesh Jain of the Indiaworld fame, talks about low cost computing solutions, well the kind a small business needs without a system administrator.

The other day a friend was pointing out that just like fortune 500 companies are out-sourcing to India, a similar cost benefit will become a necessity for the small and medium businesses in the US. Now these opportunities cannot be serviced with the same mind set that is used for serving large accounts. Welcome to the world of quantum business. n

The author is the Chief Catalyst of businessgyan. His area of intrest include business strategy and innovation. For feedback and more information, mail: This e-mail address is being protected from spam bots, you need JavaScript enabled to view it \n This e-mail address is being protected from spam bots, you need JavaScript enabled to view it "

Issue BG49 Apr05

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