The First Question: Is Your Business a KATZ or a Chick-fil-a?
The first question I ask the CEO of a growing company is: Do you want you company to remain a Small Giant or do you want it to scale?
My friend Bo Burlingham coined the term Small Giant in his excellent book of the same title:
A Small Giant is often a regional, intimately managed, hands-0n, familial and PROFITABLE business. Take, for example, my favorite Small Giant, KATZ’s Deli. This icon of the Big Apple, this Crown Prince of Corned Beef, this Pinnacle of Pastrami has created winding lines around the corner of Houston street for over 70 years:
My partner talked recently to the owner of KATZ and told him that a similar strategically placed deli in Buckhead, Georgia would create lines all the way down Peachtree Street. The owner responded that they had considered creating other locations, starting in other parts of NYC, but the water would have changed the flavor of the meat and that was unacceptable. What a perfect answer from the owner of a Small Giant. KATZ’s is immensely profitable and an icon of the community. But it will never become a scaled business in the vein of Chick-fil-a as I described in a previous post.
Answering the question of scale is essential to success for an Entrepreneur. If the business is a “KATZ”, he/she can work hard, become involved in the community, produce a solid ROI, retain current leadership and deliver a healthy lifestyle business. If, however, the Chick-fil-a model is the objective, then preparations should occur early to address the growth pains in the Market,Management, Model and the Money; in other words, Gazelles must at some point face No Man’s Land.
Eat Mor Chikin’ in No Man’s Land
No company to my knowledge enjoys the same credibility for quality products and uber service than Chick-fil-A. My son worked at a local Chick-fil-A in high school and reported that the product and management were indeed “what you see is what you get.” A pristine, scaled Value Proposition supported by a model that includes a shut-down on the potentially busiest day of the week. And yet, Chick-fil-A generates more revenue per restaurant than any other fast food restaurant in the industry, by far.
Surely such an icon of success should be able to skirt the perilous journey through No Man’s Land? No, not even Truett Cathy and his “early” bird brigade. Cathy, in his excellent corporate biography, “Eat Mor Chikin’” describes his company’s transition through the second stage of company growth.
All I had to do was look at the table of contents to find the story – chapter 10, titled “Crisis and Purpose”. It was mid-1980′s and Chick-fil-A was a late bloomer. Over $100 million in sales, but still on the verge of scaled growth through No Man’s Land. Management issues, confusion, capital constraints, economic model clarity, competitive copycats, etc. to the point where Cathy and his team met and asked the questions, “Why are we here?” “Why are we alive?”
I encourage you to read Eat Mor Chikin, not only to enjoy the story of a highly valued and brilliant entrepreneur who lives his (scaled) value proposition every day, but also to see a classic case study of how a company beat the odds to become a member of the 1 in 10 ventures that survive and thrive. They made it because they embraced the brutal facts of No Man’s Land and made the critical decisions that so few make. Cathy was and is, a SCARY GOOD Economy Hero!
Brent Sapp
