Small Giants
Small Giants Overall Rating 8/10
Idea: You don’t have to be big to be great
Tagline: Companies that provide outstanding value in unique ways to customers and employees
Rereadability: 2/10 Useful to reread only if setting up a business and needing specific ways to engadge employees or ensure fantastic service
Useful ideas:
-Mistakes are inevitable, plan around the managing of the mistakes
-Cole- Often we are given choices A, B or C. Deciding there is actually a D or Z is up to us.
-Cole – If work is strenuous systems need to be revised to make it not strenuous.
-Life is unfair but merciful. Business is unmerciful but pretty fair.
-Importance of clear responsibilities and recognizing who or what did not do their function correctly that lead to an error
-Mistakes are inevitable, haphazard conduct is preventable.
-Entitlement leads to complacency and complacency leads to sloppy or no work done.
“The shareholders who owned the businesses I was looking at had other, nonfinancial priorities in addition to their financial objectives. “ --> Include non financial rewards in businesses – specify non business related key performance indicators
“People who choose to stay private and closely held and to place other goals ahead of growth get two things back in return: control and time. The combination equals freedom—or, more precisely, the opportunity for freedom”. --> Ideally this is true. I see that many people choose to run their businesses with too much Ego. They place too much importance upon themselves. Develop airtight systems that can handle all the problems. Ideally I should never have to be contacted once everything is set in place
“I’ve made much more money by choosing the right things to say no to than by choosing things to say yes to,” said restaurateur Danny Meyer of Union Square Hospitality Group, and he could have been speaking for others. “I measure it by the money I haven’t lost and the quality I haven’t sacrificed.” --> Saying no to specific things is important
“When you launch a business, your job as the entrepreneur is to say, ‘Here’s a value proposition that I believe in. Here’s where I’m coming from. This is my point of view.’ At first, it’s a monologue. Gradually it becomes a dialogue and then a real conversation. Like breaking in a baseball glove. You can’t will a baseball glove to be broken in; you have to use it. Well, you have to use a new business, too. You have to break it in. If you move on to the next thing too quickly, it will never develop its soul. Look what happens when a new restaurant opens. Everyone rushes in to see it, and it’s invariably awkward because it hasn’t yet developed soul. That takes time to emerge, and you have to work at it constantly.”
“First, I could see that, unlike most entrepreneurs, their founders and leaders had recognized the full range of choices they had about the type of company they could create. They hadn’t accepted the standard menu of options as a given. They had allowed themselves to question the usual definitions of success in business and to imagine possibilities other than the ones all of us are familiar with. Second, the leaders had overcome the enormous pressures on successful companies to take paths they had not chosen and did not necessarily want to follow. The people in charge had remained in control, or had regained control, by doing a lot of soul searching, rejecting a lot of well-intentioned advice, charting their own course, and building the kind of business they wanted to live in, rather than accommodating themselves to a business shaped by outside forces. Third, each company had an extraordinarily intimate relationship with the local city, town, or county in which it did business—a relationship that went well beyond the usual concept of “giving back.” That was part of it, to be sure, and all of these companies were model corporate citizens, but the relationship was very much a two-way street. The community helped mold the character of the business, just as the companies played an important role in the life of the community. Fourth, they cultivated exceptionally intimate relationships with customers and suppliers, based on personal contact, one-on-one interaction, and mutual commitment to delivering on promises. The leaders themselves took the lead in this regard. They were highly accessible and absolutely committed to retaining the human dimension of the relationships. Customers responded by sending fan mail. Suppliers responded by providing extraordinary service of their own. The effect was to create a sense of community and common purpose between the companies, their suppliers, and their customers—the kind of intimacy that is difficult for large companies to achieve, if only because of their size. Fifth, the companies also had what struck me as unusually intimate workplaces. They were, in effect, functional little societies that strove to address a broad range of their employees’ needs as human beings—creative, emotional, spiritual, and social needs as well as economic ones. Herb Kelleher of Southwest Airlines once observed that his company’s famously vibrant culture was built around the principle of “caring for people in the totality of their lives.” That’s what the companies I was looking at were doing. They were places where employees felt cared for in the totality of their lives, where they were treated in the way that the founders and leaders thought people ought to be treated—with respect, dignity, integrity, fairness, kindness, and generosity. In that sense, the companies seemed to represent the ultimate expression of a business as a social institution. Sixth, I was impressed by the variety of corporate structures and modes of governance… Some highlights have been hidden or truncated due to export limits.” Companies as functional little societies. Often we are given choices A, B or C. Deciding there is actually a D or Z is up to us.
“Then we’ll move on to the characteristics small giants share, three of which involve creating a level of intimacy—with the community, with customers and suppliers, and with employees—that is difficult, if not impossible, to achieve when a business grows too fast or gets too big. We’ll also look at some of the corporate structures and practices that small giants use to achieve their goals."
“It was called the Zingerman’s Community of Businesses, or ZCoB, for short. Weinzweig and Saginaw envisioned a company comprised of twelve to fifteen separate businesses by 2009. The new businesses would be small and located in the Ann Arbor area. Each would bear the Zingerman’s name but would have its own specialty and identity, and all would be designed to enhance the quality of food and service offered to Zingerman’s customers while improving the financial performance of ZCoB and its components. There was already a bakery, Zingerman’s Bakehouse, as well as the deli. There could also be a training company, a mail order business, a caterer, a creamery, a restaurant or two, a vegetable stand—you name it. “
“Inevitably, people began approaching him about doing another restaurant. Some of the offers were tempting, but he was nervous about overreaching. So he came up with three tough standards that any new place would have to meet. First, it would have to be capable of becoming as extraordinary a restaurant as Union Square Cafe. Second, it would have to enhance the value of Union Square Cafe. Third, it would have to bring more balance to his life, not less. “ --> Good Criteria for choice – Personal Action point Develop criteria within which to make specific choices.
