Get Small. Get Lean.

An article in last Sunday's NYTimes addressed the value of corporations staying small. In contrast to the early days of the internet when "get big, fast" was the mantra for all firms (especially internet startups), there's a growing recognition that there are real benefits to thinking small.

Although the article doesn't address Lean, the message is familiar to any student of lean processes. For example,

Decentralizing the hierarchy opens the door to creativity, giving workers the leeway they need to make significant decisions without first jumping through executive management hoops. “The idea,” says [Philip Rosedale, founder and chairman of Linden Lab, the company that built Second Life], “is to enable a creative environment where there’s a good degree of experimentation.”

And experimentation, after all, is what Toyota is all about: running controlled experiments in an effort to continually improve the production process.

The article goes on to argue that one of the major advantages of thinking small is the increased opportunity for small group collaboration. Although the author doesn't recognize the key features of a value stream management approach, one of the companies she profiles clearly does:

At Avocent, an information technology management company based in Huntsville, Ala., customers, product developers and testers had gotten to the point that they rarely interacted. Each group felt that it lost control of a project too early in its progress. So, in March 2007, the company revamped development so that members of all three groups would work on the same team, following a project from start to finish and making changes as needed. With customers, programmers and testers working virtually side by side, Avocent tripled production without adding workers.

The focus on the customer hasn't just increased production, either. It's reduced the waste of rework:

By making sure products in development meet customer needs each step of the way, Avocent has been able to avoid spending weeks correcting errors in the final product, says Ben Grimes, chief technology officer.

I don't think that a company has to be small to orient itself around the value stream and focus on the customer. There are plenty of large customers that manage the same trick. But if thinking small is a more palatable way for companies to give up command and control management techniques in favor of a lean respect for people, so be it. As Seth Godin says, "small is the new big."

Comments

[Brandon]

Thank you for outlining the key points of that article and expanding on them.

I would agree that thinking small does have advantages (a good example is Toyota as mentioned by you). I think this is an area that all company's could look at doing in the future.

[david foster]

The fact that a company is small by no means ensures that its employees are given any decision-making autonomy. Many small companies are run by a founder who considers the company an extension of himself, and employees merely as "arms and legs" to do things that he doesn't have time to do himself and not as people who should exercise business judgment in their own right.

If a company reaches the size of several thousand people, and manages to survive for a decade or two, it will likely have put at least *some* level of decentralized decision-making in place.

[Ron Meledandri]

What I have seen over many years is that many small businesses do not know how to grow into big businesses. First, they tend to grow before they are ready, that is, they have a few good years of profit and assume that being bigger will make them more profitable so "let's get bit now." When that happens, they often find that their management staff does not have the skills needed for growth. In addition, the business owner will hire unqualified people just because he or she wants to grow NOW so they want to hire people quickly. Lastly, the policies and procedures they have in place are designed for a small business, not a large one. Uncontrolled, rapid growth has caused many good small businesses to close their doors as they tried to get big too fast.