SMALL GIANTS: COMPANIES THAT CHOOSE TO BE GREAT INSTEAD OF BIG BY BO BURLINGHAM

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The author shared his new discovery about companies that have resisted the temptation to grow if it meant compromising their mission for growing. He tagged these companies as companies that choose to be great instead of big because they choose to focus on well-conceived core values coined round their employees, communities, and customers. This idea counters a business’s believe of rapid growth and stockholder performance in small businesses. Small giants in this context are businesses that maintain their personality and core focus without bending to the siren song or potential merger or public stock offerings. The most exciting part of Small Giants is the unique part these businesses take to grow and stay dominant while retaining their popularity. 

The 14 companies Burlingham studied demonstrate a sustained success customer, competitors, and external observers are drawn to most notably the resistance of selling out and growing merely to get that proverbial “next level.” Instead, they remain dedicated to their employee driven culture and communities, which created their success. Companies such as Cliff Bar and Co. owned by Gary Erikson would rather work at the eleventh hour than sell his business to a large food conglomerate.

Often, small business owners are passionate that they would instead choose quality over profit. Employees in these companies tend to be more motivated, focused on quality and passion rather than only maximizing profit and meeting sales targets. Therefore they tend to have more loyal employees and significant local ties with communities. 

Small giants have a soul. They have an excellent working environment that has been cultivated from early on and elusive quality that is intriguing, meaningful, and exciting for employees. The most important reason for this is the drive for outstanding quality. The small business owner could achieve that. At Zingerman’s Deli, all employees have a passion for great cooking. This event helps them understand and consider factors that many other companies might count as unimportant, such as the smell of food. They are the company’s best fans, putting themselves in the place of potential customers.

In addition, small business owners take their time in selecting the perfect location that will significantly impact the experience of customers who visits. Such devotion to setting and locating their business rightly is one of the reasons why they are often happy where they are with no desire to change location. Above all, there must be a fitting reason why small businesses choose to stay put, delivering the highest quality service if concentrated networks of partners can be developed. 

In conclusion, Bo Burlingham helped his readers to understand what Small Giants are made up of and how small businesses can grow to be one. The author shared his thought about small giants to be businesses that have chosen to stay true to their ideals rather than choose growth and compromise their mission. They are passionate and more concerned about what they do and focused on doing it exceptionally well. Following this little principle has made them very successful. This book will help you to discover a more excellent way to make your business successful. It also depends on you whether you will prefer to chase quality rather than growth or vice versa.

THE BIG THREE – KEYPOINTS

Key Point #1: Small Giants have a soul

Key Point #2: Owners of small giants retain control of their company so they can do what they love

Key Point #3: Small Giants understand employee’s satisfaction and motivation.

One Last Thing

“Busyness is certainly one of the reasons that owners don’t think about whether or not their journey is taking them to a place they really want to wind up. They’re constantly preoccupied—it goes with the territory—and figuring out the ultimate destination doesn’t seem particularly urgent alongside, say, meeting the next payroll or landing the next big customer” -. Bo Burligham

ONLY THE PARANOID SURVIVE How to exploit the crises point that challenge every company BY ANDREW S. GROVE

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In this book, the former CEO of Intel Corporation, Andrew Grove, describes the major crises Intel suffered from his experience at running Intel. He introduces a strategic model that can be used to thrive and adapt to crises. He tagged this strategy SIPs or Strategic Inflection Point, a strategy that can be implemented to bring out the most from a company’s sink moments. The author also describes the strategic inflection point as a point when balances of forces shift from old structure and way of doing business to new. 

There are three different forces that may cause SIP, which include: 

1. Strength of competitor (i.e. competitors’ focus and funding. Are they well-funded? Do they have a clear focus of the business?)

2.Strength of Suppliers (are they so much that the business has a lot of choices or are they few such that they have the business by the throat), existing customers( are there a lot or few of them and what is their demand rate?), potential competitors ( this is about those that are not competing yet but have the potential to join the competition when it becomes favorable) 

3.Substitution (are there other substitutes for your product/service? If yes, this is more deadly), and lastly, complementor (does your product have a complement and how powerful and complementary are they). 

 

A strategic inflection point is also a time in the business trajectory cycle when its fundamentals are about to change. That change can either be an opportunity for a company to thrive or collapse. SIPs are likely to be caused by technological change when not maximized or competitors when they become more efficient or deliver more value. It can be a threat when ignored. An example of such change was IBM, when consumers could easily handpick computer parts such as microchips, drives, software, and build a customizable PC for themselves. IBM didn’t see this coming, so they did not compete well with companies that sold individual components. Some of these changes are hard to track, more reason why companies have to be on a lookout for any changes in a proactive way.

Intel adopted the SIP strategy, and that was what changed them into Microprocessor Company. They became a market leader in a short time. The need for strong leadership at this point cannot be underestimated. Strong leadership is needed to remain focused and relevant. Organization CEO’s need to be cautious of changing the core of the business. Especially because human beings get emotionally attached to past and present processes, to avoid staff getting emotionally attached to the current state of business, a lot of staff have to go, and others will have to be retrained for the new position. Some existing employees of companies get glued to the old way of doing things because a person’s work is part of the person’s self-image. Therefore changing the nature of a person’s job puts their personality in question, which is more reason why companies prefer to bring in external consultants to analyze their business with fresh objective of view.

