There is No Perfect Recipe for Harmony in Family Business
My family has been selling country ham in central Missouri since the 1920s, when my entrepreneurial grandfather started selling a few country hams for a bit of extra money. He ultimately constructed our original facility, the “Ham House,” in 1952, and with the help and support of his family, the business was launched. My father, along with other G2 family members, built upon that foundation to significantly scale our Evergreen business, Burgers’ Smokehouse. Today, we operate two facilities and employ 350 people, producing a wide variety of cured and smoked meats and other foods for customers throughout the U.S. and southeast Asia.
I am one of nine third- and fourth-generation family members working in the business, and all of us are keenly aware of our role as stewards of a gift that has come to us through the energy and vision of those who came before. Our shared Purpose is to perpetuate the organization to benefit employees and our community and to create value for family shareholders—indefinitely over many generations to come.
For us, remaining privately held is essential to fulfilling that Purpose. We know that as the business grows in size and complexity, opportunities for disharmony will also increase, which could potentially force a sale. As President, I’m charged with implementing structures and guidelines around family ownership and engagement that will help us avoid these pitfalls. I know that tackling family issues head on is essential if we want to be Private forever.
Here are some of the steps we have taken around family ownership and employment to help ensure the success of our Evergreen business. There’s no cookbook or perfect recipe for family harmony and business success, but these steps have been helpful to us as we’ve navigated through transition points and worked to create mileposts for the road ahead.
Family Guidelines
In the mid-eighties, when the G3s started coming on the scene, my dad could see the need for more formal structure around family involvement in and ownership of the company. He went to work creating some of our first family guidelines, which included developing entry and exit guidelines, as well as a formula for our generation to buy stock, based on our relationship to the founder. Those guidelines have continued to evolve and expand and are a living document to help guide the family around a wide range of employment and ownership issues.
Working Outside the Business
Included in the original family guidelines my dad created, was a requirement for family members to work outside the business for a minimum of two years before joining the company. He had the foresight to see that as the company and the family grew, we would need that outside work experience in the next generation. That outside experience has been invaluable and absolutely impacts the way the company is moving forward today. The family members who spend time working in other organizations develop strong skill sets in a variety of areas and come back with life experiences and skills that benefit the company.
Summer Work Program
We have developed a summer work program that really does a good job of helping family self-select whether or not they want to come back to the family business and build a career. Family members can start around age 14-15, and while current labor regulations don’t allow for hands-on work in the plant as was standard in my generation, we offer opportunities for them to work outside the walls of the plant or on our farm, which provides work experience at an early age. It’s not glamorous work—they are painting and weeding and helping check tasks off a list of things that need to be done each summer around our property—but it provides important insight into the company and the scope of our operation.
Family Education
When my dad began developing guidelines, our generation (G3) started meeting as a junior board. We would hear from guest speakers—bankers, insurance experts, other business professionals. My dad also brought in an advisor at that juncture who provided insight into succession and transition issues. We have continued to learn from outside experts, and, just this past year, I hosted a Saturday workshop for family members and presented the family with a comprehensive guidebook that included the guidelines, policies, and procedures that we want family to understand. As we educate family, our aim is to be very intentional about family management and ownership—and that they are different and come with unique rights and responsibilities.
Family Council and Family Board
We’re at an interesting transition with the structure of our family meetings. The Family Council numbered about 15 active members when it was formed in 1994 to build a stronger family and continue refining the guidelines established earlier. In recent years the Family Council has been on autopilot. The family now totals 50 people and counting, rendering a direct democracy too unwieldy to be productive. We are currently developing a Family Board consisting of members representing various branches of the family to review guidelines and plan social events.Recommendations will be brought back to the Family Council. The purpose of the family governance is to address how the family interfaces with the business. Corporate governance is the responsibility of the Corporate Board.
Corporate Board Composition
One of the best things we ever did was include three outside directors on our Corporate Board, which has been really important. I don’t think we’d be where we are today without their influence. The Corporate Board also consists of four family members who work in the company.We are currently strengthening the outside board members’ presence on our salary committee and are using benchmark data to ensure that we’re paying market prices for the positions that family members hold and that those don’t get either inflated or deflated. We may expand the board to nine members by adding another outside member and a representative from the newly formed Family Board.
Seek Out Resources and Advice
For our family, a key to managing family dynamics and guidelines has been to tap into the many resources out there today around these topics. There is a plethora of books and experts and university programs that exist for the perpetuation of family businesses. Know that you are not alone; the challenge you face is nothing that hasn’t been faced by probably every family business in one way or another. Seek out those resources and opportunities. You may also want to consider working with a consultant who has had experience with a lot of different families and can provide best practices for any family business at their particular stage, size, or family dynamic. There are things you do in a start-up family business that you don’t have to concern yourself as you progress through multiple generations. The level of complexity and issues change from generation to generation.
Conclusion
It’s a very gratifying and humbling experience to have a part in passing on a family business from one generation to another. For me, growing up in a second-generation family business, working through the challenges and issues of moving into third generation employment, and now taking the knowledge from 35 years and sharing what I’ve learned with a new generation has stretched me as a business and family leader, but in the end, has been a gift.
Steven Burger is President of Burgers’ Smokehouse.
Purpose in the Pipeline
Here’s a little plumbing 101: It takes a minimum of 8,000 hours of combined on-the-job training and classroom instruction for an apprentice plumber to test to get a journeyman’s license. That means a person will likely work three-to-four years in the trade before he or she can even test for their license; after that, if the goal is a master plumber license, that requires another four-to-five years.
