Saturday, April 22, 2006
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.