Matters Column

Better to be a David than a Goliath

September 22, 2017
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If you are not familiar with Ted Talks, I encourage you to check it out on YouTube, NPR or Google it. It is a series of brief talks by experts, the elite, the famous, the infamous, etc. At last count, I think there are 2,000 of them. They cover an incredible number of interests from sometimes unusual perspectives. My latest favorite explains how Goliath was the underdog and David was a sure bet.

The talk was by Malcolm Gladwell, the New Yorker magazine writer who is the author of national bestsellers “The Tipping Point,” “Blink,” “Outliers” and others. I heard a term years ago that really caught my attention; a speaker referred to a BFO. That is a blinding flash of the obvious. Gladwell explains by the concept of BFO, had you been there and if you were familiar with the contestants, you would have bet on David.

Goliath had one notable advantage in individual combat. He was a giant. That was it. He most likely suffered from pituitary gigantism. If that were the case, he would most likely have suffered from double vision, limited mobility and a host of other physical problems. He would have worn a heavy and confining set of armor. He had to get close to you, and you would have had to get within his grasp for his size to matter.

Then there was the underdog, David. He was a shepherd. You envision a pastoral scene with soft little wooly sheep in knee-deep green grass being watched over by a soft, white robe-dressed ballet dancer type. The fact is a Navy Seal-class shepherd protected them from wolves, lions and thieves. His weapon was a slingshot; it was the equivalent of a 45-caliber pistol. The slingshot was used effectively against wolves and lions. Poor Goliath was sent out to do battle with an adversary who was far superior. The results should have been predictable.

So what does this have to do with small business? Is bigger better?

I hope we have all come to understand that too big to fail is a myth. General Motors, Enron, Arthur Andersen, etc — all Goliaths. Gladwell has a unique capacity to find the errors in thinking that lead to disaster. The movie “The Big Short” tells the story of a few analysts who predicted the 2007 economic meltdown. Looking back, their predictions were correct because they dealt with facts, not hype. A CPA speaking in a cash flow seminar I attended in the mid-1980s predicted the bankruptcy of GM. When I questioned his analysis, he stated numbers are the numbers regardless of the size or name of the entities.

Small business is similar to David. David won because he was agile, intelligent, adequately armed and courageous. Goliath came to the battle with expensive armor and, due to its weight, became a liability against a small, agile opponent. Goliath was overconfident. If David had fought as expected, Goliath would have crushed him. David assured his superiors that his plan would work. Also, the fact no other Israeli accepted the challenge helped David win the assignment.  

Giant organizations fail because of a variety of reasons but lack of ability to manage a large entity adequately is a big one. Wells Fargo bank is the latest example of big being unmanageable. Opening a bank account without the customer’s knowledge is reprehensible. Over 1.5 million phony accounts opened, generating millions in customer fees — an example of loss of institutional control. The nature of small business due to the owner’s intimate knowledge of their whole operation is control.

Too big to fail and too small to succeed are both fundamentally flawed concepts. One of my favorite lunch conversations was with a partner in large CPA firm who called me after I spoke at an event. After a great conversation, he told me he envied me. Of course, I was surprised. He said that I was in my 50s and still had not had the enthusiasm squashed out of me. When you can actually have an effect on the business you work in, business is an adventure. My father was a GM executive at Buick in Flint. In the early 1970s, he tried to tell Detroit that GM was doomed if it continued to ignore quality issues and labor costs. He was demoted and threatened with severe punishment if he went public. How many GM employees could see the handwriting on the wall and were intimidated into silence?

Goliath's size encouraged him to overestimate his capabilities. The armor he wore made his lack of agility worse, which contributed to his demise. His affliction caused double vision, which didn’t allow him to see his adversary properly. Had he been able to see David clearly, he would have seen that his adversary was equipped to kill him.

In a nutshell, GM was a giant that lacked agility and vision just like Goliath. Small businesses can compete because they have vision, agility, courage and creativity.

Shepherds had to be resourceful in order to protect their flocks from lions and wolves.

A lumbering giant who was vision impaired and had no protection from a fatal shot between the eyes is less fearsome than a 600-pound lion that moves like a cat with the strength, vision and agility of, well, a lion.

Be a David and slay your Goliath. Avoid lions if you can. 

Paul Hense is the retired president of local accounting firm Hense & Associates and past chairman of the Small Business Association of Michigan.

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