In 2008, Airbnb began as an idea, two roommates and a stack of maxed-out credit cards. Seven short years later, it’s poised to become the largest hotel chain in the world—that is to say, if it were a hotel chain. Though Airbnb doesn’t own a single room or employ a single bellperson, its available occupancy surpasses that of InterContinental Hotels Group (IHG), the largest hospitality network in the world. And Airbnb’s current valuation now places the upstart ahead of Hyatt Hotels, a highly respected global brand with a 50-year head start.
A decade ago, one might be tempted to shrug off an anecdote like this as a one-in-a-million fluke. In this new age of digital disruption, however, such David and Goliath stories are no longer rare. They’re not even an exception to the rule. One in a million has now been whittled down to roughly 7 in 10, according to a recent study by Forrester Research:
Approximately 700 of the companies currently on the Fortune 1000 joined the list within the past decade. That’s double the turnover we saw just two decades ago. Why the shakeup? Tech-savvy customers and digital-native startups have changed the competitive landscape.
Size Is No Longer A Safety Net
Like every other Fortune 1000 company, both IHG and Hyatt had all the advantages of market leadership: deep pockets, access to credit, vast global marketing organizations, seasoned management teams, dependable vendor networks, loyal customers and stellar reputations.
The one advantage they lacked, though, was the one advantage Airbnb has in spades: adaptability. Small, digital-native firms like Airbnb are built—from the ground up—to thrive on disruption and instability by being fast and adaptable.
For the past century, established firms have eagerly paid for the relative safety of scale by sacrificing speed and adaptability. But we’ve entered a new, turbulent era of creative destruction where the surrender of speed and adaptability is too steep a price to pay. And scale is no longer the safety net it once was. As Harvard Business Review puts it, in the article “Adaptability: The New Competitive Advantage”:
Sustainable competitive advantage no longer arises exclusively from position, scale, and first-order capabilities. Increasingly, managers are finding that it stems from the ‘second-order’ organizational capabilities that foster rapid adaptation. Those that thrive are quick to read and act on signals of change. They have built up skills in managing complex multi-stakeholder systems in an increasingly interconnected world.
What Can Big Learn From Small
Though small digital firms have been largely responsible for the rapid change in the overall business climate, the lesson here is not that “small” will own the future. Some of the very firms that ushered in this new era are now themselves market leaders employing tens of thousands of people around the globe. Think Google or Facebook. The lesson is that speed and adaptability will own the future. Organizations that put a high premium on these traits, no matter their size or industry, will win.
How Management Consulting Can Help Big Act Small
Traditional management consulting hasn’t kept pace with the speed at which markets and industries are changing. This new era of continuous disruption needs a new brand of management consulting, laser-focused on helping large firms nimbly negotiate an increasingly volatile business landscape.
Today, management consulting must help large organizations across all industries act with greater speed, responsiveness and control so they can better capitalize on opportunities, react to threats and thrive in this new disruptive business environment. In short, help big move fast and act small.