Small Is Beautiful
Written by Chris Barling
Thursday, 20 August 2009 15:02
Given the massive advantages that large companies enjoy, how is it that any small company can survive and prosper? Large companies enjoy massive economies of scale; they expect and get the best prices from suppliers and usually have significant financial resources. If a critical employee drops dead, gets ill or leaves, there’s a queue of competent individuals to take their place from both inside and outside the company.
Sadly small companies have very few of these advantages, so how come they can survive? Actually, there’s a whole series of reasons.
Shorter lines of communication mean that when there is a crisis, a special response to a customer or a change of policy, everyone can be briefed and the change may be made in hours. The same change can take months in large organisations, where there are consultations, changes to processes, manuals and training and updates to big inflexible IT systems.
In small companies, usually there are less politics as everyone knows everyone else, and it’s harder for the politicians to get away with it. This increases efficiency, as politics are hugely wasteful of time and energy.
Typically within a small company there are more people who care about their job. When you know the owner, there’s more of a family feel to things. This leads to better service, and often a better atmosphere for employees.
In a small company there is less “received wisdom” which is a set of informal rules which everyone follows. An example would be Kodak. It “knew” that there was no point in selling cameras, all the profit was made from film. So Kodak’s first foray into digital publishing still involved film! It’s like there was an unwritten rule that stopped anyone from saying “film is dead” for several years. As a result, it lost a huge opportunity and made massive losses. Only when the truth was inescapable did things change. In a small business, limited resources make it impossible to be so blinkered for so long.
Other small companies wish to do business with other small companies. Have you ever tried to deal with a big company where just as you are nearing the end of the six month sales cycle, a re-organisation moves your prime contact? Then the process has to start all over again. Work with the smaller guys and the problem doesn’t arise.
In my company, which has just over forty employees, all of the directors have worked for multi-billion pound corporations in the past. And none of us want to go back.
Yes, there are benefits in being small. The ironic thing is, every big company started small. This means that the disadvantages can be overcome. And the advantages can be lost.
By Chris Barling, CEO, Actinic. Originally published in www.businesszone.co.uk.