The author also identifies the need for effective communication in an organization. A company should gladly open up to both leaders, managers, and subordinates about new product development to remain competitive. Middle management is, most times, the first to identify a business problem, have ideas on how to improve the process, and have a solid bead on daily operation. A flexible team builds a trusting environment for new ideas to develop and prosper. A flexible and versatile workforce is always challenged to be creative. 

In conclusion, Managers and employees should have a clear communication to and from leadership and middle management. Also, getting a consultant for objective opinion will go a long way when SIP occurs.

THE BIG THREE – KEY POINTS

Key point #1: SIPs does affect not only the CEO but also a significant concern for the employees in an organization

Key point #2: SIP could either result in a catastrophe for a company or open a tremendous opportunity.

Key point #3: If SIPs are adopted at just the right time, then the company gets the opportunity to lead an entirely new market.

One Last Thing

Bad companies are destroyed by crisis; Good companies survive them. Great companies are improved by them. – Andrew Grove

Cashflow Quadrant. Guid to Financial Freedom

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Robert Kiyosaki is an active investor in real estate and specializes in the development of small-cap companies. He teaches business and investment principles and shares some of his knowledge through his book, CashFlow Quadrant.

The Cashflow Quadrant describes the four ways income can be generated:

EMPLOYED: Working for someone for a paycheck.

SELF EMPLOYED: Working for yourself, receiving an income that depends on you.

BUSINESS: Owning process/system, i.e., work happens without them being present, so they get a paycheck even when they are not present.

INVESTMENT: Making your money work for you. none or little interaction is needed for getting a paycheck.

Robert does a great job explaining the complicated financial and economic concepts in a very simplistic way. He offers a plan for those on the left side of the quadrant (employed and self-employed) to move to the right side of the quadrant (business owners and investors). The right side of the quadrant is where the rich focus all their attention in order to become financially independent. As part of his plan, Kiyosaki explains that it is not enough to be making a lot of money. What is really important, what makes the difference, is to be financially free. Being financially free is the difference between a medical doctor, a highly paid employee and Jeff Bezos, wealthiest man in history.

Robert Kiyosaki’s main point is to earn enough financial literacy to move from one quadrant to another.

The quadrants are:

EMPLOYEE: This is probably the most challenging quadrant in which to become financially free. Most people fall into this quadrant because of the way their mindset has been programmed since childhood. They get the same suggestion from their parents while growing up, “study hard, find a high paying job and have a secure life.” Your parents’ advice, coupled with schools and colleges is designed to create employees who need security, live from paycheck to paycheck and depend on allowances. There is very small proportion of children who get advice from their parents to start investing or open their own business.

To this group, job security is more important than financial freedom. Although you can become rich in this quadrant, it is quite tough compared to other quadrants.

SELF-EMPLOYED: Those in this quadrant have the mindset of “if you want to do it right, you have to do it yourself.” They are sometimes referred to as “solo-people.” They own their job and often do their work because of the perfectionist mindset, and they do not trust anyone else with their job. A few examples are the retail shop owner, small company, doctor, etc. They trade their time for money. Unlike employees who enjoy the benefits of medical allowances and paid leaves, the earnings of a self-employed is very fragile. If they get sick, it would be hard for them to make an income. The self-employed have to devote more time if they want to earn more. Their income is directly dependent on how much work they can do, i.e., their time equals money. Also, their freedom is more important than their financial independence.

BUSINESS OWNERS: This quadrant allows the best opportunity to become financially free. Those here are people who own the system or process where people work for them. According to Forbes, big companies are those with over 500 employees. However, in recent times, this rule is no longer valid. There many big companies which do not require 500 employees to work. For example, Whatsapp is a multi-billion company with less than 50 employees. Unlike the self-employed who can not stop working if they want a regular  income, the business owner does not need to trade his time for money as he owns the system. Even in their absence, their employees will work for them.

INVESTORS: This group of people make their money work for them. Investors are the fourth and highest level of the cashflow quadrant. You cannot jump into this quadrant without being successful in one of the other three quadrants mentioned above. The investors are one of the most financially free groups who make their money work for them. They invest in business stocks, real estate, etc. Most times, they do not need to get involved in the working of the business or asset they’re investing in; hence they get plenty time, money and freedom.

In conclusion, it is comparatively easier and faster to become wealthy when you’re working on the right-hand side of the quadrant. You do not need to shift to another quadrant entirely at once. You can keep your feet in two or more quadrants. However, the best way to get rich is to stay on the right side of the cashflow quadrant.

 

THE BIG THREE – KEYPOINTS

Key point #1: The self-employed believe if you want to do it right, do it yourself.  Often self-employed people think they have a business, but if your business requires you to be there in order to keep generating an income, you don’t own a business, you own a job.

