In preparing for starting your own business there are an enormous number of resources available to you to figure out what you should and shouldn’t do (the latter being particularly helpful). In preparation for this little venture I think I have gone through thirty to forty different books I thought might be helpful. While I’m certainly no expert, I am able to discern when a book is giving me value and when it’s wasting my time. I also get bored pretty quickly so stories and case studies are much more interesting to me than endless abstractions. Even if the point verges on mediocre, sometimes the story can be inspirational.

Of the many business books I read, my current favorite has to be Small Giants, Companies that Choose to Be Great Instead of Big by Bo Burlingham. Burlingham documents a common crossroads that most successful small businesses reach – the choice of whether to expand based on their early success or stay small to try and preserve what made them special in the first place. Having spent some time analyzing the world of food where small businesses abound as do small businesses that have expanded into vast corporate empires, this was a choice I was familiar with (at least as an observer). And at the risk of sounding corny, I too would rather be great than big.

When you’re scaling a software service there is a concept called horizontal scalability. Typically software services that get popular require ever increasing powerful hardware to run at scale and with decent performance. But these services typically run into problems when their needs exceed the capabilities of the most powerful servers available. The software needs to be designed so that its requirements can be met by multiple servers where adding additional hardware lessens the load on the overall system, and the software just uses the available processing as it’s added. The notion of multiple physical machines has been abstracted away and the underlying pool of resources all act together as a single logical unit. In Small Giants, it’s not that the businesses decided to stay small and stagnant, they each chose to scale horizontally.

This is a discussion that could be worthy of separate posts (or many separate posts) but for now I’ll just say I believe that scaling a business (in the traditional fashion – growth! growth! growth!) beyond a certain size while potentially extremely profitable can lead to all kinds of unwanted compromises:

• lowering the quality bar for hiring
• having your best people spend the bulk of their time managing junior folks or performers instead of doing what they do best
• needing to find ways to scale the appeal and/or production of the product in ways that compromises what made the product (and/or company environment) great in the first place
• the list goes on…

The book is filled with stories of businesses across a wide spectrum of industries discussing how they approached this challenge, with specifics on how they turned out. I particularly enjoyed the sections on Zingerman’s, Righteous Babe, and the stories about leadership succession at multiple companies.

I go into this venture with a set of beliefs. There’s no doubt in my mind that they’re not all correct, but I do think they comprise a reasonable system of values. And while I’m sure that these beliefs will be tested, refined, and corrected over time, it was nice to see so many of them echoed (almost word for word) in the pages of Small Giants. Some of my favorites:

• on emotional connection –
  “…Erickson and his employees first identified companies that had once had mojo and lost it and then tried to figure out how that had happened? The group concluded that, among other things, the companies ‘forgot about the emotional connection with the consumer…and concentrated on the process of business.’ They stopped being the type of business to which customers feel an intimate connection – the type they identify with and want to be associated with because they share the company’s values; or because they know they can always count on it to come through; or just because they think it’s cool.”
• on authenticity in brand –
  “For lack of a better term, we might refer to the process as building a sense of community – that is, a sense of common cause between the company, its employees, its customers, and suppliers. That sense of community rests on three pillars. The first is integrity – the knowledge that the company is what it appears to be. It does not project a false image to the world. The second pillar is professionalism – the company does what it says it’s going to do. It can be counted on to make good on its commitments. The third pillar is the one we’ve been discussing – the direct, human, connection, the effect of which is to create an emotional bond, based on mutual caring.”
• on the natural healthy size of a business –
  “UNBT had been founded on ‘the heretical notion that a company’s growth has organic, almost preordained limitations.’ and that, if you exceeded those limitations and grew too fast, you would undermine your ability to provide excellent customer service, create a great workplace for your employees, and maximize shareholder returns. ‘We could grow faster, but it would cost us everything. In the bureaucracy of growth you lose your distinctiveness.”

Back to horizontal scalability, I think this is the fundamental lesson of the book. It’s not that each of these businesses didn’t want to continue to grow. It’s just that they wanted to grow in a way that didn’t compromise the core of what they were about. And in their own way, each business discussed found their own path to horizontal scalability.

I realize we’re a ways off from having to worry about this problem. But it’s nice to know that when we find success, even in a world where most businesses are obsessed with raw growth, there are role models for how to succeed without sacrificing being great.