Ownership Matters, Evergreen Companies, & Grow Frequently not Explosively
Small Cities Weekly | 09.12.2025
After a hiatus, Small Cities Weekly is back. I’m trying to get back on a weekly cadence and hopefully share some essays I’ve been thinking a lot about. I also have a new project in the works - more on that soon!
Ownership Matters
South Bend has been at the center of two quintessential stories about change in the industrial Midwest in the last 75 years. Studebaker in the 1960s and South Bend Lathe in the 1970s.
They’re usually told as stories about workers, pensions, strikes, and shutdowns. But hidden in both, there’s a quieter, but equally important theme - ownership. And when you zoom out with that lens in mind, you can see the draft of a compelling story taking shape. Two acts of three already penned, one waiting to be written.
Act One: Studebaker
By the 1960s, Studebaker was no longer the family company it once was. As Andrew Beckman of the Studebaker Museum explained:
“The Studebaker family wasn’t involved in the company much after they went public in the early teens… outsiders came on to the Studebaker board, money interests. Lehman Brothers, other banking houses got on Studebaker’s board. The family essentially withdrew from the company at that time.”
That increasing distance, over decades, shaped what came next. On December 9, 1963, the Tribune ran the headline: AUTO OUTPUT TO END HERE. The “official” announcement was scheduled the next day in New York, but word had already spread outside Gate 1 on Sample Street.
The losses were devastating: thousands of jobs and ultimately the pensions that workers were promised. UAW researchers warned: “I am advised that the average age of the South Bend Studebaker workers is 54 and that it is unlikely that the pension fund will have sufficient monies to pay pensions to workers under 60 years of age.”
Studebaker became a national case study. As historian James Wooten later wrote, “Studebaker became a poster child for the cause of pension reform and… termination insurance moved squarely onto the policy agenda.”
Almost 10 years later, ERISA was passed, the company oft mentioned as inspiration.
Act Two: South Bend Lathe
In 1975, it was a different company, but a familiar problem. A once-local company, South Bend Lathe, was slated for liquidation by its owner, Amsted Industries, a Chicago conglomerate. The company was nearly 70 years old, world-famous in its industry, and employed almost 500 people.
This time, the signs were caught before it was too late. A federal-municipal partnership, local banks, and a newly-legislated employee stock ownership plan (ESOP) stitched together a unique buyout. Ironically, it was ERISA, the legislation inspired in part by Studebaker, that made it possible.
The experiment drew national attention. TIME magazine ran a story titled More Worker-Owners. The Wall Street Journal ran How and Why U.S. Helped 500 Workers Take Over a Machine-Tool Manufacturer. For a moment, it was the model for a new worker-centric capitalism.
But inside the plant, it felt different. Five years later, a Washington Post article titled, Workers at Employe-Owned Firm Find the Going Rough, would quote a machinist:
“I did what I did back then just to save our job. I didn’t know a damned thing about ESOP, other than that it would keep the plant going and the paychecks coming. I figured we could wait until later to work out the kinks in this ownership stuff.”
After an initial few years of improved performance and profitability, the company struggled to find its footing and reorientate its traditional management-labor dynamic into that of a collectively-owned firm. In 1980, it reached a breaking point and workers went on strike against the company they owned. What had once been a poster child became, as one of the architects of the deal put it, “the bête noire of the ESOP movement.”
Act 3: [Unwritten]
Ownership determines who decides, who benefits, and who survives. I think it’s the most underused, under-leveraged, and under-appreciated tool of economic development today. It should sit alongside tax incentives, talent attractive, workforce development, and all the other strategies being deployed. I’m not just talking about employee ownership - I’m talking about ownership in general. It’s a tool that can take many forms, used in many ways, and deserves attention and innovation.
South Bend, and cities like it, have an opportunity to write the next act.
Studebaker showed the tool of ownership go ignored, except in the retrospective.
South Bend Lathe showed the tool of ownership used, but reactive.
What happens when the tool of ownership is used to build resilience?
Links
You can find links from this and all previous editions here.
Another Way: Building Companies That Last… and Last… and Last, Dave Whorton & Bo Burlingham
Not only were there companies out there like Hewlett-Packard in its heyday, or even more impressive, but they could be found in almost every industry, at almost every size, under multiple ownership types, and across many generations. One of those firms is almost three hundred years old. They all perform extremely well; they weather hard times better; they build deeply happy and loyal workforces; they are quiet pillars of their communities; they make good money. Few people in esteemed business circles seemed to know about them, or care. But they should. And so should you.
I highly recommend this book, especially for those who crossover between the land of startups and the land of legacy businesses.
A Stake in the Outcome: Building a Culture of Ownership for the Long-Term Success of Your Business, Jack Stack & Bo Burlingham
Part of the problem has been the tendency of companies to use stock merely as a form of compensation—a carrot to get people to work harder. In a company with a strong culture of ownership, stock is more than compensation. First and foremost, it’s a vehicle for change. The goal is not just to reward people for the work they do, or to maximize profits for their own sake, or to enhance shareholder value, improve cash flow, or whatever. Rather, equity is used to involve people in the process of making a difference in the world. Why? Because business is not an end in itself. It’s a means to an end. It’s a tool that allows us to accomplish the things that matter most to us, and those things must transcend business to have real meaning and value. The precise nature of those loftier goals will vary from company to company, and even from person to person, but you must have them. They are what makes ownership worth caring about.
The story of SRC is an interesting one to learn in parallel with South Bend Lathe. Both had a similar starting point, but very different paths as early ESOPs. Jack has written multiple books about his journey there but this one is a great inside look at how employee ownership culture gets built.
Debunking Growth Myths, Dr. Gary Kunkle, Evergreen Journal Podcast
But the other thing that we found, which was kind of counterintuitive in a way, was that all growth is not good. There's good growth, and then there's incredibly destructive growth.
Two really great takeaways from this. (1) The industry cluster theory of economic development may not be as clear cut as once thought. (2) The companies that sustain growth over long periods of time are the ones that grow most frequently (even if in small amounts), not the ones that grow most explosively. The act of growing frequently, unsurprisingly in hindsight, gives you practice in learning how to grow well. The more you practice, the better you get at it.
You can reach me at dustin@invanti.co if you want to chat more about the small city segment!