Last week I attended a panel held at HUGE LA for Social Media Week called “David vs. Goliath: How Do Big Agencies and Small Agencies Stack Up In The New Gig Economy?” Panelists included industry people who have worked on both sides of the fence.
The general consensus seemed to be that larger companies can be riddled with extra layers and bureaucracy that make it difficult for them to react quickly, although bigger agencies do have a greater amount of resources to draw from as well as name recognition.
On the other hand, small agencies were seen as more nimble and tend to adopt a startup mentality (functioning with small teams, giving employees the ability to make autonomous decisions, etc.).
One area where I think we could have probed further was whether or not companies should focus on growing or staying small. I know – it might sound counterintuitive: shouldn’t every company try to get as big as Wal-mart?
Not necessarily. One panelist mentioned “running lean” – an idea repeated a lot in the startup community, where you only hire and add staff when you absolutely need to to satisfy demand for your product or service.
In a recent Fast Company article, 37Signals founder and CEO Jason Fried warned about the growth approach he sees occurring with many tech startups who staff too quickly. Instead, he offered a different set of metrics to evaluate success:
- Are you profitable?
- Are you building something great?
- Are you taking care of your people?
- Are you treating your customers well?
Yes, of course, there are a lot of other important things to take into consideration when building a business, but this is a simplified, focused and long-term approach to running a successful business that I think more and more companies are going to adopt. See the Coudal Partners story as an example of one company who scaled down and found success. At the end of the day, I think the ideal size of a company is as small as possible. This could mean 3 employees or 30,000 as long as being big, in and of itself, isn’t the main objective.
If you’re interested in reading more about this topic, I suggest “Small Giants: Companies That Choose to Be Great Instead of Big,” Adam Morgan’s”Eating The Big Fish: How Challengers Brands Can Compete Against Brand Leaders” and “Startup = Growth,” a recent post by venture capitalist Paul Graham.