The extensive process is critical. While plumbing is an often under-appreciated trade, the reality is that licensed plumbers serve communities in essential ways, protecting people’s health by helping ensure the availability of clean water and functional sanitation equipment and gas lines. Modern plumbing has saved more lives than modern medicine.
At our Evergreen business, Charlie’s Plumbing, we train plumbers to enter into the trade through our apprenticeship program and ongoing training opportunities. Stepping into the apprenticeship program is a transformative opportunity for many. Vocational training was largely removed from high school and community college curriculums in the early 2000s, and while it has been reintroduced to an extent in recent years, plumbing programs are few and far between in Texas. For that reason, we work hard to make young people aware of the meaningful and well-compensated work available in the trade through career days, technical classes, and other venues. We want them to know that if they entered an apprenticeship after high school, they could be a licensed journeyman by 22 or 23.
And while we do bring young people into our program, it’s not uncommon for people to come to the plumbing trade later in their career path. In fact, the average plumber gets his or her license at 36. Many of the people who choose this path may have left high school with no sense of what they wanted to do, so they’ve bounced around between jobs without developing a strong set of skills; life may have intervened in various ways to get in the way of their getting a college degree. This industry and the training they receive as an apprentice can offer a fulfilling, lasting career, and we’re proud to be growing this workforce and introducing skilled, good people to the industry.
Once people find their way to us, my goal is to offer them the best training resources to develop their skills. While much of apprenticeship training is hands-on work with experienced licensed plumbers on our team, we have also developed on-site training facilities, including a “sandbox” that allows them to learn how to run underground piping and practice blue print reading and a training area equipped with pipe fitting materials, boilers, water heaters, and other materials to practice skills. And, we’ve just recently added a “dollhouse”—a miniature house that provides a practice model for building to-scale plumbing structure, which mirrors what they will have to complete on their license test.
Certainly, I’m motivated in these efforts by the very real labor shortage and lack of vocational training available for those who are interested in entering the trade. But for me it runs deeper. While the apprenticeship program allows us to provide the commercial and industrial plumbing services that are the core of our business, it also allows us to fulfill our Purpose: to provide really good jobs and to be a home for our employees.
It’s that Purpose that inspires me to offer not only a robust benefits package but a work environment, technology tools, and personal development opportunities that reflect an employee’s value to our business. Even more important, I want employees to feel included and engaged because I think at the end of the day that’s the most important benefit I can offer. I want each person to know that when I ask, “What is it that you would like to offer the business?” or “How can we make you feel you are part of the team and that your opinion matters?” that I truly want to know. Our business will grow and thrive when people are invested and feel heard.
I think that while the definition of “a really good job” continues to evolve in the current labor market, especially for the younger generation, the lasting, authentic benefit of providing an employee a sense of value and a workplace that feels like a place to come home to is what matters.
Merrill Crawford is the CEO and President of Charlie’s Plumbing.
Evergreen in Hollywood
There’s an oft-repeated quote in Hollywood: “They come, they go, who called?”
The originator of that quote, Lew Wasserman, was the godfather of all talent agents. He ran the legendary MCA, bought Universal Pictures, was forced out of the agency business by the government for his monopolistic control of the talent and their work, was considered the link between Mafia money and Hollywood, and famously helped elect Ronald Reagan as President—among other famous (and infamous) points of notoriety.
He wasn’t exactly Evergreen. His 7Ps were: 1.) Plunder, 2.) … Well, now that I think of it, all seven were plunder.
Building a 100-year company has never been the priority in Hollywood. In an industry where everything revolves around what sells right now, short term thinking rules. Ethics and morality are considered conveniences at best in the pursuit of transient power. Making a living off pop culture in a landscape wherein this year’s investment is worthless by next year tends to bring out the worst in people and the businesses they build. The culture breeds cynicism.
I began my career as an actor and musician. I did well in my twenties, making a living in theater, TV commercials, and recording sessions. Invariably, I was cast as a 16-to-19-year-old. Then I woke up one morning and didn’t look 16-to-19 anymore. Too old to play a teen, too young to play a Dad, they stopped casting me. It all fell apart.
Almost 30, married with two young children, I moved over to production to make ends meet. I worked on TV commercials, driving equipment trucks and working my way up. Six years later, as an Executive Producer, I cast off the 16-hour days to become an agent. As an actor, I had seen my agents as a necessary evil.It was the thing I swore I would never be.But, the family had to eat, and there was an opportunity, so… never say never.
Twenty-three years, one big agency experience, one start-up and two mergers later, I am Co-Founder and CEO of Worldwide Production Agency (WPA). We’re a mid-sized agency in a large-sized agency marketplace, with offices in Los Angeles and London.
When we started WPA in 2010, we were a small, boutique agency that operated in guerilla mode, recruiting clients away from the big agencies almost at will. Able to move quickly and do things they couldn’t was our advantage and USP. But then things changed. The big agencies, in response to increased competition with one another, began eating boutiques like us, stripping out as much talent as possible as quickly as possible. Essentially using boutiques as talent farm teams, they culled the most lucrative employees and talent from the smaller firms, seeking out the self-propelling money-making machines and ignoring the foundational work of agencies to nurture and grow talent.
With the pressures of those large agency tactics propelling us, over the past five years we’ve scaled at a rapid pace, growing our client list from 70 to over 400, leaving the boutique mantle behind, and entering the mid-size market, with offices in Los Angeles and London. The strategy is to grow talent as we always have, yet to be able to sustain sudden and unexpected client losses.
