Small And Successful
The traditional business mantra of expansion through sales and a larger customer base doesn’t hold much merit in today’s economy. Growth is overrated, and many small businesses, driven by mere hearty enthusiasm are showing the way. Bo Burlingham’s Small Giants examines companies that have made it big by shifting the focus to quality and caring for their workforce.
Choosing To Stay Small
The emphasis and importance that CEO’s of big, publicly traded companies place on growth are evident in many interviews they have given. However, the trend is shifting. Many companies today are going against the tradition of expansion in order to stay true to their missions.
Bill Butler, the owner of W. L. Butler Construction Inc., saw his company expanding rapidly between the 1970s and 1980s, and despite having annual sales of $20 million and 129 employees, he felt unhappy.
He realised that expansion only meant that he would not be able to have a personal connection with all of his employees. Thus with a focus on narrowing, he reduced his clientele from 25 to 10. He even let go of his largest client, who accounted for about 50% of his project value. This was a bold move to align his company with his personal mission of achieving personal relations with his employees.
Anchor Brewing the Californian brewery has had not more than 50 employees for the past twenty years. This decision has not only led to fostering better relationships between employees but also allows them to see the outcomes of their hard work, faster.
Smaller companies are able to foster a healthier work environment. Additionally, functions like customer service tend to be better due to higher levels of personal interaction. Employees and owners alike, can foster closer relations with clients and even know them by face and name, which is often difficult in huge corporations.
Control And Passion
Big corporations mostly have a large number of shareholders. When a company’s stock is in the hands of outside investors, it often becomes difficult to keep control of the company, as some of the oversight lies at the discretion of those shareholders. Hence, owners often prefer to keep the company stock in the hands of a few.
Burlingham’s for example has only 4 ‘outside’ shareholders, who don’t directly work for the company. For small giants, ensuring control over the company, especially the stock, is crucial. This enables company owners to pursue their passions and focus attention on quality rather than profits.
Anchor Brewing is dedicated to traditional methods of brewing. Their philosophy focuses on ensuring a quality beer rather than crunching profit numbers. Hence, they prefer to use copper kettles rather than stainless steel ones, and choose to ferment their beer in the naturally cold night air, rather than use ice.
While these methods take time and can prove to be a little more expensive than modern ones, they result in a better quality beer. For the company, better quality trumps profits any day.
Zingerman’s Deli’s vision reads, ‘“to sell sandwiches so big you needed two hands to hold them and the dressing would roll down your forearms.” In order to stay true to their vision, they decided against franchising, as it would jeopardize quality, and go against their vision. Instead, they developed Zingerman’s Community of Businesses, a network of businesses working under the name, and having their own distinct identities. This move helped retain the passion for high-quality sandwiches.
The local community plays an important role in shaping a company.
If we consider a restaurant business, the local community is intrinsic to its success. Right from the staff it employs, the customers that visit the restaurant, to the dishes that are influenced by the geography of the location, the local food producers the restaurant depends on for fresh produce, etc. These factors amount to what the French call the ‘terroir’. ‘Terroir’ is an important factor that affects the success of the restaurant.
Small giants depend on these factors. Furthermore, they are able to actively give back to the communities they are situated in.
Ani DiFranco, the label owner of Righteous Babe Records, the Buffalo-based music label, helped rescue an old church in downtown Buffalo that was about to be demolished. She financed emergency repairs in the church and was allowed to set up her business inside the church, as a reward for her kindness towards the community.
For small giants, such local interaction and community consciousness can pay back in many ways.
Loyalty is a valued virtue for small giants. They put the needs of their employees before profits. Moreover, they are able to do this purely because their focus doesn’t lie on expansion and growth like bigger corporations. Being small, they are able to create personal connections with employees, thereby harbouring an employee-centric work atmosphere.
Michele Howard started working for ECCO, the shoe brand. With no education and a single mother of three, the experience she gained working as part-time manual labour, enabled her to later work full-time in the customer services department.
By loaning money from the company’s pension account, she eventually bought a house for herself. In the following years, she became a shareholder by participating in the employee stock ownership plan that holds 58% of the company’s shares.
Obert Tanner, the late owner of the O.C. Tanner Co., an HR consultancy that focuses on employee recognition, was known for engaging in personal conversations with employees. He knew the names of almost every employee in the 1700-employee organisation.
He also arranged for 65% of his stock in the company to be transferred to a 100-year-old trust. This ensured that the company could never be merged, sold, or taken public. His endeavour helped guarantee employees their jobs.
Such actions that instil loyalty among employees are rarely found in bigger corporations.
The benefit of caring for employees strengthens loyalty. This can be seen at Artists Frame Service (AFS), a Chicago-based picture framing company. One of the managers was offered a $10000 raise to change jobs. However, the manager refused the offer because he felt the competitor did not treat employees as well as AFS did.
Small giants are known to punch passion in what they do and stand for. One often hears employees in bigger organizations complain that they are ‘faceless cogs in a machine, and don’t feel passionate for either the organization or the work they do.
Small giants, on the other hand, work to cultivating an atmosphere that is motivating, meaningful, and exciting for their employees to work in. They imbue their organization with soul by encouraging employees to reflect on what they feel about the work atmosphere and why they value it.
For instance, one of the employees at Clif Bar, the organic food company, summed up the soul of the organization in one sentence – “You got that engine running, baby, and the sky’s the limit!”
Once again, not focussing on growth or profits makes employees of small giants intrinsically motivated and passionate about what they do. It is because these small companies started with a passion, the people who are hired are chosen because they share the same passion as the founders did.
Zingerman’s Deli is a great example. The passion for cooking that employees have enables them to consider and understand factors – such as the smell of the food they serve – that many other businesses don’t.
Such employees are the company’s biggest fans.
Happy Just Where They Are
The setting and location of a business are vital to how it impacts patrons. For example, the Mona Lisa would never have attained the fame it has if it wasn’t placed at the Louvre.
Danny Meyer, the owner of Union Square Hospitality Group, the New York-based chain of restaurants, passed an opportunity to open branches in Las Vegas. He valued the setting of the restaurant and understood how it affects the dining experience.
Understanding these factors is what makes small giants happily stay where they are and not run after expansion. However, the ability to create a strong network in one location, have partners who are essential to help maintain quality, and the time such endeavours need are other practical reasons why small giants prefer to stay put.
Righteous Babe Records knew that staying put in Buffalo, which has a very low cost of living, would enable them to focus on developing a signature style rather than pursue profit generation. They understood that the competition in other cities would never have enabled them to find dedicated musicians or even build their style at the pace they did.
There certainly are benefits to running or working in a smaller company. The successes of many small giants can be credited to the fact that they do not focus on growth, expansion, and profits. Staying true to their ideals and passions, they are able to create a more cohesive work atmosphere and find individuals who truly care and are equally passionate about the company.