Learning From Literature

Small Giants by Bo Burlingham

Cover of Small Giants by Bo Burlingham

Small Giants: Companies That Choose to Be Great Instead of Big by Bo Burlingham is a business book published in 2005.

Large, publicly-owned companies and fast-growing technology ventures shape the modern-day idea of business. Conventional wisdom is that companies either grow or die — but many small, private companies don’t do either and are quite healthy. 

Burlingham identified “Small Giants,” companies that trade growth for being excellent at what they do. These businesses embrace the idea that the next level doesn’t mean a bigger level and prefer to focus on non-traditional goals such as high-quality customer service and improving community ties in addition to profits. 

Small Giant — Extraordinary, privately owned companies willing to forgo revenue or geographic growth in order to achieve remarkable ends. By extraordinary, the company had a distinctive vision and mode of operation that clearly set it apart from others in the industry

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Table of Contents

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Intro

Small Giants → Foundations promoting “mojo” (a strong, positive culture):

  • Don’t accept regular standards of success
  • Leaders remain in control & stick to true vision for the company
  • Exceptionally intimate relationship with local area
  • Exceptionally intimate relationships with customers / suppliers
  • Unusually intimate workplaces
  • Wide variety of corporate structures & modes of governance
  • Passion
A Culture of Intimacy 
  • Employee relationships are the motor of a company
    • Everything that makes a company great depends on those to do the work of the business
    • Unless they feel great about what they do, who they do it with, and where they are going, “mojo” won’t happen
    • Relationship so close that employees never doubt the leaders care about them personally
    • Make sure you hire people that match the company’s vision
  • Operations
    • Have a system for managing the business & problems — distill practices into easily understandable / teachable concepts
    • Not just exceptional customer service → an entire experience customers can’t get anywhere else
    • Have good internal communications & adequate follow-through on decisions
  • Imperatives For Creating Culture Of Intimacy
    • 1 — articulating, demonstrating, and imbuing the company with a higher purpose 
    • 2 — reminding people in unexpected ways: How much does the company care about them? 
    • 3 — collegiality – feelings employees have towards another & mutual trust / respect
Free to Choose
  • You will sooner or later have a choice about how far and how fast to grow the business
    • Everyone will be encouraging to grow as fast and far as possible — most people don’t know there is an alternative
    • Most people end up blaming the business instead of their choice of what to do with it
  • Many small giants demonstrate the huge payoff for choosing the less traveled path – reigning in uncontrolled growth and “staying small”
    • Zingerman’s
    • Union Square Hospitality Group
    • Anchor Microbrewery
    • Clifbar
Who’s In Charge Here?
  • A company is often pushed in directions the founder never intended
    • Growth is limited by capital (money, human, research, etc)
    • Companies sell out because they can’t finance their own growth – they need capital that they can only get by selling to a larger company, having an IPO, etc
    • Social / cultural pressure on owners for growth
  • You can’t have many outside shareholders to build a small giant
    • Small giants search for something indefinable / immeasurable
    • Outside shareholders need measurable, standard definitions of success
    • Doesn’t mean only one owner, just majority in-company
The Mona Lisa Principle
  • Small Giants → intimately connected to the local area; it’s hard to imagine it anywhere else
    • Every community has character; that should be incorporated into the business
    • Each small giant had a distinctive personality reflecting the local environment
    • Relationships with communities overlap relationships with customers & employees 
    • Many leaders of small giants feel strongly about the social responsibility of business
Ties That Bind
  • Extraordinary Customer Relations
    • Word-of-mouth = most effective marketing tool
    • If you maintain the emotional connection with consumers, sales will follow
    • Customer-Intimate > Customer-Friendly
    • Unique methods considering location, nature of the business, and types of customers
  • Employees @ Small Giants
    • Can’t teach caring / passion — hire for those qualities and train for the rest
    • Unexpectedly personal from management to lowest employee
    • Employees feel valued, respected, but also have fun
    • Commonly had generous benefits (health insurance, 401k match, education program, etc)
    • Result → warm, upbeat, closely-knit corporate culture that also is appealing to customers
  • Small Giants → also have beyond-normal intimate relationships with suppliers
  • 3 Pillars Of A Sense Of Community
    • Integrity → knowledge that company is what it appears to be
    • Professionalism → company says what it’s going to do
    • Direct Human Connection → emotional bond of mutual caring
Galt’s Gulch
  • Focus on the big picture
    • How do you want the business to look, act, and feel like 10 years in the future?
  • Small Giants → different cultures & systems of governance but similar business approach
    • Profits are not optional – while compassionate, don’t ignore the responsibility to be unmerciful when necessary 
    • Hold meetings at least once a week – ideas, personal connection, etc
    • Systems in place avoided most problems if people just followed them
How Small Giants Fail
  • Long-term success depends on maintaining:
    • Steady Gross Margins → no company can remain if they can’t pay bills
    • Healthy Balance Sheet → reflected in ratios & other measures
    • Sound Business Model → how company delivers value to customers + earns profit in the process
  • Circumstances, technology, and industries change → your business model will also have to change
    • Small giants must adapt to changes in the competitive environment like any other business
    • Culture does not insulate you from the marketplace
Pass It On
  • When you begin chasing growth, you lose focus, efficiency, and profitability
    • A business with the discipline to maintain focus could deliver superior returns indefinitely
  • The Greatest Challenge → making the “mojo” / culture last
    • Requires a clear, well-articulated vision ingrained in the day-to-day life of the business
    • Especially difficult between transfers of leadership & struggling in a turbulent business environment
  • The author gives examples of successful succession stories and how the small giants kept their “mojo” / culture alive
The Art of Business 
  • Entrepreneurs are artists of the business world
    • It’s not possible to have “mojo” without leaders that feel passionate about what the company does
  • Understand you can’t measure the value of a company by profit only
    • Financial indicators are the most convenient & objective measures of success so many entrepreneurs are tempted to chase growth 
    • Maximizing success ≠ maximizing growth
  • For people in companies with mojo, the process IS the business
    • Passion for the process helps them avoid the trap of growth
Ten Years On

“Change is the only constant in life”

Heraclitus
  • Even companies with the healthiest culture + cutting-edge techniques have room for improvement
  • The author describes how the the small giants have changed ten years later

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