While walking to a restaurant for lunch the other day I passed a man carrying a picket sign. It turned out he belonged to the local nurses’ union, which was on strike against a corporation consisting of six once-independent hospitals. I asked him about the issues (healthcare, staffing), and then posed the question that really interested me. “Do you think the executives of the [deleted] corporation are bad guys, just driven by greed?”
“No,” he said without hesitation. “They’re just like everybody. They listen to the people who are in front of them. And those people are saying that profits ought to be a little bit higher. They’re not focused on giving better care.”
Thinking about this over curry, it dawned on me that his comments represented a microcosm of what’s wrong with a lot of America’s once-successful manufacturing companies: their size. The belief in economies of scale has been so strong for so long that it has blinded company leaders to the problems that size creates – specifically, the problem of focusing on numbers to the exclusion of caring about the product.
Focusing on “the numbers” inevitably leads to the minimal product that can still be successfully sold. No offense, but Bud Lite, the Chevy Trailblazer and Dell computers are not products to die for. The beer market is probably the best example here. Where’s the growth? Not in the giant brands! It’s among microbreweries where quality is everything. Leaders of big companies, who are relentlessly pressured to produce “good numbers” every quarter, simply can’t focus on making really, truly great products no matter what it takes. So quality suffers.
Small companies have more options. In a small company, the leaders can make quality a matter of personal pride.
Starbucks is an interesting case study in what happens to quality in growing companies, and its newly returned CEO, Howard Schultz, has been doing a good job of articulating the evils of growth. In the case of Starbucks, it amounts to a series of decisions that he plans to reverse, e.g. the switch from grinding coffee on-site to supplying it pre-ground in plastic bags. Each one of these was a good decision in itself, her argues, but collectively they diluted the café experience that fueled Starbucks phenomenal growth in the first place.
The problem for Schultz will be one of execution. It may take more than a year for some of the stores to make the changes he wants.If you only own three coffee shops, you could remodel them all in a month or so. And of course, the same goes for small-scale manufacturing. Change is easier. (Not easy, I’ll grant you, but easier.) And in an rapidly changing economy where being nimble is a huge advantage, being small is a huge advantage as well.