Estimated reading time: 4 minutes

It's Only Common Sense: Big Versus Small

Editor's Note: To listen to Dan's weekly column, as you've always done in the past, click here. For the written transcript, keep reading...I read a lot of business books. In fact, on average, I read at least three a week and, for the most part, I get a lot out of them. I've been doing this for years and consider it a critical part of my business career development. But, truth be known, I never read a business book written by someone who heads a large company.

Actually, I have in the past; I checked out the works of Jack Welch and other CEOs of very large companies, but I never found them very helpful. Full disclosure: I always read books about visionary CEOs like Steve Jobs. I do find those informative, instructional, and inspiring, but I think that’s because companies like Apple have made it big by being so non-traditional in their approach to business.

Books by CEOs of traditional big companies just don’t have much to say. They're just so far out of the real world that they really have nothing to teach me. A CEO talking about closing divisions and laying off 23,000 people does not relate very well to me, my business and the businesses I work with.

A few years ago a friend of mine told me about a friend from college who was making his living as a trainer for IBM. His job was to properly train young executives who were on the fast track to leadership positions. After thinking about this for a while, I told my friend that if IBM really wanted to give these fast-trackers a great experience, they ought to give them a $5 million-a-year board shop to run by themselves for a year--with absolutely no IBM connections. Let’s see how they would do. If they could manage that, they could manage just about any company.

One of our industry’s biggest companies bought up another of our industry’s bigger companies recently--creating an even more massive company. Since then I have been surprised by the number of calls and e-mails I’ve received soliciting my opinion about what this means for our industry and, more importantly, what it means for the smaller companies I work with.

This got me thinking about the big company/smaller company thing again and how this huge company merger would indeed affect our industry.

First of all, if you are a small or smallish company, I think this merger will be good for you. Here are the reasons why:Our customers do not like dealing with board shops bigger than they are. I think it’s basically a control issue. They like to feel in charge and to do that they do not want to subcontract (that’s what a board shop is after all, a subcontractor) to someone who is bigger than they are. This means that the bigger a PCB company gets the more uncomfortable most of their customers will be. I say "most" of their customers because there are large companies who buy so many types of boards in such large quantities they need to work with an equally large board house. They need someone who can handle their needs. But, then again, these are not really our customers to begin with and probably never will be. In terms of those companies who are our customers and had been buying from the large companies we’re talking about here (as well as buying from us), we will do well with those companies. If you are a small board shop, say an $8-10 million-a-year shop,  a $500,000-a-year customer is a big deal to you. This customer can count on being large enough to get your attention, large enough to hold a position of status in your company, and important enough to demand and get the best service you can provide. What does that same $500,000-a-year customer mean to a $1 billion board company? Not much. No matter how much their salesperson tries to convince that customer he is still important, he’s probably not.

And here’s the interesting part: Even if he was an important customer to one of the behemoths’ smaller divisions, he will not believe it. The perception that he is no longer important will drive him away in the end. A good thing for you and your small board shop. More business will open up for you because of this acquisition.Then there are just all of those disadvantages of dealing with a large company. Things like not knowing exactly where your boards will be built; finding the right person to talk to when you have a problem; having a good, personal relationship with the owner of the company; or being able to work out price issues or any other issues for that matter.

And the biggest problem of all: If you’re a CM buying boards from someone you're competing with it's not a good thing.

I think this acquisition will be good for all of the smaller companies. I believe that you will get a chance to grow your business with the tier 2 and 3 accounts in the next few months. I also think that you'll be able to take advantage of your size, mobility, and flexibility to make your company truly outstanding vis-à-vis the few giant guys. It’s only common sense.