What happens to companies that start late in any industry that is growing phenomenally?
They are behind in the learning curve to begin with. They are perpetually smaller than the average. They are always playing the catch-up game. They try hard to differentiate. They compete for small deals. They get beaten up on margins pretty badly. They nether have the breadth of service offerings, nor depth in the service offerings they do have.
These small companies find it harder to attract people, retain them and offer them the range of opportunities that the big companies can offer. In-fact small companies offer lesser opportunities for rapid growth, if there are senior people already at upper levels.
Do these companies survive? Some of them do, but most either stagnate or get acquired. It will be interesting to watch where MindTree Consulting ends up being.
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Hey! Good question. I can tell you from within a small company. By they by, the company you've mentioned as a small one (Mindtree) is probably a giant for me. Anyways, we are facing some of the things you've mentioned i.e. getting beaten up, no breadth/depth etc. However, it is a unique position to be in. There is still opportunity to come out with something that is totally different from the mainstream and success is not hard to achieve. Its just rare. Perhaps a different way of saying it is that small companies that work hard may not make the cut, but smart innovators can fly high.
ReplyDeletethanks for writing the great read.
Aditya, you recked the very dilemma of being a laggard/late start-ups in a growing industry. The questions that you pose obviously is pragmatic by consideration.
ReplyDeleteAgreed the learning curve and depth is initially low. But I believe each late entrant is left with one obvious choice of "differentiation" and there is lies the key. In search engine paradigm "Wandex" was the first search engine way back in 1993. Even when Larry and Bin may be finalizing their graduation. But see how Google turned the tide. Like wise Guruji.com is doing great by providing localised content. You may argue that the nature of business is different in comparison to what Mindtree might be doing. Still sharing a space with big boys will include lot of perils but on the other side companies gain better clarity in understanding their core-competency's. There in lies the focus.
I agree lot of them fail, fuckedcompany.com is a repository for them. Still wondering after the IT bubble in late 90's entrepreneurs should at least have that much brain to chase their dreams. What say?
Surely smart innovations will fly. Else Toyota could never overtaken GM. Nice read and very well placed your thought.
~ Samiran
let's turn your question a bit.. let's ask "what happens to companies that start late in an industry that is mature?"
ReplyDelete....
many fail, but some do well and some beat the incumbents by figuring out a "better way" of doing things.
Now coming back to your remarks.. in a growing industry, small companies can thrive by just catching the tail-wind.. there is so much business that there is always something for everyone. So it's easy to ignore the basic's of business like asking "what does the customer really really want, how do I compete etc. etc." When growth slows, and you really answer these questions a real game changing winner can come out.
I'm not saying anything about MindTree here, but just putting your thought in a perspective.