Thanks to all of you who have left comments here lately. I apologize for not responding sooner. Many people have asked about the availability of an audio version of Small Giants. I'm working on getting one produced, but first I need to re-acquire the audio book rights. Apparently, the audio book makers decide whether to create an audio version of a book before it's published, and they passed on Small Giants. I can get one produced if I can get the rights back. I'll keep you posted.

Dear Friends,

The blog is on hiatus. In the meantime, if you would like to leave a comment about the book or a related topic, please feel free to do so here as a comment on this post.

Cheers, Bo Burlingham

Recently I've come to appreciate how important names and labels can be. It's much easier to ignore a phenomenon if it has no name. I suspect that's one reason why the Small Giants phenomenon -- that is, companies choosing to be great instead of big -- has been ignored up to now: It hasn't had a name.

These thoughts come to mind as a result of a meeting the staff of Inc. had last Friday with Timothy Faley and Mary Nickson of the Zell Institute for Entrepreneurial Studies, which is affiliated with the Ross School of Business at the University of Michigan in Ann Arbor. We naturally began discussing the different types entrepreneurial companies. Dr. Faley explained that the institute was formed to leverage the University's enormous research base and thus focused on the fast-growing, venture-backed companies. He and Ms. Nickson noted that there were programs at community colleges to support people who wanted to start restaurants, salons, clothing stores, and the like. What about other types of entrepreneurial businesses? we asked. They said that they also saw people who wanted to have lifestyle businesses.

That is, in fact, the way most people have divided up the world of private companies during the past 25 years. We've had the fast-growing, venture-backed gazelles; the stereotypical small businesses; the lifestyle businesses -- and that has been about it. In retrospect, it's clear to me that, in the process, we overlooked a large and important class of entrepreneurial companies, namely, those that aspire to be the best at what they do but that aren't interested in getting as big as possible. They don't force growth. They let it come to them. What drives them is the desire to contribute something great to the world. They regard financial success not as the goal, but as a byproduct of having great products and services, of cultivating great relationships with their customers and suppliers, providing a great place for people to work, and being a great corporate citizen. They are, in other words, the Small Giants.

My fondest hope is that, by giving the phenomenon a name, we will help to make visible a part of the economy that has remained invisible for far too long. I also hope we will provide people just starting out in business with a new goal worth striving for.

You can't talk, or think, about Small Giants without considering the question of scale. How big is small? That is, how big can a company be and still be thought of as small? That question has come up in some of the responses I've gotten to Small Giants.

Here's one from Taylor Bodman, a partner in the venerable firm of Brown Brothers Harriman & Co. "We fit the Small Giant bill in so many ways, but looking at your criteria, I can see why we'd be excluded. 3,000 employees... a bank (!)... 188 years old... 38 individual owners (still a general partnership after all these years). In what is our primary business line these days, securities services, we compete directly with the world's largest financial institutions. But in its 30 year retrospective of the global custody business, Global Investor magazine named us 'The Best Custodian Ever.' Stranger still, virtually all of our customers are licensed and capable to do for themselves what they instead have hired us to do for them." Is Brown Brothers Harriman & Co a Small Giant? Within its industry, you'd probably have to say yes.

The point is that size is a matter of context. To a person with a home-based business doing $200,000 a year in sales, a company with 6 employees and annual sales of $2 million is huge. The mainstream media, on the other hand, tend to view any business with less than $500 million in annual sales as small. Years ago, Business Week ran a (very good) article about companies that had become "management Meccas." One of them was Springfield ReManufacturing Corp., the pioneer of open-book management, which had $104 million in sales at the time. The magazine referred to the company as "itty-bitty."

Nevertheless, I knew that -- for the book -- I had to decide how to think about size. As I went along, I came to believe that, for my purposes, the relevant measure was not the amount of annual revenues, but rather the number of employees a company had. The companies I was looking for all operated on what you might call "human-scale," that is, a size at which it's still possible for the CEO and owner to meet with new hires and to have a personal connection with everyone in the organization. That, I found, was a factor in developing the kind of culture these companies have -- what I refer to as a culture of intimacy. Can a company with 3000 employees have that type of culture? I'm not sure, but I couldn't rule it out without knowing a lot more about the business in question.

As I've gone around promoting Small Giants, I've gotten a lot of great questions. One of the most interesting came from Bill Taylor, the cofounder our sister publication, Fast Company, at my very first book signing event. My friend and former Inc. colleague Tom Ehrenfeld was there, picked up on the exchange, and subsequently persuaded Bill to write down his question and got me to write down my reply. Tom posted them recently on the excellent business blog at 800-CEO-READ. I thought you'd be interested in reading them.

