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How can small subsidiaries deliver big impact?
Man moving a large rock

How can small subsidiaries deliver big impact?

by Mikhail Gerchuk

The ability to change quickly is the key to success in modern business, particularly in the telecommunications and digital world. There is no time to examine what will work and what won’t, no time for bureaucracy or long chain procedures. This helps startups to accelerate their businesses very fast. Since they don’t have multi-level approvals, they can react immediately to fluctuations in societal needs.

What is the key to the success of small companies? The speed at which they lead change and tweak their business. Their fearlessness – they are prepared to take risks. Finally, they keep things simple – they don’t have complicated structures and can easily take decisions.

So, what can big companies do to stimulate innovation and generate new opportunities? Google’s model provides some insights. Google subdivides its business into smaller, relatively self-contained projects: Gmail, Google Translate, Google+, Google Doc, Google Maps, Chrome and of course Android, the most popular mobile platform.

In each of these “projects,” the company can experiment independently of others, searching for new opportunities to implement, becoming more flexible in addressing changing users’ needs. But what is more important is their ability to take small calculated risks – rather than risking the whole business. If something goes wrong and customers don’t like new features, it shows that the company has chosen a doubtful strategy which can be corrected or at worst, written off. In the event of positive results, Google can easily apply new solutions or their related learnings into its other services.

However there is another area where companies can experiment. Large firms can also use small or emerging markets, where they operate, as test beds where they can innovate with limited risk. At VimpelCom, which has most of its operations in a number of developing markets in Asia and Eastern Europe, this practice has become more and more central. For example, Tajikistan became the first country where the Group introduced a 3G network and services. The Tajikistan learnings were then applied in Russia, certain mistakes were avoided and the deployment was faster than would have otherwise been possible. Georgia was VimpelCom’s first country with Mobile Number Portability (MNP), and the experiences gained there helped Russia and Armenia execute their MNP launches with minimal issues. Commercial approaches like data tariff plans are also frequently piloted in smaller markets before being launched in larger markets.

As mobile operators move into the realm of digital services, the value of small operations as test beds and in-house startups will add considerable value, as apps and app concepts get defined, designed and tested, with the more successful being spread to larger markets. Indeed, supporting local app development competitions, particularly in smaller markets, is a major VimpelCom priority in 2015.

In the last century, bigger was better—there was always a push for size and scale. In this century, could smaller really be more beautiful? And can experimentation in small, low-cost markets yield big market results? It can – especially if low risks can pave the way to higher benefits.

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  1. Abdul
    Posted 2 years ago - 0 reply

    Bigger will always be better as economies of scale cant be toiled so quickly (Google owns part of their success to their size), yet we must change our organizations to sight opportunities outside our normal field of view and experiment with them in most appropriate units with knowledge that they wouldn’t always be successful. Converting lessons into business requires agility as well.

  2. Ikhtiar
    Posted 2 years ago - 0 reply

    Scale has the problem of inertia. Anything you do or don’t do has large, significant consequences or risks. In that sense, experimenting or risk taking with smaller operators is a good idea. However, this requires a certain mindset and the willingness to accept failure. Tests can and will go wrong but experiments are, after all experiments. If this is not taken into account, smaller operations will resist and will make the whole concept difficult to implement.

  3. James Murray
    Posted 12 months ago - 0 reply

    It’s an interesting topic. There are many ways a small company can deliver world wide impact. We think competition is the guy next door, in the next state or country. In the digital world though the only competition are the top three organic search winners in your category. By dominating with a keyword search, a small company can quickly develop a national or international community of customers. By-passing the traditional paths.