Today I delivered a speech to the annual conference of the Economic Developers Council of Ontario. They’re the people who try to attract new business to Ontario cities. Increasingly, however, they are spending more time helping local businesses grow.
Which is a new spin on the old business adage that it’s a lot cheaper to get more business from your existing customers than to try to find and attract new customers.
In my presentation, I talked about the changing role of small business, and why I think it is going to become even more significant in North America in coming years.
Here’s part of that speech.
“…As they say, small business is big business. And I think it’s going to get even bigger.
Back in the 1950s and 1960s, small business looked as old and outdated as the Edsel. Big new companies, based on new management sciences and concepts of command and control that helped win the Second World War, were emerging to push out smaller manufacturers and mom and pop businesses all over North America. Parents who grew up in the Great Depression urged their baby boomer kids to work for Canadian National and Procter & Gamble and Eaton’s and Simpsons.
Then reality intruded. The twin recessions of the early 1980s and 1990s proved that big businesses were having just as much trouble keeping up with changing markets as the smaller firms they’d supplanted. More demanding consumers gained an appetite for foods not produced by megafirms, and shopped in boutiques that understood their customers better than department stores. Suddenly, innovation was as important as economy of scale, and entrepreneurs were back in business – filling specialty needs faster than big companies could even identify them.
Then came the technology revolution, which put the power of desktop publishing, computer-controlled design and manufacturing, financial controls and instantaneous electronic communication into the hands of individuals. Suddenly, knowledge counted for more than size and market clout – and any Future Shop customer could enjoy more advanced technology than most employees in big companies. And don’t forget the cellphone, which enable single individuals to be on top of things and in charge in a way that wasn’t possible before.
Today, entrepreneurs are generally credited with being more creative than big business, more sensitive to opportunities, and more willing to gamble on new ideas. Today, small business is a primary source of innovation and R&D to big business. Look at the way IBM, Microsoft, Nortel, eBay, and most of the packaged goods manufacturers in North America hungrily stalk small business for acquisition opportunities. Canadian Tire bought Mark’s Work Wearhouse, Ralph Lauren bought Club Monaco; Estee Lauder bought MAC Cosmetics; Wendy’s bought Tim Horton’s.
By and large, big business has settled into a new role as the owners of assets, counting on small business to do the hard work of creating new ideas and market-testing them. Then big business buys out the entrepreneur. Which is great, because the entrepreneurs get well paid, and as soon as their non-compete clauses expire they are free to jump back into the market and work their magic all over again.”
Do you agree? Disagree? Leave a comment.