In the introduction to Bo Burlingham’s Small Giants – Companies That Choose to Be Great Instead of Big, he made some interesting points about limited our prevailing benchmarks of what makes a “successful” business really is. Much of the writing about business has been around data that is limited to:
- Publically listed companies – primarily due to the easy access of financial data.
- Companies that are well know – thanks to their marketing spend. This also has a roll-on effect: surveys tend to return these well known companies over others.
- Much business “wisdom” has been from the leaders of these large firms – because these businesses are well known, the words of their leaders have more perceived weight. Whether these leaders actually act on what they say or not is less relevant.
- The assumption that there is only one form of shareholder value – in publically listed ocmpanies, financial return is a key factor for shareholders. In the majority of other businesses, this is less so the primary goal.
- The desire, or logic, to grow bigger and bigger is not universally applicable – especially for privately held companies who are not driven primarily by the bottom line.
- Privately held companies are too diverse to make simple comparisons meaningful. The different mechanisms of taxation applicable to privately held companies means decisions are made differently with very different outcomes at the balance sheet level.
Small Giants – Companies That Choose to Be Great Instead of Big by Bo Burlingham. ISBN 978-1-59184-149-4.