So, what then becomes our USP?In truth, I didn’t know what USP—nor ROI, ROE, or ROA for that matter—until several years ago. I am a self-trained executive, and my only guiding principles were constant learning and trying to do the right thing. In many ways, I’m glad I didn’t know what I didn’t know.Ignorance of traditional business practices may have led me to take bolder risks—but also to be less prepared to operate at scale.
Then I came across Evergreen.
When I read the interview with Tugboat Institute founder Dave Whorton in Conscious Company Magazine, I knew I had found the thing missing in Hollywood and what I was looking for to establish guiding principles for WPA. I saw that an Evergreen orientation could replace the USP that had been lost through rapid growth.
The process of introducing and reinforcing the concepts of Evergreen in our company has been a journey, and the progress has been slow but steady. It’s an orientation that goes against the grain of the common agency model, wherein each agent is treated as an entrepreneur running an individual business under the banner of the agency. It’s a model that breeds competition, secrecy, and fiefdoms inside the walls. It encourages hoarding of information and dis-incentivizes teamwork. Perhaps good for the bottom line, it’s terrible for employee morale, turnover rate, and, most important, for servicing clients.
When the agency is smaller, these issues are not much of a problem.When you have five employees, you generally know what everyone is doing, and the information is easy to share. The common goal is to survive. When you scale to over 25 employees and have grown at the rate we have, when survival is no longer at stake, you then need a common philosophy to make sure you’re all headed in the same direction.
Now, the Evergreen 7Ps are that shared direction. Because the concept goes so against the grain of the Hollywood way, it needs constant reinforcement to get into the fabric of the company culture. It sounds good enough, but applied to an aggressive, take-no-prisoners industry, it can appear “soft” regardless of its inherent power. Like I said, the progress has been slow but steady.
I’m selling those around me on building a new Hollywood: Less carnivorous and more humanistic than in the past; less known for the Harvey Weinsteins and Lew Wassermans than for exceptional working environments that support high creativity and a pop culture that helps lead society in a better direction.
It is not easy.It means going our own way in a town where there is safety in numbers. There is irony in the fact that a herd mentality can exist in a market that is in essence a race to the newest, shiniest thing. Conversely, safety also is in going with the flow and never upsetting the balance of power too much or too quickly. Being the outlier can be dangerous.
There will always be tremendous profit to be made in Hollywood.It’s the land that casts dreams and gives people hope through stories, and that pays. Of course, there will always be the occasional nightmare, and that pays too, but there are some of us now who are pursuing something better: Sane companies, based on the 7Ps or similar forward thinking and evolving philosophies. It can be done. Perhaps a new mantra is at hand: “They come, they succeed, let’s keep doing it for 100 years.”
Steven Jacob is Co-Founder and CEO of Worldwide Production Agency.
Wired for Optimism
When I was a sophomore in high school, I wrote a report in biology titled, “The Positives of Positive Thinking.” I’d chosen the subject because I was, to put it mildly, not science-minded. I remember that the research and writing was an agonizing process, but I found myself intrigued by the data around the impact of optimism. From my earliest memories, people had always noted my positive nature and ready smile. While I certainly have moments of sadness and anger, I don’t think I’d be exaggerating if I said I have a smile on my face most of the time. I’m just wired that way.
I got an A on that biology paper, and I still remember the comment that my teacher wrote on the top of the first page: “I don’t know if this is BS, but if you can keep this thought process, it will serve you well.”As I reflect on the power that positive thinking has played in my life since—personally and professionally—I can say unequivocally that she was right.
I always look at the positive side of life; it’s what drives me. Even when people bring me negative thoughts or experiences that are difficult to discuss, I really try, in my response, to reflect my affection for that person and to show them that there is a positive side to all experiences. I see my outlook reflected in the way my own children view the world and their responsibility to effect positive change, and I see it in the culture of the Evergreen insurance brokerage firm, Johnson Kendall Johnson, where I serve as managing partner.
All of this is not to say I have not encountered challenge and personal heartbreak in my life. My father passed away when he was only 61, and I lost my older brother when he was 52. Both were significant losses that deeply affected our close-knit family. Several years ago, when my eldest son and his wife suffered a miscarriage, I felt the pain of an early, unexpected loss again. During a conversation with my business partner and dear friend at that time, I said to him, “I don’t know how to manage this; bad things don’t happen to our family.” His response offered meaningful perspective; he said, “Bruce, of course bad things happen to you—it’s just that your outlook on life means you always look to see the upside.” I realized that he was right: I live through challenge like anyone else, but my natural inclination is to move forward from a place of hope and with an expectation of good.
This deeply ingrained sense of optimism likely makes me uniquely suited for the insurance business, where our work every day revolves around helping our clients build, sustain, and grow their business—often in the face of significant challenge. Our mission is to deliver strategy and solution, and we often do that in the midst of emotionally-charged situations that create stress and uncertainty. Being able to respond in an optimistic, forward-thinking way serves our clients well.
I recently witnessed the essential role of optimism in our work when a client suffered a significant fire. The fire broke out in the night, and our claims group and I were on the scene by 7 a.m. We remained on site all day—and many days thereafter. We came to realize that after the first responders departed, we were the most stable presence for our clients during the months that followed as they worked through the damage assessment, healing, and reorganization and planning that the situation required. And we weren’t just there to write checks; we were there to offer the expertise and assurance that they desperately needed. We were there to offer hope—and to deliver on that promise of a brighter day. We are honored to offer clients the experience and stability, the peace of mind, that sees them through difficult times. And, in this case, we were thrilled to be on hand for the groundbreaking of their new facility; they are rebuilding and anticipate opening a new facility in the months ahead.
