2 Types of Problems Startups Should Let Big Companies Solve
There's a passage in a recent Harvard Business Review post that asserts, "certain problems are almost custom-made for global giants" to solve.
The statement, written by Innosight's Scott D. Anthony, begs a provocative question: What business challenges should entrepreneurs and startups just leave alone, since the cost or degree of difficulty is just too vast--so vast, that only global giants have the resources to tackle them?
On the surface, the question seems almost blasphemous. If entrepreneurs had backed down from daunting challenges, what would that have meant for the automobile, the personal computer, or the telephone?
Certainly, the idea isn't to retreat from large-scale problems on principle alone. Nor is it to fear launching a business whose model initially requires some navigation through slow-moving bureaucracies or government entities. Netflix, for example, has always held a competitive edge because of its hard-won mastery of USPS logistics. Likewise, Uber has not been daunted in its quest to change the world of transportation, despite what the New York Times calls its "clashes with various municiple authorities."
So, let's get it straight: No one is saying you should back down from solving a difficult problem. After all, by solving a difficult problem, you'll erect high barriers to entry that shield you from future competition.
However, it's certainly arguable that when it comes to some specific business challenges, entrepreneurs would be better off leaving them for larger companies to solve. Here are two examples:
1. A product or service requiring months of off-the-clock, under-the-radar testing and development. In startups, fast results are vital. Often, the founders need to generate revenues before their funding runs out. Not only are they in a hurry to get their product to market--for the so-called "first-mover" advantage--but they're also hoping to outproduce their so-called "burn rate," i.e., the rate at which they use up their capital.
Though these pressures aren't nonexistent at large companies (fast results are never unimportant), it's safe to say that the need for speed isn't quite the same. In fact, to innovate or problem-solve at large companies often requires a mastery of slowness; that is, it requires patience and "taking on the organizational politics required to convince others in the company of the value of their innovation," notes the MIT Sloan Management Review.
In the book Serial Innovators: How Individuals Create and Deliver Breakthrough Innovations in Mature Firms, authors Abbie Griffin, Raymond L. Price and Bruce A. Vojak describe how for innovators at large companies, it can be "many months… before they have a concept that is developed sufficiently to enter the firm's formal NPD [new product development] process. During that time, they can appear highly unproductive, as little physical output may be generated."
So if your idea requires months of seemingly unproductive "development," you might consider abandoning it--or trying to pursue it under the auspices of a large organization.
2. A pricey, regulated product in a complex, foreign market. In his article, Anthony cites an occasion when Innosight helped Medtronic sell pacemakers in India. It was a multifaceted, detailed endeavor, Anthony writes, that "no startup in the world" could have pulled off:
The model involved an innovative combination of direct marketing through billboards and leaflets; diagnostic camps where technicians would screen scores of patients in an afternoon; changes to the supply chain to lower the cost of the pacemaker for selected hospitals; and the world's first loan program for an implantable medical device. No start-up in the world--in fact, no other company in the world--had the technology, the knowledge of the Indian market, the ability work with local regulators, and the financial heft to pull it all together.
Mind you, that doesn't mean that getting pacemakers to patients in foreign markets wasn't a legitimate problem.
If anything, it was quite a worthy challenge for the business world to tackle.
But as Anthony convincingly argues, it's a problem that a large company was in a far better position to solve.