What SMEs need to know before going into business with corporates

Understanding the whale

Marc Andreessen, founder of Netscape and top venture capital firm Andreessen Horowitz, writes that corporates must be understood as entities that are, to a large degree, beyond understanding. He compares the small business owner to Herman Melville’s Captain Ahab, with the prospective corporate partner filling the role of the great white whale, Moby Dick.


Mr Andreessen writes that something strange happens when groups of people are drawn together in a commercial entity of many divisions and leaders – usual measures of predictability go out the window.


So, when you are presented with the opportunity to collaborate in business with a much larger partner, here are things to keep in mind to get the most out of the opportunity, as well as to know when you should back out too.


Decisions, decisions


In your business, it is likely that the decision-making burden rests on you alone, as the owner, or among a small group of people, depending on the decision-making infrastructure at play. One of the great advantages of running a small business – being able to adjust to new circumstances with flexibility – stems from having to consider only a small number of people when contemplating larger decisions.


A corporate yields far greater power than you, but that clout is contained by internal processes and layers of decision-makers that will, unfortunately, remain opaque to you.


The first lesson of dealing with corporates lies in internalising the slow pace at which they are compelled to move. You may have very positive talks with heads of a particular department, but getting to the point at which signatures are exchanged will bring in people with whom you will never interact – branches of legal, other departments that may be affected by your prospective deal no matter how tangentially. If an objection is raised – from any quarter – your deal could quite possibly be tabled.


Politics, cubicled


Even if the deal is as sound, and mutually beneficial as any ever made, factors outside of basic economic rationality may come into play. Corporates, you may be reminded, are not strictly commercial entities. From sheer force of human numbers, corporates become political entities – if you’ve worked at a larger organisation, you may have experienced this – it may be why you’re working in a small business. Personal vendettas, power plays, can leave you out in the cold in your business deal. In some unfortunate cases, it may seem as if your business idea and operation is taken in by the corporate, only to emerge as an internal division that now competes with your own operation.


This is not to say that a small business should avoid dealings with corporates. Such dealings can be the making of a small firm, and drive operations to new heights. The extended infrastructure connections that are gained in corporate deals can inspire new branches of your own business – a big leap towards empire.


You may land your white whale; but if you feel like your pursuance is driving you to the ends of your sanity, then be assured that it is not you who is irrational – a certain kind of craziness is contained within the nature of big C beast.