In the last few years our firm has developed a holiday tradition of sending an influential business book to our clients and partners. This year we’ve selected Wikinomics – How Mass Collaboration Changes Everything by Don Tapscott and Anthony Williams as the Diversified Insurance Group’s 2007 Book of the Year.

We chose Wikinomics because it expands on some of the themes from our previous two “Book of the Year” selections – The World is Flat in 2005 and Small Giants in 2006. Each of these books examines how collaboration and technology are changing the business landscape. All three works emphasize that business size is no indicator of greatness, expertise, or creativity. In today’s world, knowledge is power. Wikinomics is about using the knowledge of the masses, specifically knowledge within online communities, to scale businesses and innovate in ways that are breaking down traditional hierarchal models. In addition to being highly informative, Wikinomics is also an enjoyable, interesting read.

Diversified has always embraced a collaborative culture by connecting with our customers, insurance carriers, complementary service providers, and even competitors in an effort to deliver a better work product, a greater value and a higher level of service. Insurance is a relationship business which is perhaps why books that address ways to more effectively communicate and create knowledge resonate so well with us. Wikinomics reminds us that the more we share and give, the more we all win.

One of our wonderful clients was rather moved by the book Small Giants that we gave her. She sent out a letter to her employees and copied us on it. I am posting this with her permission. Thanks Sarah.

To each of you, this book is about private businesses whose leaders choose for the business to be great, rather than big. The ideas and concepts expressed appeal to me a great deal, and I want to share them with you. I see the Sunshine Terrace Foundation as one of these “small giants” and I hope it always will be. I am very grateful to Joe Henriod and Diversified Insurance for sharing this book with us (it is their Christmas gift to us).

Let me share some of the characteristics of a “small giant” and then you tell me if you think our Sunshine Terrace Foundation is a “small giant.”

Mr. Burlingham, the editor at large of INC. Magazine, feels strongly there is a new class of great companies forming—they don’t fit into the “normal” great company category—big, getting big, and small. He notes our society and the media has focused on the public companies and accepts the axioms relating to them—“business must grow or die.” “Getting to the next level” is another axiom—consistent increases in sales are the goal for many public companies. “Shareholder value” is another. This can mean different things—what’s in the interest of shareholders depends on who the shareholders are!!

These companies are utterly determined to be the best at what they do. Most of them are recognized for excellence by independent bodies inside and outside their industries. They have chosen not to focus on revenue growth or geographical expansion, but instead have pursued other goals they consider more important than getting as big as possible. The leaders in these small giants have other, non-financial priorities in addition to their financial objectives. They are interested in being great at what they do, creating a great place to work, providing great service to customers, having great relationships with their suppliers, making great contributions to the communities in which they live and work, and finding great ways to lead their lives. They have learned that to excel in all those things, they have to keep ownership and control inside the company and place significant limits on how much and how fast they grow. These companies have a distinctive vision and mode of operation which sets them apart from others in their field. They try to stay at the size where it is possible for a person to be acquainted with everyone else in the organization and for the CEO to meet with new hires, and possible for employees to feel closely connected with the rest of the company.

The author notes, accurately in my opinion, that when you are “hell” bent on maximizing growth, or when you bring in a lot of outside capital, or when you take your company public, you have very little freedom. When people choose to stay private and closely held, and place other goals ahead of growth, the result is increased control and time which equal freedom.

The leaders are clear about and confident in their decision to put other goals ahead of revenue or geographical growth. They walk around and talk with their employees. There is excitement, anticipation, a feeling of movement, a sense of purpose and direction, of going somewhere in these companies. These leaders are in sync with their market, with the world around them and with each other. Everything seems to click!

Here is a comment I love: “A business without soul is not something I’m interested in working at” said Danny Meyer of Union Square Hospitality Group. The soul of a business grows out of the relationships a company develops at it goes along. Soul cannot be there unless there is active, meaningful dialogue with stakeholders: employees, customers, community, suppliers. Another way to say this is that these small giants have “mojo”—something about them and they way they are that is different, unique, special—they are creative, they have an emotional contact with their customers, they are authentic and never compromise quality, they have a strong relationship with the community, and strive to retain their culture through having a strong mission. Mojo can definitely be lost through complacency and negligence. It is an elusive quality. It is lost when creative is stifled or lost, along with authenticity and quality. It is lost when the relationship with the community declines, and when the organization fails to retain its culture.

Leaders in the small giants remain in control, do a lot of soul searching, and reject a lot of well-intentioned advice, chart their own course, and build the kind of organization they want to live in, rather than accommodating themselves to an organization shaped by outside forces.

