My business partner gave me a very interesting and unique book the other day called “Small Giants.”The author‘s premise and focus is that growth doesn’t always need to be the most important metric for success. Instead, through telling the story of 14 very special, privately held companies, he shows that success can be viewed through many different lenses in a variety of unique ways.
In fact, each of these 14 companies has consciously decided not to grow their business. Yes, they are all profitable. But, each owner(s) finds gratification in a host of different ways, including: giving back more to the community, having the best product/service available in a smaller business pond, providing the best work environment possible for employees and even innovating to always be better for customers without growing so large that this might not be possible.
One of the fascinating, heart-felt stories focuses on the founder and CEO (Fritz Maytag) of Anchor Brewing, the first micro brewery based in San Francisco. This home grown entrepreneur had started the company making the highest quality beer in the mid 1960s. At that time, micro brewed beer wasn’t known and Anchor had limited demand of about 600 barrels from local restaurants and liquor stores. But, by 1973 demand started to soar because of the products high quality appeal. Anchor was producing 13,000 barrels. Yet, success was a mixed blessing. For the company to keep up with demand, it had to greatly expand by taking on significantly more overhead (new brewery plants), or outsource the actual brewing of the product. The thought of outsourcing his secret formula and taking a chance that quality and taste would be sacrificed created a lot of sleepless nights for Fritz.
Instead, he made the decision not to outsource or expand, but to ration the amount of beer distributed to each customer. Of course, that didn’t make these customers very happy. The loved the beer and instead of receiving more, they now had to deal with half the supply typically sent to them. As time moved on and Fritz saw that demand continued into the 1980s he considered taking the company through an IPO to raise the money needed to grow. That would provide him with his own capital and the business would no doubt be considered a success. In the end, he followed his heart and backed away from going this route because Fritz believed that growth wasn’t how he viewed success and he never wanted to jeopardize that local, high quality product that created such high demand in the first place. Fritz said, “It occurred to me that you could have a small, prestigious, profitable business, and it would be all right. Like a restaurant. You can stay as you are and have a business that’s rewarding and a source of great pride.”
Anchor’s story is a great one. It made me take a look at Peppercom and ponder whether this philosophy (become great, not big) could work within the public relations and marketing services world. Could it be right for us? There is no doubt that as firms become larger, they tend to lose that higher value touch that clients want and expect. Many also find that it’s much harder for them to maintain that “special sauce” (i.e. innovation, quality, results driven) that made them great in the first place (read the chapter on CitiStorage for more on this topic) as their revenues double and triple in size. These reasons alone should make any agency CEO carefully ponder the risks versus rewards of exponential growth.
In Peppercom’s case, we’ve never been focused on growth for growth’s sake. Our mission has always been to innovate by creating new offerings and new ideas that can help solve our clients’ challenges or take advantage of real opportunities. We believe that if we’re successful in accomplishing that, growth will naturally come with it. That said, I doubt that we could ever become a company that isn’t interested in growth.
Why? Well, employees want to be part of an organization that is dynamic, offering new opportunities for them to grow. And, growth is critical because the reality of our industry is that clients tend to come and go. So, new business efforts need to continually be in motion to replace and add to existing revenues. Yet, there needs to be a greater good beyond becoming a larger entity. Making the workplace environment a real place to learn and excel, giving back to the community and those who need it and trying to create a culture where people do enjoy coming to work are all critical goals at Peppercom.
I highly recommend “Small Giants.” It might not change your thoughts about whether to grow or not. But, it certainly will provide life and business lessons that can make you better.