The Compounding Power of Community – Tugboat Institute® Summit 2024
At Tugboat Institute®, we frequently talk about the sources of competitive advantage afforded to Evergreen® companies. A key one is their commitment to profitable, Paced Growth over years and decades that leads to a powerful compounding effect. We see this compounding effect in capital over time, strength of culture over time, honing of know-how and innovation over time, and impact against their Purpose over time, to name several. This past week, at Tugboat Institute Summit 2024, the compounding effects of our growing membership, built over time on a foundation of trust, were on full display. It has allowed our membership to deepen past relationships while forming new ones, with authenticity and curiosity. It has allowed members to share their experiences, best practices, new ideas, setbacks, accomplishments, and inspiration with each other whether from the stage, on a hike, or over a meal. Our growing membership and the resources and feedback it provides us has also allowed us to launch new, exciting offerings, as illustrated by an announcement we made during our week together.
While bringing our like-minded leaders together is top of our list of priorities, learning is a close second when we have in-person experiences, and we spent two mornings learning from our peers and thought leaders aligned with our Evergreen values.
On the first day of talks, Professor Hermann Simon joined us, all the way from Bonn, Germany, to share his wisdom around Hidden Champions. Hidden Champions are medium sized, market-leading companies who are relatively unknown but who have captured an outsized share of their market and are export powerhouses. Alan Beaulieu, of ITR Economics, shared an update on his economic outlook for the coming years, specifically the great depression he sees coming in 2030. Tugboat’s own Dr. Gary Kunkle, research specialist and expert in sustained growth companies, shared a short perspective on the return on philanthropy, assuring us that in addition to doing good for good’s sake, Evergreen companies’ philanthropic efforts also have a positive effect on new and future employees and customers, and the bottom line. Tugboat member Jeff Patterson, Founder & CEO of Gaggle, next shared what he had learned on his quest for strategy, starting with clarity around the concept of strategy itself. Jeff Chungath, member and CEO of Telligen and a bio-medical engineer by training, shared the careful and meticulous work they do in his company to continuously improve all aspects of the business in an efficient and effective way. Dr Sonja Lyubomirsky, distinguished professor and researcher at University of California at Riverside, shared her research and data on happiness – what makes us happy, and what we can do to effectively increase happiness. Member John Burns then shared a short perspective on hybrid work; he finds that it gives his company, John Burns Research & Consulting, a distinct competitive advantage at a time when many companies are backing off from remote work. Dr. Denise Pope, Stanford professor and co-founder of Challenge Success, shared a talk about the importance of helping our over-scheduled kids find balance in today’s world. And Tugboat member Steve Doerfler shared a powerful talk about his personal and professional journey into leadership at Metalcraft, which was characterized by some unusual and difficult challenges. Finally, our first day of talks included a panel discussion, led by Stanford professor and longtime Tugboat friend Dr. Roberta Katz, between Dave Petersen, Vice Chair of the Board of O.C. Tanner, and Lisa Ingram, President & CEO of White Castle. Each of these respected leaders shared their philosophies on managing conversations around polarizing and political topics in their firms.
On the second day of talks, three more thought leaders, Sam Walker, Paul Seck, and Jeffrey Korzenik, shared their wisdom on various topics. Sam is the author of The Captain Class and shared his insights into the shared characteristics of the winningest teams of all time. Paul is a landscape architect whose firm regularly partners with engineers and city planners, and he shared how their collaborations make space for creativity to flourish. Jeffrey is an economist by profession and also a passionate advocate for Second Chance hiring. He shared the why and the how of this practice which is not only a solution to a societal problem, but to our country’s long-term labor shortage as well. In addition to these outside speakers, we heard from six Tugboat members on day two. In two short talks, member Kris Maynard spoke about his recent experience transitioning from founder & CEO to Executive Chair of Cathedral Holdings and member Paul Mears III shared the strategies that allowed him to find as much harmony as possible between his work as President & CEO of Hello! Destination Management and family commitments, both topics that touch all Evergreen leaders at some point in their lives. Tugboat members Scott White, CEO of IGS Energy, Elizabeth Glasbrenner, co-founder, President & CEO of Smiley Technologies, Brad Herrmann, founder & President of Text-em-All, and Kirk Aubry, President & CEO of Savage rounded out the day. Scott stepped on stage next to share his outlook on the energy landscape in the coming years, and what business leaders can do to protect themselves from potentially disruptive events and phenomena. Brad, whose company is early in its journey to become an Employee Owned Trust, shared what he has learned and what he loves about this unique ownership structure. Elizabeth shared how some enormous personal and professional transitions have shaped her outlook on life and her leadership style. And Kirk shared his compelling vision for what he calls the ‘Secret Sauce’ that is the true source of power of the Evergreen company – connection.
