I read a really interesting blog post earlier this month, and since I’m still thinking about it nearly two weeks later, I’ve decided to discuss it with you. It was written by one of my favorite people, Jules Pieri, co-founder and CEO of The Grommet, a company that launches undiscovered consumer products. Jules is also a member of the Women in Retail Leadership Circle and has spoken at our Summit the last two years. Her blog post discussed that as she was reflecting on the kind of company The Grommet is, she thought about the past companies she worked for and decided the companies fell into two buckets:

1. transactional; and
2. transformational   

Jules explained that she benefited from both types of companies, even though they’re radically different. 

A transactional company, Jules explained, has these characteristics:

  • obvious business model with direct competitors;
  • optimized processes;
  • clear chain of command;
  • articulated opportunities for training, development and promotion; and
  • (probably) a high degree of specialized work.

Transactional companies, Jules said, had very simple “contracts” with their employees: the employees give their time and skills, and in exchange the business tries to deliver clarity about its goals and business model, meaningful training, and well-organized advancement opportunities. There are times in anyone’s life, Jules explained, when a straightforward job is welcome and a transactional company can be a great place to find it, even though the downside can be rigidity and risk aversion.

A transformational company, on the other hand, has these characteristics, Jules explained:

  • a complex or innovative business model with few (or no) direct competitors;
  • a high degree of change and experimentation;
  • a lack of refined processes;
  • changeable organizational structures and individualized career paths; and
  • tolerance for risk.

Jules said she has worked for very few transformational companies, but organizations like Amazon.com, Google, Alex & Ani and Jeni’s Ice Cream are in this camp. She suspected the relative scarcity of transformational companies is because they’re harder to sustain, and original business models don’t always work out — despite best efforts. They probably also have a natural likelihood to evolve into transactional companies.

While transactional companies are a great place to learn, a transformational company is a great place to expand and grow, Jules said. And she thinks of The Grommet this way. Her challenge, however, involves maintaining that transformational nature while scaling the business.

Jules descriptions remind me of how I think about great art: In order to become a great abstract painter (transformational company), the painter must have a great foundation and know the basics (transactional company). Only when they have the basics down can they experiment, expand and grow.

I’d love to get your thoughts on this. As Jules asked her readers in her blog post, does this sorting into transactional and transformative types resonate with your work experiences and/or help you sort out your goals? Please let me know by dropping me a line at mcampanelli@napco.com. I would love to get a dialog going on this!

Melissa Campanelli
Co-Founder, Women in Retail Leadership Circle