"Instead, he expressed his point of view in four other places he opened in the Union Square area from 1998 to 2004. Each had a unique theme and identity. Eleven Madison Park was “a grand restaurant,” noted for its spacious art deco dining room and gold-leafed wine bar. Tabla offered a fusion of American and Indian food. Blue Smoke/Jazz Standard served barbecue hearkening back to Meyer’s St. Louis roots. The Shake Shack was a classic burger and frozen custard stand in the center of Madison Square Park. Viewed together, they did indeed seem like the novels of a gifted author. Each had a distinctive plot line and set of characters, defined by the menu, the location, the ambience of the dining room, the wait staff’s attire, and the smells and tastes of the food. And yet all the restaurants had a common style as well, characterized by a level of customer service so natural, so warm, and so apparently effortless that patrons didn’t experience it as service at all, but rather as the kind of hospitality they might receive if they were guests in the home of a person whom they perhaps didn’t know very well but who clearly felt honored by their presence. Meyer called it “enlightened hospitality,” and it was the foundation of his company. --> The idea that every Restaurant has a distinctive plot line and set of characters.
“I was always worried, Am I missing an opportunity here? Am I leaving money on the table? How do you turn that off? How do you keep the success bug from turning into the success disease? And it was harder because of the biz kid thing. I’m twenty-something and I get written up in Forbes. I turn forty and I’m not so hot anymore. I hear about a guy worth $40 billion, and I think, How can that be? How much smarter is he than me?” --> Constant comparison with people who are better helps us to achieve more and reach higher goals but also makes us unhappy
“As with most addicts, Goltz had to hit rock bottom before he could summon the will to change. “ --> Change comes from Desperation
“There was another important component to the change Goltz went through. Like many entrepreneurs who feel driven to grow their companies, he suffered from a major disability, namely, his own blindness to what he had accomplished. He was haunted by a sense of inadequacy, of not measuring up. He would compare himself with the most famous entrepreneurs in the world and wonder what they had that he lacked. He was so focused on his shortcomings that he couldn’t see—or give himself credit for—the real contributions he had made to his community and the positive impact he had had on the lives of people around him. It was as though all that counted for nothing if he hadn’t achieved what the world considered the pinnacle of success as measured by the size of his company or his personal fortune. “
“He remembered a story he’d once heard about a girl throwing starfish into the ocean. “An old man comes along and says to her, ‘Don’t bother. There’s millions of them out here. You can’t save them. What you’re doing won’t make a difference.’ She looks at the starfish in her hand and says, ‘It makes a difference to this one.’ And she throws it into the ocean. Lily was one of my starfish.” --->Beautiful story and nice story to tell someone when they comment that you aren’t making a significant difference.
"Business is business, and mistakes happen no matter how great a company you have, as Danny Meyer was well aware. “If someone finds a small screw in their risotto, they’re going to tell everybody they know,” he once observed to Gourmet magazine. “I can’t change that. But what I can do is make sure that when they tell the story they go on to say, ‘But do you know how the restaurant handled that?’ --> Mistakes are inevitable, plan around the managing of the mistakes
“And that’s the whole point. Remember the exercise I mentioned in the introduction, wherein 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 perceive it to be authentic, true to itself, the real McCoy; “
“They argued that, to be really successful, a company had to focus on providing one of three types of value to its customers: the best price, the best product, or the best overall solution. Each type of value called for a completely different kind of organization, culture, and mind-set, so you would inevitably get in trouble if you tried to excel at more than one. To have the best price, for example, you needed to focus on being “operationally effective,” doing one thing extremely well, day in and day out, thereby keeping your own costs as low as possible. Having the best products called for a whole different focus—on innovation, rather than efficiency—which meant staying several steps ahead of customers, coming up with a product they would need before they knew they needed it, and being driven more by the possibilities of technology than by the current demands of the market. Then again, if you wanted to provide the best overall solution, you took yet another course, becoming “customer intimate,” that is, developing products flexible enough to serve a wide variety of customer needs and working closely and collaboratively with customers to give them what they wanted. “
“Like 140 or so of her fellow employees, Michelle was an owner of ECCO. She was a member of the employee stock ownership plan (ESOP) that controlled 58 percent of the company’s stock. When I met her, her stake was worth $12,000. More important, she felt like an owner and believed she was treated like one. She had a lot of direct contact with the CEO, Ed Zimmer. Among other things, he held a regular monthly lunch with all the people who had a birthday that month, and they talked about themselves and the company and whatever else they wanted to discuss. There was also a companywide meeting each month to go over the financials, as well as a steady flow of financial information between meetings. “Things aren’t secret here,” Michelle said. “Everything is shared, which makes me feel safe. I know we’re not going to get bought out, and I’m not going to lose my job. I hope we never get bought out. I don’t want to work for a big corporation. I like ECCO the way it is. I know that if anything terrible happened, ECCO would do whatever it had to do to take care of me and whoever else needed it.” Equity as a way to keep people engadged in the work they are doing.”