In addition to the inspiring and powerful learning that took place each day, we had the opportunity to celebrate our incredible community in the evenings. On one of these evenings, we had the honor to announce the first-ever Best Evergreen Companies™ list and the first Evergreen Company of the Year™. To learn more about this new initiative, aimed at elevating and celebrating Evergreen leaders and companies in our society, read the announcement here.
Over a decade into the Evergreen movement the compounding effects of this community were clear. New members felt it as they met their peers in person for the first time, returning members felt it as they sunk back into the atmosphere of joyous and authentic connection, Tugboat team members felt it as their pride in supporting such a wonderful group of people soared, and even our thought leader speakers shared that they felt it. What we heard many times from our members during this past week is that our community is different and truly special. We are not only bound by a unique and shared set of values and by the support we can offer each other as we walk the challenging path of leading an Evergreen company. We are also bound by the certainty, reinforced every time we connect, that despite the challenges, we are doing it the right way – the Evergreen way – and contributing to making life better for a great many people.
INTRODUCING THE INAUGURAL BEST EVERGREEN COMPANIES™ LIST AND EVERGREEN COMPANY OF THE YEAR™ AWARD
Since our founding in 2013, we at Tugboat Institute® have eagerly anticipated having a platform to publicly celebrate and recognize extraordinary Evergreen® leaders and companies for their impact in society and as vehicle to build general awareness of what it means to be an Evergreen company.
Today, we are thrilled to announce our inaugural Best Evergreen Companies™ list and the first Evergreen Company of the Year™ award winner!
First, we are honored to share the Best Evergreen Companies list, each of whom exemplifies excellence across all the Evergreen 7Ps® principles. Their dedication to their business excellence is characterized by determination, patience, and an unwavering desire to improve. As reflected in the list below, outstanding Evergreen companies exist in every industry from finance to technology, and from consumer packaged goods to construction. Their sizes, ages, ownership structures, and geographies vary widely as well, confirming that excellent Evergreen companies can and do exist everywhere. The winners are listed alphabetically, not in rank order, as we aim to celebrate each of these remarkable companies equally.
BEST EVERGREEN COMPANIES™
Awesome
Betts Company
Bishop-Wisecarver
ECRS
Edward Jones
Enterprise Mobility
Essential Ingredients
High Plains Bank
In Time Tec
John Burns Research & Consulting
Meijer
Radio Flyer
Redeemers Group
SAS Institute
Savage Services
Smiley Technologies
SRC Holdings Corporation
Stotz Equipment
Supportworks
Telligen
Test Double
Text-Em-All
The Motz Corporation
Torch Technologies
Some of these company names are household names that we all know and respect, while others may be unfamiliar. We encourage you to learn more about them, as some may be in your community, employ someone you know, or significantly impact the areas where you live. These and other Evergreen companies continuously strive to improve while staying true to their Purpose.
And with that, we are thrilled to announce the company that rose to the top in our assessment that we have named the very first Evergreen Company of the Year:
EVERGREEN COMPANY OF THE YEAR™
O.C. Tanner
Led by Tugboat Institute® member Dave Peterson, O.C. Tanner was founded in 1927 by Obert C. Tanner and initially made class rings and commemorative pins for high school and college graduates. Almost a century later, the company has evolved into a complex market-leader in employee and customer appreciation software and consulting. Obert Tanner’s primary goal was always to serve his customers and his community to the best of his abilities, often going above and beyond for them, and to find ways to give back to his community, specifically in education, wherever possible. His spirit and intention are alive and powerful in the company today.
