Peter Bregman: Why Small Companies Will Win in This Economy

by Volker Weber

Yesterday morning I had breakfast with a good friend of mine, a mentor in the consulting industry. He's a senior partner in a large consulting company and has worked in one large company or another for the past 35 years. Really smart, really talented.

And now really depressed. He hasn't been having fun for some time but it's gotten worse. He's survived several rounds of layoffs but who knows, he tells me, he might be hit by the next one. And if he isn't, he might leave anyway because it's so miserable. He doesn't understand how his company is making decisions, including how they decide whom to let go. He is one of the most senior leaders in this company and even he doesn't trust it anymore.

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Comments

It's good to be your own boss :o)

Karsten Lehmann, 2009-03-25

There will also be a lot of new small companies. A lot of those people that get laid off start new small businesses.

Carl Tyler, 2009-03-25

This is the standard company dynamic, albeit with the added twist of a global recession...

As Carl says, people that are laid off or who leave through their own volition are prone to start small companies that are more reactive to their market and provide better service to their customers. They're small and vulnerable so they need to try that little bit harder to stay afloat and if they get it right, it's a win-win - happy customers and successful companies.

Then at some point, driven by the need to grow and continue to be successful, one small company will take over or merge with another to make a larger company..more customers and more success? Well, that depends. Larger companies tend to have more bloat, employees become slightly more detached from the revenue stream, sit back and take it easy. I have worked in both large and small companies and I don't care how productive 'gurus' may say that time spent around the water cooler can be, if I was a senior manager, I'd be reminding people that what they pull out of the company in salary and benefits has to be earned somehow.

Anyway, the larger the company then, in general, the less dynamic and responsive it is. This leads to disgruntled customers as they witness the huge inertia associated with dealing with the company 'Oh you need to fill out an XYZ form before we can do that' or 'It's procedure' the customer service rep bleats.

Then there's the huge disconnect between the senior management and what the workforce are doing. It seems to me that large companies have an executive 'class' that move through large companies on a conveyor belt: Arrive-sort out stock options-stay 2 years-take options-leave. People at this level have their own objectives which tend not to be aligned to the long term objectives of the company. When it gets to this point, it's time to leave and start your own business.

I have seen this cycle happen twice with printed circuit board companies in the electronic industry and when I've worked in large companies have marvelled at the laziness of some people in the workplace.

Consequently I have wondered about what it takes to be large and successful. I used to think that it helped to have a company founder at the helm. They've grown up with the company and so know what it's like to be close to the edge and never forget where they came from. They *are* the core values of the company in person, but I've also seen founders waiting for the big sell off and at that point their focus is elsewhere.

I have wondered about the company within a company approach that a lot of businesses follow. Sometimes they're called divisions or business units, but in essence they're the same thing: small pools of autonomy, focussed on their own specific business objectives. Witness the 'skunk' works - it's all about unleashing people's creativity and desire to succeed, that which is often stifled in a large company. The downside of this approach can be the duplication of effort - particularly in support overhead terms - that can result. Most companies that I have seen do this fail because the 'units' themselves are so large that all they end up doing is making more slow moving lumps of treacle.

I think that providing a supportive environment where people can be let off the leash, whilst at the same time knowing that if they f*ck up, that same leash will be used to hang them can be an incredibly productive place to work. That's not meant to be a culture of fear either, but just the right amount of 'connect' between one's own actions and the success of the venture.

I left a large company nearly 6 years ago, one that was rotten in my view and while it had such massive potential in its creative workforce, was throwing it all away in a series of catastrophic business decisions. I could see such greatness lying dormant in the company and found it so frustrating to see it destroyed from the top...it's something I've never quite got over...hence this rant I guess!

John Ash, 2009-03-25

Very thoughtful comment. Thank you, John.

Volker Weber, 2009-03-26

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