Leaders in the small giants are accessible and committed to retaining the human dimension of the organization. These organizations have unusually intimate workplaces—they are functional little societies that strive to address a broad range of their employees’ needs as human beings—creative, emotional, spiritual, and social needs as well as economic ones. They are places where employees feel cared for in the totality of their lives, where they are treated in the way people ought to be treated—with respect, trust, dignity, integrity, fairness, kindness, and generosity. These small giants represent a business as a social institution.

The leaders in these great companies are passionate—they love the subject matter, they have deep emotional attachments to the organization, to the people who work there, and to the customers and the community. These sorts of feelings, according to the author are the bane of professional management.

The leaders are remarkably in touch with, and focused on, what most of us would agree are the good things in life. They are clear in their own minds about what life has to offer at its best in terms of exciting challenges, camaraderie, compassion, hope, intimacy, community, a sense of purpose, feelings of accomplishment, etc. They organize their business so they and they people they work with can get these things! People coming in contact with this can’t help but feel the attraction. What’s going on inside is good, fun, interesting and something you want to be associated with. This is mojo! Companies with it have a quality that makes people want to be part of them!

The leaders of these companies I am describing for you have a passion for what their companies do—they love it, and want very much to share it with other people. They thrive on the joy of contributing something great and unique to the world. They refuse to let go of this passion, and are successful at keeping it alive through thick and thin. They understand you cannot measure the value of what a company does by looking at how big it is or how much profit it makes. These companies focus on the relationships the company has with its employees, customers, and community. Relationships are rewarding in and of themselves, but their strength reveals the degree to which people are inspired by the company, and its ability to inspire them is the best measure of how they perceive the value of what the company does. If they are as passionate about it as the leaders, the financial results are highly likely to follow!

Those relationships are fragile and these small giants know that. These relationships depend on a level of trust and intimacy that’s easily lost. All it takes is a little neglect. If you allow yourself to get distracted, if you stop working on whatever it is that ties you to the people you do business with, the intimacy will vanish, the trust will dissipate, and the bonds will erode. That can happen for many reasons, but usually it happens when the company’s leaders begin focusing on growth or financial return, not as by-products of a well-run business, but as goals to pursue for their own sake.

Passion helps leaders of these companies to maintain their organizations well! They so love what they and their companies do, and they are so determined to keep doing it, that they develop powerful protective instincts. They become acutely sensitive to anything that might stop them or lead them off course. In the same way a symphony is the end result of a composing process, any great service is the end result of its own particular creative process, and whoever is doing the creating must love the process as much as the end result. For people in companies with mojo process is inseparable from the business.

Wow! I hope the small giant characteristics noted above turn you on like they turn me on. I firmly believe we are a small giant here at the Sunshine Terrace Foundation, and we have great potential to continue to be one. In order for that to happen we need to maintain our passion, we need to follow the principles noted earlier in this e-mail. If we do these things, we will continue to be a small giant. I hope you will join me in this wonderfully exciting venture, and when I am no longer here at the Sunshine Terrace Foundation, I hope you will continue it—it seems terribly important, don’t you think? Our Sunshine Terrace Foundation is special—it is unique, it is a people place, it has mojo!

My heartfelt thanks to all of you for your passion, and your leadership for this unique and wonderful organization.

Sarah Sinclair, CEO, Sunshine Terrace

For the past two years, our firm has selected what we consider to be one of the most influential and enjoyable business books of the year.

Last year, we chose Thomas Friedman’s bestselling book The World Is Flat. (Read reviews about it HERE or HERE or buy it HERE.) We selected this book for a number of reasons, but mainly because it resonated with our firm’s culture and collaborative service model. As a firm that competes daily with larger global competitors, we enthusiastically embrace Friedman’s theory of the “coefficient of flatness” and the idea that legacy-free companies can innovate more quickly, provide better service and offer a heightened sense of urgency to their clients. As the world continues to flatten, we are believers that the small really can act big and that size is no indicator of greatness.

In keeping with the notion that the world is getting flatter and small companies are playing an ever larger role in the global economy, our 2006 book of the year is Small Giants by Bo Burlingham. (Read reviews HERE or buy it HERE.) This book showcases 14 companies that eschewed growth-for-growth’s sake in favor of a passionate dedication to being the best by creating a unique corporate charisma. The companies profiled in the book contribute to their communities, provide excellent work environments to their employees, give outstanding customer service, and of course, make world-class products for their customers.

The message of this book is that being the best does not necessitate being the biggest. Clearly, there are numerous examples of great, large companies. In fact, most books about successful businesses focus on large market cap companies that are defined by their growth and shareholder value. Small Giants is an interesting read because it highlights several remarkable companies that have taken a different path to unconventional success.

We would love to get your thoughts on the titles we’ve selected as our books of the year:

2005 The World Is Flat
2006 Small Giants

In an effort to foster an exchange of knowledge and ideas, we’ve created an on-line book forum. We would appreciate any comments you have on our past selections, as well as your assistance in helping us pick the most compelling and insightful business book for 2007.