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Building a Small, Nimble, and Focused Organization That Drives Innovation

In this U+ Insight, we dive into the innovation risks presented by large organizational bureaucracies and ask why small and nimble businesses enjoy higher rates of entrepreneurial success.

Building a Small, Nimble, and Focused Organization That Drives Innovation

In the innovation space, as in the world of butterflies, small is beautiful.

Many business leaders are tempted to pursue organizational growth at all costs. Large companies with tens of thousands of employees on payroll undoubtedly enjoy many benefits, not least having greater power and influence on the wider world compared to their more modestly sized rivals. However, with great size comes increased fragility, as risk expert Nassim Taleb has shown.

“To see how large things can be fragile,” Taleb writes, “consider the difference between an elephant and a mouse: The former breaks a leg at the slightest fall, while the latter is unharmed by a drop several multiples of its height. This explains why we have so many more mice than elephants.”

The fragility of large companies is often hidden behind an outward display of might, as evidenced by the towering headquarters of so many powerful multinational companies. However, a combination of status quo bias, slow decision-making cycles, and bureaucratic inefficiencies can blind such companies’ stakeholders to unexpected opportunities and emerging threats, while making it prohibitively difficult to respond to these forces effectively and at the right time.

By contrast, smaller, nimbler organizations are perfectly structured to take advantage of rapidly developing market trends, to pivot at will, and to foster the culture of collaboration that makes innovation possible in the first place. Here are a few reasons why.

Fewer delays between idea to execution

Large, traditionally structured organizations don’t necessarily produce fewer ideas than their nimbler counterparts; in fact, with an upper hand in terms of the talent and resources they can command, large companies are rarely lacking in fresh, exciting ideas. However, due to the management and coordination challenges that come with size, these companies lack a reliable through-line between idea and execution, hindering their ability to get new ventures off the ground.

By contrast, nimble organizations rely on transparent networks of small, autonomous teams (Amazon’s Jeff Bezos has said the company aims to “create teams that are no larger than can be fed by two pizzas”). With fewer bureaucratic obstacles to overcome, and cross-functional collaboration at every stage of the innovation lifecycle, stakeholders operating in a nimble organizational structure can devise, validate, develop, and launch new business ideas at unprecedented speed.

This is important, because speed is underrated in an organizational context. A 2019 McKinsey survey1 identified “a strong correlation between quick decisions and good ones, suggesting that a commonly held assumption among executives—namely, “We can have good decisions or fast ones, but not both”—is flawed.”

Every employee can contribute to innovation

Small, nimble organizations tend to have relatively flat hierarchies and a certain fluidity around roles, both for individual contributors and entire teams. At their best, these organizations encourage every team member to adopt a growth mindset and constantly question their assumptions – a tall order in more hierarchical company structures where strategies can remain fixed in spite of fresh market learnings.

When every employee is empowered to contribute to innovation, distributed leadership becomes the norm. Each team is aligned on the outcomes they’re aiming for, while crystal clear about the role they play in bringing those outcomes to fruition.

Learn directly from customers

Small organizations enjoy a paradoxical benefit: because they have fewer customers, they can afford to understand them to a degree that heavily staffed data teams and support centers cannot. Often, a startup’s representatives can speak to their customers directly and get a clear, high-level picture of each person’s motivations, behaviors, and pain points at every stage of the user journey.

This is an example of what Y Combinator’s Paul Graham calls “things that don’t scale.” In his famous essay by that name, Graham praises Stripe co-founders John and Patrick Collison for their commitment to in-person, non-scalable activities like personally demonstrating new features to early users. Graham writes, “When anyone agreed to try Stripe [the Collison brothers] would say "Right then, give me your laptop" and set them up on the spot.”

Directly interacting with and learning from users is an invaluable habit for innovators – and one that becomes progressively more difficult to sustain as your organization grows larger. In addition, people are more likely to engage in such interactions with companies they see as small in scale; a 2019 survey found that some 91% of customers prefer to use small businesses when convenient, citing the “ease of building relationships” as the top benefit.2

How U+ can help your organization become more nimble

While nimbleness is easier to achieve for small organizations compared to large ones, the principles behind the concept are accessible to any company that’s willing to invest in it. A powerful way to capitalize on a nimble leadership and culture while retaining your organization’s current size is to enlist the help of a venture studio like U+.

The U+ Method can efficiently and effectively lead the development, implementation, and improvement of innovations in any sector. To date, we have used this method to bring 100+ products to market, creating over $2 billion in value for Fortune 1000 companies. Check out U+ success stories here.


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