Smaller Business Doesn't Automatically Equal More Agile Business

Lou Gerstner, Chairmain/CEO of IBM from 1993-2002, brought the company back from a dying has-been to a relevant, powerful force which helped to usher in the internet age.

In his memoir "Who Says Elephants Can't Dance" (2002), Gerstner writes:

"For much of my business career, it has been dogma that small is beautiful and big is bad. The prevailing wisdom has been that small companies are fast, entrepreneurial, responsive, and effective. Large companies are slow, bureaucratic, unresponsive, and ineffective.

This is pure nonsense. I have never seen a small company that did not want to become a big company. I have never seen a small company that didn't look with envy on the research and marketing budgets of larger competitors or on the size and reach of their sales forces...

Big matters. Size can be leveraged. Breadth and depth allow for greater investment, greater risk taking, and longer patience for future payoff.

It isn't a question of whether elephants can prevail over ants. It's a question of whether a particular elephant can dance. If it can, the ants must leave the floor."

The turn-around that IBM experienced was nothing short of extreme, both in it's scope and the amount of time in which it was achieved. It took just 4 years for IBM to come back from the brink of bankruptcy in 1993 to surpassing its previous highest stock price. Since then, the company has grown to many times its previous size, and is now the world's largest and profitable IT company with revenue exceeding $100B, the majority of which is comprised of new lines of business.

Business agility is a skill, not a given because you are small.

That being said, the David v. Goliath story that gets spun a thousand times over in the tech industry (guilty here, too) is a load of crap. Whether it's the new wave of web 2.0 companies, independent game developers, or boutique PC shops, you have got to be a true innovator with lots of smart people and a little bit of luck to succeed. The market is not forgiving because you are battling bigger companies. Customers do not make purchasing decisions based on your size (and if they do, they'll go with the bigger company not the smaller). And while smaller companies have the potential ability to do very specific things better or more fully service very niche groups, don't kid yourself that someone with $$ couldn't commoditize what you do (if they aren't already!).

The only way to keep from having to leave that dance floor is to stay ahead of that elephant's feet!