O.C. Tanner hosted Tugboat Institute @O.C. Tanner in Salt Lake City in 2023, and it is an exemplar of Evergreen excellence indeed, across all the Evergreen 7Ps® principles. Their Purpose is simple but powerful: To help people everywhere thrive at work. They are ethical above all else and their People First culture and policies are second to none. Their attention to Pragmatic Innovation has allowed them to evolve and essentially enter a new industry, re-inventing themselves to stay competitive and thriving as the world changed around them. Their growth has been thoughtful and Paced, allowing them to Persevere for the long term, through good times and bad. Over time, they have been consistently Profitable, which has enabled them to be better and better at innovating, supporting their people and communities, and broadening their reach, both geographically and through a number of industries. Finally, there is no better example of a Private company. Obert Tanner was committed to ensuring that his company would last, that it would always be privately held, and that ownership and leadership transitions would happen seamlessly and without strife. His work on this front is indeed another example of extraordinary innovation.
O.C. Tanner represents the best of what it means to be an Evergreen company. They are a wonderful example and confirmation of what is possible, when a company commits to this path and has the patience to let their success build and compound over time. We are honored to award them the very first Evergreen Company of the Year designation.
MORE ABOUT THE BEST EVERGREEN COMPANIES™ LIST AND EVERGREEN COMPANY OF THE YEAR™ AWARD
The Best Evergreen Companies list and the Evergreen Company of the Year award give us, at Tugboat Institute®, an opportunity to celebrate and elevate wonderful Evergreen companies and our Evergreen movement, in a language that society understands. We chose not rank order our Best Evergreen Companies list to avoid unnecessary competition between these exceptional companies that earned a spot on the list, allowing us to celebrate all equally. Companies become eligible for inclusion on this list by either becoming Certified Evergreen® or by hosting two-and-a-half day Tugboat Institute Exemplar Visit. Both of these paths require a deep, introspective dive into practices across all of the Evergreen 7Ps® principles, and provide tangible measures of Evergreen maturity across each of the principles and into overall excellence. The winner of Evergreen Company of the Year in turn will be awarded to one company that truly distinguished itself over long periods of time thus earning the extra recognition of this pinnacle award that can be won only once.
In the years and decades to come, our vision is for this recognition and award program to gain increasing awareness and scope over time, moving from a single list to several that celebrate and recognize even more Evergreen companies across various sizes, industries, demographics, and geographic regions. We believe that lifting up one Evergreen company lifts up all Evergreen companies, and we are pleased to have created this new program to do just that.
On Purpose
In 2022, at Tugboat Institute® Gathering of Teams, Tugboat CEO Dave Whorton shared a talk entitled On Purpose. At the time, we were approaching our ten-year anniversary and our Evergreen® community had grown and matured a great deal. Everything Dave, and all of us at Tugboat Institute, had learned from our incredible members and friends over the years had confirmed Dave’s thinking about the power of the Evergreen company back in 2013, when he set out to create Tugboat Institute. As he honed his vision and planning for the future of this important group, he reconsidered the Evergreen 7Ps® principles and decided it was time to revise our definition of Purpose.
We have decided to re-share this important talk two years later, because our community continues to grow and our circle of friends and followers is growing quickly as well. Purpose lies at the heart of what it means to be an Evergreen leader and company. Whether you watch this as a re-fresh, as a boost and confirmation for the hard work you are doing leading your company, or as an introduction to the values and thinking that collectively guide us, it will be an inspirational twenty minutes!
Watch and be (re-)inspired by the power of the Evergreen movement.
