The business community radiates with numerous stories of small entrepreneurs having grown and prospered from ideas, products, and services that either were abandoned, left frozen, or relegated to tail-end importance by big corporations. Using vision and intuitive skills, these entrepreneurs excelled in sensing the demand potential and financial attractiveness of many rejected ideas. And by guts, focus, and creativity, they succeeded in building distinct values and commercializing these ideas to the point of sustained profitability.
An idea rejected by a big corporation can have good business rationale, and can perfectly work, with small entrepreneurs under any of the following situations:
1. The idea is outside of the big corporation's core business, but within the key competency of the small entrepreneur.
Most big corporations have reached a point of business supremacy due to intense focus on their core business. These progressive corporations wish to spend every ounce of internal strength to what the organization can best do for the customer. This core business mindset has led to the adoption outsourcing as a vital big business strategy that, in turn, benefitted small entrepreneurs with key competency or specialized knowledge to address big business needs.
For instance, a car maker is in the business of car design and assembly, and not in tire, headlight, or car accessory manufacture. Car industry history tells us that it is not operationally viable for any assembler to handle the integrated production of all component parts of a vehicle. It is for this reason that car makers outsource a lot of production needs (e.g. upholstery, stereo, air-con, glass tint, and rust-proofing service) to different small businesses.
2. The idea's revenue potential falls below the big corporation's business threshold, but satisfies the strategic goals of the small entrepreneur.
Big corporations can turn down an idea even it shows a clear potential to generate money. This happens when the amount of projected money from the idea falls short of the company's minimum revenue requirement. This big volume-big money business selection criterion finds classic example in the telecommunications industry. I remember a client's offer of service partnership being rejected by a carrier because the estimated annual project revenue of US$ 2 million was short of the US$ 20 million carrier's benchmark. This client pursued and cashed in on the project in the magnitude of his small business projection over a 3-year window.
In many underdeveloped economies, telecommunication companies used not to give much premium to minor services with low recurring revenue contribution. Telecom carriers have continued to focus on high-ticket business from long distance, mobile, and private network communications, but not until small value-added services providers started making money by offering customized voice mail, short messaging, Internet, and managed services applications. These enterprising small providers simply used PC-based communication solutions linked to fixed-rate, leased broadband subscription from the carriers. A great number of these small providers has significantly grown, with solid cash flow and profitability performance.
3. The big corporation blinked, or had erroneous market reading, but the small entrepreneur had sensed what would come and how the market would behave.
Many big corporations become too close to the issues, details, and circumstances surrounding their core business that they fail to see, or err in seeing, the bigger picture they can leverage on. Paychex, a successful company engaged in multi-billion dollar salary calculation services for businesses with less than 50 employees, began when the business model proposed by Thomas Galisano was rejected by his bosses in a big company. Galisano saw great opportunity in his idea, but in the words of his bosses: we think that the idea is unsuccessful. Yet, remaining unperturbed, Galisano courageously pursued his idea to establish a successful Paychex enterprise.
In the 1970s, a leading firm in the industry of importing and selling beverages had declined the idea of importing bottled water. The big boss categorically said, who would need water in bottles when you can simply get it from the tap, and who would want to buy sparkling water? The unknowing boss thought that there was no market in the US for mineral water such as Perrier, Evian, and San Pellegrino. The water was being drunk by millions of Europeans and Americans travelling to Europe, or with European origin. This addressable business potential gave the entrepreneur the courage to begin importing bottled water after establishing a small company, and the small business has become a large and thriving corporation.
4. The idea will increase customer service cost of a big corporation, but for which a small entrepreneur has cost-effective solution to offer.
A major issue against big corporations is the continued deterioration of quality in their customer service programs. These giant enterprises relentlessly look for ways to cut costs or increase revenues, very often at the expense of the customer. Many big corporations have become too impersonal to the customer. They practically outsource everything that has to do with customer service to the extent that they no longer know who their customers are, except by looking at their database. Having a robust, people-dependent in-house customer service organization is a problem in big business models where small entrepreneurs have thrived in filling up the vacuum.
The proliferation of call centers handling broad customer service functions amplifies the importance of small entrepreneurs in the cost containment programs of big corporations, and even of medium and small businesses. In fact, human resources, technology, prospecting, billing, collection, and Web management functions, which are critical customer satisfaction areas, are already being outsourced to small independent service contractors.
Whatever is the reason of big corporations for rejecting a business idea, it is the vision, intuition, specialized knowledge, courage, adaptability, and industry of small entrepreneurs that transform these failed ideas into outstanding success. Without entrepreneurial action, a brilliant idea remains an idle thought without tangible results.