Review: Small Giants

Title: Small Giants
Author: Bo Burlingham
Publisher: Portfolio
Pages: 225
ISBN: 1-59184-093-7

Growth has been the mantra of business more than a hundred years now. Generations of business school students have had this mantra ingrained into them. Growth is good. Not growing means stagnation and stagnation leads to decline and ultimately the disappearance of the firm. Business is a Machiavellian struggle to become and remain a giant global company which bestrides the Earth like a colossus.

However, perhaps there is another way. Small Giants by Bo Burlingham is an important book in this regard. Unending relentless growth is not the only way forward. There are companies which choose another path and which succeed brilliantly on their own terms. Before looking at what those terms may be, it is perhaps relevant to look at what the basic implication of growth at all costs is.

How can a company grow? A simple question that has generated reams of paper outlining in great detail exactly how the company will grow. Essentially speaking, growth can come either by increasing the number of units sold; whatever those units may be or by increasing the price at which those units are sold or by a mixture of both. Practically speaking, price increases are inevitable in an inflationary environment. The price has to be increased at atleast the inflation level to avoid a loss of profitability. However, the ability to increase prices is limited by the perceived cost/benefit ratio that the end consumer has for the company's product. Many companies have learned to their cost that if the perceived cost/benefit ratio becomes too skewed towards the cost side, then their consumers tend to switch to competitive and/or substitute products. There are very few products that have no effective substitutes (oil being a prominent example that comes to mind). So if the ability to raise prices is limited, then the number of units sold has to be increased. This in turn means either selling more to the existing consumers and or bringing in new consumers or a mixture of both. As a company increases in size, the imperative to grow also increases driven partly by an increase in cost base while at the same time greater effort is needed to achieve this growth.

The companies included in Mr. Bo Burlingham's book have forged a different path. They have shown that it is possible to have a great company without getting onto the treadmill of growth. These companies span a variety of industries and corporate structures. They have a large number of techniques and strategies to keep themselves relevant to and engaged with their consumers. All of them show that it is possible to build a company great opportunities both to customers and to employees. Indeed, for many the primary focus is not customers but employees. It is possible to forge another path and these companies show the way. Every business can learn something from the example of these companies.