This specific situation displayed how critical a positive outlook is in our business, but it’s certainly not a unique scenario. Optimism is essential across every part of our business, and we intentionally recruit for positive, solution-oriented people. Each time we encounter a challenge or face a tough decision as a group, I frame the conversation by saying, “I understand the problem; now let’s determine the best way to solve it.” Led by a positive outlook, we move forward together on behalf of our clients.
That strong desire to serve our clients not only motivates us to find positive solutions for every day, it also compels us to stay Private. In an industry landscape rife with mergers and acquisitions, we are committed to remaining independent so that we can continue to serve the client and the community in the best way possible. That’s what makes our glass half-full.
I didn’t know when I wrote that paper for my high school biology class just what a central role “positive thinking” would play in my professional life. I only knew that I had a distinct outlook in life. I saw the good in people and in the world around me. I’m happy to know, now, that my personal outlook has helped me provide solutions and lead others to navigate their way to the bright side.
Bruce White is Managing Partner at Johnson Kendall Johnson, a full-service insurance brokerage and risk management firm.
Building Teams Behind the Scenes
As a cinematographer on feature films, I’m responsible for the look of the film and for taking the director’s vision and translating it visually—getting inside his or her head and interpreting how that person wants the story to look and feel. In the simplest terms, the work my crew and I do to choose the right cameras and lighting, select locations, set up for each scene, and operate the equipment to deliver the visuals transforms the words of the script into cinematic entertainment.
As you can probably imagine, building teams of professionals to do this work skillfully and efficiently—often across multiple, wide-ranging locations and under the financial and time pressures of a film’s production cycle—can be challenging. Part of my responsibility is to hire the lead team member for the three departments that I manage—camera, lighting, and grips—and then delegate the staffing of each of those departments to that lead. All of us work as contract or freelance employees, so the team has to be built from scratch for each project.
While the responsibility of managing this human resource aspect of my job is not something I envisioned as an artsy film student, I’ve come to embrace the role—it’s truly satisfying to work with interesting people and create a professional environment that’s positive and fulfilling for the team that comes to work for me each day. Over the years, I’ve come to realize that my approach to building and managing crews is not the norm on film sets. Though these positions are essential to the film’s production, these professionals are often not treated very well and don’t feel valued. Many film sets are antagonistic, and crew members can be miserable. Terrible stories circulate about sets where yelling and even physical altercations are standard.
This is crazy to me—we’re all so lucky to be doing this work. Why wouldn’t we want to create a positive environment and enjoy our time on set? That just seems like a better way to live. With that in mind, I do my best to bring together people who I know will create a positive environment and do good work and then manage them with respect.
The foundation of teams is, of course, the people you bring together. When I was young I just wanted to work with the most experienced people, but I learned that even though many of these people have incredible credits to their name, they may not be the best people for the job. Early on, I hired some people who weren’t team players or whose egos were really big or who were aggressive or antagonistic or dishonest. For me, character has become a priority; it has taken decades, but I’ve built a list of stellar human beings that I draw from now when I build my teams. I’m lucky I have found these people.
Once assembled, my approach to managing my crew reflects my own personality and the influence of mentors I’ve learned from over the years. I have a naturally calm demeanor, which determines how I interact on a regular basis, and I owe a lot to my experiences working with a friend from film school, a director named Zack Snyder. We’ve worked together on many movies, and early on I noticed the respect he extends to everyone and how that impacts the tone on the set. He truly values each person’s insight and treats people well. I don’t know how conscious I was in the beginning of developing a specific style that reflected that ethos, but once I became conscious of the impact and value of that environment, I made it a priority to lead in creating that People First dynamic.
With the right team in place and a shared satisfaction in our contributions, we’re able to be productive and efficient on set. With an average budget of $1M per day, that makes a big difference. As I watch my crew work, it’s also satisfying to see the way the group we build is perceived by the broader team as they contribute beyond their responsibilities. There can be inter-departmental strain on some sets, but my team will generally offer to help others, and I can see the surprise this evokes among people who aren’t used to being supported beyond their own department.
At the end of the day, even with the intensive planning, preparation, and team building, the reality is that each production is really a circus tent of craziness. Most of the time we’re just trying to keep our heads on straight. But if my team can be some part of reigning in the chaos and delivering an end-product that we can all be proud of, that’s a great feeling. I try to accept the challenge of each new project, carry out my role with grace, and make people feel good about the work they do each day.
Larry Fong is a cinematographer best known for his work on 300, Watchmen, and Kong: Skull Island, among others. He is an active member of the American Society of Cinematographers and was a speaker at Tugboat Institute Summit 2018.
Happy New Year from Tugboat Institute
Dear Evergreen Journal readers,
Happy New Year! As we head into 2019, we are grateful for the learnings and experiences we shared in 2018. We are excited by the momentum in the Evergreen movement.
The Year in Review
Tugboat Institute membership grew by 30 percent in 2018, broadening our membership to include new industries and new geographies.
In January, we launched Evergreen Journal Quarterly, a print publication that includes Evergreen Journal articles and additional content we create each quarter. The magazine allows us to regularly curate the expertise and experience of our community in a new way, offering members and a wider audience a valuable, Evergreen collection of best practices, insights, and information.
