Malcolm Gladwell is back – to tell us all about SMEs and more


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Malcolm gladwell
Acclaimed writer and speaker Malcolm Gladwell recently spoke to AmEx OPEN Forum about his latest book. In David and Goliath: Underdogs, Misfits and the Art of Battling Giants he analyses what happens when ordinary people confront giants.

You know all about Gladwell, I’m sure. The Tipping Point, Blink, Outliers – you name it, he wrote it. This blogger described him perfectly: “His great strength is finding significance and even fascination in the mundane.”

Now Gladwell has turned his attention to the psychology behind large and small businesses – the book is about more than just SMEs, but it’s what we’re focusing on in this post. Being small, Gladwell stresses, doesn’t have to be a bad thing. In fact, the very things that appear to be disadvantages can later turn out to be the reasons that you hit the jackpot. Haven’t I told you this before?

Buy the book, and read it. But just to make sure you can join the conversation at that sophisticated dinner party in the meantime, let me fill you in on three of the main findings from David and Goliath.

1. SMEs: be prepared to take social risks.

We think of successful entrepreneurs as being people prepared to take risks – risks which, if they succeed, will pay off later. Gladwell emphasises that successful entrepreneurs don’t just take operational risks when setting up a business. They take social risks. They are prepared to do things that other people disapprove of. “When you do something that challenges the conventional wisdom, you put your reputation on the line,” he says in the AmEx talk. “You have to be prepared to take that kind of social risk.”

Being a social risk-taker doesn’t necessarily mean you’re being dishonest, rude or improper. It’s simply about being unconventional. Innovators need to be ready to challenge the status quo. This is not something that many big businesses, with their complex structures and slow-moving systems of gaining approval, are prepared – or even able – to do. The theory of disruption states that big innovations question the status quo, but you don’t need to be a big company to have big innovations. In fact, being big can work against you.

2. Realize that bigger isn’t necessarily better.

The companies that are ready and willing to take social risks usually aren’t very big. And there’s a reason for that. As design strategy professor Lisa Kay Solomon points out, larger companies have to answer to shareholders and report regular profits. “They’re focused on short-term results. Innovation often takes a long time to incubate and nurture. It doesn’t operate on a measurable timeframe.”

This is just one example of how, as Gladwell puts it, ‘giants are not what we think they are’. His latest book, of course, takes its title from the well-known Bible story of the future King David who, as a young teenager, took on the seemingly invincible giant Goliath – and won. We tend to interpret it as a story of winning against the odds, but Gladwell points out that despite appearances, the odds were not stacked against David after all.

We see the disadvantages that David has because he’s small. But we overlook a crucial point: there are also plenty of disadvantages associated with being big. Being slow and having more limited mobility, for starters. The story of David and Goliath is a metaphor for the business world, according to Gladwell. There are the young, nimble and agile SMEs on one side, and the lumbering, bigger and older businesses on the other. Despite appearances, big companies have to contend with all sorts of disadvantages. “The same qualities that appear to give them strength,” Gladwell writes, “are often the sources of great weakness.”

3. Be very, very different.

So what words of advice does Gladwell have for SMEs? “Attitude is everything. Take the opportunity to do something very very different, unconventional, dramatic.” But what does that mean in practical terms?

Gladwell gives the example of IKEA founder Ingvar Kamprad, who famously figured out that flat-pack furniture would be much cheaper to manufacture and ship than the conventional product. Less well known, however, is Kamprad’s disruptive approach to a major problem he encountered. In IKEA’s early days, his suppliers – Swedish furniture manufacturers – became unhappy about his low prices, and stopped filling IKEA’s orders.

With no product to sell, the company faced ruin. Ever-flexible, Kamprad looked for suppliers overseas. It may not seem unusual to us today, but in the 1950s and 60s it was a radical idea: sourcing goods from Poland, then a Communist country (with all the social disapproval that entailed) and with manufacturing capabilities lagging far behind those of the West. What Poland did have, though, was plentiful timber and a willing workforce. The rest is history. Kamprad’s unconventional, dramatic, social-risk-taking approach saved the day.

As people never tire of repeating, the statistics show that most new businesses fail. But in this period of financial crisis, David and Goliath is a timely reminder that there are still plenty of ways for the underdog to succeed – and being the underdog can actually be the reason for your success. As Gladwell says: “The act of facing overwhelming odds produces greatness and beauty.”

Adjust your attitude. Focus on the advantages of being small, take social risks as well as operational ones, and don’t be afraid to pick yourself up, dust yourself off and try, try again.