Small Giants: Companies That Choose to Be Great Instead of Big, 10th- Anniversary Edition [Bo Burlingham] on maroc-evasion.info *FREE* shipping on qualifying. PDF - Small Giants. It's an axiom of business that great companies grow their revenues and profits year after year. Yet quietly, under the radar, a small number of. SMALL GIANTS. THE SUMMARY IN BRIEF. It's a widely accepted axiom of business that great companies grow their revenues and profits year after year.
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Thank you for downloading small giants companies that choose to be great instead of big. As you may know, people have search hundreds times for their. PORTFOLIO/PENGUIN SMALL GIANTS Bo Burlingham is a contributing writer at Forbes magazine and former executive editor and editor at large of Inc. In business, it's grow or die. Or is it? In this eye-opening book, Inc. Magazine editor. Burlingham shows us a third way: the way of the Small Giants, companies .
A lot of people had warned him that he was taking an unreasonable risk in acquiring Sky Courier, but he had brushed them all off. He never even heard what they were saying. So he cultivated a new habit: Above all, Brodsky spent time reevaluating what he wanted out of business, and what he wanted out of life.
And what about business? And he could thank his bankruptcy for that. Among other things, they feared putting themselves in a position that would force them to compromise the excellence they strove for.
These are people, after all, who are passionate about what they do and dedicated to pushing the boundaries of how well it can be done. Yet the more successful they are in achieving what they want, the more difficult it is for them to stay on course.
Because of their success, they find themselves faced with so many opportunities that it takes a conscious effort on their part to keep from heading off in the wrong direction. He became a star of the New York restaurant scene at an early age.
A native of St. In , at twenty- seven, he opened Union Square Cafe, which won critical acclaim from the start, including a coveted three-star rating in The New York Times. Inevitably, people began approaching him about doing another restaurant. Some of the offers were tempting, but he was nervous about overreaching.
So he came up with three tough standards that any new place would have to meet. First, it would have to be capable of becoming as extraordinary a restaurant as Union Square Cafe. Second, it would have to enhance the value of Union Square Cafe. Third, it would have to bring more balance to his life, not less. I was already working sixteen hours a day. He decided to do it in part because he had the opportunity to bring in a great chef who would otherwise have found something else to do.
Besides, Meyer himself was ready for a change. I tend to make wines that are awkward at first but fortunately improve with age. Union Square Cafe was the most popular. It held that position the next year, then rose to number three in and number two in —second only to Union Square Cafe.
The two restaurants remained number one and two in the rankings until , when they switched places. In , they switched back. Meanwhile, the booming economy of the s had changed the restaurant business. Chefs like Wolfgang Puck and Todd English were becoming celebrities, egged on so to speak by real estate developers who had discovered that a great restaurant could transform a neighborhood or a mall and drive the growth of hotels, casinos, museums, and other businesses in the area.
Sure enough, developers from all over the country began descending on Meyer, hoping to entice him to build a Union Square Cafe or a Gramercy Tavern in Las Vegas or Los Angeles, or wherever. Meyer resisted their entreaties, coming up with what he called his five- minute rule. Aside from wanting to be near his family and not wanting to expand geographically, there was a practical reason for the rule. As long as the restaurants were close to one another, he could work lunch at all of them in the same day.
Even the five-minute rule was tested, however. Each had a unique theme and identity. Tabla offered a fusion of American and Indian food. Louis roots. Viewed together, they did indeed seem like the novels of a gifted author. As time went along, moreover, he began to lose some of his aversion to growth, for a variety of reasons. To begin with, he had a management team, a group of partners, and a staff of employees who were capable of handling growth and eager for new challenges.
If you want to make sure a restaurant remains excellent over a long period of time, you have to hire people with ambition. Not everyone on every team is interested in growing, but the only way to keep a nineteen-year-old restaurant like Union Square Cafe on its toes is to staff it with people who want to figure out a better way to do everything every day.
Over time, you get a critical mass of people like that. The restaurant was called The Modern, and it put an end to the five-minute rule. So I am clearly transforming myself from a restaurateur into a CEO of a restaurant company. Meyer was tempted. His mother had owned an art gallery in St. Louis when he was growing up, and the family had had a membership in the museum.
There had always been a MoMA calendar on the wall. But neither Meyer nor the company was ready to do a MoMA restaurant in By , they were. In many ways, it was a fundamentally different undertaking from any of the previous restaurants. Who knows what anybody has been doing before they come in?
They could have gotten off an airplane, could have finished a business meeting, could have come from their hotel room, could have walked twenty blocks to get here. It changes our understanding of the product people will be in the mood for, as well as the type of service. Probably to get you off your feet, eat quickly, and get something in your belly. Our job is to figure out what we can add to the dialogue on those three basic needs.
If it was alone on a side street, the restaurant would be the story. Here the story is much larger. The restaurant comes along for the ride. It benefits from and has to live up to the spotlight.