In June our members came together in Sun Valley, Idaho for Tugboat Institute Summit 2018. I was happy to launch the week’s talks by sharing the story behind the phenomenal success of In-N-Out Burger, an exemplar of Evergreen principles, including Private, Paced Growth, and People First. Talks by members ranged from heartfelt experiences of personal development to tactical growth strategies to best practices in building culture for the long-term. Across the talks, conversations, and activities, we found inspiration, lessons, and valued connections.
In August, we moved our headquarters from Palo Alto to our new office in Sun Valley. We are spoiled to be working with a view of world-famous Bald Mountain from our conference room, and we welcome any visitors who venture to our peaceful mountain town to stop by and say hello!
We also launched our first online Tugboat Seminar in August, expanding upon member Joe Motz’s Summit talk, and we followed that with two additional seminars in September and November—hosted by member Tom Rosztoczy and Tugboat Fellow Spencer Burke, with Kim Sheehy, respectively. The seminars were met with enthusiastic support, and we are happy to be planning six additional seminars for 2019.
In October, we traveled to St. Louis, Missouri, where members were graciously hosted by Andy Taylor, Executive Chairman of Enterprise Holdings, at the company’s headquarters for our fall Tugboat Institute Exemplar visit.
Our inspiring days at Enterprise were followed by a wonderful opportunity—facilitated by Tugboat Institute Fellow Spencer Burke—to share the Evergreen story with the wider community of St. Louis at the Olin Family Business Symposium at Washington University.
Looking Ahead
We are heading to Chicago, Illinois in April, where Tugboat Institute member Robert Pasin, Chief Wagon Officer of Radio Flyer, will host us for our Tugboat Institute @RadioFlyer Exemplar event.
In June, members will again gather in Sun Valley for Tugboat Institute Summit 2019. We are excited to be hosting the event at the recently completed Argyros Performing Arts Center, an amazing new venue perfect for our group.
New in 2019, we have launched a Tugboat Institute YouTube channel, and I am in the beginning stages of launching a personal blog to offer Ideas and perspective about Evergreen practices.
In addition to these programs, experiences, and new content platforms, we are investing time and resources to expand the Tugboat Institute experience to members’ key executives and family members. The Evergreen Conference, developed at the request of members, is planned for Dallas, Texas in spring of 2020 and will be open to members’ families and leadership teams. We have also been working to expand and enhance our Certified Evergreen program to offer a rigorous certification process, based on the Evergreen 7Ps. While both the Evergreen Conference and Certified Evergreen program will initially be offered to members, we anticipate both will be made available to other Evergreen companies.
Final Thoughts
As we head toward a new year, we are optimistic about the positive impact of Evergreen companies on their employees, their communities, and on society. While this past year has presented some uncertainty—through this past fall’s downturn in the stock market and concerns over trade—we feel confident that the year ahead will offer Evergreen companies ample opportunity.
At Tugboat Institute, we are looking forward to continuing to support members and the Evergreen movement. As we navigate the year ahead, we will continue to embrace the long-term view.
With Gratitude,
Dave Whorton & The Tugboat Team
The Transformative Power of Why
When I stepped into my role as CEO of our Evergreen population health management company, Telligen, in 2011, we were at a crossroads. As co-founder of what was now a new business emerging with the assets of a predecessor company where I had been an employee, I knew I was facing a period of significant challenge—but I had a few ideas. When I assumed leadership, we were losing clients, revenue, and employees. The exodus of very talented people was especially devastating because the real value of our type of business is in the people.
I knew that to move forward, we had to answer the most basic question: Why do we exist?
At that point, the company had been pursuing a wide range of work, and neither employees nor clients were able to articulate a connection or clear Purpose that bound the pieces to form a whole. Employees may have identified with a specific domain of work or a specific client, but it wasn’t clear why we existed as an entity.
And yet, I knew these disparate pieces could be brought together to form a company that would reflect our passion for transforming lives and economies through better health. I had a sense for the incredible experience of our people and the products and solutions we had built and could continue to create as a company. So, rather than quickly jumping into how to fix sales or account management or financials, which were all jockeying to be top of mind, I knew we first had to find our center and define our Purpose.
Without the resources for an outside consultant or facilitator, we started internally by asking questions and finding focus. I started the conversation by asking the negative question: “If we didn’t exist as a business, would anybody miss us? What would be different? Who wouldn’t get something they needed?”
As we worked through that exercise, employees responded, reflecting their individual projects and clients’ needs. Answers ranged from, “If we didn’t exist, then a cancer patient wouldn’t be able to get case management;” to, “if we didn’t exist, this provider wouldn’t be able to implement an electronic health record;” to, “if we didn’t exist, this nursing home would not be able to ensure the best quality of care to loved ones.” Everybody was touching the elephant in a different place—circling around one another as though inhabiting different planets and speaking different languages.
But amidst the different answers, a strong common thread emerged: Each project, each piece of work was, in its unique way, moving people to better health, and together we were helping manage the cost of healthcare. We had found our shared Purpose. With that grounding work complete, we moved on to develop a mission and vision by asking: “What would we look like if we did things really well? What would that mean to our clients?” With our Purpose defined, the vision came naturally: We want to improve people’s lives and fix the U.S. economy that is so negatively impacted by high healthcare costs.