Planning 5 for 50…and Beyond
Mercer Landmark is a cooperative (coop) deeply rooted in agriculture and community. We serve agricultural producers of everything from grain to feed to agronomy services and energy in Ohio. When I stepped in as CEO five years ago, the company was 90 years old. It was started by a group of agricultural producers back in the 1930s. Our cooperative had seen financial success, but I quickly realized that we needed a significant transformation to ensure our longevity for the next 90 years.
The fundamental, underlying issue that I found when I came in the door was an incredibly decentralized business model. We had five distinct business units, but they operated independently, with little to no collaboration. Worse, we had locations within the same business unit that were competing against each other. The root of the issue lay in the managers’ incentives, which were solely tied to the bottom line. Unfortunately, this had led to a culture of minimal investment in our facilities, as managers prioritized short-term bonuses over long-term sustainability. While Mercer had been financially successful up to that time, we were not thinking about tomorrow; it was all about today.
I thought to myself, it’s great that we're successful, but looking out ten years from now is scary. How are we going to survive as a company, because in 10 years the market's going to change and we're still going to be operating like we were 25 years ago? Guided by this concern and this mindset, we embarked on our journey of what we now call our “5 for 50” strategy.
In essence, the 5 for 50 strategy emphasizes a long-term, Evergreen® mindset and thinking that we needed to adopt to ensure our survival through the next century. It governs our planning strategy and reminds us that even as we plan for just the next five years, we have to see them as a runway to the next fifty. But how did we translate this theoretical framework into actionable change? For starters, we had to tackle the decentralized structure. We needed a cohesive organization where everyone worked toward a common goal. We also had to evaluate our current assets and determine what we would require in the future. Capital allocation became a critical aspect of our planning. However, the most significant transformation was in our company culture. We knew that we needed to shape and change our culture from where it had resided for a long time. We had to clarify what we wanted our culture to be. Then, we had to decide how we would convey that effectively to our employee base and our customer base, to ensure that they bought into it as well.
To guide us through this transformation and ensure its longevity, we established a framework of four pillars, intended to guide us into our future. Our four pillars are: Innovate, Grow, Develop, and Perform. They have allowed us to take our abstract ambitions and turn them into tangible changes.
Innovation is critical to any organization that wants to exist for the long term. The world changes fast and you have to be prepared to change with it. Agriculture has been a bit of a laggard in technological advancement over the years, so we've put a lot of emphasis on creating a culture of innovation. We know the best innovation doesn't come from the top down; the people on the front lines are usually the ones that come up with the best ideas, so we embrace a culture of open collaboration. Our team is learning that if you have a good idea, bring it to us! You can be sure we reward those good ideas. We believe that infusing innovation into our business processes and technology is crucial for enhancing customer experiences as well as our customers’ ROI. This, in turn, means we are more successful as a company, so it benefits everyone involved, right back to the employees who generated the good ideas in the first place.
The pillar of Grow is clear; of course we aim for ongoing, Paced Growth in our organization. But it’s about more than just growing the company. At the same time, we want to keep maturing, becoming more sophisticated, and continuously improving across the organization. We have invested heavily in this pillar. We’ve gone so far as to create a new position to oversee this work, the Director of Organizational Development. We call him the DOOD. We have some fun with that, but we take this pillar very seriously. We have embraced organizational health, which couples our Grow pillar and our Develop pillar together. Pat Lencioni’s book The Advantage has been a huge component of this work; we view organizational health as our advantage. This is unique for the agricultural space, and it is what we feel sets us apart from our competition.
The next pillar, Develop, is about providing support and opportunities for our team members. In agriculture perhaps more than many industries, it’s been the norm for a long time to bring a new person into the organization for a frontline role, for example, without ever thinking about what that career path might look like. There was nothing in place to show people that they can evolve within the organization. As a concrete step toward improving this, we've created what we call our Ambition in Action (AIA) group; every year we have a class of emerging leaders that we send through a seven-month management training program. We break them into groups, and they do a project within our organization, which we try to make as immersive as possible. Many of these people are frontline workers or new in a management role. It’s been incredible, because now, suddenly, these people have embraced the full culture we’ve been working to create. We started the AIA about three years ago and most of the people from our first class are now in bigger roles within our organization. Creating those career paths and showing people that it's not just about being a mill operator, or a driver forever has been powerful and empowering for our team.
