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Yesterday, while visiting a client, I learned that a previously profitable company had made repeated mistakes in its rush to expand, ultimately leading to a halt in production. It was heartbreaking. A small company is a small company; it cannot develop the way large companies do.
Small companies need a management model that suits their current stage of development, not a one-size-fits-all copy of large enterprise management. Though small, they are "small but complete," with all sorts of organizational structures. Moreover, small companies easily fall into "big company disease," which is a very common phenomenon!
Symptom One: Too Many Non-Revenue-Generating Employees!
The core purpose of a company is to generate profit, ensuring its normal operation and long-term development. If a company is always losing money or not making a profit, it deviates from its original purpose.
Employees are divided into two categories: revenue-generating and non-revenue-generating. Revenue-generating employees mainly include marketing and R&D personnel, who belong to specific functional departments and create direct benefits for the company (especially marketing personnel). Non-revenue-generating employees mainly include platform staff, such as administration, HR, finance, and logistics, who support the "frontline soldiers" and provide logistical support; they are part of the cost expenditure.
Every company needs both types of employees, but they must be kept at a reasonable ratio. In particular, the company must ensure that the proportion of revenue-generating employees is higher than that of non-revenue-generating employees; otherwise, the company will be at a loss and not profitable!
Many companies inadvertently find that the number of non-revenue-generating employees is increasing, while the proportion of revenue-generating employees is decreasing, until one day they discover that the company is living beyond its means!
Moreover, at that point, the company boss will also notice two strange phenomena:
Each platform employee (non-revenue-generating) seems indispensable and crucial; it feels like the company cannot function without any one of them. In contrast, revenue-generating employees (marketing and R&D) seem replaceable at any time.
At first glance, the company has many employees and talent everywhere; but when it comes time to make money, there is not a single employee who can step up!
At this point, the small company has already fallen into "big company disease"!
Symptom Two: Over-Management
For small companies, survival comes first, development second; they must first ensure they can survive and have the capital to do so, rather than, like large enterprises, constantly talking about strengthening internal management and organizational structures.
Large enterprises believe that "management yields efficiency." Many bosses and leaders of small and medium-sized companies either come from large enterprises or blindly admire "large enterprise management models," so in their daily operations, they copy the "management operation models" of large enterprises and strengthen internal management.
For example, marketing personnel are required to fill out various reports every day and participate in various training exams, leaving them no time, energy, or mood to engage in actual marketing work. At the end of the month, performance is dismal, and when investigating the cause, it is certainly attributed to poor quality of marketing personnel, inadequate training, and the need for stronger management. Finally, the company enters a vicious cycle! Another example: R&D personnel are required to attend morning and evening meetings daily, participate in various discussions or exchanges, and share learning experiences or management insights, eventually turning our R&D personnel into "office directors" who sit in the office reading newspapers and learning the latest management experiences.
These are all manifestations of "over-management" in small companies. On the surface, it seems that small companies are humbly learning from the "mature management models" of large enterprises, but in reality, they are harming themselves. Small companies need a management model that suits their current stage of development, not a one-size-fits-all copy of large enterprise management. Over-management is more terrifying than no management at all!
Symptom Three: Complex and Cumbersome Processes
The biggest disadvantage of a small company is being "small," lacking sufficient strength and capital; the biggest advantage of a small company is also being "small," as "a small boat is easy to turn around," being quick and responsive, which large enterprises find hard to achieve.
However, in reality, many small companies violate and abandon their "small" advantage, instead "using their weaknesses to attack others' strengths," responding to the market with complex and cumbersome processes that they are least good at and should least do. This is the most regrettable and tragic thing, yet it is vividly demonstrated in many small companies.
I once dealt with a small and medium-sized company that did something laughable in terms of process formulation and issuance: the company basically issued the latest processes, systems, and documents every day, requiring employees to study and be assessed; over half a year, the accumulated process documents reached more than 200, totaling 500 pages of A4 paper. In the end, employees didn't know how to "comply" with company rules because there were too many, and none stood out!
Small companies are very afraid of this. Once small company processes become complex and cumbersome, it means the small company has lost its biggest advantage in competing in the market, and most of the employees' time will be consumed by these "internal processes" rather than winning market share and returns!
The complexity of small company processes also implies another meaning: that the company has too many platform employees, too many non-revenue-generating employees, leading to "overstaffing"; these non-revenue-generating employees, being too many, must find ways to demonstrate their value, so they inevitably formulate various rules and regulations to highlight their worth, regardless of whether these rules are beneficial to marketing or company development.
Symptom Four: The Temptation of Diversification
I have dealt with some software companies with very small scales. However, these small companies have big "ambitions": with only 3 to 5 R&D personnel, they dare to develop all types of management software, whether it's financial management software, HR management software, mall or supermarket management software, or hotel management software... As long as the customer puts forward a "requirement," they can "fulfill" it!
This situation is common across industries. Small companies with "big energy" dare to do anything and do everything. In fact, because these companies do not focus their resources and lack core value, they are prone to bankruptcy and closure in market competition. As the saying goes, "past experiences are lessons for the future," but in reality, there are still too many small and medium-sized companies that cannot resist the temptation of diversification and get deeply trapped.
A small company is a small company; it should have "big ambitions," but it absolutely cannot immediately contract "big company disease," especially if it is unaware of the disease and even proud of itself—that is even more terrifying!
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