One of the first benefits of this new foundation was to align our work with our Purpose. Now, in reviewing existing projects and prospective clients, we were able to easily discern if their goals were aligned with what we wanted to be as a company. If they were, we were able to quickly recognize that and say, “yes, what you’re trying to solve aligns absolutely with what we do, and we want to do this job.” On the flip side, if we were presented with a project that did not reflect our Purpose, we could say, “no, that’s not what we do; that’s not who we are.” Knowing what work to go after, what work to keep, what work to grow, and who we needed on the bus to do the work and move us down the road were all early results of our newly defined Purpose.
As we became increasingly centered as a business, we attracted new clients who aligned with our Purpose, and existing clients noticed our clarity and found a deeper connection between our work and their goals. With increased sales, the business’ top line changed, which created all sorts of good things, as we were able to slowly open up opportunities for professional development, create new products, and improve existing systems. Prioritizing these internal investments came pretty quickly with our newfound Purpose because we knew now what we were about. Instead of fragmenting investment with the hope that something would click, we knew which investments aligned with our Purpose and would move us toward our shared goals.
As we moved forward, directed by our Purpose, we also honed our language and were able to clearly articulate who we were and how we were meeting our goals internally and externally. Internally, we were able to share success stories and client acquisition in a way that allowed employees to connect those wins to our mission. Externally, we were able to connect with clients more efficiently and more deeply. And, our recruiting efforts improved as hiring managers began to use the new language of our Purpose and attract a different kind of talent that was more connected to the company’s Purpose.
Now, seven years later, I can say that our Purpose is part of our DNA. I have seen how a business can be transformed when you are clear about your Purpose and understand why your company exists. On a personal note, as an Evergreen CEO, I continue to feel the power of the work we’ve done. When I am facing a challenge, it’s my deep belief in our Purpose that keeps me going: I know exactly why we exist and how we are changing lives. That makes it all worthwhile.
Jeff Chungath is the CEO and a founder of Telligen, a 100 percent employee-owned population health management company with a mission to be the company that fixes what ails the healthcare system in the United States through health management solutions that drive better health and value to purchasers of health benefits.
When It Comes to Success, There Is No Checklist
I am a lifelong educator, committed to ensuring that every child has the opportunity to choose the life they want to lead. It all starts with immersing them in an excellent school experience. My first job after college was at an alternative school for students who had been expelled from other institutions. The soundtrack of that school was people screaming at one another. It was not a good place for children.
This experience 25 years ago, and my inability to make change in that toxic environment propelled me to pursue a graduate degree in education, and, ultimately, to a career in teaching, leadership, and program development for schools in underserved communities. Throughout my career, I have been guided by the revelation that when everyone really intentionally thinks about what children need to thrive—and the unique types of support their circumstances may require—we can truly change lives.
But changing lives is not accomplished by checking boxes or following a blueprint for academic success. Anyone can follow instructions in a playbook; it’s when culture and values are brought to life every day by the players and the coaches on the field—the teachers, the administrators, the leadership—that students surpass expectations. In the most engaged, successful academic settings, people literally breathe the culture.
From 2012 to 2017, I served in several roles at Success Academy Charter Schools (SA), the largest and highest-performing free, public charter school network in New York City. There are no tests to get into the schools, and students are admitted by lottery. In 2017, 95 percent were proficient in math and 84 percent were proficient in literacy, based on the scores from the New York State Test. That’s compared to a 40 percent proficiency rate in New York state and New York City. SA’s closest peers are the state’s richest school districts, though 73 percent of SA’s students are economically disadvantaged. The starkest contrast is this: when I was a principal in Harlem, 94 percent of the children in my school were proficient in math; our school was in the same school building with another public school, where only 7 percent of the students were proficient. Same neighborhood, same community, same building—vastly different results.
So what’s the difference? When professional development is threaded into the fabric of every day, it means leaders are having conversations with teachers about the impact of effective instruction, studying student work and planning together, then coaching and giving feedback, to ensure all students are being held to high standards. This People First approach is hands-on, and there’s an obsession with practicing and honing because it’s motivating to get better every day and to grow. This culture of mentorship, where leaders are consistently engaging in observing, evaluating, and providing a cycle of rapid, bite-sized feedback is transparent and normalized. It’s understood among team members that a principal’s role is to make junior leaders and teachers the best they can be, just as it’s a teacher’s job to ensure that each student finds success.
As your manager, I don’t want you to fall short of your goals; I want to push you to get there. I believe everyone can grow. You don’t always know what students need right away, but we work to get them there, and the same approach can be applied to teachers and to leaders. Throughout the organization, we should always be asking, what am I doing to make sure that my people are successful? A continual cycle of feedback and coaching, along with hundreds of hours of more formal training— core values, classroom management, curriculum planning, interpersonal communication skills, creating exceptional learning environments, time management, to name a handful— lead to consistent results from class to class. By listening for any challenges, observing and diagnosing, offering feedback to work toward a solution, we teach one another how to be better. This directly contradicts the cultural norm of most schools, wherein a visit from the principal to a teacher’s classroom is seen as a sign of failure.
Throughout my career, I’ve worked with many schools and educators who strive for the success we found at SA, but not many—if any—have been able to recreate the experience and achievement that lead to the same outcomes for students. They may implement similar curriculum, classroom processes, and facilities models—all items that can be captured in “checklists,” but that isn’t enough to achieve the same remarkable level of excellence. The difference is culture.
Successful school culture stems from a deeply ingrained Purpose: a tremendous confidence in the children, and the drive to provide them opportunity. All students, particularly those from underserved communities, should be offered the same opportunities to succeed in life as students attending the most advantaged private schools. The culture can be further developed by Pragmatic Innovation, which keeps us continually looking at curriculum, processes, protocols, and facilities to ensure we are truly creating opportunities for our students.