Our final pillar is Perform. Perform centers on measurement and management. We realized that if we couldn’t measure something, we couldn’t effectively manage it. Over many years we had accumulated a ton of data, but we couldn’t get our hands around it. We couldn’t visualize it or manage it, so it was not useful to us. As a result, we were very reactive in the way we responded to new revelations. Over the last five years, as part of the Perform initiative, we've tried to get more proactive around Key Performance Indicators (KPI) and live data. This work has dovetailed nicely with our Innovate pillar; we have embraced and implemented a ton of new technology throughout the business. We’ve implemented methods like Power BI, which helps us drive accountability. We now have something that allows us to measure performance, from managers to salespeople, and even truck drivers and field spray applicators. That's been an exciting component of shifting how people think about their work at Mercer.
Like in any organization, change is hard. A lot of our customers have multi-generational operations, so they may have two, sometimes three generations in the businesses. People get entrenched. The changes that we have been working on over the past five years have been challenging, not just for our team, but for our customers. In addition to getting clarity on our vision for the future and articulating it clearly through the four pillars, a lot of the work has been in getting the message out to all our stakeholders. We talk about the four pillars in every meeting, anchoring them deep within our organization’s culture. They are fundamental to our decision-making process at every level. In fact, we repeat them over and over so often that we get sick of hearing ourselves talk about them! But this redundancy is purposeful, and necessary to drive the culture deep into the organization and ensure everyone is on board.
Five years in, the work is not finished (it never is), but we have made a significant shift toward being a truly Evergreen company, in position to last another 90 years. We plan for the next five years, all while keeping an eye on the next 50 and beyond.
Optimize Pragmatic Innovation by Granting Permission to Dream
Creating and implementing innovation within a company is critical to ensuring sustained growth and longevity. To optimize Pragmatic Innovation, new ideas can’t come from just one person; diversity of ideas and the vetting of ideas by people with a variety of perspectives and skill sets helps ensure that blind spots are seen, creative ideas come to light, and new ideas are born. I am sure that most every company leader agrees with this, but how to make it happen is another thing. At Metalcraft, we have decided that there is no such thing as being overly intentional about this.
Back in 2014, I was a Radio Frequency Identification (RFID) engineer at the company, and not yet in senior leadership. I was on the product development team, and our objective was simple: develop new products. Nevertheless, I watched as great new ideas appeared, plans were created, and then they struggled to come to life. I wondered if we could do something to fix whatever was preventing their forward progress.
The product development team was not charged with bringing new ideas to the table, so that part of the process was relatively unstructured. I went to our CEO, Steve Doerfler, who is a Tugboat Institute® member, and said, “I think we should create a standalone innovation team.” I explained that the purpose of this new team would be distinct from the product development team in that it would be charged with generating new ideas for improved products or processes. We would evaluate new technology that was coming available in the marketplace, and we would consider how we could utilize it at Metalcraft. As compared to the product development team, it was more outwardly oriented; we would look outside of Metalcraft's areas of activity and offer recommendations to the product development team. That was in January of 2014 and after going through the process with the leadership team, it was approved. We had our first meeting in February of 2014.
The new team had a charter, and our stated objectives were fourfold.
1. Evaluate evolving technologies and markets.
2. Generate new ideas for manufacturing processes.
3. Generate new product line options.
4. Instill an innovation-minded company culture.
We sought to brainstorm and most importantly, challenge the status quo. Initially, we met once every two weeks and then moved to monthly meetings and updates depending on what was going on. It was very free flowing; we created structure around when the meetings took place but left a lot of freedom around the rest so we could modify when it made sense.
I think the spirit of the group was important. The freedom on how we met, what the meetings were like, and how we generated ideas left plenty of space for new thinking to emerge. In terms of who was in the room, we included people from throughout the organization and I think that's a key piece. It wasn’t just people who were product focused or manufacturing focused; we had people from IT, sales, and even product development on the team.
