Roger Trapp: Why size does not always count

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The Independent Online

In the early days of this month, when much of the country was still trying to shake off the effects of the festive season while staring in shock at the images from tsunami-hit Asia, two surveys appeared.

In the early days of this month, when much of the country was still trying to shake off the effects of the festive season while staring in shock at the images from tsunami-hit Asia, two surveys appeared.

The one that attracted the most attention was the less interesting one. This was the study by MORI on behalf of the human resources consultancy DDI that "revealed" that people who had been prefects or sports captains or held other positions of responsibility at school had tended to find themselves rising up the hierarchies of companies when they joined the world of work. As Jeremy Warner pointed out in The Independent at the time, this was hardly surprising. A few respondents to the survey were bold enough to claim that they were marked out as leaders early on. It was just evidence of the system working. You went to the "right" school, did the "right" things, went to the "right" university, where you again did the "right" things and - lo and behold - you were employed by establishment employers, be they the country's largest companies, its most prestigious law firms, the Civil Service or armed forces.

The problem is that this natural progression was all very well in days gone by, when there was much more certainty in the world. Nowadays, success in business is about much more than knowing the right people and being a "safe pair of hands". So, while having a position of responsibility at school might help an individual into the top job at a blue-chip company it does not necessarily mean that he or she will succeed there. Warner conjectured - probably correctly - that a similar survey carried out among entrepreneurs would reveal far fewer former prefects. People who set up their own companies tend to be more iconoclastic and less likely to be loaded with conventional qualifications; they are more likely to have the drive to succeed that usually comes from the outsider rather than the comfortably established.

Which brings us to the other, more interesting, survey. This one, by business information group Findlay Publications, found that small British manufacturers have been harnessing technology and technical expertise to counter competition from centres of low-cost manufacturing in such places as eastern Europe and China. The study identified the emergence over the past five years of a new breed of technology-intensive "micro-company" fulfilling the manufacturing requirements of larger businesses. Such businesses typically employ fewer than 50 people and combine sophisticated machinery with well-qualified workers.

Anybody who has spent any time around successful entrepreneurial businesses will not be altogether surprised by this apparent ability to fly in the face of the received wisdom and take on low-cost producers. After all, experts are constantly telling us that the way to counter cheap imports is to "move up the value chain" by increasing the skills of the workforce and the sophistication of the machinery that they are using.

What is more shocking - and it might be linked to the findings of the first survey - is that large businesses are not apparently doing this themselves. Admittedly, their very size makes it more difficult for them to be flexible and responsive. But, at the same time, their very size must surely make it much easier for them to invest in the sort of equipment their comparatively tiny suppliers have been buying.

According to Findlay, the proportion of machine tools used in companies - mainly subcontractors - employing fewer than 20 people and which have computerised controls rather than manual ones rose to 44 per cent by the end of 2003, up from 32 per cent in 1997. This rise was significantly higher than for other businesses employing more workers. Indeed, in companies with more than 500 employees the proportion of computer-controlled machine tools has remained almost static at just over 60 per cent.

All this suggests that - though we continue to see mergers in all sorts of sectors predicated on little more than the notion that bigger is better - size does not always count. What probably matters much more than size is having good ideas, good people (at all levels of the organisation) to carry them out and a risk-taking rather than a safety-first mentality.

Which is why - in the pharmaceutical industry, in manufacturing and in other areas - some of the most dramatic developments are still being produced by small teams in small laboratories and sheds.

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