One Thing Inc. 5000 Companies Have in Common: Performance
BY Leigh Buchanan
How Inc. 5000 companies make other companies better. And in the process, make the economy work.
We know companies that operate data centers are critical to the economy. If we thought about it, we would realize companies providing air conditioners to keep those data centers running are critical, too. But how critical are companies that maintain and service the air-conditioning systems that cool the data centers?
Toby Thomas found out in 2007. At the time, he was working for a business that was hired by Perot Systems to ensure its data center stayed cool while a new one was under construction. Perot Systems had many big financial clients, and "the day before we went in, we got a call from a top executive saying, 'I want you to know, if this fails, what will happen,' " recalls Thomas. " 'It will be on CNN. The stock market could be affected. The value of the dollar could be affected.'
"I realized, Wow, we're not just guys in hardhats doing a job," says Thomas. Two years later, he founded EnSite Solutions, now based in Irving, Texas. "Data centers are more tied to our economy than oil is," says Thomas. A company that services data-center cooling systems is mission critical to the mission critical to the mission critical.
The Fortune 500 traffics in consumer products, oil, pharmaceuticals, cars, retail, and the kinds of telecom services and software most people use every day. The Inc. 5000 is, by and large, a more esoteric crowd. Many supply businesses and government agencies with such products as network-on-chip design (Arteris), cloud-services brokering (Cloud Sherpas), and electronic payment technology optimized for the clinical-trial industry (Greenphire). The niches they ply can be inscrutably specific. Acquia provides products, services, and technical support for the Drupal social publishing system. Understanding Acquia requires a pit stop at drupal.org to learn about a fascinating corner of the global open-source movement.
Management author Hermann Simon calls companies like these hidden champions, because they deliver outstanding performance while operating "in the 'hinterland' of the value chain, supplying machinery, components, or processes that are no longer discernible in the final product or service." As such, they are the sinews of our economic physiology. But jobs are also created by the thousands of organizations that constitute the Inc. 5000's customers. The ability of those organizations to hire is predicated, in part, on financial performance that the Inc. 5000 helps make possible.
The National Center for the Middle Market describes companies such as those on the Inc. 5000 as "model links" in corporate supply chains. In a period of uncertainty and frequent shocks, their ability to deliver improves corporate customers' resiliency. These businesses make and keep American companies competitive: Within their niches, they are as innovative and service oriented as the most beloved household names. But rather than strategize to build brands, they earn reputations simply by virtue of how well they do what they do. They grow reference by reference until every customer in their markets knows whom to call.
The largest distinction between consumer-facing Inc. 5000 companies and their business-to-business counterparts is that the former thrive by making customers happy. The latter thrive by making customers look great. Last year, a friend forwarded Toby Thomas an article in a business publication lauding one of EnSite's New York City clients for quickly restoring generator service after Hurricane Sandy swept through. "No mention of EnSite," Thomas's correspondent noted curtly.
"I wish they'd mentioned us," says Thomas. "But it was still awesome."
This article, which also appears in the September print edition of Inc. (the Inc. 500 issue) has been updated to reflect the Inc. 5000 list.
LEIGH BUCHANAN is an editor at large for Inc. magazine. A former editor at Harvard Business Review and founding editor of WebMaster magazine, she writes regular columns on leadership and workplace culture. @LeighEBuchanan