“I’ve always thought it was more fun and satisfying to have all chiefs and no Indians,” he once said in an interview with Harvard Business Review (HBR). “That was one of my ideas—to have a small group of people, where everyone knows they’re all interrelated and where, as far as possible, everybody is in charge and nobody is looking over anyone’s shoulder and there are no time clocks.”
“To begin with, you need to get the basics right. That starts with making sure you have the right people on the bus, as Jim Collins put it in Good to Great, referring to the primacy of hiring decisions. “ --> Having the Right mix of people is essential
“I have never encountered angrier and more cynical employees than those I’ve met in socially responsible companies that have been so focused on saving the world they neglected to do what was necessary to save themselves. Some of them were famous for their mojo early on, but they lost it, in part because they didn’t take care of the basics. “ --> Nowhere and company action point : set up systems that make the work very easy and not strenuous. If the work is strenuous you haven’t built the system correctly to accommodate things. After strenuous work where there were many people working hard ask yourself. How do we set up a system so that this is easy in the future?
“ ZingTrain began by distilling various practices into easily understandable and teachable concepts and principles. “We already had the 3 Steps to Great Service,” said Weinzweig. “We just kept building from there.” One by one, additional rules and tools were developed: the 5 Steps to Handling Customer Complaints, the 4 Steps to Order Accuracy, the 3 Steps to Great Finance, the 4 Steps to Productive Resolution of Differences, the 5 Steps to Bottom-Line Change, and on and on.” Stremlining simple systems. –> Decide on using simple systems training at nowhere.
“As Jay Goltz pointed out, no business is really like a family, nor can it be. “A family is unconditional love,” he said. “Business is conditional love.” Companies with a family feeling wouldn’t have it if the employees weren’t good enough at what they do to have earned the trust and confidence of their peers.” -->Business =/ Family -- Family = Unconditional Love – Business = Conditional Love
“every new business represents an attempt by its founder, or founders, to reorder the world in some way. “
“The first challenge is to figure out whether or not his, or her, idea can become a viable business—that is, capable of sustaining itself on its own internally generated cash flow. “
That quest can go on for a long time, even years, provided you don’t run out of capital prematurely—in which case the issue of viability becomes moot. If people haven’t already thought about how they want their business to look, act, and feel ten years in the future (as they probably should have), they’re unlikely to spend much time thinking about it while they’re struggling for survival. Should they be fortunate enough to get beyond survival, one of two things usually happens. Either they’re so overwhelmed with problems and opportunities that they don’t get around to thinking about the bigger picture, or they become so focused on strategy and tactics that they neglect to ask basic questions about the kind of culture and organization they want."
“Creating and nurturing a work environment that frees coworkers to grow and reach their full potential is the primary purpose of the company,”
“You know, life is unfair but merciful. You can do everything right and get a brain tumor. Business is unmerciful but usually pretty fair.
The more I looked, the more sayings I saw. “You can spill some milk if you don’t kill the cow.” “Values don’t break. They crumble.” “Our biggest competition is mediocrity.” “That’s me,” Goltz said. “I hate mediocrity. Mediocrity is my enemy.” He picked up a completed frame and pointed to a blue screw on the back. “Everyone has their own color. It creates pride of ownership. When the wire on a frame falls off and it comes back, we know who did it. The quality improved significantly when we started doing it.” --> The importance of clear responsibilities
One of my biggest responsibilities is letting people off the hook in situations like that. I told both of them, ‘Don’t worry. I could have done it myself.’ That has a big impact. There were a lot of other employees standing there. They see how you behave. You could be doing bonus plans, holding rallies, having parties to build morale. Then you scream at someone and throw it all away. Did I scream when I was younger? Yes. I didn’t understand the role of the boss. I had to learn the difference between a mistake, which I can live with, and haphazard conduct. Backing into a pole is a mistake. A crooked label is a sign of carelessness.” --> Mistakes are inevitable, haphazard conduct is preventable.
“We concluded that to be successful over the long term, the company has to have and maintain: (1) steady gross margins that it protects; (2) a healthy balance sheet, as reflected in the current, cash-to-debt, and debt-to-equity ratios, among other measures; and (3) a sound business model governing how the company delivers value to customers and earns a profit in the process. “
“Wahlstedt conceded that before the change in leadership, the board had grown concerned about a creeping sense of entitlement among the coworkers and its negative effect on productivity. Reell had put too much emphasis on the quality of life inside the company, he said, and not enough on developing products, finding new markets, and paying attention to the financial needs of the business. He referred to the latter as “stewardship.” “We were laissez-faire about stewardship,” he said. “Whether or not we’d changed leadership, we would have lost both the value and the financial stability of the business if we didn’t get more intentional about stewardship.” --> Entitlement leads to complacency and complacency leads to sloppy or no work done.
“Training was obviously a critical component of trust-and-track, and Sarillo’s training program was elaborate, rigorous, and ongoing. The first level was called 101 and began with a two-day orientation, followed by a four-hour stint in the kitchen, where everybody went through a basic pizza-making course. The new hires then separated into work groups and moved on to 201, in which they were trained and certified in specific jobs. A pizza maker, for example, would take two to five weeks to reach the level of proficiency required for certification, after which she could make pizzas on her own. When she was certified in two other jobs—say, salads and sandwiches—her wage went from $8.00 to $8.25 per hour. After certification in six positions, it increased to $9.50 an hour, and she received a red hat. (Until then, she’d been wearing a tan hat.) Certification in nine positions earned her a black hat and a raise to $11.00 an hour. “ --> Beautiful training structures with price in centives and clear peer recognition and feedback.
