I am happy to see that marketing guru Seth Godin has picked up and expanded on my post last week:

Too small to fail

One secret of being a large financial institution is that you can take huge risks because you’re too big to fail. If you hit craps and lose it all, don’t worry, because you’ll get bailed out.

One secret of ‘small is the new big’ thinking is that you won’t fail and you can’t fail and you don’t need to worry about a bailout. Not because you’re small in headcount or assets, but because you act small.

A small acting bank would never have invested in tens of thousands of loans that they hadn’t looked at. And a small acting startup wouldn’t hire dozens of people before they had a business model… and then have to lay off a third of them just because their VC firm showed them a scary PowerPoint.

I’ve always been frightened by big-firm accounting. The sort of financial legerdemain in which skilled accountants work hard to make the numbers look the way the CEO wants, instead of making them clear. Cash accounting run on a simple bookkeeping system is the small way to do it… even if your company is huge. That’s because sooner or later, management has to know what’s actually happening as opposed to what they can pretend is happening.

Big-thinking companies lose customers all the time because big-thinking companies isolate the decision makers from the outside world. Angry customers who are leaving don’t get heard… that news is heard by the poor shlub reading a script at the call center. 90% of the angry customer mail that people forward to me (I have enough for a lifetime, thanks) is angry because the (former) customer is tired of being ignored.

If you act small and think big, you are too small to fail. You won’t need a bailout because your business makes sense each and every day. You won’t need a bailout because your flat organization (no matter how large it is) knows about problems long before they’re too big to deal with.

The media and the tech blogs glamorize businesses that act big. They write about the big checks VCs hand out and they lionize the organizations that make a splash. The untold story is in the organizations that are close to the customer, close to the product and close to each other. Thinking small always pays off.

(Thanks to Howard for the phrase that inspired this post)