Rooting for small.

• Author: Hall, Robert
• Position: Marketing Solutions

What is it about "small?" Small towns, small armies, small organizations? Sam Walton's original Wal-Mart strategy was to win the small towns--places large enough for on discount retailer but too small for two. He executed this strategy from Bentonville, Ark.--certainly now the intergalactic center of small-town bigness.

In banking, we have seen local, small-town banks take market share from larger banks. This trend is also seen in the military, which continues to fight battles with smaller, more nimble armies. A small, decentralized group called Al Qaeda is terrorizing the U.S., the U.N. and other significant world powers.

Applebee's has aped Sam Walton's strategy, placing its restaurants in small communities with fewer than 25,000 inhabitants--large enough for one upscale chain restaurant, but too small for two. With 1,500 locations, Applebee's is now the largest player in the casual dining segment.

In 2003, according to AuditAnalytics.com, 510 clients of the Big Four accounting firms switched auditors, 55 percent hiring a smaller firm. So far this year, about 60 percent of those switching from the Big Four are turning to smaller firms. In 2000, it was only 39 percent.

Even the fast food industry is rethinking "super sizing."

The appeal of Small

Just about the time we were learning how to play Big--how to scale, dominate, bring overwhelming power, be number one or two in a market, use the tools of technology and the muscle of marketing to win big, Small shows up and kicks selective and sometimes collective butt.

An irony about Small: a common outcome of winning Small is the aspiration to become Big. Wal-Mart is learning that even if your original strategy was about Small, if it makes you big, you earn the same resentment and backlash reserved for other, openly Big companies. All of the members of the Big Hall of Fame--GE, Citibank, Wal-Mart, the U.S. military, Microsoft--were once small.

What is it about Small that is so resurgently appealing? Is it distrust of what so often accompanies Big? (The concentration of size, power and control? Impersonalization and loss of relationship? The ineptitude of a cumbersome bureaucracy? The smothering of creative impulses?) If the dinosaurs could talk, what would they tell us about size?

Up to a point, size seems to mean greater security. Past that point, it becomes the opposite--a source of insecurity.

Lacking a crystal ball about what this trend means for the future, we can at least make three...