Why Do Large Enterprises Incur So Much Unneeded Waste?

Why Do Large Enterprises Incur So Much Unneeded Waste?

When the Soviet Union fell in the early 1990’s and the government of Boris Yeltsin began to promote democracy and co-operation with their former Cold War foes, principally the United States: we discovered much that was amazing and instructional. It quickly became apparent that our decades long fear and competition with the Communist titan was based on wrong assumptions. Russia was actually a third world country with a first world army. Aggressive? Yes. Dangerous? Yes. Belligerent? Yes. But, the rivalry was really a one-sided competition between Russia’s lumbering, poor, creaky, stifled centrally planned system and America’s continually evolving, dynamic, rich, energetic model, fully utilizing the benefits of a free and capitalist system.

This disparity in resources and real strength, now so obvious, poses an interesting question: How did the Soviet Union deceive the western democracies into believing that they had the capacity to potentially control the world? Studying the history of the cold war is an interesting exercise. The opening of old Soviet record’s reveals so much that counters widely believed thoughts of that time. Distilled down, the Communists perfected a type of hyper-public relations (propaganda) created to instill dread in their own population while engendering fear and compliance in the satellite states they maintained and occupied under military force. Russia’s western foes were continually forced to react to threats, charges and bullying. Yes, the Russians were classic schoolyard bullies!

The Potemkin-type steps and guises that the Russians undertook to appear larger, tougher and more capable than their reality was a very clever strategy. The ability to appear larger than you are is a time-tested strategy. It is a strategy that I have used for myself and for many clients in positioning products, inventions and small businesses for maximum leverage in campaigns to feint and confuse much larger competitors.

Why do larger enterprises, countries and companies allow themselves to be bullied and out-maneuvered by smaller or weaker foes? How did the downtrodden Russians fool the all-powerful United States and its allies for decades? How can small businesses and entrepreneurs manipulate markets and large companies into reacting to perceived, but unproven rumor or reality?

I believe that the answer to these questions is contained in the very elements that occur after successful enterprises mature. Success and maturity typically crimp invention. Energy and ambition are not as highly prized. The entrepreneurial spirit can create fear inside large organizations. Profit, cash and donations dim the urgency to be inventive. Waste is often tolerated after success occurs. Why? Because urgency and leverage are often mitigated as enterprises become fat and happy.

How did Coca-Cola miss out initially on the bottled water business opportunity? How did the United States miss the obvious signs of ultimate Soviet implosions? Why has WalMart, 30 years ago a start-up, supplanted Montgomery Ward, W. T. Grant, Woolworth, Kresge and many other entrenched retailers? Why was FEMA so incompetent during Hurricane Katrina while FedEx, Home Depot and WalMart were so much more successful in delivering timely service and aid? In every business category we see young, energetic market leaders that have leapt past mature but doddering older competitors.

The Soviet Union was very competitive with the United States in the race to outer space. Using inferior equipment, the most basic technology and primitive logistics the Russians, nevertheless, maintained an active space program. The American space program was blessed with amazing levels of funding, pristine facilities and a military/industrial/scientific support complex unlike any in the world. Yet, despite the huge disadvantages the Soviets faced, they were more than competitive. They had to be. They had no margin for error or waste.

A perfect metaphor for the difference between fat, happy and wasteful, and lean, creative and thrifty is the development of the space pen. The simple act of writing in the zero gravity atmosphere of outer space was actually quite a challenge. The National Aeronautic and Space Association (NASA) tried to perfect such a writing utensil without success. Contracts to develop and produce such an implement were let on several occasions. However, none of the prototypes offered could withstand the effects of gravity, extreme propulsion and weightlessness all occurring inside the enclosed environment of the space capsule. Millions of dollars were spent in pursuit of a customized space specific writing implement.

When the Soviet Union fell, and the two countries began space collaboration, an interesting discovery was made. American scientists asked their Soviet counterparts what they used to write in space. The Soviet reply: “A #2 lead pencil”. The Soviets did not have millions of rubles to waste. They reverted to a simple common sense answer to a basic need. The Americans were able to spend millions to pursue an obtuse technical solution to this simplest of problems because they simply could. The money, though wasted, was of little import in the huge financial machinations and of NASA and the federal government.

This small example is not unusual or an aberration. Waste is an issue any time large, lead-footed enterprises are confronted by smaller, hungrier, more nimble adversaries. This is the entrepreneur’s natural advantage. The space pen model is repeated every day as entrepreneur’s rush to fill voids vacated or unnoticed by large, successful enterprises.

My consulting firm, Duquesa Marketing, Inc. works every day with entrepreneurs to customize strategies necessary to nimbly overcome the effects of size and maturity. The successful entrepreneur sees the #2 lead pencil as an obvious answer to the space pen problem. Seeking, and achieving simple solutions to real or perceived problems is the reason there will always be a successful inventor class.

Contact Geoff Ficke, [email protected], ph. 407 260 1127, to discuss this article or an entrepreneurial matter of interest.

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