First, it gave people room to grow and find new challenges without leaving Union Square Hospitality Group. And on and on. Up to that point, Union Square Hospitality Group had been a collection of individual restaurants, but, as it became clear what the future might hold, he realized he had to begin focusing on the organization as a whole, and what he wanted it to look like. How centralized should it be, and what exactly should be centralized?
And what relationship would employees have to the company? To the degree they feel like cookie-cutter offshoots of a larger entity, who needs it? The restaurants would be recognizably part of Union Square Hospitality Group, and yet completely different from one another. They would have a common culture, but the feeling of each would be distinctive. They were like kids, Meyer said: Some of their DNA would be the same, and some different. There were, he conceded, some issues that had yet to be worked out.
Beyond that, I think things should look different, taste different, smell different—which you need to sustain a high level of interest. Could a large company retain the sense of intimacy with customers? The process of taking an order, cooking for people, feeding them, and managing the operation is not the same as running a big corporation.
Our people are running a restaurant with a sense of ownership for how well the restaurant works. He thought he could pull it off—he could keep adding to the company without losing the soul.
Yet he found himself in that position only because he had resisted the pressures to expand in the early years before he was prepared to handle the challenge without sacrificing the soul. By saying no, he kept his options open and preserved his ability to choose how far and how fast to grow. And therein lies another lesson: If you want to have the choice, you have to fight for it.
All successful businesses face enormous pressures to grow, and they come from everywhere—customers, employees, investors, suppliers, competitors—you name it.
As we shall see, those forces will make the choice for you if you let them, in which case you will lose the opportunity to chart your own course. W hen Martin Babinec started his business in , nothing could have been further from his thoughts than the possibility that it would become one of the fastest-growing companies in America or that he would someday be getting it ready to go public or be sold to venture capitalists. Nor would he have been particularly happy to know that both prospects lay ahead.
Navy bases all over the world. After being shuttled around from Davisville, Rhode Island, to Seattle, Washington, to Yokosuka, Japan, to Naples, Italy, to Oakland, California, he and his wife, Krista, wanted to settle down and raise a family in San Leandro, just south of Oakland, where they had bought a house. She had recently given birth to their first child. Babinec, for his part, was sick of the corporate bureaucracy and ready to strike out on his own.
Then, at a national conference of human resource managers, he had heard about a new type of business, the professional employer organization or PEO —an outsourcing company that handles the HR needs of small-to- midsize businesses, giving them access to expertise, services, and insurance rates that they could not otherwise get.
What followed was the more or less typical roller-coaster ride of a business start-up. Along the way, he contended with the full range of pressures that often cause entrepreneurs to lose control of their companies at an early stage, with the result that decisions about how much and how fast to grow wind up getting made for them. Even if you succeed in retaining control, moreover, you still have to deal with a variety of forces pushing you to grow whether you want to or not.
For two years, he struggled to figure out what he had gotten himself into and how he could keep the company alive. TriNet had one paid employee and six clients and was all but bankrupt. In addition, he faced the enormous, and extremely expensive, task of educating a market that had never heard of PEOs or HR outsourcing. He had spent every nickel he had and borrowed every cent he could squeeze out of people he knew. It was, he says, absolutely the lowest point of his life. He could try to raise money from outside investors, but it was the longest of long shots.
How do you sell stock in an illiquid, insolvent company? What do you tell people when they ask why the next two years will be any different from the last two? As it happened, Babinec thought he had an answer to the second question. Up to that point, he had followed the practice of other PEOs, taking every account he could get in hopes of building a large enough customer base to achieve the economies of scale that would allow him to provide benefits like low-cost insurance and still earn a profit.
With no money to advertise, however, he needed referrals to bring in new accounts, and referrals were hard to come by when you followed a scatter-gun approach.
He would go after the type of companies that most needed his services and would therefore be willing to pay him a premium—specifically, the fast-growing technology companies that were sprouting up all over nearby Silicon Valley. They were under enormous pressure from their financial backers to develop their technology as quickly as possible. Babinec could help by relieving them of the need to spend any time on HR administration. Best of all, people in the technology world were constantly talking to one another.
If TriNet did a good job—and he had no doubt it would—it would start getting the referrals it needed. It was a counterintuitive plan and a heretical concept in the small world of PEOs. If you needed large numbers of customers to achieve the required economies of scale, why on earth would you adopt a strategy that excluded the majority of potential users, who would be priced out your market?
But Babinec was thinking only about survival at that point, and—to survive—he needed a way to sign up as many high-paying customers as he could, as fast as he could. That meant getting referrals. He might have to bring in some outside experts to help. If he failed, moreover, he and Krista could lose everything, including their house, and find themselves out on the street—homeless, with a two-year-old daughter, a baby on the way, no income, and a recession looming.
He told her that he thought he should probably start looking for a job. We need to get on with our lives. You still have an option. He immediately went to work on his business plan. And he persuaded the guru of PEOs, T. They included everyone he knew who might conceivably be interested in downloading stock in TriNet.
