Scale Is Fail: How Big Companies Need To Act Small To Thrive Today

By John Gerzema, Harris Poll CEO | Forbes |

About five years ago, I had an early glimpse into America’s changing corporate landscape in, of all places, Japan. While researching our book, The Athena Doctrine, I met Ryo Nakagawa. His startup, Share0, helps self-employed entrepreneurs and consultants find office space in companies with empty suites. For generations, the Japanese embraced the “salaryman” model of work, which called for workers to devote themselves to a corporation that would, in turn, provide long-term employment. But Ryo believed the future belongs not to big organizations but to individuals with skills who come together for collaboration.

Born into the Lost Decades of low growth with fewer secure positions available in big corporations, a vast cohort of young Japanese must now reconsider the salaryman ideal and invent other ways to establish themselves.

Fast forward, and a similar dynamic is underway in the U.S. In our annual Reputation Quotient Study of corporate reputation, many large companies declined in esteem and trust. But what really caught our attention was the trendline: Fifteen years ago, the largest companies were the most respected, but today, many with the best public reputations are smaller, regional players and those with intimate customer service and values that resonate within their consumer communities.

Curious, we then assessed which companies had excellent leadership and a similar trend emerged. Even among larger companies, organizations with relatable and humanistic leadership, who speak out for employees and issues they believe in, often lifted the perceptions of their firms. Berkshire Hathaway, for instance, ranked No. 24 overall in the RQ study, but the firm jumps to No. 1 in our RQ leadership ranking, while Apple moves from No. 29 to No. 9.

This shift in trust signals a change in consumer culture and values. Thanks to social media-fueled transparency, the public has more insight into the business practices and values of leading companies. In fact, in a 2015 Gallup Poll, 67% of U.S. adults reported having a great deal of confidence in small businesses, far exceeding the 21% who were similarly confident in big businesses.

It seems that a behemoth scale today is no guarantee of having consumers’ trust. Instead, there is an emerging belief that a bigger business doesn’t always equate to a better business. Even CEOs like Google’s Sundar Pichai have stated as much: “As a big company, you are constantly trying to foolproof yourself against being big, because you see the advantage of being small, nimble and entrepreneurial,” he told The Guardian. “You always think there is someone in the Valley, working on something in a garage — something that will be better.”

Read more at Forbes.