Benign Businesses, a review of 'Small Giants,' by Bo Burlingame
I am a peripheral part of a small community of entrepreneurs in Greensboro, NC.
Like the rest of the world (it seems), they are obsessed with attracting investors in order to grow as fast as possible. They promote the Lean Startup Method. They host events with panels of “successful” entrepreneurs, with success being defined by having made a lot of money in as short a time as possible. I used to teach deductive logic, and so I am sensitive to arguments from definition, and to conclusions like Bigger is Better, which are always stated as being necessarily true.
23kg tumor removed from the uterus of a woman in Buenos Aires. source.
Malignant Ideas
I'm also a biologist by training, and so biased against statements like Bigger is Better, because that single-objective business model is shared in the natural world by one process, namely cancer. Tumors grow in an uncontrolled fashion until they kill their hosts. Other plants and animals are required to balance a large number of competing goals: survival, reproduction, personal comfort. These variables trade off against one another. For instance, number of children trades off against the size of individual babies – using the same amount of energy, you can make two smaller ones, or one bigger one. The health of an individual or a species requires a "good enough" process of optimizing all variables rather than maximizing any single one of them.
Benign Businesses Counterexamples
I had seen the book Small Giants: Companies that Choose to Be Great Instead of Big lying on a table at the B&N several times but always passed it over. It was originally published in 2005, but revised to reflect any changes to its subjects in the past ten years and reissued as a paperback in 2016. Today, after a phone call with a potential client, it spoke to me and I picked it up. From the Introduction:
“I've made much more money by choosing the right things to say no to rather than choosing things to say yes to … I measure it by the quality I haven't lost and the quality I haven't sacrificed.”
-Danny Meyer of Union Square Hospitality Group
The title pretty much says it all.
This is not so much a business book as a bunch of case studies like you might see in business school, but written by a journalist, so they're full of more interesting human details. Burlingham profiles fourteen companies that had opportunities to take investment capital, to grow grow grow, to join the cancer game, and they all said NO, THANK YOU, because they wanted to prioritize other variables. They were also (except for one) highly profitable.
Burlingham looks for similarities and differences in his sample of fourteen companies, trying to find general principles for this kind of success. He starts out with some mystical marketing fluff about “mojo” but quickly zeroes in on seven principles.
- The founders recognized that they had choices about their paths.
- The leaders retained or regained control of the company from investors. This was exactly the opposite of every other piece of advice I've heard: "if someone offers you money, take it." Of course, most of those people were investors.
- Every company had a close, two-way relationship with its geographical location.
- Every company developed “exceptionally intimate” relationships with customers and suppliers, “based on personal contact, one-on-one interaction, and mutual commitment to delivering on promises.”
- They were not simply workplaces, but all serves as “functional little societies,” which tried to meet their employees' needs on multiple levels.
- Each one developed its own management systems and practices. This is something I hear criticized about small businesses, that they can get “inbred,” like dysfunctional families. The opposite is also possible.
- Their leaders were “the opposite of professional business managers.” They had deep emotional attachments to the business.
Local (#3) was the principle that interested me most.
The Mona Lisa Effect opens with a profile of Ani DeFranco's record company in Buffalo, including this quote from its president Scot Fisher:
“Small towns, he believed, impose a kind of accountability that was missing in the modern music business, as well as in most other parts of the corporate world. 'We found out that the promoter was adding a $5 parking fee to each ticket even though the parking came free with the venue. It was a sneaky way for him to make an extra $25k to $50k without giving anything to the artists. You couldn't get away with that in a small town.”
I think colleges should customize their curricula to reflect the needs of local employers, governments, and service organizations (and pay me to help them do it). That's a hard sell to academics who idealize eternal principles of intellectual development, and who are suspicious of “diluting” their discipline, but I disagree that the two variables are in a trade-off relationship. I think it's a supportive relationship, that without real-world context, eternal principles and buzzwords like “critical thinking,” are so vague as to be meaningless. It's the problem of a deductive definition (critical thinking) conflicting with the inductive way that actual humans learn by generalizing from individual examples and experiences. Of course, students can memorize a rule and repeat it back, but that doesn't mean they understand it. Application is what makes it real for them.
The other issue is that college professors are usually politically and culturally liberal, and the communities that surround them may or may not be, especially in the South. Again, I don't see that biology, for instance, is right or left. I taught evolution to evangelicals at the local community college, and I didn't need for students to leave class agreeing with me. I needed them to understand, which required that I address their specific cultural concerns. My largely African-American students at A&T had different concerns about the same concepts. Those should be reflected in their textbooks and assignments.
I just learned this morning, as I was writing this post, that the book, like the Lean Startup Method, has apparently inspired a Small Giants community, or at the very least a coaching firm.
We are an organization committed to the development of values-driven business leaders. We take entrepreneurs on a journey, supporting them each step of the way with the resources, events, mentorship and connections needed to take their business to the next level and bring their vision to reality.
I'll update as I learn more, but if you have any experiences with this community, please reply below.
You can follow me here @plotbot2015.
REFERENCES
These are the websites of the fourteen companies profiled in the book.
CitiStorage, Inc. (sold to a competitor)
Rhythm & Hues Studios (they work on Game of Thrones!)
Selima, Inc. (too cool for a website)
Union Square Hospitality Group