“Schmitt’s belief in the virtues of limiting growth and staying relatively small dated back to his tenure as California superintendent of banks in the 1970s. There he had noticed that smaller banks consistently delivered a higher return on assets than the larger banks did. “It stood out like a sore thumb,” he said. The explanation, he suspected, was that—by keeping their overhead low and focusing on a specific market—the small banks were able to operate more efficiently. When they began chasing after growth, they lost their focus, and their efficiency and profitability declined. But a bank with the discipline to maintain its focus, he reasoned, could go on delivering superior returns indefinitely. “
“The passion that Maytag felt for his craft of brewing isn’t much different from the passion that Selima Stavola felt for her art of clothing design. “I tell you, I wake up in the morning, and it’s the best hour for me—because I’m so excited about going to work,” she said. “When I lived in New York, I would set the alarm for 3:30 A.M. and catch the 5:04 A.M. train. I would get up, and I’d be wide awake and full of joy because I was going to work. I hear other people saying, ‘I can’t wait for my vacation.’ To me, it’s a lost day out of your life when you feel that way. It’s such a waste to be unhappy when you can wake up in the morning anticipating the day. Your work should be something you enjoy. My client has to be someone I enjoy. It all comes down to, are you happy with yourself when you tackle a new day?” --> I’m excited to wake up and do this thing. What more can we ask for in life?
“Paul Spiegelman, the cofounder and then-CEO of BerylHealth, a leading provider of outsourced patient communication services to hospitals.” --> What a breath of different businesses there are out there in the world. I would have never thought there would be a place for services like this. Seeing these examples fills me with hope that there are interesting businesses that I can start up maybe that I don’t even perceive the possibility for at the moment.
“The wringer—or at least one of them—was the annual budget process. Each of the Berwind companies was required to deliver to headquarters in Philadelphia a package laying out its proposed budget for the coming year along with all the necessary supporting documents. “That process had us looking at things we didn’t look at before. Pre-acquisition, we were always in this growth mode. All of our focus was on growing revenue. Denis was trying to get us to change our thinking to ‘Let’s make money.’ That required us to make some cultural shifts, which was a bit painful.” --> The importance of financials
“I’d always thought that success was about retention rates,” he said, “but it’s not. It’s about bringing the right people in and exiting the wrong people at the right time. In 2014 and 2015, a lot of these senior people left the company and were replaced by others we added with culture in the forefront of our minds.” Meyer blamed himself for creating the problem. “I built the company like you raise a family, and in a family nobody ever leaves. I put too high a premium on making sure that nobody left. That was great to a point. Loyalty between a company and its senior leaders is a really wonderful virtue. But businesses are not families. Successful businesses blur the line between going to work and coming home, but it’s still going to work. Sometimes if you don’t say good-bye to certain people, it is really hard to walk the talk. That has been the hardest thing I’ve had to deal with over the last couple of years.” --> Some people need to be let go
“ www.smallgiants.org - founded in 2008 by Paul Spiegelman, then the CEO of BerylHealth, with my support. He loved the small giants concept, which fit his company to a T, and he wanted to create a venue where aspiring small giants could learn from each other about how to improve and strengthen their businesses. That’s exactly what members of the Small Giants Community do—in local groups and online webinars, at an annual summit, and during visits to great companies, including some of those I’ve written about here “
“Think of it as a small company hall of fame into which we induct new members every year. (If you know a company that you believe is a small giant, please feel free to contact me at [email protected], and keep an eye on my blog at Forbes.com for announcements.) “
“I would particularly recommend The Great Game of Business (www.greatgame.com), Great Place to Work Institute (www.greatplacetowork.com), Tugboat Institute (www.tugboatinstitute.com), and National Center for Employee Ownership (www.nceo.org), not to mention the excellent programs offered by small giants themselves, including ZingTrain, a member of Zingerman’s Community of Businesses (www.zingtrain.com); Hospitality Quotient, affiliated with Union Square Hospitality Group (www.hospitalityq.com); and Nick’s University, the teaching arm of Nick’s Pizza & Pub (www.nicksarillo.com/nicks-university-leadership-training). They all provide aspiring small giants with great resources, most of which weren’t available back in 2006. “
“Gary Erickson’s book, Raising the Bar: Integrity and Passion in Life and Business: The Story of Clif Bar & Co. “
“Danny Meyer has written two renowned cookbooks featuring recipes from Union Square Cafe, but even more highly acclaimed is his business book, Setting the Table: The Transforming Power of Hospitality in Business. It is a wonderful piece of writing, as insightful as the man himself, and a must-read if you want to know what it really means to be a small giant. In addition, I’d recommend Bruce Feiler’s excellent article on Union Square Cafe, “The Therapist at the Table,” which appeared in the October 2002 issue of Gourmet. “
“Financial Intelligence: A Manager’s Guide to Knowing What the Numbers Really Mean by the late Karen Berman and Joe Knight, with John Case.”
Further book recommendations are at the end of the book.