Key point #2: If you own a process/system where others work for you, you’re a business owner. As a business owner, you are more comfortable to reach the ultimate goal, financial freedom by having your money working for you as an investor.

Key point #3: Everyone has money problems. For most people, money leaves faster than it comes. For others, they have money but cannot reinvest it fast enough. For those who can reinvest it, more money comes in. Yes, the rich do get richer.

One Last Thing:

“A lot of people are afraid to tell the truth, to say no. That’s where toughness comes into play. Toughness is not being a bully. It’s having  backbone.” ~ Robert T. Kiyosaki, The Cashflow Quadrant.

Rich Dad, Poor Dad

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In his book, Rich Dad Poor Dad,  Robert Kiyosaki makes an illustration of the mindset beliefs that make a rich person rich and a poor person poor. He does so by contrasting the advice of his real dad, who was poor, with the guidance of his financial mentor, his friend’s father, who was rich. The big idea is to have the right financial mindset which the education system does not teach.

At a very young age, Robert Kiyosaki learned the first rule of how to make money. The first rule was that the rich people do not work for money; their money works hard for them. Robert and his friend Mike worked for Mike’s father at a very young age. The first thing Mike’s father did was to pay them both 10 cents per hour. With this, they could experience a salary they find short and imagine how that works if multiplied over the time span of 50 years. Then Mike’s father, taught them working for free which taught them two lessons: first, most people are guided by fear of not being able to pay for their bills or desire. Secondly, the need to think of alternatives to make money which Robert and Mike did. At a very young age, they set up a small library room where they provided leftover magazines to other kids for a token.  Which became their first official, entrepreneurial venture.

One of the most interesting topics covered in the book, is Robert’s idea about the differences between being poor and being broke. There is a difference between being poor and being broke. Poor is eternal while broke is temporary. Money, as they say, comes and goes but if you have the right education with regard to how money works, your power over money will be unlimited and you will begin to build wealth. Most people strive for the feeling of security when it comes to money,  driving them to be fearful about their money. This causes them to be directed by fear.. When fears enters, passion exits, and passion is one of the main driving forces to build wealth. The illusion that working for money is safer is ingrained in our heads since we are kids. The reality is that it’s easier to work for money, but as history has shown it’s not safer.  So, if you want to secure your financial wealth, don’t work for money, work to learn.

Throughout the book, the author makes a case for teaching financial literacy. Financial literacy is an essential aspect of life and yet, it is not taught in school, not even in finance classes. With the level of simplicity, most people tend to ignore it and not focus on it.  However, there is only one rule: know the difference between an asset and a liability and buy the asset.  For instance, people think of a house as an asset. In accounting definition it is but, in reality, your home results in cash moving out of your pocket, the mortgage payment, insurance, property tax and the worst of all is that you missed opportunities because your money is stuck in your house instead of having it available to work for you. Instead of pretending your house is an investment, acknowledge it as an expense.  When you want to buy a liability, first buy an asset that generates enough cash to cover the liability

The author contends that making money is nearly as important as how you spend what you make. Therefore, the author urges young people to seek  work for what they will learn, and that they have opportunity to learn more than what they will earn. Aim to learn a little about a lot instead of seeking specialization because specialization is for employment and not being rich.

 Most importantly, the author recommends that you be sure to develop skills in communication, sales and marketing as those skills combined well with other skills are often necessary to create wealth.

Conclusively, this book lists important tips on how to start making money and to improve your financial life. Contrary to popular wisdom, it does not take money to make money. It takes education about money. Start early, buy a book, go to a seminar. Start small and practice. What is in your head determines what is in your hand. Money is only an idea. This book by far is one of the best available books for entrepreneurs, entrepreneurs to be and employees with the desire of understanding the basic concepts on the entrepreneurial and intrapreneurial mindsets. I received a copy of this book as a Christmas gift in December of 2004 from my girlfriend at that time, now my wife. The book changed my life. As a young medical doctor, it transformed my point of view in regards to work and in regards to my career path. Today, I am as excited for starting new lines of business inside the workplace (intrapreneurism) as I am outside of work (entrepreneurism). The book’s basic principles of 1) increasing your value in the market is to increase the value of the people around you, 2) creating life project teams, 3) increasing your assets and 4) acquiring as few liabilities as possible are as vital today as they were thirteen years ago. This book has many jewels. Getting yourself a copy would be a great investment.

THE BIG THREE – KEYPOINTS

Key point #1: The rich do not work for money

Key point #2: Know the difference between asset and liability and buy assets.

Key point #3: Don’t confuse your profession with your business. Bring replicable value to both of them.

One Last Thing

“I am concerned that too many people are focused too much on money and not on their greatest wealth, which is their education. If people are prepared to be flexible, keep an open mind and learn, they will grow richer and richer through the changes. If they think money will solve the problems, I am afraid those people will have a rough ride. Intelligence solves problems and produces money. Money without financial intelligence is money soon gone.”

― Robert T. Kiyosaki, Rich Dad, Poor Dad