While interviewing an owner of a California-based manufacturing firm, I realized that he, too, has the same fear of smallness that many leaders hold. Not long ago, the prestige in owning a firm or managing an operation was the size of the company—how many employees and how many offices.
The reality is that companies should not be measured by head-count but by productivity, innovativeness, reaction time, and profitability, just to name a few. REMco (Rock Engineered Machinery Co. Inc.) is one such company. It's small—30 people—and it's rocking the foundation of the stone industry. They make what's called a crusher that is used to pulverize large "boulders" into little pieces used for building projects such as roads and buildings. REMco has one product, and according to industry experts, it is cutting-edge. In addition, REMco out-sources all of the manufacturing, enabling it to concentrate on what it does best—design and selling.
On the other hand, REMco is also cutting-edge when it comes to organizational design. Without knowing it, they are using the Hollywood Model of doing business. Think about it. How big are the companies that make the movies we see? Even the pre-credits seem to make the companies seem extremely large. Paramount, Sony, Tristar, Columbia Pictures, MGM….present an Alan Parker Film, A Centropolis Film in assoc.............. five minutes of associations. The reality is that no longer do large firms create films, but a network of companies create a film. Lighting, design, camera crews, sound effects, costumes, staging firms all coexist for the purpose of putting together a film. Less than ten people may own and operate a company, hire the staff involved for a 6-month project, give it a budget, and complete the movie. The group disbands only to be reincarnated on the next project with a different network of people and companies. Kevin Kelly states that "in fact, out of the 250,000 people in the industry, almost 85% of firms employ ten or fewer people." Only ten firms employ over a thousand people. Watch the Emmy's and note who gets the awards: smaller companies that worked on the project.
As the technology impact is felt, firms’ organizational structures may shift from large organizations to network firms that, more and more, are streamlined to fit their particular niche. That's not to say that the larger firm will disintegrate, but that the use of the Hollywood Model will be cheaper and will allow the company much more flexibility to adapt and to change.
© MM David & Lorrie Goldsmith
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