The money came with obvious strings attached. That meant growing the company fairly aggressively. In the meantime, he focused on implementing his new strategy, and it worked brilliantly. TriNet quickly began to develop a reputation among start- ups in Silicon Valley as a company that could take care of all their HR needs, leaving them free to focus on getting their technology to market as fast as possible, which was the key to their success. Soon venture capitalists took notice and started referring the companies they invested in to TriNet.
Babinec himself became a familiar figure on Sand Hill Road in Menlo Park, California, where several of the major venture capital firms were located. By , TriNet was solidly in the black and growing fast—but not fast enough, Babinec realized. The bigger a PEO was, the better it could serve its customers, the lower its costs per transaction would be, and the more likely it was to survive the increasingly fierce competition in the industry. If Babinec wanted to stay in the business, TriNet would have to get big quickly.
That meant two things: First, he would have to raise a huge amount of money to finance the growth. But such people were in enormous demand. They had their pick of employers, who would offer them all kinds of benefits and perks to sign up. In contrast, Babinec had only three recruitment tools at his disposal two of which were intangible: Of course, the equity would be worthless unless the stock could be sold at some point.
So to attract the people, as well as the investors, it would have to be understood that the company was being groomed either to be acquired or to do an initial public offering.
Babinec did eventually succeed in attracting the people and raising the money he needed, although it took some doing. The following year, he sold Yes, he was the CEO, with all the perks of the office, but he was by no means a free agent. Above all, they determined the kind of business he would have. He loved the people he worked with and found the challenges of the business invigorating.
Although the pressures were intense, he could handle them, and he readily accepted the level of scrutiny and accountability insisted upon by his investors, especially his European partner.
True, he and Krista, with three young children, longed to move back east, where their families lived and where they thought the educational system was better than in California, but even that turned out to be possible. But the point here is not to celebrate how well things worked out for the Babinecs, as happy as we are about that.
Rather it is to take note of the pressures Babinec encountered along the way, the same pressures that other entrepreneurs have to deal with and that can push any company in a direction its founder never intended for it to go.
Obviously, the crucial decision Babinec made was to choose a business that needed an extremely large customer base to compete successfully. For Fritz Maytag, the revelation came right around the time that the demand for Anchor Steam Beer was starting to take off. To grow 10 percent, you need to make ten additional units. You get about three tons per acre of vineyard. So we need half an acre more. Depending on where you are, it might be a little more.
That was an eye-opening realization for me. Just one more case needs capital. So there are these giant steps you have to take. They just have to do with people.
Say you hire a new guy. Six months of salary is a big bite. You need a big room filled with very expensive people who are thinking hard all the time about what to do next year when your software will be obsolete because Microsoft is coming out with something better. And success just makes things worse. As a result, it becomes much more difficult to make the kinds of choices that the companies in this book have made.
The outsiders must at least download into your vision, which will only happen if they get out of the deal what they want. One of them was Reell Precision Manufacturing, 56 percent of whose stock was owned by the retired founders, their children, and their grandchildren.
He had a more diverse group of outside investors later on, but they, too, gave him a free hand. I pick people who are friends and whose advice I welcome. As for the other ten companies, they had taken care—often extreme care —to make sure that all the equity stayed inside.
He first tried to find a commercial bank that would lend him the money and got no takers. He then looked into mezzanine financing, which involved borrowing at a much higher interest rate, and was turned down again. Even then, he and his wife, Kit Crawford, had only percent ownership until Thomas got all her money.
Fortunately, the company did well enough in the next two years that he was able to refinance his debt and pay her off early. He said he refused to consider the option. He later saw other entrepreneurs try that, and they all regretted it.
The reason was simple enough. These companies were searching for something indefinable and immeasurable, something that went beyond the standard definitions of success in business, something that could easily be lost unless it was protected against the homogenizing influences brought to bear on every company. I call that quality mojo. See the introduction. If you are not involved in helping to generate mojo, you have nothing to contribute except, perhaps, capital, and the capital usually comes at too high a price.
In five of the companies, the founder had brought in key executives as equity partners. In two others, a majority of the equity was owned by an employee stock ownership plan, or ESOP, of which all employees were members. The majority stake in O. Tanner, the oldest company of the group, was owned by a trust. Whatever their particular ownership structure, all of the companies guarded their equity zealously to make sure it remained in the hands of people committed to the same goals.
If you do acquisitions, for example, you generally want the option of paying with your stock, so as to minimize the need to borrow money or generate additional cash, but then the stock usually winds up in the hands of outsiders.
Most of the companies in our sample had no interest in downloading other businesses, given the difficulty of merging corporate cultures.
The exception was ECCO, the Boise-based, employee-owned manufacturer of backup alarms and vehicle warning systems. Its chairman, Jim Thompson, and its president, Ed Zimmer, realized that—to compete effectively—ECCO needed a presence in Southeast Asia and Europe; and they decided the best way to get one was to download existing businesses with which the company already had relationships.
In some cases, you may feel pressure from big competitors—or the fear of big competitors—as Erickson and Lisa Thomas of Clif Bar did. The more you sell, the more they sell. But, ironically, the most intense pressure often comes from two sources that both determine and define your success as a business, namely, your employees and your customers.