On a practical level, and much like a great manufacturing company would do, we look to ways we can innovate and improve processes to make our time with students as productive and efficient as possible. On a small scale, students in grades K-2 to wear shoes without laces because we’ve learned that when they do, teachers spend an inordinate amount of time tying shoes instead of teaching. We consistently ask, how do we maximize our time? This carries over to the design of the classrooms, where everything is strategically placed— collection bins for student work, backpack hooks and boot bins. The efficiencies also encompass what people repeatedly do— routines for passing out and collecting materials, giving quick directions using “economy of language,” using hand signals to communicate “I need some water” (crossed fingers in the air), or “I don’t understand that vocabulary word” (two fingers raised in a “V”), all of which avoids wasting time in order to maximize learning and creates a sense of urgency about all of the engaging work we have yet to do.
Finally, when everything comes together and culture becomes the air we breathe, our students develop something critical beyond academic achievement—they develop resiliency. This essential character trait isn’t measured by test scores, but it becomes their most valuable achievement. Because resiliency is what will keep them in college once they get there; resiliency is what will push them to work through challenge in work and in life. It is the intrinsic motivation that will help them succeed in a way that no textbook or curriculum can deliver. If we are able to develop that resiliency with academic achievement, then we have been truly successful.
So, while it may be fairly straightforward to replicate the operational checklists of an exceptional school, it’s only half the equation. The other half is the soft stuff—the critical cultural elements: belief in students and teachers, extensive training and mentoring on how to do one’s job well, continuous improvements throughout the organization, and encouraging and rewarding character. Without our culture, we would just have a bunch of lists.
Meghan Mackay has served for over two decades as an educator and education leader. She was Managing Director of Schools at Success Academy Charter Schools, as well as Managing Director of Programming for the Education Institute and Principal of Success Academy Harlem 5.She has also taught middle school and high school literature and writing, developed educational software and student information systems, written curriculum, and facilitated professional development for principals. She has helped found five high-performing charter schools in Boston, Trenton, and the Bronx. In 2018, Meghan, together with several former SA colleagues, opened Zeta Charter Schools, a new network of schools serving New York City children. She also launched an operating foundation, LeveragED Foundation, to bring expertise and capital to school networks that seek to optimize the implementation of instruction and professional development.
Growth is Not a Goal
At POWER Engineers, we don’t use the word “growth.” In fact, at one time, that word was not allowed to be spoken during company meetings. And yet, as a global consulting services and engineering firm, we average a 15.6 percent annual growth rate.
So, what’s our secret?
First, a little background on POWER. We were founded in 1976 by three Idaho engineers and are now an employee-owned C-Corp with a team of 2,500 worldwide and annual revenue of $450M in 2017. In fact, we’re the largest power delivery consultant in the United States—not bad!
As employee owners, we’ve achieved this success not by focusing on growth, but by focusing on what our employees, clients, and shareholders care about most. It’s what we call “mutual success,” and it has led to a steady, paced growth for over 20 years.
Here are four key points to our “Paced Growth” philosophy.
We’re motivated by opportunities.
First, in our view, growth is a result, not a goal itself. We don’t believe that growth expectations are the driver for our business—market strength is. So we focus on more meaningful business concepts like “opportunities,” “market changes,” “new technologies,” and “Profit.”
We ask, “What’s the barrier to entry? Who’s the competition? How can we compete? Do we have an internal champion?” If we determine, for example, that a certain project makes sense to us, we take it on. As employee owners, we’re empowered to make those decisions.
So instead of being driven by growth expectations, we’re motivated by the opportunity to chase fun, challenging projects.
We make sure we’re sustainable.
Our next overarching goal is to provide a long career for our people. Our fundamental requirement has been to maintain strong margins (our charter says we must have 10-15 percent income from operations [IFO] on gross revenue).
So, as we evaluate projects, we understand that if we don’t make money none of us will have a job. And that means we won’t be able to continue to build this company.
As employee owners, we make sure to be transparent with these decisions. That’s why we publish our financials every month to every employee in the company and have done so from the beginning—we tell people what we do and why.
We plan from the bottom up.
Third, we practice a bottom-up approach. Each year, each of our departments delivers a market analysis to the executive team of what they think they can realistically do in the coming year.
We tell people: “If your market is in a downturn or is going to crash, you have to tell us. If you did $50M last year at 10 percent and you’re going to do $40M at 6 percent this year, we have to know because this is how we budget money to move the company forward.”
Our managers lead the effort from the bottom up. Of course, some groups “sandbag” and others are overly optimistic, but we trust our managers and the information they present. The exec team then calibrates and adjusts a bit and plans accordingly.
Because we practice transparency, the results of this planning are on display for everyone to see throughout the year. Peer pressure is key to the success of this model because nobody wants to look bad in front of their friends!
We’re geeks at heart.
Finally, and perhaps most important, as engineers, we’re geeks at heart, and our work is our fun. We have intentionally built a culture with that directive at its heart.
Since the 1980s, our slogan has been: “Do Good Work. Have Fun. Make Money.”
And it’s not just the engineers and consultants who feel this way—the entire staff, from our receptionists to our project managers understand that what we do is important and interesting.
It’s our commitment and love for our work that moves us forward.
Postscript
In all fairness, our success story has not been without its challenges.
For example, in 2001, ENRON collapsed the energy market. At the time, they were a big client. That event singlehandedly took our revenue from $99M to $75M and our staff from 735 employees to 500.
