Academic journal article The McKinsey Quarterly

Reader's Guide

Academic journal article The McKinsey Quarterly

Reader's Guide

Article excerpt

Call them May-December marriages: an older, slower, company hooks up with a toothsome young start-up. USA Networks buys Lycos. Disney takes a stake in Infoseek. Gray-templed Goldman Sachs elopes with Wit Capital.

Beneath the obvious charms of each partner lies a deeper yearning. Big companies, it seems, want to become more like small ones. Small companies, no doubt with some ambivalence, are shedding their disdain for big-company ways--at least those that advance rather than frustrate their love of action and novelty.

The explanation? The Internet, of course. Traditional corporations have learned much from the explosion of Internet stocks and the rapid innovations of electronic-commerce pioneers. Internet highfliers, for their part, have been startled by their own market valuations into recognizing the need to manage their growth trajectories more systematically. Each party can learn much from the other.

For bigger companies, the challenge is to think big but act small--to leverage their huge resources, capabilities, and reputations while becoming more innovative, more agile in bringing new products to market, more in touch with customers, and generally more nimble. As "The curse of too much capital" makes clear, many big companies undermine their efforts to keep up with small ones by relying too much on their access to capital and on their own people and systems. The business plan competitions described in "Do-it-yourself Silicon Valley" have yielded auspicious results in several large corporations and communities.

For expanding younger businesses, the challenge is to hold on to their entrepreneurial cultures while creating more formal structures, better management processes, and scalable operations and information technology systems. In essence, such companies must capitalize on their early growth without incurring the pains and costs of bureaucracy or losing the initiative, responsiveness, and small-company feel of their early days--the fuel that will propel them to the next stage of their evolution. …

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