Harvard Business Online
From Small to Super
Small business is by far the leading job creator, and entrepreneurship the leading engine of American economic renewal. As unemployment swells, small business prowess is needed more than ever. But can a small company be a SuperCorp, like progressive larger companies such as IBM and Procter & Gamble?
Undoubtedly some smaller companies can leap tall hurdles in a single bound—or, in Google's case, leap from zero dollars to billions in less than ten years. Although flying that high is rare, small companies can gain power through strategic social responsibility, whether their products are chocolate chips or computer chips. Among my candidates for SuperCorp of the Future is a Boston residential real estate developer with 60 employees and big growth ambitions. The founder is firmly committed to end-to-end responsibility for his subcontractors' work, their vendors' quality, and his tenants' amenities. He values community service, green building technology, and workplace happiness. He thinks this is why his company remained profitable during the worst real estate crisis in decades.
This isn't idealism; it's Organization 2.0, a practical response to 21st century economic and social demands. Consider four ways any enterprise can create innovation, profits, growth, and social good in the same small package.
A SuperCorp acquires clout by uniting employees behind a sense of purpose. For Honest Tea, a 1998 startup that grew into a big bottled tea producer, purpose is embedded in the name as well as operating mode. An inspiring purpose helps attract, motivate, and retain the best talent, as studies of new generation knowledge workers show.
When purpose, values, and principles guide decisions, then people can be trusted with more autonomy and self-organizing. A common mind-set helps resolve controversies or react quickly in a crisis. P&G Middle East evacuated employees ahead of anyone else in the Lebanon-Israel War because everyone in P&G knew the right thing to do. Similarly, employees in service companies with clear values and principles are more likely to assist team-mates or go above-and-beyond for customers. Leaders of big retailers like Macy's or smaller grocery chains like Wegman's talk about values often with their front line workers. Small companies can more easily discuss purpose and principles as a weekly ritual with everyone in the same room.
A SuperCorp has deep connections with ultimate end users, understanding their needs and problems and feeling responsible for their success. Rather than remaining behind company walls, feeling that their way is the best way, a SuperCorp locates close to users and seeks new ideas by looking at the context that surrounds them. Omron, a Japanese multi-national, asks field sales reps to scout new ideas from customer visits. P&G's leaders regularly visit families in their homes. Digitas, an interactive marketing agency formed in 1999, from inceptions sought to know its clients' businesses better than they did, to better serve them through innovation.
Community contributions stimulate innovation by requiring mind-stretching to solve unresolved problems seen from the users' perspective. In IBM's pro bono work with U.S. public school, technology developers lived in school buildings (sometimes in retrofitted janitors' closets) in order to observe teachers and refine software on the spot. Instead of leftovers, schools got the best and latest technologies, created for them before commercial markets. Imagine that: give something away first, get credit for great contributions to a cause, and then gain a profitable business.
A SuperCorp gains reach and impact through extended family responsibility. A SuperCorp builds partnerships at every end of the supply chain, from their suppliers' suppliers to their customers' customers, in order to take the systemic responsibility that consumers and the public increasingly demand—why Starbucks buys fair trade coffee and Levi-Strauss and Nike raise labor standards at Asian factories.
Partners help with trend-spotting, giving advance information about new capabilities (at the supply end) or new preferences (at the market end). Cemex, the global cement company from Mexico, created a brand for smaller independent hardware stores and gave them computers, training, and community service opportunities. The stores gained business, Cemex better distribution and end user information. Partnership networks offer power to do more than one could do alone.
A SuperCorp wins customer/partners by talking about values before selling a deal. In Omron's industry (electronic sensors), about half of sales cold calls result in rejection, yet Omron salespeople nearly always get in the door on the first call because Omron talks first about its principles. It lands acquisitions, such as a coveted Silicon Valley company, by first holding long conversations about values. Similarly, Publicis Groupe enticed advertising agencies considered unattainable to join its global network because the CEO empathized with company owners and talked values, bonding socially before discussing business.
Embracing a societal cause is even better, because that demonstrates values in action. Non-profit boards or civic committees provide opportunities for relationships first, transactions later. An IBM senior international sales executive said that the company's community projects are its best customer conversation. Small companies can play here too, lending talent rather than dollars and impressing partners with their competence.
By thinking bigger than their size and stressing values, smaller companies can gain business superpowers to accomplish high-performance goals. For the sake of economic recovery, I hope they do this faster than a speeding locomotive.