That is, in fact, why many owners wind up putting their companies on a path of aggressive growth, even if they themselves might prefer to rein it in. The CEOs of our small giants had all faced the same issue.
One way or another, they had to keep their best people engaged and challenged or run the risk of losing them. For a conventional business, however, the growth is the goal, and the control is what you need to keep it in hand. With the companies I was looking at, creating opportunities for employees and opening up new possibilities for the business were the goals.
Interestingly, while a few of our companies had grown in fairly traditional ways—by launching additional product lines, for example—most had done it by spinning off new ventures, often becoming entirely different entities in the process. We saw in the last chapter how Union Square Hospitality Group evolved from a single restaurant into a company that started new restaurants around different ideas.
Righteous Babe Records added a retail business, a music publisher, a real estate developer, a foundation, and a concert venue. Artists Frame Service morphed into The Goltz Group, including a home and garden store, a wholesale frame business, and an art gallery.
More often than not, the owners and CEOs were also responding to exciting opportunities that they thought both they and their people were ready for, that would strengthen the company in some way, and that would provide them all with the chance to explore new areas of business. But the new ventures had the effect of giving good people an avenue to grow and take on new challenges without having to find employment elsewhere; and that was, in most cases, one of motives for branching out.
The pressure is there, after all, because people like your product or service and want a chance to download more of it. The pressure is thus a powerful indicator of your success. How can you say no? Once you start down that path, however, it becomes extremely difficult to go back.
If you decide to change course, people will have to be let go. Contracts will have to be renegotiated. At that point, you find out just how deeply you care about being the best at what you do. The year was Although he was living in the commune with his wife and their son, it was not their legal residence.
Nor did they have electricity and indoor plumbing. I had no insurance or property or anything, but I liked doing business, and I liked building, and I liked people. The company finally got an office in , though its telephone remained unlisted until And a lot of people did like his work.
By , Butler Inc. He was spread thin and so was his company. Licensed in California, Oregon, Washington, Nevada, and Arizona, it had projects going in all those states; and there were more jobs in the pipeline than it could handle.
There was no corporate infrastructure. Things were out of control. So we sat down and did a lot of soul-searching. We asked what we did well, what kind of work did we get a better return on, what did we need to improve. And then we changed everything. We had one hundred twenty-nine people then; we have one hundred twenty-five now. The team spent hours analyzing the customer base, noting which jobs were more profitable, discussing which niches Butler should be in and which clients played best to its skill set, projecting how economic trends would affect different industries, and so on.
Then came the cuts. The people they had on our projects were demeaning to us. In order to keep the company at the size he wanted, Butler also had to say no to good customers, the ones he wanted to continue doing business with. I want to work with clients who see us as their partners. Butler said he felt enormous pressure from customers to grow.
In , Target gave Butler Inc. Butler was also the smallest vendor ever to be so honored, as well as the one that received the award in the shortest time. How do you say no to a client like Target when it comes asking you to do a store far out of your region? And they were our best competitors, too, because we wanted the customer to be happy with whatever work they did. I get more business from you than from my own people. Although Butler avoided publicity—he granted a single newspaper interview in twenty-five years, and that one only because the long-haired reporter reminded him of his commune days—the company became legendary in its community for its charitable works and its extraordinary workplace.
The company kept growing in spite of itself and in spite of a recession that was brutal on commercial development. Customers saved the few jobs they had for Butler. People were working too hard. Everybody was too stressed out. This one comes partly from the social and cultural environments in which we all live and work, and partly from something in the entrepreneurial psyche. He had developed a system that allowed his sixteen employees to outperform mortgage companies with three or four times as many people.
I have control. I have freedom. I have family time and travel time. What more can I ask for? That widespread assumption, in turn, can become another pressure to grow, especially when considerations of status and prestige come into play. What is most important to me? What do I want to do with my life? Get bigger. But once you open that door, all those questions are out there.
Jay Goltz readily admited that he was one of those people.
But what I got from him was the excitement of business. So when he was in his junior year of college, studying accounting and thinking about starting a company, it was the framing business that came to mind, not the dime store.
His mother just sighed when he told her what he wanted to do. He was a man on the move. He would read articles about entrepreneurial stars like Michael Dell or Fred Smith and push himself even harder.
He investigated the possibilities of franchising. He considered getting involved in so-called industry roll-ups. He even thought about going public. His home store and his art gallery were thriving as well.
He was in demand as a speaker and as a teacher, and he was writing a book of advice to entrepreneurs. Somehow, on top of all that, he was still married to the same woman after sixteen years, and they had three healthy children. I always worried, Am I missing an opportunity here? Am I leaving money on the table? How do you turn that off? How do you keep the success bug from turning into the success disease? And it was harder because of the biz kid thing.
How much smarter is he than me? It happened in the spring of He had bought a building on Clybourn where he planned to create an upscale home and garden store, expanding the home store he had started in leased space down the block. In the midst of it all, he ran out of cash. It was incredibly stressful. At the same time, my mother had cancer, and my kid was having trouble in school. It was horrible. First, you have to feel the pain. It went with the territory. This was self- imposed. Was I out of my mind?
