Don't be afraid of the big players

Big competitors can look frightening when you run a small business yourself. In September 2012, I talked about a visit that reminded me that a smart reception and lots of employees did not necessarily mean a company could move quickly.

My advice was to focus your energy on the right competitors. I often had more respect for two people starting from scratch in a garage than for a large organisation with an existing business to protect.

Big competitors could impress at first glance

I had visited a large, impressive company. The reception staff wore headsets, there were large signs, the company’s name in gold and information screens behind them. In the lift, you met people in jackets and ties, and there was activity everywhere.

As an entrepreneur, you could feel intimidated, especially if the company was a potential competitor. I could find myself thinking: Wow, that’s impressive.

But when I sat down with an individual employee, I often experienced something different. I heard about internal disputes, a lack of recognition and long routes through the organisation before an idea could come to anything.

A product might need help getting through one department, then on to a manager and possibly from there to the board. The polished surface could hide a working day full of obstacles.

I saw internal departments getting in each other’s way

I used Sony as an example and was very harsh in how I spoke about it. I referred to problems with networks and credit card details and criticised the products. That was my broad attack at the time, not a review of every incident or product.

What I found interesting was the combination of music and hardware. In my view, Sony had both a large music business and experience from the Walkman. So why had they not created the iPod?

My explanation was that different departments could have different interests. The hardware people might want the music included, while the music side feared copying. Opportunities could then drown in internal disagreement.

That was my interpretation of an organisational problem, not evidence of Sony’s specific decision-making process.

The old business could set the pace

I also used Microsoft as an example of a company that, in my opinion, had been tied to its established business. I talked about CD-ROMs, long development cycles and software that had to be finished when it was shipped out on lorries.

I contrasted it with Google and felt internet companies could seize opportunities while others clung to the old way of working. That was a rough comparison, not a full history of the two companies.

My point was that existing earnings could make a company prioritise the familiar even as the market began to move.

Nokia was my example of quarterly pressure

I was also very critical of Nokia. I imagined an organisation where small phones were still selling well while the development department pointed to smartphones as the future.

The new product was expensive to develop and might initially have few customers. The old one made money. So I described management and a sales organisation that might fear hurting the next quarter’s results by shifting focus.

I talked about investors, the share price, the board and a chief executive who might fear being fired. That was my model of how short-term considerations could block a necessary change, not an account of a specific meeting at Nokia.

The company could then one day be left with an old type of product that customers no longer wanted. That was the risk I wanted to highlight.

Two people in a basement could be more dangerous

I retold from memory a remark I attributed to Bill Gates: that the biggest threat could be two guys starting from scratch in a small basement. I did not provide a source or a precise interview.

That image fitted my experience. We small entrepreneurs could feel vulnerable and fear the big players would take our ideas and run off with the prize.

I felt people often overestimated that danger. Go into a large company and stay for a few days, I said. You might discover how much energy went into processes and internal problems.

A consultant had told me about chaos behind the façade

I referred to a business consultant who visited some large Danish companies. As I recounted it, he had told me I would be horrified if I saw how unprofessionally some of the work could be done.

I mentioned manual processes, internal conflict and trouble. That was the account I had been given, not a study of all large companies.

I put it very crudely myself, describing a company with a thousand employees where, in my caricature, almost everyone was occupied with lunch, absence and fighting each other. The numbers were my exaggeration, not a measure of productivity or an accounting of parental leave and care days.

I felt many people might stick to the old way because it was safe and familiar. Learning new things and taking chances required an effort. It was this inertia I wanted small businesses to notice.

The new product could take customers from the old one

I also talked about an unnamed group of companies I had spoken with. In my experience, it knew its product was outdated and had an idea of what the new one should be.

The problem was that the old one still made good money, even though the customer base was shrinking. Developing the new product could take customers away from the old one.

I called it a battle many companies found difficult to fight. You had to be willing to change something that still looked good in the accounts before the market forced you to.

Business brokerage was my concrete example

I asked why some of those brokering the buying and selling of businesses did not create their own online database to compete with Amino Virksomhedsbørs.

My explanation was that they made money from their database of interested customers. I mentioned around 100,000 kroner upfront and a seven-to-ten per cent success fee as the amounts I discussed at the time. It was not a verified price list for the whole industry.

I felt a lawyer could help with negotiation and an accountant with other parts. If contact with the buyer could be made more cheaply online, in my view the established broker would have to explain what else the customer was paying for.

I drew a sarcastic caricature of sea views, BMWs, expensive homes and secretaries with red nails. That was my attack on a costly model, not a description of a named company’s actual expenses.

My own fear had been wrong too

I had visited a company I thought was copying much of what we were doing in another company I was involved in.

When I got there, I found they were not even considering it. I had imagined a far more decisive competitor than it turned out to be in that conversation.

So I said provocatively that the bigger a competitor was, the more clumsy and slow it could also be. At the same time, I acknowledged that of course there were examples where that was not true.

I did not want people to lose heart purely because of size. That did not mean no large company could ever react quickly.

Use competition to get yourself moving

I thought a little fear could provide positive energy. A fire under you could make you think in new ways and put in a real effort.

But if I had to spend energy on a threat, I would rather look at the two people in the garage who could start without an old business and organisation to consider.

I named IBM, Microsoft, Tele Danmark and JP/Politikens Hus very categorically as the big players you should not let intimidate you. That was my polemic from 2012 and my call for action, not a guarantee that they could not compete.

I ended by saying you should use your energy wisely. Look at what a competitor can actually do, and do not let gold lettering in the reception make you give up your own opportunity. Read also Iværksætter til jeg dør about my experiences of creating and developing businesses.