Resisting the Temptation to Grow

Author Bo Burlingham says the success of a business shouldn't always be measured by size: Sometimes small is better

by Stacy Perman

Conventional business wisdom holds that size and growth equal success. However, author Bo Burlingham challenges that notion by chronicling 14 small, successful, privately-held companies in his book Small Giants: Companies that Choose to Be Great Instead of Big (Portfolio). The book looks at companies such as microbrewery Anchor Brewing, energy-bar maker Clif Bar, and folk singer Ani DiFranco's record company, Righteous Babe Records, and examines the success some small companies achieve by taking the road less traveled and focusing solely on being the best at what they do.

BusinessWeek staff writer Stacy Perman recently spoke with Burlingham about Small Giants (first published in 2005 and reissued this year in an updated version). Edited excerpts of their conversation follow:

When a small business is launched, isn't one of its primary goals to become bigger?

Actually, the first goal of most small businesses is just to survive. Once they achieve that goal, people usually have a picture in mind of what success is going to be. It may not be fully articulated, but it will be there. What happens is that once you reach a point in the process, you have to make choices. The problem is that many times we don't know that we have choices. We think what we're supposed to do with a business is to grow it as fast as possible and to get it as big as possible.

The point of my book is to say that you have a choice of what you want to accomplish. You can be great company without getting big as fast as possible.

Well then, does size matter?

In business, it's very easy to confuse big with better and size with greatness. But when you think about it, that isn't really true. Is Exxon (XOM) our greatest company? Is General Motors (GM) our greatest company? The point of my book is to get people to ask themselves: What does it mean to be great? Different people have different answers to that question, but everybody benefits from asking it.

The answer isn't necessarily that there's anything wrong with wanting to build a large public company. But do it with your eyes open. There are trade-offs. Whole Foods (WFMI) was a small giant in Austin, Tex., and [Chief Executive Officer] John Mackey decided to go public. It allowed him to do many things he couldn't have done if he stayed small, but he also lost some things. [Howard] Schultz [CEO] of Starbucks recently recognized that for all the great things that Starbucks does, it lost something in the process [of becoming a giant].

Great companies, particularly as defined in American business, tend to be big like IBM (IBM) or McDonald's (MCD), yet you define a great company as a small giant. Explain.

The people in my book focus on relationships with all of the people they come into contact with: employees, suppliers, their communities. They judge their success and greatness by the strength of those relationships.

One of the criteria I used to select all of the companies [I included] was that they had the opportunity to get much bigger, faster and chose not to. Second, these are companies that are considered by their peers to be the best at what they do. Third, I looked for companies that had been recognized by independent third parties for their contribution to the world and to society. And finally, [I chose] companies that had been around long enough to experience both the ups and downs of business.