People who build giant companies from scratch are different from you. Then finally, it hits you, the third realization: Things are okay. You think, I can be happy. I can lead a good life, have a great business, make enough money, without going crazy. And you begin to notice all the unhappy rich people around, with unhappy families. I began to think, What would you do with all that money if you made it anyway? That was a revelation. Like many entrepreneurs who feel driven to grow their companies, he suffered from a major disability, namely, his own blindness to what he had accomplished.
He was haunted by a sense of inadequacy, of not measuring up. He would compare himself with the most famous entrepreneurs in the world and wonder what they had that he lacked. In the end, it was one of his employees, an older African American woman, who opened his eyes. Her name was Lily Booker. She and another woman, Willie Hardwick, were retiring from Artists Frame Service after eight years with the company.
At their retirement party, Lily got up to say a few words. She talked about her introduction to Artists Frame Service. I just want to thank you for giving me a chance. Goltz himself was turning forty that year and beginning to feel his mortality. In any case, her statement jolted him. Poor kids I was going to save who kept screwing up and getting into trouble. I looked around and saw a lot of people who appreciated their jobs. Lily was one of my starfish. There was the framer who looked for every opportunity to work overtime.
It turned out he was sending the money home to his family in Tibet. And there was Luan Le, who had been a captain in the South Vietnamese navy. After the fall of Saigon, he was arrested and sent to prison for more than eight years, moving from one camp to another until his release in A year later, he took a hundred people in a motor boat from Vietnam to Malaysia, a three-day journey, surviving an attack by pirates from Thailand en route.
He eventually made his way to the Philippines, where he learned English, and then to Chicago. Artists Frame Service hired him through an agency that places Vietnamese and Cambodian refugees. That appreciation is a common characteristic of all the companies in our sample, and it makes possible the intimacy they are able to achieve with employees, customers, suppliers, and the community—an intimacy that is both one of the great rewards and one of the crucial generators of the mojo they exude.
You need only visit the cities, towns, and neighborhoods where these companies are located. In , it became the home of Righteous Babe, the music company founded by singer-songwriter Ani DiFranco.
It was also a symbol of hope for the city of Buffalo, and thereon hangs a tale. Buffalo, which sits at the eastern end of Lake Erie, was once a thriving center of commerce, where grain from the Midwest would arrive by boat and be unloaded, processed, and sent on to New York City—and the rest of the world—via the Erie Canal and the Hudson River.
Richardson and Frank Lloyd Wright. Lawrence Seaway in and growing competition from the Sunbelt and beyond.
Businesses moved away, and commerce dried up. On late-night television, Buffalo became the butt of jokes about its long, bleak winters and the futility of its professional football team. With no major corporate headquarters and little industry to speak of, the economy went into the doldrums and stayed there. The city government had to depend on subsidies from the state just to maintain basic services. Although based in nearby Coudersport, the Rigases were devoted Buffalo boosters.
At last, Buffalo would get the shot in the arm it needed. It seemed almost too good to be true. Unfortunately, it was. On July 24, , the Rigases were indicted for stealing vast sums of money from their company at the expense of investors and creditors.
A few months later, Adelphia filed for Chapter 11 and moved its base of operations to Colorado. By then, the citizens of Buffalo were used to disappointment. She had hundreds of thousands of fans around the world and had sold millions of her CDs, plus a smaller number by other artists, under the Righteous Babe label. Her decision to go it alone, despite being ardently courted by all the major recording companies, meant that her albums were seldom played on mass-market radio stations.
She had done dozens of concerts in the area and, through Righteous Babe, contributed to numerous community causes. When she performed for charity, as she often did, her picture made the front page of the Buffalo News.
Although Buffalo was a conservative blue-collar town, its citizens embraced DiFranco. So what if she was a self-described bisexual with a large and devoted following among lesbians? So what if she walked around with flowing dreadlocks, a ring in her nose, and a tattoo across her chest? That was the acid test. In the process, DiFranco had played a major role in building at least three local businesses in addition to her own and was directly responsible for creating about jobs in a city with one of the highest unemployment rates in the Northeast.
For all its beauty and architectural significance, the building was a ruin by the time Righteous Babe got involved. No one had done any maintenance work on it for decades.
Was Righteous Babe interested? This was not in some corner of the city, either. Delaware Avenue is one of the main thoroughfares downtown. A lot of people drive right by it every day on their way to and from work. They thought it would be the usual stalemate, and so there was definitely a feeling of communal uplift to see it getting done. Like Righteous Babe, they were all so intimately connected to the place where they were located that it was hard to imagine them being anywhere else.
CitiStorage was Brooklyn to the core. Reell Precision Manufacturing and the Twin Cities went together like, well, a horse and carriage. And the influence ran both ways. The companies shaped their respective communities, and the communities shaped them. Nor was that relationship a matter of happenstance.