Idea: You don’t have to be big to be great
Tagline: Companies that provide outstanding value in unique ways to customers and employees
Rereadability: 2/10 Useful to reread only if setting up a business and needing specific ways to engadge employees or ensure fantastic service
Useful ideas:
-Mistakes are inevitable, plan around the managing of the mistakes
-Cole- Often we are given choices A, B or C. Deciding there is actually a D or Z is up to us.
-Cole – If work is strenuous systems need to be revised to make it not strenuous.
-Life is unfair but merciful. Business is unmerciful but pretty fair.
-Importance of clear responsibilities and recognizing who or what did not do their function correctly that lead to an error
-Mistakes are inevitable, haphazard conduct is preventable.
-Entitlement leads to complacency and complacency leads to sloppy or no work done.
“The shareholders who owned the businesses I was looking at had other, nonfinancial priorities in addition to their financial objectives. “ --> Include non financial rewards in businesses – specify non business related key performance indicators
“People who choose to stay private and closely held and to place other goals ahead of growth get two things back in return: control and time. The combination equals freedom—or, more precisely, the opportunity for freedom”. --> Ideally this is true. I see that many people choose to run their businesses with too much Ego. They place too much importance upon themselves. Develop airtight systems that can handle all the problems. Ideally I should never have to be contacted once everything is set in place
“I’ve made much more money by choosing the right things to say no to than by choosing things to say yes to,” said restaurateur Danny Meyer of Union Square Hospitality Group, and he could have been speaking for others. “I measure it by the money I haven’t lost and the quality I haven’t sacrificed.” --> Saying no to specific things is important
“When you launch a business, your job as the entrepreneur is to say, ‘Here’s a value proposition that I believe in. Here’s where I’m coming from. This is my point of view.’ At first, it’s a monologue. Gradually it becomes a dialogue and then a real conversation. Like breaking in a baseball glove. You can’t will a baseball glove to be broken in; you have to use it. Well, you have to use a new business, too. You have to break it in. If you move on to the next thing too quickly, it will never develop its soul. Look what happens when a new restaurant opens. Everyone rushes in to see it, and it’s invariably awkward because it hasn’t yet developed soul. That takes time to emerge, and you have to work at it constantly.”
“First, I could see that, unlike most entrepreneurs, their founders and leaders had recognized the full range of choices they had about the type of company they could create. They hadn’t accepted the standard menu of options as a given. They had allowed themselves to question the usual definitions of success in business and to imagine possibilities other than the ones all of us are familiar with. Second, the leaders had overcome the enormous pressures on successful companies to take paths they had not chosen and did not necessarily want to follow. The people in charge had remained in control, or had regained control, by doing a lot of soul searching, rejecting a lot of well-intentioned advice, charting their own course, and building the kind of business they wanted to live in, rather than accommodating themselves to a business shaped by outside forces. Third, each company had an extraordinarily intimate relationship with the local city, town, or county in which it did business—a relationship that went well beyond the usual concept of “giving back.” That was part of it, to be sure, and all of these companies were model corporate citizens, but the relationship was very much a two-way street. The community helped mold the character of the business, just as the companies played an important role in the life of the community. Fourth, they cultivated exceptionally intimate relationships with customers and suppliers, based on personal contact, one-on-one interaction, and mutual commitment to delivering on promises. The leaders themselves took the lead in this regard. They were highly accessible and absolutely committed to retaining the human dimension of the relationships. Customers responded by sending fan mail. Suppliers responded by providing extraordinary service of their own. The effect was to create a sense of community and common purpose between the companies, their suppliers, and their customers—the kind of intimacy that is difficult for large companies to achieve, if only because of their size. Fifth, the companies also had what struck me as unusually intimate workplaces. They were, in effect, functional little societies that strove to address a broad range of their employees’ needs as human beings—creative, emotional, spiritual, and social needs as well as economic ones. Herb Kelleher of Southwest Airlines once observed that his company’s famously vibrant culture was built around the principle of “caring for people in the totality of their lives.” That’s what the companies I was looking at were doing. They were places where employees felt cared for in the totality of their lives, where they were treated in the way that the founders and leaders thought people ought to be treated—with respect, dignity, integrity, fairness, kindness, and generosity. In that sense, the companies seemed to represent the ultimate expression of a business as a social institution. Sixth, I was impressed by the variety of corporate structures and modes of governance… Some highlights have been hidden or truncated due to export limits.” Companies as functional little societies. Often we are given choices A, B or C. Deciding there is actually a D or Z is up to us.
“Then we’ll move on to the characteristics small giants share, three of which involve creating a level of intimacy—with the community, with customers and suppliers, and with employees—that is difficult, if not impossible, to achieve when a business grows too fast or gets too big. We’ll also look at some of the corporate structures and practices that small giants use to achieve their goals."
“It was called the Zingerman’s Community of Businesses, or ZCoB, for short. Weinzweig and Saginaw envisioned a company comprised of twelve to fifteen separate businesses by 2009. The new businesses would be small and located in the Ann Arbor area. Each would bear the Zingerman’s name but would have its own specialty and identity, and all would be designed to enhance the quality of food and service offered to Zingerman’s customers while improving the financial performance of ZCoB and its components. There was already a bakery, Zingerman’s Bakehouse, as well as the deli. There could also be a training company, a mail order business, a caterer, a creamery, a restaurant or two, a vegetable stand—you name it. “
“Inevitably, people began approaching him about doing another restaurant. Some of the offers were tempting, but he was nervous about overreaching. So he came up with three tough standards that any new place would have to meet. First, it would have to be capable of becoming as extraordinary a restaurant as Union Square Cafe. Second, it would have to enhance the value of Union Square Cafe. Third, it would have to bring more balance to his life, not less. “ --> Good Criteria for choice – Personal Action point Develop criteria within which to make specific choices.
