Once upon a time, the size of a company was seen as a pretty good indicator of its health. If your company went from 1,000 to 10,000 employees, that had to be a good thing, right? Nowadays, maybe not. As Tom Perrault, Rally’s Chief People Officer, writes in Harvard Business Review, if staying small used to be seen as a sign of weakness, in today’s digital marketplace it might just mean you’re smart.
Traditionally, when companies encountered a hurdle, or wanted to branch out into a new market, they just hired more people to make it happen. In a world where growth was valued for its own sake, this had the added effect of making the company appear robust. Win-win! Unfortunately, even as companies touted their growing staff, the resulting bureaucratic bloat made it harder for them to actually stay nimble in the areas that matter most — product innovation, responsiveness to changes in the market, and so on.
Today, Tom says, growth for its own sake is losing its luster as companies like Instagram and Snapchat achieve huge valuations despite — or because of — their small size. Far more important is to be smart in how you balance the manpower you have with smart cutting-edge technology. In fact, the very technology that allows today's companies to reach more consumers, faster, is also what allows them to grow without adding a lot of people.
But aside from the fact that growth may be outmoded as a measure of success, is there an actual advantage to staying small and lean? Possibly. Smaller companies can be more agile, allowing faster changes of direction in response to market shifts. Instagram saw a market niche and filled it before a company like Facebook ever knew it was there, which is why the world was stunned to see Facebook buying Instagram — with its staff of just 13 at the time — for a cool billion. And of course, fewer people on staff means a lower payroll, allowing money to be directed more efficiently into areas like research, design, and delivery.
Smaller companies can also have an easier time retaining their vibrant, idealistic startup culture, making them the kind of place today’s best candidates want to work in. It may turn out that digital companies have the best of both worlds: They can stay small, nimble, and hungry while using smart technology to scale and reach massive numbers of consumers.
What about a company like Rally, which is growing fast but keeping focused on staying efficient and agile? We asked Tom for his thoughts.
“Rally has been super-smart about how we grow and about how we use technology to scale in lieu of headcount,” he says. “You can see that in all of our products: We reach more and more people but need less incremental headcount to reach those customers. That's one of the reasons I believe we'll ultimately be very successful. We understand the benefits of using technology to operationalize our strategy rather than just adding more headcount, which could ultimately lead to slower decision-making and more bureaucracy.”
Read Tom’s full story here.
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