Danny Meyer of Union Square Hospitality Group, for one, viewed the community as a critical factor in deciding where he would open a restaurant, and what type of restaurant it would be. The animals in one place will be grazing on different vegetation from those in the other, and the grape vines will be growing in different soil and getting different amounts of sun and rain.
Because the terroir is different, the cheese will be different, and the wine will be different, even if you follow the same process for making them. You can taste the difference. Every community has its own character, which is sort of a spiritual terroir. When you mass-produce food, you strive to take the terroir out. The whole idea is remove any variations due to climate, or soil, or season, much as companies that are spread out geographically strive to reduce variation and develop a common culture.
They work hard to make sure people throughout the organization are following the same rules, living up to the same standards, working toward the same goals, reflecting the same values. Righteous Babe was a good example. For all the jokes about its weather, the city has a kind of civic pride— the pride of outsiders and strivers—and exerts a powerful, if somewhat mysterious, hold on its inhabitants.
But there was more to it than that. By way of illustration, he told a story about a well-known promoter who produced a concert that DiFranco did with Bob Dylan. They were playing at an outdoor performance space near a major northeastern city. Your reputation is all you have, and word travels fast. The promoters we use would no sooner cheat us than they would cheat their own mothers. Ani and I sometimes joke about how we live in a fantasyland of honest people who treat each other with respect.
But Scot and Ani have used its qualities to their advantage. Righteous Babe has been able to carve out a spot here much more easily than it could have in a larger market. Our radio guy had started out on a local college station. We were all learning as we went along. As a result, the albums, catalogs, and marketing materials they produced were fresh and imaginative but hardly amateurish. In , the music industry recognized their work by awarding DiFranco and Grunert the Grammy for best packaging.
Practical benefits aside, Righteous Babe also drew strength from the Buffalo ethos, the sense of being the scrappy outsider and underdog, fighting against the odds. It imbued the company and served as a motivateor for everyone, including Fisher. Initially there was considerable skepticism as to whether or not he was up to the responsibility. How many times have we seen this? Whatever his state of mind, he threw himself into the job and—working closely with DiFranco—proceeded to build a highly respected, diversified music business, including one of the few successful artist-created labels around.
A decade later, Righteous Babe was still going strong, while several of the record companies that had courted DiFranco were out of business. IRS had a phone; we had a phone. IRS had a fax machine; we had a fax machine. We must have done something right. And I think that staying in Buffalo all this time, working in a modest office, was a factor. It helped us keep things in perspective.
In some mysterious way, all that contributed to the buzz around the business, the passion people felt for what they were doing. You could see it with Anchor Brewing, which was so woven into the culture and history of San Francisco that it had become something of a tourist attraction in its own right.
Like the city itself, the brewery had survived all manner of natural and man-made catastrophes—earthquakes, fires, war, Prohibition, financial ruin—each time manag-ing to rise again thanks to the intervention of someone willing to fight to keep it alive.
When Fritz Maytag, then a young Stanford graduate, bought a majority stake in , he was just the latest in a series of saviors. Among the many things Maytag brought with him were a keen appreciation of and respect for the special relationship between Anchor Brewing and San Francisco.
Maytag had decided to move it there in , taking over an erstwhile coffee roastery. Jay Goltz and Artists Frame Service had an even closer relationship with the Near North Side of Chicago, an area whose name has changed along with its fortunes.
Back in , when Goltz started his company, the neighborhood was called New Town as distinct from Old Town. It was a run-down section of decrepit old buildings and empty lots. There was so little happening along North Clybourn Avenue, where the business was located, that local hot- rodders could hold drag races down both lanes on Friday and Saturday nights.
Local merchants and real estate developers credited Goltz with leading the change. His was the first new business in the area. When he started out, empty space on North Clybourn was going for about one dollar per square foot. By real estate was pushing forty dollars per square foot, and the major headache was traffic. Anticipating that parking would become a problem, Goltz had bought his own parking lot for his customers. It was across the street from the building that houses his home and garden store, down the block from the framing shop and the art gallery.
The ambiance of the stores—employees referred to them collectively as the campus—reflected the vitality of the neighborhood, and vice versa. CitiStorage had a different relationship with Williamsburg, the section of Brooklyn in which it was located. Like New Town when Goltz arrived, it had been a depressed inner-city neighborhood when Norm Brodsky moved his headquarters there from midtown Manhattan in He had also worried that people would leave because of the location, and that it would scare away potential recruits.
On the other hand, he felt it was important that he and the other senior managers be based in the warehouse rather than in offices across the East River. As a precaution—and to allay fears—he installed a state-of-the-art security system on the premises and set up a van service for employees going to and from the subway. But the fears had turned out to be largely unfounded.
While some people left the company because of the move, those who remained were reenergized. Given the scarcity of well-paying jobs in Williamsburg, moreover, recruiting actually became easier. As more people from the area joined the company, Brodsky and his wife, Elaine, a co-owner and vice president of CitiStorage, worked hard to develop close ties to the community. They invited neighborhood people to the parties they held at their waterfront location.