"Instead, he expressed his point of view in four other places he opened in the Union Square area from 1998 to 2004. Each had a unique theme and identity. Eleven Madison Park was “a grand restaurant,” noted for its spacious art deco dining room and gold-leafed wine bar. Tabla offered a fusion of American and Indian food. Blue Smoke/Jazz Standard served barbecue hearkening back to Meyer’s St. Louis roots. The Shake Shack was a classic burger and frozen custard stand in the center of Madison Square Park. Viewed together, they did indeed seem like the novels of a gifted author. Each had a distinctive plot line and set of characters, defined by the menu, the location, the ambience of the dining room, the wait staff’s attire, and the smells and tastes of the food. And yet all the restaurants had a common style as well, characterized by a level of customer service so natural, so warm, and so apparently effortless that patrons didn’t experience it as service at all, but rather as the kind of hospitality they might receive if they were guests in the home of a person whom they perhaps didn’t know very well but who clearly felt honored by their presence. Meyer called it “enlightened hospitality,” and it was the foundation of his company. --> The idea that every Restaurant has a distinctive plot line and set of characters.
“I was always worried, Am I missing an opportunity here? Am I leaving money on the table? How do you turn that off? How do you keep the success bug from turning into the success disease? And it was harder because of the biz kid thing. I’m twenty-something and I get written up in Forbes. I turn forty and I’m not so hot anymore. I hear about a guy worth $40 billion, and I think, How can that be? How much smarter is he than me?” --> Constant comparison with people who are better helps us to achieve more and reach higher goals but also makes us unhappy
“As with most addicts, Goltz had to hit rock bottom before he could summon the will to change. “ --> Change comes from Desperation
“There was another important component to the change Goltz went through. Like many entrepreneurs who feel driven to grow their companies, he suffered from a major disability, namely, his own blindness to what he had accomplished. He was haunted by a sense of inadequacy, of not measuring up. He would compare himself with the most famous entrepreneurs in the world and wonder what they had that he lacked. He was so focused on his shortcomings that he couldn’t see—or give himself credit for—the real contributions he had made to his community and the positive impact he had had on the lives of people around him. It was as though all that counted for nothing if he hadn’t achieved what the world considered the pinnacle of success as measured by the size of his company or his personal fortune. “
“He remembered a story he’d once heard about a girl throwing starfish into the ocean. “An old man comes along and says to her, ‘Don’t bother. There’s millions of them out here. You can’t save them. What you’re doing won’t make a difference.’ She looks at the starfish in her hand and says, ‘It makes a difference to this one.’ And she throws it into the ocean. Lily was one of my starfish.” --->Beautiful story and nice story to tell someone when they comment that you aren’t making a significant difference.
"Business is business, and mistakes happen no matter how great a company you have, as Danny Meyer was well aware. “If someone finds a small screw in their risotto, they’re going to tell everybody they know,” he once observed to Gourmet magazine. “I can’t change that. But what I can do is make sure that when they tell the story they go on to say, ‘But do you know how the restaurant handled that?’ --> Mistakes are inevitable, plan around the managing of the mistakes
“And that’s the whole point. Remember the exercise I mentioned in the introduction, wherein 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 perceive it to be authentic, true to itself, the real McCoy; “
“They argued that, to be really successful, a company had to focus on providing one of three types of value to its customers: the best price, the best product, or the best overall solution. Each type of value called for a completely different kind of organization, culture, and mind-set, so you would inevitably get in trouble if you tried to excel at more than one. To have the best price, for example, you needed to focus on being “operationally effective,” doing one thing extremely well, day in and day out, thereby keeping your own costs as low as possible. Having the best products called for a whole different focus—on innovation, rather than efficiency—which meant staying several steps ahead of customers, coming up with a product they would need before they knew they needed it, and being driven more by the possibilities of technology than by the current demands of the market. Then again, if you wanted to provide the best overall solution, you took yet another course, becoming “customer intimate,” that is, developing products flexible enough to serve a wide variety of customer needs and working closely and collaboratively with customers to give them what they wanted. “
“Like 140 or so of her fellow employees, Michelle was an owner of ECCO. She was a member of the employee stock ownership plan (ESOP) that controlled 58 percent of the company’s stock. When I met her, her stake was worth $12,000. More important, she felt like an owner and believed she was treated like one. She had a lot of direct contact with the CEO, Ed Zimmer. Among other things, he held a regular monthly lunch with all the people who had a birthday that month, and they talked about themselves and the company and whatever else they wanted to discuss. There was also a companywide meeting each month to go over the financials, as well as a steady flow of financial information between meetings. “Things aren’t secret here,” Michelle said. “Everything is shared, which makes me feel safe. I know we’re not going to get bought out, and I’m not going to lose my job. I hope we never get bought out. I don’t want to work for a big corporation. I like ECCO the way it is. I know that if anything terrible happened, ECCO would do whatever it had to do to take care of me and whoever else needed it.” Equity as a way to keep people engadged in the work they are doing.”
