Small Giants summary

If you’ve ever seen the CEOs of huge, publicly traded companies being interviewed, you’ll know that they always emphasize the importance of growth. No doubt this is how the companies became so big in the first place.

But in fact, there’s another kind of company: the small giant. These are privately owned companies that have faced a moment of truth where they had to decide whether to grow or not, and decided against expanding if it meant compromising their mission.

Think of W. L. Butler Construction Inc., which expanded rapidly in the 1970s and 1980s. At one stage, the owner, Bill Butler, found himself with 129 employees and $20 million in annual sales.

But he was unhappy. He realized that he didn’t want his company to keep growing as he felt he should know every employee personally. So Butler narrowed his business focus and reduced his clients from 25 to ten. This even meant letting go of his largest client, an abusive financial services company that accounted for 50 percent of the value of the company’s projects.

But staying small has some real business benefits.

Consider the Californian brewery Anchor Brewing, which has remained at around 50 employees for the past 20 years.

The small workforce fosters better relationships as everyone knows everyone else, and it also helps the employees take pride and responsibility in their jobs as they can actually see the impact of their efforts immediately.

Not only do small companies have a nicer atmosphere at work, they also tend to be better at tasks that benefit from personal interaction, like customer service. This is because the owner can literally know the face and name of every customer, which would be impossible in a big corporation.