They made space available for a local theater group. And they let employees decide whether to continue having an annual holiday party or to spend the money on a local charity. The employees chose the charity, a school for autistic children, for whom they bought, assembled, wrapped, and delivered Christmas presents.
CitiStorage soon became like the rest of Brooklyn—a melting pot of people from many backgrounds, speaking many languages. In many ways, he was like them, a street-smart Brooklynite who had pulled himself up by his bootstraps, taking a lot of hard knocks in the process but ultimately coming out on top.
His passions were bike racing, rock climbing, and improvisational jazz. If you had visited its building on Fifth Street in the Berkeley Flats, you would have seen numerous signs of the renovations and expansions that had been required over the years.
Another wall was just for climbing. It all fit right in. A decade and a half after founding Clif Bar, Gary Erickson had changed a bit—he was married with three children, for one thing—but Berkeley was pretty much the same, just more prosperous. That could be said of Clif Bar as well. Everything that had characterized it in its early days was still there, just more of it and better organized.
It had formalized its commitment to a sustainable environment, using certified organic ingredients in its products, organic cotton in its T-shirts, recycled paper in its publications, and as little energy as possible in its operations. It supported a multitude of social programs and had a program for employees, wherein the company donated at least hours per year—the equivalent of one full-time person—paying employees to do volunteer work in causes they selected themselves.
In almost every way, it was a reflection of the city in which it had been born and raised. So was Reell Precision Manufacturing, located in St. Paul, Minnesota, and steeped in the business culture of the Twin Cities, which has a long history of corporate community involvement.
Somehow it was all tied up with the business culture of Minneapolis—St. To be sure, many large, public companies have also been molded by their communities. For that matter, Target and H. Fuller are just as much products of the Twin Cities as Reell. What was different was the intimacy of the connections. A human-scale company in a single location can be part of a community without dominating it. Unlike, say, Madison, Wisconsin, or Iowa City, Iowa, it was next door to a major city, giving it a somewhat more cosmopolitan feeling than most other Big Ten towns—or so Ann Arborites believed.
We also tend to get employees who are young and idealistic, which is another part of being in Ann Arbor. Sure, they want the bonus, and I want them to get the bonus, but people here get more excited about donations than they do about personal gain, which is nice. Saginaw argued that the Compass Group would play that role. Weinzweig and the managing partners of the other businesses were willing to go along with that. But there was another sticking point.
In the course of producing Zing , the cofounders had made a commitment that all the new businesses would be in the Ann Arbor area, even if other opportunities might appear to offer significant financial benefits. The airport was in Detroit, twenty-five miles away. In the end, we decided that the airport was the gateway to Ann Arbor for many people, and it would be a cool thing to greet people and welcome them to Ann Arbor through the airport store.
But it was a matter of intense discussion and lots of disagreement before we finally decided to go forward with the plan. How could it possibly have mattered whether or not they opened a place outside the Ann Arbor area? If it was a good opportunity that they could handle and that would enhance the company, what difference did it make where the new store would be located? Letters of thanks and praise poured in from all over— from customers, public officials, other businesses, distant admirers, and Ann Arbor ex-pats around the world.
But there was one tribute that stood out from the rest. The sign said: Thank you for feeding, sheltering, educating, uplifting, and inspiring an entire community.
Happy birthday to a deli that makes a difference. Below were the logos of thirteen nonprofits from Ann Arbor and Washtenaw County, in which the town is located. From the many, many, many, people you help. With all our hearts. The nonprofits, which had conceived of and paid for the sign, were not exaggerating. Paul Saginaw said he got the idea for it when he was reading a magazine article about professional food photographers in New York who had begun collecting the food that was left over from photo shoots and would otherwise have been thrown out or taken home by staff members.
The photographers had leased a van and would take turns driving around to pick up the food, which they would then drop off at the Salvation Army. The deli also had leftover food that was perfectly wholesome but not quite fresh enough to sell to the public. Instead, the managers would use it for employee meals, or toss it in the garbage. We could do here what those photographers in New York are doing. She could start by researching the need for such a program. Meanwhile, he began calling restaurants and food businesses to gauge their interest in the idea.
It turned out that they were very interested and that there was a need—specifically for fresh produce, meat, and dairy products. Three months after reading the article, in November , Saginaw incorporated Food Gatherers as a c 3 charitable organization, borrowed a van from a catering business called Moveable Feast, and made the first round of pickups with deYoung.
Over the next eighteen years, Food Gatherers grew steadily. In , it took over the local food bank, which was about to lose its national accreditation due to poor management, and began branching out, providing a full range of food products to homeless shelters, detoxification centers, the Salvation Army, and neighborhood feeding programs in low income neighborhoods.
In order to avoid competing with those organizations—and to win their trust—Food Gatherers made a point of not directly feeding people in need and charged the agencies only what it cost Food Gatherers itself to download certain types of products. The rescued food was free. As a result, when Saginaw and others had to go out to raise money to expand the operation, they got no resistance from the nonprofits they supplied because they knew the proceeds would eventually come back to them.