“I’ve always thought it was more fun and satisfying to have all chiefs and no Indians,” he once said in an interview with Harvard Business Review (HBR). “That was one of my ideas—to have a small group of people, where everyone knows they’re all interrelated and where, as far as possible, everybody is in charge and nobody is looking over anyone’s shoulder and there are no time clocks.”
- For Nowhere next year everyone needs to be a lead in something. This will also include a Rota lead and Co Lead to organize the Rota.
- Specific applications of this principle are important and re-inforcing the idea that there are no followers only different leaders.
“To begin with, you need to get the basics right. That starts with making sure you have the right people on the bus, as Jim Collins put it in Good to Great, referring to the primacy of hiring decisions. “ --> Having the Right mix of people is essential
“I have never encountered angrier and more cynical employees than those I’ve met in socially responsible companies that have been so focused on saving the world they neglected to do what was necessary to save themselves. Some of them were famous for their mojo early on, but they lost it, in part because they didn’t take care of the basics. “ --> Nowhere and company action point : set up systems that make the work very easy and not strenuous. If the work is strenuous you haven’t built the system correctly to accommodate things. After strenuous work where there were many people working hard ask yourself. How do we set up a system so that this is easy in the future?
“ ZingTrain began by distilling various practices into easily understandable and teachable concepts and principles. “We already had the 3 Steps to Great Service,” said Weinzweig. “We just kept building from there.” One by one, additional rules and tools were developed: the 5 Steps to Handling Customer Complaints, the 4 Steps to Order Accuracy, the 3 Steps to Great Finance, the 4 Steps to Productive Resolution of Differences, the 5 Steps to Bottom-Line Change, and on and on.” Stremlining simple systems. –> Decide on using simple systems training at nowhere.
“As Jay Goltz pointed out, no business is really like a family, nor can it be. “A family is unconditional love,” he said. “Business is conditional love.” Companies with a family feeling wouldn’t have it if the employees weren’t good enough at what they do to have earned the trust and confidence of their peers.” -->Business =/ Family -- Family = Unconditional Love – Business = Conditional Love
“every new business represents an attempt by its founder, or founders, to reorder the world in some way. “
“The first challenge is to figure out whether or not his, or her, idea can become a viable business—that is, capable of sustaining itself on its own internally generated cash flow. “
That quest can go on for a long time, even years, provided you don’t run out of capital prematurely—in which case the issue of viability becomes moot. If people haven’t already thought about how they want their business to look, act, and feel ten years in the future (as they probably should have), they’re unlikely to spend much time thinking about it while they’re struggling for survival. Should they be fortunate enough to get beyond survival, one of two things usually happens. Either they’re so overwhelmed with problems and opportunities that they don’t get around to thinking about the bigger picture, or they become so focused on strategy and tactics that they neglect to ask basic questions about the kind of culture and organization they want."
“Creating and nurturing a work environment that frees coworkers to grow and reach their full potential is the primary purpose of the company,”
“You know, life is unfair but merciful. You can do everything right and get a brain tumor. Business is unmerciful but usually pretty fair.
The more I looked, the more sayings I saw. “You can spill some milk if you don’t kill the cow.” “Values don’t break. They crumble.” “Our biggest competition is mediocrity.” “That’s me,” Goltz said. “I hate mediocrity. Mediocrity is my enemy.” He picked up a completed frame and pointed to a blue screw on the back. “Everyone has their own color. It creates pride of ownership. When the wire on a frame falls off and it comes back, we know who did it. The quality improved significantly when we started doing it.” --> The importance of clear responsibilities
One of my biggest responsibilities is letting people off the hook in situations like that. I told both of them, ‘Don’t worry. I could have done it myself.’ That has a big impact. There were a lot of other employees standing there. They see how you behave. You could be doing bonus plans, holding rallies, having parties to build morale. Then you scream at someone and throw it all away. Did I scream when I was younger? Yes. I didn’t understand the role of the boss. I had to learn the difference between a mistake, which I can live with, and haphazard conduct. Backing into a pole is a mistake. A crooked label is a sign of carelessness.” --> Mistakes are inevitable, haphazard conduct is preventable.
“We concluded that to be successful over the long term, the company has to have and maintain: (1) steady gross margins that it protects; (2) a healthy balance sheet, as reflected in the current, cash-to-debt, and debt-to-equity ratios, among other measures; and (3) a sound business model governing how the company delivers value to customers and earns a profit in the process. “
“Wahlstedt conceded that before the change in leadership, the board had grown concerned about a creeping sense of entitlement among the coworkers and its negative effect on productivity. Reell had put too much emphasis on the quality of life inside the company, he said, and not enough on developing products, finding new markets, and paying attention to the financial needs of the business. He referred to the latter as “stewardship.” “We were laissez-faire about stewardship,” he said. “Whether or not we’d changed leadership, we would have lost both the value and the financial stability of the business if we didn’t get more intentional about stewardship.” --> Entitlement leads to complacency and complacency leads to sloppy or no work done.
