Retaining the soul of a small company

Retaining the soul of a small companyI recently attended the 25th-anniversary celebration of Olam International, a founding member of the Developing Market 100 and one of the companies Chris Zook and I discussed at length in our book, Repeatability. Olam is a global agribusiness leader, selling 44 agricultural raw materials and food ingredients, including edible nuts, spices, coffee, cocoa, vegetable ingredients and rice. It is a challenger that has carved out an attractive niche for itself in a well-established industry with a number of strong competitors that have been around for more than a century. A few fun facts from Olam’s website give you a sense of how quickly the company has grown in its 25 years:

  • It processes enough peanuts to serve 7,610,626,992 peanut butter sandwiches;
  • It trades enough dairy ingredients annually to fill nearly 9.2 million bathtubs;
  • It provides the cocoa beans for one in every eight chocolate bars consumed globally;
  • It plants, harvests and processes enough tomatoes to top 3.2 billion pizzas and handles enough rice annually to provide everyone in the world with three servings.

The celebration included a conversation with the company’s board, and I was particularly struck by the presentation of Nihal Kaviratne, who spent 40 years at Unilever and has worked with a wide range of global leadership teams. In addition to serving on Olam’s board, he is chairman of Akzo Nobel India and a director at GlaxoSmithKline Pharmaceuticals, StarHub, SATS Limited and DBS Bank. In his presentation, Nihal touched on a key theme: How can Olam retain its Founder’s Mentality® over the next 25 years of growth?  He talked about five key lessons “to retain the soul of a small company,” which I share here:

  1. Clarity of purpose. Nihal argues that it is crucial for the board and the leadership team of any company to have extraordinary focus and clarity of purpose. It is also vital to continuously cascade that purpose down to the front line.
  2. Freedom within a framework. Bosses must provide a clear framework for their people, then give them the freedom to find their own way within it. In other words, the leader’s job is to be clear on the “what” and give far more freedom on the “how.” The price of that freedom, however, is that folks must use it to win, to innovate and to fight hard for the company. Nihal noted, “One thing that can happen with companies is that as leaders rotate around jobs, they start to view their goal as ‘avoiding more scars’ on their back, rather than trying to earn more medals on their chest. We become too risk adverse.”
  3. Informal communications. “We have so many opportunities to maintain this in companies,” Nihal argued. “Technology puts everyone one step away from the CEO—just text or email.”
  4. Interdependence. This is not the same as codependence. This is about building a team and recognizing that it is always better to work together than to work in silos. Nihal argued that you can’t win sustainably as a company without operating as a team. Teamwork must be nurtured.
  5. Generosity of spirit. This is about “saving the rookies”—keeping the blame, but sharing the credit. A small company is the product of dozens of deeply personal relationships, and if it is successful, these relationships are defined as the give-and-take of caring individuals.

I love this. And, a number of these points support the lessons we’ve heard from other founders:

  • The notion of the “strategy on a hand” is all about clarity of purpose, of trying to lock in the sense of insurgency that companies have in their early days.
  • The idea of translating that strategy and those capabilities into nonnegotiables is quite similar to creating freedom within a framework.
  • The need for informal communications hints at many of the themes we’ve discussed about the need for the CEO to get back into the field and to learn from the “kings.”
  • The theme of interdependence echoes our discussions about the importance of the kings and the court working together, about embracing conflict and understanding that it takes a team to win.

But Nihal’s point on generosity of spirit is very fresh and something we clearly don’t talk enough about. At the end of the day, the soul of the small company is indeed the product of hundreds of relationships that have been built up over time. The glue that strengthens these relationships is generosity—the willingness of everyone to coach, inspire, encourage, support, praise and respect one another. You can see how easy it is to lose that generosity of spirit as you grow—and with it, the soul of your company.

This entry was posted in Frontline obsession, The paths to Great Repeatable Models by James Allen. Bookmark the permalink.

About James Allen

James Allen is a senior partner in Bain & Company's London office and recognized as a leading expert in developing global corporate and business unit strategy. He is co-head of Bain’s Global Strategy practice and a member of Bain & Company's European Consumer Products practice. He is co-author, with Chris Zook, of Repeatability (HBR Press, March 2012) and Profit from the Core (HBR Press, 2001 and 2010).

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