Inevitable change

Change is occurring in so many corners of industry – across varied communities, organizations and diverse verticals – it’s everywhere you look. It is visible in the dynamics around the new Access Economy, the disintermediation occurring in every sector, and the "Buy Local – Be Local" initiatives found from Charleston to Seattle. It can also be seen in the resurgence in local banking and a growing multitude of alternative investment instruments. These changes go hand-in-hand with the new wave of creative knowledge and remote workers enabled by the Internet – our relatively new global biosphere network – where over 10 percent of the world’s population is now on broadband in less than 20 years of commercial Internet growth. The list continues to grow, as entrepreneurs find new and innovative ways around the thousand-car pileup otherwise known as our current national economy.  You can liken it to the recovery in nature, how it organizes itself and rebirths after a forest fire, volcanic eruption, or hurricane. 

Kirkpatrick Sale’s seminal work, Human Scale, is now over 30 years old, but has never been more valuable in its application to the many systems that drive America, from transportation to education to business. Sale walks through almost every major human-invented system on the planet, from governments, to schools, communities, businesses and even streetscapes, and concludes that each has a breaking point, and that size does matter. 

But in this case, running contrary to the big is beautiful mindset, each system has a breaking point and when that is passed, its effectiveness diminishes proportionately as it grows in size. The big box, global corporation cowboys argue that WalMart is more efficient, for example, than many local farmers serving their goods through local stores. When you add up the underlying data and impacts, the ramifications are, in fact, disastrous for communities, our health, the middle class, and on and on. The result is low-wage jobs, lack of ownership and empowerment, decreased food quality and safety, loss of community dollars and loss of Main Street. The point here is that it does not need to be an absolute, but clearly a rebalancing back towards small business is in order, and is on the way.

Small business accounts for roughly one-third of our economy. Firms with less than 100 people account for 99 percent of the companies in the US, 30 percent of the jobs, and 21 percent of the revenue [see How Important is Small Business to the U.S. infographic for details and sources].

Also, startups (which typically begin as small businesses) create a constant and large number of new jobs in the US – new firms add a 3M jobs per year, old firms lose 1M (see Job Growth in U.S.  Driven Entirely by Startups, a study from the Kansas City-based  Kauffman Foundation).