When big businesses make mistakes it usually makes headlines because we expect these giant corporations to know what they are doing. But they are still run by human beings, and therefore are susceptible to the same errors as a small business, just on a much grander scale.
The Goliath Effect
In his book David and Goliath, Malcolm Gladwell outlines how smaller-sized businesses can compete with the big boys, and provides studies and anecdotes to prove his points. Knowing about the potential pitfalls of becoming too big for your own good can help you avoid a similar fate as your business grows, or as you realize greater and greater success with your investments.
#1: Too Big to Fail
Some of these large corporations believe they are too big to fail, relying on their large amounts of revenue to make up for any shortcomings they might have. One example is Facebook, a company that is not really innovating but rather buying up new innovations like WhatsApp, Instagram, and Oculus with their vast cash reserves.
Retain the humble feeling you have from being a smaller-size business or lone investor even if you scale things up and keep making bigger trades.
#2: Not Responding to New Changes
As the world gets more and more connected and technology keeps improving so quickly, what worked yesterday won’t necessarily work tomorrow. When a company gets too big it can be slow to change because there are so many moving parts and so many things to change that it takes too much time.
Always keep your eye on the news with a filter that looks for changes that could affect the business climate in the industry that you’re in.
#3: Not Innovating Fast Enough
When a company hits a home run they tend to rely on that success for too long rather than coming up with the Next Big Thing again. Take for example Apple, who after pioneering the rise of the smartphone with the iPhone, has merely kept up with the Joneses for the last decade and hasn’t done anything wildly amazing or industry-shaking.
Never stop innovating and always designate some of your cash flow to research-and-development in the form of trying new things or exploring new areas of opportunity.
#4: Not Hiring the Best
You’re only as good as the people you hire, and when a company gets big they tend to relax their hiring requirements. This is a mistake that will eventually undo any previous success and will eat a business apart from the inside.
When it’s time for you to hire your first employee or your next employee, never settle for second-best and always hire the perfect person to fill the position.
#5: Losing Sight of What Got Them There
It’s surprising how many companies lose sight of what made them successful in the first place. If a company experienced success following a certain philosophy but ditched that philosophy after attaining success, they’ll usually see themselves start to falter.
Stay true to who you are and realize what it is that actually got you to where you are once you make it. Never compromise your beliefs and values after you’ve climbed the mountain of success.