While that experience was difficult, we came back the same way we have moved forward since 1976—through steady, paced growth that is a result, not a goal—fueled by fun and inspired by challenge.
Jack Hand is the Chairman of POWER Engineers, a global consulting engineering and services firm specializing in energy, facilities, and environmental.
Peaks and Perseverance in an Evergreen Journey
As with many aspiring CPAs, my career goal had been to take on the challenge of becoming CEO at a company. I had a number of opportunities throughout my career as a CFO to achieve that goal. Since most of those opportunities were “turn around” situations, each required complete commitment and devotion to the task at hand, which was to save the company. However, as a life-long learner, I was my own worst enemy. Invariably, in five to seven years, the challenge and the opportunity to learn new things diminished, and I felt an “itch” for the next challenge. That itch brought me to Andesa Services in 2005 as CFO.
In the case of Andesa, there was no “save the company” urgency. Andesa was a stable, 22-year-old, privately held provider of technology and services to the life insurance industry. Predictably, after five successful fiscal years, the same career decision point loomed in the back of my mind. Time to move on?
Unexpectedly, in December 2010, I was offered the opportunity to lead this extraordinary company as CEO. There was a moment when I believed I had reached the pinnacle of my career. My career aspiration had been achieved!
That exuberance was short lived. In the same Board meeting where I was offered the opportunity to be CEO, management informed the Board that the company’s largest client had announced its exit from the market and would no longer offer the insurance products administered by Andesa. This announcement was a tidal wave that put significant revenue at risk. So much for basking in the glow of a career milestone.
At that meeting, Andesa’s Board deferred approval of a budget to allow management time to assess the situation and financial impact as well as prepare a plan for a reduction in force. In one meeting, my mental state descended from the mountain top into the valley of reality and reaction. For Andesa to maintain its long-term, Evergreen perspective, there was no choice for the organization but to make short-term decisions and operate in turnaround mode until we had weathered this storm.
For only the second time in the company’s history, performance and projections led us down a path that contradicted our People First culture. I was keenly aware that culture can collapse quickly, especially when profitability strains the ability to invest in a healthy environment. Self-consciously, I questioned my own leadership talents. Could I lead my Andesa teammates through this difficult period to a brighter, long-term future? It was baptism by fire. I knew my first conversation with the employee team would set the tone for our future together.
I began that initial team meeting by expressing appreciation for our exiting CEO and wishing him future success. I acknowledged the confidence that the Board had placed in me, and I shared how those conversations had been some of the most affirming discussions in my life. I then quickly pivoted the conversation with the following statement: “But this isn’t about me—this is about Andesa Services.” I went on to highlight excerpts from Good-to-Great highlighting the discipline needed to confront challenge.
Because there was no question we were facing challenge: The company had underperformed plan in 2010; 28 percent of its revenue was now at risk; plans for investment in new product lines would be deferred; and, on top of all that, we were undergoing a major leadership change. I noted that, “We may need to go sideways or even backwards for a while in order to move forward—but go forward we will.”
I emphasized our strengths, not our fears: our fiscal soundness; our reputation for service excellence; a strong technical environment that requires constant modernization investment; and, an ethical work environment made vibrant by a set of core values lived by our teammates. I asked each teammate to look at the faces of their colleagues around the room that day, to recognize that this group of individuals is the best in the world at understanding, processing, and administering complex life insurance products and policies.
Despite my best intentions to inspire, the reality of the situation was still brutal. Layoffs were emotional and difficult. Many team members questioned the organization’s culture and financial stability. In the ensuing months, we witnessed the departure of many talented individuals. But, those who remained stayed focused on their work and never wavered in our commitments to our clients. They preserved the Andesa culture by supporting one another through a difficult time.
Three things sustained me through this transition. First, I believed: I had a deeply rooted trust and confidence in the people of Andesa Services, and the number one goal during this time was to ensure we preserved our core values and culture which had led to 27 years of growth and success. A reduction-in-force cut to the heart of our vision and sense of community, and I made constant reminders to myself and the team that who we are was significant.
Second, I called on my faith: My journal from those days is filled with prayer requests—some answers were clear, and some requests were answered in ways I have yet to comprehend. Remaining grounded in my faith during those trying days was paramount for staying positive and confident we would persevere. Finally, I focused on nuggets of good news: Small daily wins dominate my journal. Sometimes a staff member shared a positive comment—the progress on a project or a hint of possible new business opportunity was enough to provide encouragement. Those daily moments reinforced my faith that we would prevail despite simultaneous daily doses of brutal reality.
Today, Andesa is a financially stable, privately held, 35-year-old company that is partially ESOP owned. We are investing in new technologies, product lines, and service offerings. We are marching toward becoming a 100 percent ESOP-owned company. Our existing clients continue to add new products each year, and we are adding new clients to our insurance administration eco-system.
The journey for an Evergreen company involves some wonderful views from the peaks, but it also requires endurance through the valleys. The long journey to “Forever” is rarely (if ever) straight and paved.
Andesa’s ability to persevere provides us the opportunity to live into our Forever Vision. The lessons learned from those first days in the leadership seat continue to drive me today. In corporate communications, we are always careful to share the reality of our situation and to emphasize our strengths and the prospect of a positive future. Most of our message focuses on our culture, purpose, and the resolve of the Andesa spirit and its team members.
And, by the way, I learn something new from my teammates every day. My “itch” seems to have been cured.
Ron Scheese is President and CEO of Andesa Services.