Here's Bill Taylor's question: It's easy to understand what your Small Giants gain by choosing not to grow as fast as they might. But did many of the entrepreneurs you chronicle -- or did you yourself -- think about what these companies give up by staying small? I'm not thinking about money, I'm thinking about impact -- the chance to have a big effect on the world. Imagine if Herb Kelleher of Southwest had decided to stick to flying routes within the southwest. Or if John Mackey, the cofounder of Whole Foods Market, had decided to stop at a couple of stores in Austin, rather than spread across the country -- and, in so doing, raise the bar for nutritional standards, the treatment of animals, the future of organics. Isn't it almost selfish, in a sense, or at least a missed opportunity, if you're a passionate company-builder who believes in what you're doing and thinks it's important, to do less than what's possible, to have less of an impact than you might have otherwise?

And here's my reply: First, let me be clear about one thing: In no way do I mean to suggest that a company can't be great if it grows fast, gets big, goes public, does acquisitions, and so forth. The two companies you cite are prime examples of great, publicly traded companies, although it's worth noting that they are striking exceptions to the rule. They have been able to resist the pressures to compromise their values only because they have so far managed to deliver consistently great returns to shareholders, who have thus been willing to let the company's management teams operate as they see fit. Most other companies that have started out with similar values -- The Body Shop, Ben & Jerry's, and People Express come to mind -- have eventually been forced to make compromises that have utterly transformed their cultures and ways of doing business.

It's also important to recognize that there are always trade-offs. Although Southwest and Whole Foods are both great corporate citizens, neither one is rooted in a community anymore, and they've both lost some of the workplace intimacy they had when they were smaller, not to mention the intense relationships with customers and suppliers. My point is simply that there are sacrifices -- lost opportunities -- no matter what you decide to do. Company owners have to choose which opportunities they want to focus on and which pressures they want to deal with.

That said, it may be true that a couple of the Small Giants' owners/leaders have given up an opportunity to have a greater impact on the world by choosing to remain private and closely held and by staying (relatively) small. I say "a couple" because extremely few people are capable of building a Whole Foods Market or a Southwest Airlines without losing control of the company along the way. In any case, I certainly wouldn't describe the decision to remain small and private as selfish. For one thing, most of these people work extremely hard to make the greatest contribution they can to their employees, their customers, their communities, and the world. Saying their decision is selfish implies that people who try to get their companies as big as possible, as fast as possible, are somehow being selfless, or at least less selfish. We both know that the motivations of company-builders, even the greatest ones, are far more complicated than that, and that altruism or selflessness seldom enters into the equation.

By the way, Tom has his own blog at www.startupgarden.com. Also, be sure to check out Bill's new column called "Under New Management" that appears once every four weeks in the Sunday Business section of the New York Times. Here's the first one.

People have asked me how I chose the companies that appear in my book Small Giants: Companies That Choose To Be Great Instead of Big. I had five criteria.

(1) I looked for companies that had made a choice to forgo revenue growth or geographical expansion in order to achieve other remarkable ends. "Choice" is the key word there. For purposes of studying the phenomenon, I wanted companies that could have taken another path--that had the opportunity to grow much faster and get much bigger--but had decided not to because they had other ambitious goals.

(2) I looked for companies that were admired and respected in their industries. After all, who can better judge a company than the people who compete against it, or at least work in the same field, and know all the subtleties of the business? I figured that, if they think a company is great, very likely it really is great.

(3) I looked especially hard for companies whose achievements had been recognized by other independent observers. This, for me, was a comfort factor. I liked to know that people other than I had decided the company was worthy of special recognition.

(4) The size issue was tricky because perceptions of size are so subjective. To a someone with two employees and $500,000 in sales, a $10-million business is huge. Then again, in an industry dominated by multi-billion dollar companies with tens of thousands of employees, a firm with 3,000 employees would be small. I decided it was important to focus on companies that operated on what you might call "human-scale." By that, I mean companies in which it was still possible for the top leaders and owners to know everyone working in the organization.

(5) Last, but not least, I wanted companies that were both privately owned and closely held--that is, companies whose stock is owned by a small number of like-minded people, most of whom work in the business. The reason was simple enough: The companies I was interested in had made choices based on criteria other than maximizing the return on investment. You can't do that if you have legal and moral obligations to outside investors who have given you their money precisely because they want to maximize their return on investment.

The odd part was that, after 20 years at Inc., I had no idea how many companies fitting my criteria I would find or what industries and geographical locations they would be in. But more about that later. Meanwhile, I'm curious to know what you think of my criteria. If we were going to do another search for small giants--as we plan to--how should we modify the criteria. Are there other criteria we should add?

Welcome to the Small Giants Blog. We will be posting Small Giants updates here. Please feel free to contribute your comments. In fact, please feel OBLIGATED to contribute your comments. The more, the merrier.

Your pal, Bo