When we launched this group, to the end of establishing an innovation-minded company culture, we also established an Innovation Rewards Program, allowing all employees to submit their ideas for consideration. It wasn’t a perfect process; while ideas poured in, not all received the necessary attention for execution. After a few years of this, it became clear that a pile of new ideas was not enough; someone had to own each new idea to get it to fruition. Therefore, in 2019, we launched a second team, the innovation implementation team. Their job was to take the ideas, and specifically the processes generated by the innovation team, and make them a reality. Now we had a complete system. New ideas came from everywhere and flowed to the innovation team. This team served as the gatekeepers to approve those ideas that were worth pursuing and reject those that weren’t. From there, approved ideas for products flowed to product development and ideas for new processes flowed to innovation implementation.
Was it successful? Definitely, yes. Through this work, we were able to launch multiple patented products out of the innovation team. We even launched a new business unit out of that team.
A couple examples of great innovations at Metalcraft that came out of this innovative process are Gray Trunk RFID, and an innovation on the manufacturing floor. Grey Trunk RFID is a product that emerged as a standalone SaaS asset tracking software for small to medium-sized businesses. Despite not being utilized internally, it has become a successful product for external markets. The second was a process refinement that allowed our manufacturing floor to go almost entirely paperless. This involved giving every member an IPAD, allowing us to move all of our previous paper files to a digital form. This shift has made the team more efficient and better up to date.
When we created these two teams over time, we were not seeking to fix something that was broken. Rather, we were trying to find ways to be better at what we were already doing. The new teams are composed of employees already at Metalcraft – no one new was brought in to do this work. However, by creating the structures and the charters for these two groups, we were inviting our team members to shift the lens through which they looked at ideas, products, and processes. We gave each team a specific purpose and then we gave them the freedom to pursue that purpose in the way that seemed most effective to them.
It's not only been effective in terms of improving our performance with respect to Pragmatic Innovation, but it has also been a culture add for the team. More people have been invited into the innovation conversation and process and the energy and excitement generated by the Innovation Rewards Program has been great. We have continued to evolve this program, and today we have an award called the Smeby Award which goes to one person, at the end of each year, who submitted the most successful idea for an innovation. The award is named for our previous owner, who was incredibly innovative. It has become a great end-of-year recognition tool.
What all of this has proven to me is that you always have to keep adapting and evolving, not just for your business but also for your team. Even our innovation team has continued to change how we do things, due to new technologies or how people prefer to interact. When we look back at 2014, it’s not that the freedom wasn't there, it just wasn't articulated. No one had said, "Hey, you can go and dream whatever you want." Now we have.
A final example that captures the spirit of all this work is something we call California Dreaming. It's a whiteboard in one of our areas that the innovation team owns, and if any employee has an idea, they can just go write it on the board. As a leadership team, we committed to looking at all ideas. Permission to dream has been a game changer for us, in terms of both innovation and also people. It’s made us a better company.
AI Doesn't Replace Human Expertise, It Enhances It
At McCarthy, our 100% employee-owned construction company, we have been in business for almost 160 years. We have grown from a small lumber company founded in 1864 into one of the largest and most diversified commercial construction companies in the U.S. That kind of timeline requires that a company reinvent itself constantly, and that kind of growth requires an understanding of how to scale. But these are not lessons we learned just once. As new problems present themselves and as the world evolves and changes, we are required to repeatedly tackle innovation and scaling challenges. Today, the pace of change is almost dizzying, but like in the past, a challenge – this one having to do with scale – served as the impetus for our recent foray into the world of Artificial Intelligence (AI).
The genesis of our AI tool began with a business problem. Around two and a half years ago, a group of forward-thinking team members at McCarthy set out to improve the design solutions for our renewable energy projects, primarily in the solar and battery storage sector. The demand for renewable energy installations was growing fast, but they realized that adding more human resources to address the demand wasn't a sustainable solution. In a highly competitive job market, they saw we needed to find a way to scale operations efficiently.
