Small Businesses Resilience in Numbers and Trust
Next Act Advisors
Next Act Advisors: Strategic advisory to scale new business models with operational excellence and good governance.
Size & Trust Matter: Why we can only maintain 150 relationships?
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When asked to describe my 35 years of professional experiences, I describe them in two segments: large public corporations and the private sector small companies – startups.???
I am indebted to the professional service firms – management consulting and audit, and sectors in which I have worked clean tech, pharmaceuticals, and retail. All these sectors contributed to the know-how I acquired in operating roles with large budgets, direct staff, and reporting lines to and within the C-Suite.
The knowledge economy represents 30% of worldwide GDP. I “peddle” my know-how to the other 70% of the economy. I am passionate to apply the know-how I acquired while working in large corporates to the vibrant ecosystem of small privately held companies.??
?The theme of the month of May at Next Act Advisors? is small businesses and their importance in the resilience of the US economy.??
This month of May is filled with content and celebration of the small enterprise and entrepreneurs. Posts include content on: National Small Business Week, SBA, SBIR/STTR, California Small Business Month, information on the largest seed fund of America, and a podcast interview with Min-Yi Shih on “intrapreneurship through the lens of a scientist solving nonlinear equations.”? At Next Act Advisors, my?purpose is to work in the small and medium enterprise arena to make change in the world through well governed, purposeful and resilient businesses one founder at a time.?
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Purpose driven enterprise:?
At Next Act Advisors I intentionally ask a potential client who (what CEO) inspired him or her, and what business model inspired him or her to do what he/she does. I share my own inspiration when I speak with each founder.?
?One of the three core tenets of my work can be found in the article I wrote on Fit for purpose.?
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Purpose at Next Act Advisors is:?
I want to assist entrepreneurs and intrapreneurs in building scalable, well-governed, and resilient businesses. I want to help you commercialize your business ideas to make a better world!?
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Sectors in which Next Act Advisors is present are clean tech, Enterprise SaaS, digital health and Medtech and women led companies.?
?When National Small Business Week came along, I could not but recall the seminal interview with John Mackey, prior CEO and co-founder of Whole Foods on “Trust Based Organizations”.??
His insights on how small groups of individuals who share a purpose and with a size of <150 meaningful relationships are what this post is about.???
John Mackey, on the High Trust Organization, remarkably makes mention of the size of 150 people being that of close trusting relationships.??
“Teams Everywhere:?Human beings evolved in relatively small tribal bands. Many scientific studies have indicated that our ability to maintain close trusting relationships with family, friends, and co-workers is constrained to probably not more than about 150 people. We can, of course, know many more people than this, but it is hard to know them well enough to develop close bonds of trust based on actual experiences. At Whole Foods we recognize the importance of smaller tribal groupings to maximize familiarity and trust. We organize our stores and company into a variety of interlocking teams. Most teams have between 6 and 100 team members and the larger teams are subdivided further into a variety of sub-teams.”?
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Dunbars’ number: Law of 150 relationships:
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I find comfort in numbers, research and often look to social scientists for validation of what I see in the business world. Afterall, as you may hear in Min-Yi Shih’s upcoming podcast, the nonlinear part of building an enterprise are human beings.?
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Robin Dunbar is a British anthropologist. In research on the ratio between brain size and group sizes he concluded that meaningful relationships are governed by the “magic number” of 150?
See the full article for details:?
Like Mackey, Dunbar has identified meaningful relationships as those that are intimate.??
The ratio limits how much complexity a social system can handle. this rule of 150 remains true for early hunter-gatherer societies as well as a surprising array of modern groupings: offices, communes, factories, residential campsites, military organizations, 11th Century English villages, even Christmas card lists. Exceed 150, and a network is unlikely to last long or cohere well.?
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Connecting with your local businesses:
?It goes without saying that during the pandemic and post pandemic, the resiliency of small enterprises was due to our local support as customers, unprecedented support from the US Federal government and the owners of the businesses.?
In the National Small Business Week Proclamation corresponding to 2023, a record of 10,500,000 applications for formation of small businesses was accounted for at the National level.???
Half of all private sector workers in our country are employed by small businesses. These businesses also account for almost half of our Nation’s gross domestic product. ?
In California, there are 4,200,000 small businesses employing 7,000,000 people.??
Yelp connects people with great local businesses. Our users have contributed over 200 million reviews of almost every type of local business, from restaurants, boutiques and salons to dentists, mechanics, plumbers and more. Our business revolves around the connections made between the consumers who read and write reviews and the local businesses that they describe. Yelp was founded in San Francisco in July 2004.?
If you are a founder, and you would like to share how your company’s purpose is to evolve within the cleantech, enterprise SaaS, digital health or women led businesses, please feel free to book time with me at Next Act Advisors.?
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Brenda A. McCabe?
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