Want to own a small profitable company?

November 4th, 2009

Simple – buy a big company and wait for it to shrink.  These are the words Tom Peters uttered earlier in the year when he came through Auckland.

There is something in that statement.

Actually there is a heck of a lot in there.

Remembering that ‘big’ is a relative term, but when you become a behemoth in an industry what are your options for growth? Move sideways; squeeze more from existing customers, get more customers and/or move vertically.

Get more is the default choice (as fits in with the scale a big company has).

The problem here is, get more = increase compromise to get that extra customer. You compromise too much you begin to lose your core audience.

Further (and you can see this happening) you almost create a culture of compromise – whereby suddenly you’re not doing anything interesting at all.

So what next? Split up and shrink.  Become small, agile, specialised.

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