“Training was obviously a critical component of trust-and-track, and Sarillo’s training program was elaborate, rigorous, and ongoing. The first level was called 101 and began with a two-day orientation, followed by a four-hour stint in the kitchen, where everybody went through a basic pizza-making course. The new hires then separated into work groups and moved on to 201, in which they were trained and certified in specific jobs. A pizza maker, for example, would take two to five weeks to reach the level of proficiency required for certification, after which she could make pizzas on her own. When she was certified in two other jobs—say, salads and sandwiches—her wage went from $8.00 to $8.25 per hour. After certification in six positions, it increased to $9.50 an hour, and she received a red hat. (Until then, she’d been wearing a tan hat.) Certification in nine positions earned her a black hat and a raise to $11.00 an hour. “ --> Beautiful training structures with price in centives and clear peer recognition and feedback.
“Schmitt’s belief in the virtues of limiting growth and staying relatively small dated back to his tenure as California superintendent of banks in the 1970s. There he had noticed that smaller banks consistently delivered a higher return on assets than the larger banks did. “It stood out like a sore thumb,” he said. The explanation, he suspected, was that—by keeping their overhead low and focusing on a specific market—the small banks were able to operate more efficiently. When they began chasing after growth, they lost their focus, and their efficiency and profitability declined. But a bank with the discipline to maintain its focus, he reasoned, could go on delivering superior returns indefinitely. “
“The passion that Maytag felt for his craft of brewing isn’t much different from the passion that Selima Stavola felt for her art of clothing design. “I tell you, I wake up in the morning, and it’s the best hour for me—because I’m so excited about going to work,” she said. “When I lived in New York, I would set the alarm for 3:30 A.M. and catch the 5:04 A.M. train. I would get up, and I’d be wide awake and full of joy because I was going to work. I hear other people saying, ‘I can’t wait for my vacation.’ To me, it’s a lost day out of your life when you feel that way. It’s such a waste to be unhappy when you can wake up in the morning anticipating the day. Your work should be something you enjoy. My client has to be someone I enjoy. It all comes down to, are you happy with yourself when you tackle a new day?” --> I’m excited to wake up and do this thing. What more can we ask for in life?
“Paul Spiegelman, the cofounder and then-CEO of BerylHealth, a leading provider of outsourced patient communication services to hospitals.” --> What a breath of different businesses there are out there in the world. I would have never thought there would be a place for services like this. Seeing these examples fills me with hope that there are interesting businesses that I can start up maybe that I don’t even perceive the possibility for at the moment.
“The wringer—or at least one of them—was the annual budget process. Each of the Berwind companies was required to deliver to headquarters in Philadelphia a package laying out its proposed budget for the coming year along with all the necessary supporting documents. “That process had us looking at things we didn’t look at before. Pre-acquisition, we were always in this growth mode. All of our focus was on growing revenue. Denis was trying to get us to change our thinking to ‘Let’s make money.’ That required us to make some cultural shifts, which was a bit painful.” --> The importance of financials
“I’d always thought that success was about retention rates,” he said, “but it’s not. It’s about bringing the right people in and exiting the wrong people at the right time. In 2014 and 2015, a lot of these senior people left the company and were replaced by others we added with culture in the forefront of our minds.” Meyer blamed himself for creating the problem. “I built the company like you raise a family, and in a family nobody ever leaves. I put too high a premium on making sure that nobody left. That was great to a point. Loyalty between a company and its senior leaders is a really wonderful virtue. But businesses are not families. Successful businesses blur the line between going to work and coming home, but it’s still going to work. Sometimes if you don’t say good-bye to certain people, it is really hard to walk the talk. That has been the hardest thing I’ve had to deal with over the last couple of years.” --> Some people need to be let go
“ www.smallgiants.org - founded in 2008 by Paul Spiegelman, then the CEO of BerylHealth, with my support. He loved the small giants concept, which fit his company to a T, and he wanted to create a venue where aspiring small giants could learn from each other about how to improve and strengthen their businesses. That’s exactly what members of the Small Giants Community do—in local groups and online webinars, at an annual summit, and during visits to great companies, including some of those I’ve written about here “
“Think of it as a small company hall of fame into which we induct new members every year. (If you know a company that you believe is a small giant, please feel free to contact me at [email protected], and keep an eye on my blog at Forbes.com for announcements.) “
“I would particularly recommend The Great Game of Business (www.greatgame.com), Great Place to Work Institute (www.greatplacetowork.com), Tugboat Institute (www.tugboatinstitute.com), and National Center for Employee Ownership (www.nceo.org), not to mention the excellent programs offered by small giants themselves, including ZingTrain, a member of Zingerman’s Community of Businesses (www.zingtrain.com); Hospitality Quotient, affiliated with Union Square Hospitality Group (www.hospitalityq.com); and Nick’s University, the teaching arm of Nick’s Pizza & Pub (www.nicksarillo.com/nicks-university-leadership-training). They all provide aspiring small giants with great resources, most of which weren’t available back in 2006. “
“Gary Erickson’s book, Raising the Bar: Integrity and Passion in Life and Business: The Story of Clif Bar & Co. “
“Danny Meyer has written two renowned cookbooks featuring recipes from Union Square Cafe, but even more highly acclaimed is his business book, Setting the Table: The Transforming Power of Hospitality in Business. It is a wonderful piece of writing, as insightful as the man himself, and a must-read if you want to know what it really means to be a small giant. In addition, I’d recommend Bruce Feiler’s excellent article on Union Square Cafe, “The Therapist at the Table,” which appeared in the October 2002 issue of Gourmet. “
“Financial Intelligence: A Manager’s Guide to Knowing What the Numbers Really Mean by the late Karen Berman and Joe Knight, with John Case.”
Further book recommendations are at the end of the book.