One of the most common questions I am asked by clients is this one: How do we keep the entrepreneurial spirit alive in a big organisation? I agree it is a tough challenge. When organisations grow big and successful they are often infiltrated by bureaucracy and complexity.
The typical response to the problem is to try simplifying the org structure, remove layers and hire consultants to come in and implement lean programmes. However, changing the org chart is often not enough. Staying quick, agile and entrepreneurial is as much a psychological challenge as it is a structural challenge, and to succeed leaders first and foremost need to addressing the way the organisation perceives itself in relation to the market.
For example, a couple of years ago I spent to some time at LEGO after they delivered the best result in the history of the company having become the world’s most valuable toy manufacturer. When the CEO presented the annual result he decided to stand up in front his team to challenge them: “Congratulations, you have delivered a great result, but are you actually so sure that we are competing in the toy industry after all?” he began.
“Imagine if a 12-year-old boy did not buy Lego, what do you think he would then buy instead? Would he buy another toy, for example Megablocks, or one of the other traditional players in our industry? Or would he rather buy an iPhone or an FC Barcelona football jersey? Let’s assume that he bought an iPhone. What does that mean? Well, it means that LEGO’s battlefield is no longer the toy industry, now the battlefield is the children’s playroom. This changes the picture completely because in the children’s playroom our main competitor is not Megablocks. It is Apple, and when we start comparing ourselves to a company that has achieved the growth that Apple has, Lego has a lot of potential for improvement. Our journey has just begun”
I found his re-frame of the market interesting because it changed the perception of LEGO from being a market leader to looking like a beginner again. Coca Cola did something similar after it won the battle against Pepsi and went on to dominate the soft-drink industry for more than 50 years.
With a 50% market share in the soft drink industry Coca Cola decides to ask the question: Do we compete in the soft drink industry after all? What if we actually compete in the industry for all liquids that can go into the human body? In that case our market share is tiny, and suddenly we are back to being a small entrepreneur again ready to attack the market.
This fresh perspective inspired Coca Cola to move into new markets, for example the production of filtered water. Today Coca Cola’s water brands Dasani and Smartwater are among the world’s biggest, and I think it provides a great lesson for how leaders nurture the organisations entrepreneurial spirit within their organisation. They re-frame their market to create a perception of them having just started their journey.