January 29, 2022

Business Forum | Use the size of your business to its full potential

Is it better to be tall or short? Listening to your competitors, they would all have the optimal size, to the point of having a competitive advantage. The reality is that companies of different sizes perform well over long periods of time. Hence the question: what is the real importance of the size of a company?



Yvon Charest
Former President and Chief Executive Officer, Industrial Alliance

I grant advantages to large companies from the outset. Among companies that have experienced financial results well below expectations over a long period of time, the financial markets, rightly or wrongly, are generally more tolerant of large organizations, which gives them better access to capital.


PHOTO MATHIEU BÉLANGER, ARCHIVES THE PRESS

Yvon Charest

Their glass would be half full: the bad patch is behind them, a new CEO will achieve a transformation, etc. While for smaller organizations, it’s the opposite, the glass is half empty: the end is near, the bigger ones will bounce back, etc.

Large companies also have the advantage of being able to choose development opportunities from a wide range of products and geographic sectors. They can easily reduce or even close the sale of certain products, knowing that they will be able to more than compensate with products whose growth and return on capital are much greater. Everyone dreams of being able to open and close the taps of capital and talent!

The importance of culture

However, the large size of an organization must face a major obstacle, namely a culture that is poorly disseminated throughout the organization. The culture of an organization is so important that we say Culture eats strategy for breakfast (“Culture swallows strategy at lunch”).

All organizations aspire to develop a few widely disseminated, accepted and fully used principles of action that give consistency in action, a unique message to clients, in short, superior execution.

Developing and deploying a culture is much easier for smaller businesses, to the point that they aren’t even on the agendas of smaller businesses.

All culture has its source in the behavior of a few leaders. Over time, it becomes necessary to describe, repeat and value the “how” we serve a customer, tackle a problem and improve an activity. It’s difficult for a large organization to be successful in this area in all of its operations.

Smaller companies can take advantage of their culture in the war for talent. Employee loyalty is the key element in this war, and this loyalty manifests itself when an employee feels that one takes care of his development, that he believes that in the medium term, his aspirations in terms of work, responsibilities and remuneration can be fulfilled.

Developing talent involves mobility in the organization and frank feedback. This activity should have the same priority as achieving strong financial results. These broad principles must be supported by a culture in which it values ​​making the right resources available to other sectors and where discussions about performance go far beyond colorless and tasteless newsletters.

A strong culture can also be decisive when it comes to cost structure. What leader does not dream that every employee manages the expenses of the organization as if the money came from their wallet?

What leader does not dream that all employees accept that there are priority expenses, necessary cuts and that decisions must ignore the comfort of each?

Large organizations live with both the potential for a better cost structure and the very real danger of receiving a panoply of projects to incorporate into the next budget. Discipline is more difficult when the organization is rich and our colleagues have lots of good ideas … to grow their own sector. In short, large organizations win in theory, but lose time in terms of costs and must adjust through reorganizations that erode employee loyalty, which harms talent management.

There remains one final issue: trademarks.

Organizations with superior strategy and vision skills, regardless of size, will be the big winners when it comes to branding. It’s all about understanding the deeper trends, the potential of new technologies, and the execution of a superior customer experience.

It’s reassuring to know that strategy is more important than size.

The Business section of Press allows space for an opinion letter from a business actor. Entrepreneurs and managers, the floor is yours. Raise questions, share your experiences, propose solutions, express your opinions.