When Large Organizations Should Think Small

There are many advantages to being a large organization. I have worked for and with large organizations. Access to funding, redundant capabilities, expansive talent pool, strong foundational support, and many other examples are all benefits of large organizations. Large organizations also have the ability to dream big and expand when things go well! The potential for growth is a very desirable element of a large organization.

However, when large organizations start acting like large organizations, it can be a detriment as well. For instance, when organizations start to grow larger, they often start hiring new executive staff personnel. These new personnel are placed in charge of various aspects of the operation. Those aspects were once guided by a single focus or small group, now they are guided by a new individual who will likely assemble a team around him/her and develop their own goals and initiatives. The aspect could be a product line or a line item on the income statement to manage.

As this hiring and expanding phase continues, it's not long that the organization begins to look very different. What was once a unified, singular approach to running the operation is now a multi-functional approach that can often take on a silo based focus if not careful. Managing line items on the income statement become more important than the bottom line.

I have heard of and seen examples of:

• Not repairing items to meet a monthly maintenance spending budget
• Delaying an install of a much needed capital project to meet a capital spending budget
• Not working overtime to get out an order to meet an overtime target
• Canceling a customer appreciation event to meet a T&E budget
• Shipping product late to avoid meet a freight budget

There are countless other examples of line item management. The sad thing is that focusing on line item management may not always drive the bottom line. In fact, focusing solely on line items can oftentimes have a negative impact on profitability.

Smaller organizations don't get caught in this trap. They don't have the luxury of not focusing on the bottom line. They have to pay attention to cash, net profit, and overall earnings. They don't get distracted by silo mentality, functional goals, or conflicting objectives. Their lien, focused staff are forced to handle all aspects of the organizations, but that allows them to be aligned and focused on bottom line results!

If larger organizations could simplify their organizational chart, reduce layers of reporting responsibilities, align around common goals shared by all, and focus on working as a team, they would experience a competitive advantage in their market place.

I can't stress enough the importance of aligning everyone around common goals as opposed to having functional goals. Organizations needs alignment and a central focus of driving organizational success, not departmental success!