Companies that don't acknowledge proactive transformation and corporate renovation as a way of life are forced to deal with it reactively when they lose market share, revenues or profits, or worse, when a corporate turnaround is needed.

Most large American corporations are too slow to react to changes in their local and global markets because of their cost-intensive, non-responsive business models. They tend to have cumbersome rules and regulations, organizational constraints, layered structures and sluggish corporate cultures, all of which conspire to discourage innovation and change.

As a result, entrepreneurial companies usually beat out larger ones when it comes to implementing the most cutting-edge, highly successful technologies that take the world by storm.

Renaissance Insight
In 1513, Niccolo Machiavelli said, "There is nothing more difficult to plan, more doubtful of success nor more dangerous to manage than the creation of a new order of things." In Machiavelli's days, the world changed slowly, but today, constant transformation is a way of life, vital for continued growth, expansion into new domestic or international markets and adaptation to new market realities.

Companies that don't acknowledge proactive transformation and corporate renovation as a way of life are forced to deal with it reactively when they lose market share, revenues or profits, or worse, when a corporate turnaround is needed.

The following action items summarize what large corporations can learn from their more-entrepreneurial business peers in the area of leadership:

· Recognize that change and transformation are vital and constants in our culture. Lead change when the business is doing well. Keep improving to compete, enhance capabilities and serve customers better - not on the way down when a turnaround is the only way to survive.
· Don't be afraid to take risks. In an interview with the Harvard Business Review (December 2004), Samuel J. Palmisano, IBM chairman, CEO and president, stated, "We were so successful for so long that we could never see another point of view. And when the market shifted, we almost went out of business." Successful transformation of an organization depends on leaders who think proactively, sense and foresee emerging trends and are not afraid to act upon them.
· Set high standards, and lead by example. Demonstrate integrity, ethical conduct and respect toward people in all ranks of the organization.
· After managers who foster a challenging, yet supportive environment are in place, give them real power. Jack Welch writes, "Hire and promote only true believers and get-on-with-it types." These people will deliver leadership's message in a convincing tone because they are a part of it.
· Focus on results, not on an elaborate change process.
· Develop an efficient decision-making and execution process that enables agility and the tackling of issues in parallel, in real time. Set up clear and accessible channels for the execution of good ideas, such as processes to evaluate their feasibility, research the markets and gather competitive intelligence.
· Encourage innovation and creativity at all levels of the organization.
· Listen to customers. Opinions of corporate leaders, management and employees are important, but the loudest voices should be those of the customers. Take an external view, and ask the market what it wants from the company.
Remember: Overnight transformations are a recipe for failure. Positive change comes with a long-term vision, a roadmap and a timetable.

Fear of Innovation
Management sometimes associates innovation with chaos, which generates the fear of losing control. In such a culture, people who dare to rock the boat are not promoted, but instead are unpopular or are driven out.

Entrepreneurial companies, on the other hand, recognize the intellectual property each person brings to the table.

What can large corporations learn from entrepreneurial businesses in the area of people management and development? Here are some ideas:

· Create and communicate clear messages to all employees to keep them informed of where the company is headed at all times.
· Within the multiple layers of existing corporate structure, establish smaller organizational units that give individuals a safety net so they can propose changes, voice creative ideas and innovate without fearing for their jobs.
· Encourage and dare people to think. Give them the outlet, the tools, the freedom and the assurance that they are safe to voice ideas.

Fostering innovation means giving people the freedom to care for the organization, to feel that they are valued and can contribute.

· Create focus groups or interest groups of employees who want to contribute more to the company.
· Understand the people who work for the company and the type of people the company needs for success.
· Hire a couple of rebels, and operate from the position that it is better to try to slow a highly motivated individual than it is to motivate a slug.

Companies need to empower and invest in human capital. They need to encourage a new state of mind. Many things cannot be measured in a tangible way, so pay attention to the intellectual property and talent people bring to the table.

Tied Up in Tape
Corporate organizational structures, layers and silos inhibit employee creativity, as well as thwart efforts to improve the customers' experiences. Thus programmed for inflexibility, employees no longer have the agility to cope with change.

Not tied up in bureaucratic red tape, smaller companies recognize that physical and mental freedom engenders innovation.

Here is what large corporations can learn from entrepreneurial businesses in the area of procedures and constraints:

· Limit rules and regulations to areas where the law requires compliance. All other activities should be loosely controlled by guidelines, which provide for the normal course of activity but allow for innovation where it is necessary.
· Create flexible systems for vacations and sick leave. Consider establishing a system, as some companies have done, whereby employees can give each other vacation days in emergencies.

This develops teamwork and commitment by letting people care about each other and the company.

· Implement flexible hours, and allow employees to telecommute.
· Take today's multicultural, multi-ethnic work force into account in work-force planning.
· Integrate employees into transformation processes.

The Fate of Dinosaurs?
The intention here has not been to minimize the enormous contributions the nation's large corporations have made not only to business, but to the world at large. In fact, companies such as IBM have succeeded in uniting the world through technology. Others brought about social and cultural advances on a global scale through expansion and international distribution of their products and services.

Further, the investment many large corporations make in their people through education and training, often beginning with new high school and college graduates, is admirable.

In fact, many entrepreneurs learned their craft initially from these large organizations.

Keep in mind, however, that the laws of nature also apply in business. The dinosaurs were extremely successful for millions of years, yet they are no longer around.

Large, inflexible corporations: Beware! The organizations that provided entrepreneurs with early experience also taught them what not to do and supplied them with a foundation for finding better ways to execute and accomplish the success they envisioned.

It's no wonder why the fastest-growing, most-successful businesses are small, entrepreneurial companies. They innovate, grow and help their people develop.

They are not encumbered by corporate structure and inflexible rules, and they don't rebuff new ideas with excuses like "we've always done it that way."

Traditional corporate culture and constraints are anathema to the change that is vital for survival and success. However, change for the sake of change or to feed a new CEO's ego is not the right road to transformation.

The map is drawn by creativity and innovation at all levels of the organization.

Mona Pearl is managing director of Action Marketing Group Inc. in Chicago, a full-service research, consulting and execution firm. For more information, call 312-642-4647, or visit www.actionmarketing.info.