When small is beautiful

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The proprietor, ‘Charlie’ Millard, knew pretty-well what you wanted the moment your eyes peered over his counter.

That seemed to go for all his customers. It was the way. A small retailer, he was the sort who put value, trust and commitment to those he knew and served above next year’s bonus.

Perhaps it’s an inevitable symptom of commercial development that the bigger enterprises grow, the more remote they become from their customers, their original stakeholders.

When was the last time you were able to break through the minefield of call-centres or negatively scripted corporate responses in your attempts to achieve a satisfactory answer from corporatedom? We’ve been forced to accept an institutional aversion to personal contact.

Once upon a time, you could feel assured that if you actually talked to someone with a modicum of influence, at least there might be some chance your inquiry or complaint would be dealt with.

I certainly have no time for the Colonel Blimp-type demands to ‘fetch me somebody in authority’, but it’s rare, except perhaps in this island, to be offered any chance of that luxury.

Try communicating between the divisions of a 40 year-old DIY chain, or a hire car company which tries harder. And it’s not restricted simply to the punters like you and me; just watch the beads of frustration on the brows of their own employees.

We all have an instinctive response to size. There’s no question that big can be impressive. But while we might automatically give way to the bulk of a 4×4 in our narrow country bye ways, we’ll have an equally powerful emotive rush of support for the proportion-challenged David facing his Goliath.

And there’s an essentially practical advantage in operating within small, manageable units.

Leaders of vital group activities, platoon commanders, medical teams, will tell you that there is a finite number of individuals – I’m told it’s roughly the same as the fingers on both hands – who can operate efficiently together. Apparently it’s a psychological phenomenon. You’d risk your life and reputation for a close colleague or, indeed, a family member; any more and that bond is seriously diluted.

At least one response to the fiasco that’s overtaken the financial markets, and sown misery from Wall Street to Hong Kong, is that institutions have grown so large that no one feels any responsibility for individual behaviour or mistakes. Cocooned within their large operation they are immune from accountability.

Preoccupation with size has also seduced us into believing that some things are too big to fail. When enterprises grow so large that they underpin the welfare of the nation, any tremor can set off a disastrous earthquake.

Such was the case for banking giant RBS, which had incorporated a string of individually successful names into the most powerful conglomerate.

When the ‘crunch’ hit home, the Government found itself in a position where it had to bail it out or it would have taken down the national economy with it.

Back in the 1980s, a ‘buzz’ phrase emerged which exemplified a pragmatic approach to expansion and development.

‘Small is Beautiful’ was the philosophy of the prominent international statistician and economist, Fritz Schumacher, who championed appropriate development to revitalise and promote the developing world.

By contrast, at home, companies began straying across international borders in a corporate lust for acquisition. ‘Big is Powerful’ became the rule. Everyone was doing it, and in the short term it was profitable.

It removed competition, streamlined supply and regulated demand. The more eggs cracked into the same corporate omelette, the less regard was paid to operating efficiency or indeed manageability.

The motor industry, for example, which owed its growth to a universal demand for mobility, gobbled up badges left right and centre, satisfying its own appetite by regularly tweaking designs, like a drug pusher stoking the needs of his addict.

Now, faced with a saturated market, its bubble has burst and it has called for government-funded inducements for us to scrap our existing models and buy their new ones. But with so many dependants, ‘cold turkey’ for Detroit or Dagenham risks widespread economic ruin.

The supermarket chains are at it too. On one hand, they cram their shelves with so much own-brand produce that we’re lured into buying too much and throw it away – £7.3 billion a year gets dumped before its table-date.

On the other, by forcing down prices to the producers, they’re putting farmers out of business. For short-term profit, there’s the prospect of long-term shortages with no-one left to work the land.

But now is not the time to advocate stripping down the mighty financial institutions to their constituent parts, though it hasn’t prevented the opportunist political hindsighters from doing just that. It would simply be a recipe for instability and deconstruction.

But focusing on smaller practices, it’s worth remembering the age-old custom of ‘shared liability’ among company board members, including banks. It spread responsibility and limited risk, so short-term sellers couldn’t just gamble with shareholders assets and make away with bonuses, whether profited or lost.

After the recent shabby spectacle of theatrical ‘Russian confessions’ by captains of the financial ships of enterprise, they’re likely to be reviled just as much for abrogating the golden rule of stewardship and responsibility, namely, overextending their competence, as for clinging to their immoderate rewards.

Heading into the ice-field, they may rue the day that they opted for the remote opulence of the state cabin over the safety of the crew’s modest lifeboat.

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