Wayne Simmons has spent much of his career as a consultant to companies large and small, helping top executives recognize fresh market opportunities that could help raise their bottom line.
Now, his Arlington-based firm, Growth Strategy Co., has designed software that could replace him.
Called GrowthCloud, the software uses analytics and social networking to keep corporations innovative and entrepreneurial. It’s a struggle that established companies often face as they try to preserve their existing business without losing sight of future opportunities and falling behind competitors.
That “isn’t necessarily natural in a lot of large companies that are oriented toward operational excellence,” Simmons said. “There’s a lot of cultural change that has to happen in a company as they move toward entrepreneurial growth.”
But cultural change derived from software? Though it seems counterintuitive, Simmons said GrowthCloud’s approach is to penetrate a company’s many layers and foster innovation in a format consistent with a company’s other operations.
Still, it’s hardly the only way major companies look to stay ahead of the curve. An increasing number of corporations have established venture capital arms that invest in promising new enterprises. Others buy young companies outright, either for their products or the team that created them.
For established companies, “the two biggest challenges, which are interconnected and very much the result of past success and growth, are complacency and arrogance,” said Anil K. Gupta, chair in strategy and entrepreneurship at the University of Maryland’s business school.
But public struggles at storied corporations — General Motors, J.C. Penney and AOL, to name a few — have forced even the biggest businesses to acknowledge their own mortality, Gupta said.
“As the leaders have seen other companies in their industry or other industries vanish, even though they were multibillion-dollar businesses, there is a degree of humility that has become part of the corporate norm,” Gupta said.
GrowthCloud stores information about a company’s prospective customers and markets. It then analyzes that information to determine the markets with the most promise and compare the company’s offerings against those of competitors.
A social networking component connects employees at all tiers of a company, offering a place where groups of people can weigh in on which markets present the best opportunities and how to go after them.
“The vast majority of the employees have an entrepreneurial bug in them. It’s a matter of, how do you harness it? How do you get it out? How do you enable it?” Simmons said.
Before founding Growth Strategy in June 2011, Simmons started Arlington-based ICOR Partners, a strategic-management consulting company that was acquired in January 2010. He began his career as a consultant at Ernst & Young and Deloitte.
Growth Strategy will target the defense and aerospace industry first. Not only is the firm located near the federal government, but Simmons said the industry is one in which firms need new revenue streams now more than in recent years.
“This industry is going through about as much dramatic change as any industry out there,” he said. “Companies are really looking at how do we differentiate ourselves and grow in the future, given the sustained cuts to the federal government.
“The large organizations are sort of hard-wired for operational excellence. They’re really good at operational processes,” Simmons added. “All of those things are the opposite of what you see in a start-up.”
Yet the notion that start-ups are inherently more nimble and capable of pursuing new markets may be more hype than reality, said Rajshree Agarwal, a professor of strategy and entrepreneurship at the University of Maryland’s business school.
“The myth is that it is much easier for smaller start-ups to be entrepreneurial and the large companies are less innovative, less entrepreneurial,” Agarwal said. “But in fact, if you actually look underneath the surface of the firms that become successful in new markets . . . it is the established firms that diversify from other industries.”
Agarwal points to the smartphone industry as an example. Apple and Google were already dominant in computers and Internet searches, respectively, before becoming market leaders in cellular devices. Start-ups didn’t claim that mantle. Neither did established firms such as Nokia or Research in Motion, the maker of BlackBerry devices.
Although large companies often have deeper pockets, with money to spend on research, development and acquisitions, Agarwal surmises that their biggest advantage over young ventures is a history of adapting to new technology and folding it into their business.
“We tend to glorify start-ups much more than the established [firms]; and it’s true that in most industries, the incumbents may not do well, but they are not being replaced by start-up companies,” Agarwal said.