And expand Food Gatherers did. In its first year, it rescued and redistributed eighty-six thousand pounds of food.
Seventeen years later, it was doing between two and three tons per day. Food Gatherers was only the beginning. And Non-Profit Enterprise at Work, which helped other local nonprofits improve their management, find and train board members, set up Web sites, and the like. And the Shelter Association of Washtenaw County, which ran homeless shelters. And on and on and on. He took on the title of Chief Spiritual Officer—Weinzweig was CEO—and became the main advocate of the community in the company and of the company in the community.
If people go to a lot of fund-raisers and always see our name, they can connect the dots. The social responsibility of a corporation is to increase its profits, as Milton Friedman once observed, and its resources ought not be diverted to ancillary purposes. To Saginaw, that whole debate was beside the point. On the contrary, it was one of the reasons he and his colleagues were in business to begin with, and one of the principal rewards they got out of it.
So you do it. Being in the community like that is a joy. Some went even further. But if you read what Friedman actually wrote on the subject—for example, in The New York Times Magazine of September 13, —you will note that he was talking only about publicly owned corporations.
He challenged the notion that a corporation, which is an artificial person, can have such responsibilities. When executives use the company to promote their own political or social agenda, they are, in effect, taxing the shareholders without their consent. As Friedman acknowledged, however, that argument does not apply to closely held private companies.
If he wishes to spend his money on such purposes, that is his right, and I cannot see that there is any objection to his doing so. What the small giants do is consistent with that distinction.
Not only do they generally avoid taking initiatives that carry the whiff of ulterior motives but they also follow the rule that—to be a meaningful expression of generosity and support—an act of charity has to be individual, personal, and largely unheralded though not necessarily secret.
Anchor Brewing was a case in point. We adopted a little middle school near us, helping them in many small ways without blowing our horn. We sponsor a rowing team on the bay.
But all of this is done quietly and without blowing our horn. At one point, we had it up to three or four to one. I sign many checks along this line.
But I love the idea of backing our own employees. We have a deep relationship with our employees. In a small company, you have a real team. So if one of my employees decides to back something, we back it too. It really goes back to a time when the brewery in Europe—or even in this country, as far as that goes—was a sort of civic center. The brewery was a place you could go and have a meeting. They contacted us.
We put together a special sandwich for him, which he helped design, and we had a sign made up for it that we put up in the deli. Published in: Full Name Comment goes here. Are you sure you want to Yes No.
Show More. No Downloads. Views Total views. Actions Shares. Embeds 0 No embeds. No notes for slide. Small Giants 2. Companies or their proprietors, for that matter are beguiled by the purported wonders that go with their impulsive—but most of the time mis calculated—sizing up.
In this light and poignant volume, Bo Burlingham demonstrates that this is not always the case: It is about touching lives and making a difference, no matter how far, no matter how small, no matter how little. Champions of logic would probably snuff us right off the bat for our seemingly unsound coinage of the term, small giants. Quite interestingly, though, the term is replete with a more profound meaning that only an earnest reader could grasp. It is actually read more with and from the heart instead of the quizzical mind.
What they do may not even be called a business, in the deeper sense of the word. It was a lifestyle. A mindset. A dream breathed into reality by sincere struggle. Their paramount goal is not only to amass earnings and obtain a good return on their investments. For they soared higher and achieved far more than what other corporate Goliaths have. Is there anything extraordinary or unique to the way they operate? Be big. Be the best. These include: Tanner Co. Butler Construction, Inc. Some have begun fruitfully, tripped in the middle, and finally got back on their feet.
Some have been on the verge of extinction, then completely metamorphosed and witnessed another heyday. Some have probably kept their clover leafs and taken the industry by storm just as easily. It is an arduous process; a personal experience wrought with a bulk of sacrifice, a handful of knotty options, a mound of decent character, and a stack of guts the size of Jupiter. The Making of Potential Davids Make the Right Choice: There is certainly no step backward, only a step ahead.
Atrophy is out of the question. Either they kick the bucket or live to tell the tale by being the biggest, the brightest, and the best.
Yet little did they know that sooner or later, they would not be able to finance this rather impetuous growth and the more likely that they would wield snippets and snippets of their business until such time that they no longer have the controlling equity. There are those special cases when stocks are vended to a couple of investors and the company eked out a good living.
What the author tried to point out, however, is the acrid truth that companies always lose a substantial amount of their independence when they sell stocks to outsiders even if they remain to be privately owned.
Burlingham notes that there is something special to the way the Mona Lisa is framed, hung, and lit where it is now, and doubts that the effect would be entirely the same if it were framed, hung, or lit in a different museum, in a different city, in a different country p. Her decision to let Righteous Babe thrive in the neighborhood was reflective of her solid attachment to her roots, a terrain of warmth and familiarity, of one-ness and identity. Righteous Babe was as much Buffalonian as DiFranco was, and to many, it seemed more like an extension of her inner self.
Yet small giants adeptly transcend this, for their owners are very much around to invigorate the workplace and demonstrate leadership by example.