What Role Do Startups Play in Driving Innovation and New Technologies?

A common comparison used in describing the strategies adopted by organizations with varying sizes and influence is that of a “big fish and small fish”. Companies who are the dominant players in their industries, being endowed with abundant resources and significant power, are often referred to as ‘big fish’. On the contrary, smaller companies display enhanced nimbleness and agility in their operations, which overcompensate for their smaller size and tend to enhance their overall maneuverability.

To illustrate, the contrast between the “big fish versus little fish” is reflected in the disparity between the progression of larger companies and start-ups. For example, TikTok enjoyed incredible success tipping the scales against Facebook, Instagram, and other meta-companies in 2023.

Many startup founders often harbor concerns about their products’ ability to compete with established ones. Nonetheless, being a minor contender in a vast market can present some benefits.

When Your Size is Affecting Your Suitability Negatively

In Western psychology, the ‘underdog’ archetype is frequently referenced, characterized by a character confronted by a formidable challenge but eventually triumphs. Stories such as Jack and the Beanstalk, Brave Little Taylor, and David and Goliath are everlasting and resonate deeply with people. When confronted by an apparently insurmountable hurdle, it is common to feel powerless.

For business founders who come to terms with the fact that they must compete against heavyweight industry players such as Google or Meta, it can be daunting. Nonetheless, the hero often prevails not merely through physical strength but through psychological fortitude and willpower. This teaches us that strength isn’t solely about physical size and may emerge from unexpected places.

Adopting a different viewpoint can offer numerous advantages. Being regarded as the underdog may unlock an array of possibilities, necessitating recognition of these potential benefits.

As an example, following Facebook’s rebranding to Meta, an outage lasting six hours affected all services, resulting in roughly $6 billion in losses. Furthermore, users owning Oculus devices were hindered from using them due to Facebook login issues.

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For a large digital enterprise, whose products heavily rely on user engagement, a six-hour downtime could have catastrophic ramifications. In contrast, for smaller organizations, the financial impact and potential harm caused by a comparable outage is insignificant when compared to their operating costs.

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The size of an object is directly related to the magnitude of force it exerts when it falls. Making mistakes can be a costly matter, and the greater the misstep, the more significant the expense. It’s understandable, therefore, that larger corporations – especially those who have a responsibility to report to shareholders – become risk-averse.

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Drawing examples from the realm of social media was a sensible decision, given that Instagram and WhatsApp began as modest social networking platforms before being acquired by Facebook. They set out on a risky journey that eventually led them to great success.

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The concept of ‘Meta’ had a different connotation in the past. Small enterprises stand to gain substantially from embracing new ideas and undertaking risks since they have less to risk and more to gain by being the first to introduce a product to the market. This is why technological advancements seem to favor smaller organizations more often.

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Defining Technological Disruption

In the business world, a disruptive innovation is one that significantly transforms the market, resulting in the appearance of new producers, added value for existing producers, or the displacement of existing trends, products, and partnerships.

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It’s crucial to recognize that disruption isn’t a singular happening, but rather a continual process. YouTube is an excellent illustration of a disruptive innovation that paved the way for live video streaming on web browsers and community-based video sharing.

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When YouTube emerged, it had a significant impact on the market, prompting companies in related sectors – such as hardware – to acknowledge the requirement for cost-effective, high-quality recording equipment to take advantage of the potential of online streaming.

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In order to be genuinely disruptive, an idea must deviate from the established norm and introduce something original. Even a minor alteration can have substantial implications.

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When introducing a new strategy, small businesses are better equipped to respond quickly and flexibly without requiring investor approval, CFO reporting or permissions. This enables them to adapt to changing market conditions and promptly capitalize on chances – reminiscent of the Silicon Valley ideal of five individuals working in a garage with complete creative liberty.

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Startups should remain conscious of the risks associated with launching a business. However, making prudent choices is crucial for any enterprise’s success. Smaller businesses have greater adaptability to market changes and can achieve more by challenging the status quo.

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The Joy of Staying Put

Amongst the masses, there exists a reluctance to embrace change. It can prove challenging to depart from our customary practices and routines, even when we appreciate the need for it. Established products are acutely aware that the larger their customer base, the greater the likelihood of encountering resistance to any modifications in their visual design or user experience.

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It’s been noted that an individual’s physical appearance and life experiences form a significant part of their overall identity. For instance, Twitter initially introduced a 140-character limit to reduce data transmission. However, this restriction has become so entrenched in the platform’s culture that the recent increase to 280 characters has garnered criticism.

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As your company grows, so does the scrutiny of its products. It’s not always feasible to produce something brand new that operates flawlessly from the beginning; problems are bound to surface. However, if your business is sizeable, technological glitches will be covered by the relevant press.

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Numerous companies prefer to stick with established methods rather than try out new ones. For instance, when Instagram Stories was launched, a slew of comparable features was introduced by other services.

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Small businesses shouldn’t challenge larger competitors as they may possess more resources and power to dominate the marketplace. However, astute entrepreneurs recognize this and prefer to locate untapped markets to gain a competitive advantage.

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It’s paradoxical that smaller enterprises can afford to take greater risks. The digital sector won’t be revolutionized by established companies, but rather by outliers such as Uber, Snapchat, and Airbnb. These entities began as small-scale experiments and have since become household names around the world.

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