So in my previous post, I mentioned how one strategy to build a large company is by building up a company that consists of many smaller companies. Another advantage that this can provide, at least in theory (although apparently in practice from my understanding as well), the best of both worlds for when it comes to companies. That basically you get the benefits of a big business (size, economies of scale, purchasing power, etc...) combined with the benefits of a small business (agility, ability to think and react quickly, etc...) at the same time.
The thing is, either one of these can have extremes that can be bad, and it seems like a challenge for any good business thus is how to find the right balance. As mentioned, in theory, a company consisting of a bunch of independent sub-companies that all operate on their own and then report to the holding company, can be able to provide the same types of fast innovation and agility that a small company will have while also providing the benefits of the economies of scale and purchasing power of a large organization. Examples can be companies such as the locks conglomerate Assa-Abloy, the luxury goods conglomerate LVMH, automation companies that consist of multiple smaller companies, and so forth.
The problem as I see it, however, is that one cannot just have anarchy. There has to be some level of central organization and direction from the top, or else you might end up with companies creating competing products, or companies doing the same kinds of research, but not sharing their research with one another, and so forth, which leads to money wasted within the overall organization (why have company B working on how to figure out the solution to a problem if company A already figured it out, but company B isn't aware of company A's research?).
I don't really have the answer to this type of problem, as I am no expert and I am more writing about it to just throw the idea out there, as I am sure plenty of other companies grapple with this on a daily basis and for all I know it has even been written about in the Harvard Business Review and so forth (I don't know). From what I have read from the management of such companies however, it seems to be that the management seek to give a good deal of autonomy and independence to their sub-companies, so that they can all act as independent smaller companies, while just guiding all of the sub-companies along in a general direction (the CEOs of the sub-companies must report to the leaders of the holding company).
The other extreme, i.e. too much top-down management and bureaucracy, is what slows a company down and kills innovation. I mean who wants to have to go through six layers of bureaucracy just to get an idea assessed, and it still may get shot down?
This problem can also manifest itself in individual companies, not just organizations that are holding companies for multiple sub-companies, but I mean individual companies themselves. There is that fine art of achieving that happy balance between innovation, entrepreneurship, and idea-generation and central direction and control, within individual companies as well. In fact, a large holding company consisting of many sub-companies may follow the way of some general central direction and lighthearted top-down management of the sub-companies while otherwise allowing them to all operate independently, so that they can innovate and prosper and be agile. These individual sub-companies, at the same time, will then have managements that must do this same process, create an environment for innovation and idea-generation while at the same time have some lighthearted top-down central direction.
How to Create a Creative Company Culture?
The above leads one to then ponder, how exactly does one foster a creative company culture? I would imagine that for one thing, try to keep bureaucracy light and efficient. As said, the company cannot function without professional management, but it cannot be too heavy. If you end up where someone has to go through layers of bureaucracy in order to get anything looked at, approved, or done, then your company has a problem. And also, try to hire creative-minded people and then listen to their ideas. I am sure there are other aspects as well, but I am forgetting them right now.
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