by: Sigurd Rinde
Why not small company, agile and market leader?
Why must big turnover equal huge payroll?
When my colleague and I did one of our first LBOs many years ago (can manufacturer) we found a "tellers window" where the employees lined up for their brown envelopes with cash at payday.
That was the reality, a firm had physical constraints, people had to be employed, communication was letters, telephone and telex – outsourcing was not a concept. Not even salary payments could be outsourced to the local bank.
Those and earlier days set the "us and them" thinking, "company resources" and "outsources".
So why do we still think in "company" terms? Why the artificial borders created by former physical constraints? Any "outside" resource can be as efficient as any company resource today thanks to new technologies.
Take another look at the basis; the Business Model:
If I imagine I can create a value for some potential customers I design a Business Model: "How to use my resources to deliver that value and keep some for myself".
Now, if I strike the "my" and rewrite it to "how to use resources…" then the need for a "company" could be limited to:
1. Strategy and business model (up)keeper.
2. Contact point for customers.
3. Legal entity for liability issues.
4. Legal entity for accounting purposes.
1. Could in extremis be a one man job – given that the "resource use", the "business model implementation" could be better organised than via hierarchies as is the norm today.
2. Requires more – but with a shift from (marketing) "push" to "pull" it changes dramatically in resource use. Less of course.
3. and 4. are both virtual issues and requires no size, just the handling.
Thus you can pare down the "core" company and still scale to large sales volumes and large market shares without becoming big-as-in-big-payroll.
It’s been tried, albeit limited, most often only in one direction – aka "outsourcing/franchising/partnering/distribution channel":
MacDonalds did it to a certain extent – franchising moved one wall – but the "push marketing" have cemented their bigness.
Dell started there – then they geared up their "push" (marketing) thinking and got mired in bigness.
Google started there – then got the idea that big-as-in-big-payroll was good and started acquiring.
Why not think holistic, skip the notion of "company" as we know it and go all the way?
Not "small volume, niche market and small payroll" – or – "big volume, large market share and big payroll", it could be "big volume, large market share, tiny payroll and all the agility in the world".
And it all hinges on the perception that the ultimate control and efficiency requires resources to be employed or owned. Skip that self-imposed limit and shoot for the moon.
Small, agile market leaders could be the new new 🙂