Large organisations are often seen as pillars of stability and success in the business world, but they are not immune to the common pitfalls that can derail even the most well-established companies. In fact, as the scale of operations and complexity of the business grows, so too do the risks of making missteps that can cause significant harm to the organisation.
In this article, we will explore some of the most common pitfalls that large organisations face and examine how they can be avoided, with reference to insights from some of the thought-leaders from Harvard Business School and London Business School – two of the top business schools in the world.
What are these 3 most common pitfalls?
1. Tendency to become complacent and slow-moving
One of the most significant challenges that large organisations face is the tendency to become complacent and slow-moving. When a company reaches a certain size, it can be easy for employees to become bogged down in bureaucracy and for decision-making processes to become slow and unwieldy. This can lead to missed opportunities and an inability to adapt to changing market conditions.
According to a Harvard Business Review article by Gary Hamel and C.K. Prahalad, large organisations can overcome this pitfall by fostering a culture of innovation and encouraging experimentation. This means giving employees the freedom to take risks and try new things, even if they don’t always succeed. It also means breaking down silos between different departments and encouraging cross-functional collaboration.
2. Lack of agility in responding to external threats or opportunities
Another common pitfall for large organisations is a lack of agility in responding to external threats or opportunities. This can be due to a variety of factors, including overly complex structures and processes, a lack of clear communication channels, or a focus on short-term goals rather than long-term strategy.
In a Harvard Business Review article, Michael Porter and Nitin Nohria argue that large organisations can overcome this pitfall by developing a strong strategic vision and regularly reassessing their competitive position. This means being proactive in identifying potential threats and opportunities and having a plan in place to respond quickly and effectively. It also means investing in capabilities that will allow the organisation to adapt to changing market conditions and consumer preferences.
3. Losing touch with their customers
A third pitfall that large organisations face is the risk of losing touch with their customers. As a company grows, it can become increasingly difficult to stay in tune with the needs and preferences of individual customers. This can lead to a loss of market share as competitors that are more attuned to customer needs move in.
In a London Business School article, Julian Birkinshaw argues that large organisations can avoid this pitfall by developing a customer-centric culture. This means empowering employees to make decisions that prioritise customer satisfaction, rather than focusing solely on short-term financial metrics. It also means investing in tools and processes that enable the organisation to gather and analyse customer feedback, and using that feedback to inform product development and marketing efforts.
Large organisations face a range of pitfalls that can threaten their long-term success. However, by fostering a culture of innovation, developing a strong strategic vision, and prioritising becoming a customer-led organisation, companies can mitigate these risks and remain competitive in an ever-changing business landscape.