To tackle this issue, the team first searched for a product that already existed, but there was nothing out there that did everything they wanted it to do. In addition, when working with AI technologies, protecting sensitive data and ensuring it remains in a secure environment is a paramount concern, so developing our own product quickly became appealing. Their next step was trying to develop an in-house solution, working on possibilities to automate the design process. They soon realized that required external expertise, so they enlisted the help of a Belarus-based development team. Once Russia invaded Ukraine, the team relocated to London.
Together with this team of excellent software engineers, we created a product to help automate the design and implementation of a solar plant using artificial intelligence. It was far better than anything else on the market and set us on the path to being able to scale like we needed to. Initially, McCarthy and the software development team shared intellectual property (IP) equally for the new product. We made a significant decision to acquire full ownership of the IP earlier this year, solidifying our control over the PV Farm tool. We have also established a joint venture with the developers to continue refining and enhancing it.
PV Farm is designed for utility-scale solar projects and it can revolutionize the way renewable energy projects are conceived and executed. The tool takes input from various sources, including landowners and developers, drone-based topographical data, and it procures information from component manufacturers like panel producers and inverter manufacturers. It then leverages this data to optimize the design of solar projects, reducing the need for extensive earthwork and optimizing the energy output. This is all work we have done for some time, but it used to take three to four weeks and required a team of skilled professionals. With PV Farm, the process is significantly expedited and streamlined, taking only a matter of hours with the right team. The tool doesn't just optimize the design, it also generates all the necessary data for project execution, from trenching requirements to cable placement.
An important learning through this process has been that while AI is an invaluable and powerful tool, it is most effective when combined with smart and knowledgeable people. Our team members spearheading this initiative are great examples of that. Without their clear and expert vision and leadership, their partnership with the engineers would not have resulted in such an excellent product. AI doesn't replace human expertise; it enhances it. We were able to test this belief recently.
We had hired a smart young intern and after only a month of working with the program, he was able to confidently present an excellent plan for a new project to company executives — this despite having no prior experience in the solar energy sector. PV Farm's user-friendly interface makes it intuitive and empowers people to work more efficiently, even without prior experience in the field. The tool doesn’t do the work all by itself, but in the hands of the right, intelligent person, it can increase productivity and quality of work exponentially.
Another key takeaway from this experience is the importance of fostering a corporate culture where employees feel empowered to tackle challenges with innovative solutions. I wasn’t even aware of what we were doing with AI and solar until about 18 months after the team started. And that’s OK. As soon as they saw they were onto something that was going to become an important part of what we do, they brought it to me. To me, that reflects a vibrant, forward-thinking culture where people have the confidence and trust to tackle and work through initiatives like this on their own. The development of PV Farm was initiated by a team of employees that recognized the potential for improvement and had the support and resources to pursue their vision. This culture of innovation is a crucial factor in staying at the forefront of industry advancements.
Our experience creating PV Farm is a good example of the potential of AI to drive efficiency and innovation within the renewable energy sector. As other companies look to leverage AI in their operations, our path through this process can translate to almost any industry — start with a business problem, empower a team of innovators, and recognize the potential for positive change in an ever-evolving industry.
The Predictive Power of Culture Analytics
Evergreen® companies, who value their teams and put People First, believe deeply in the importance of a strong culture. However, the critical value of a strong culture is not simply a matter of faith. In this Tugboat Institute® talk, Oliver Staehelin shares concrete data around the specific, strategic advantages a strong culture can give a company. In a world where competition for great talent is not going to ease anytime soon, this is not an optional undertaking for the company that wants to retain a strong team over the long term.
Oliver was an early member of Tugboat Institute, while he was leading the culture assessment company he co-founded with Stanford Professor Charles O’Reilly, Pomello. His early career and all of his subsequent work confirmed for him that culture is not a ‘soft’ topic, nor are its benefits immeasurable.
Watch and be inspired to transform your company’s culture into one of its greatest strategic advantages.
The Entrepreneur as Artist
We typically think of art and business as very separate domains. However, as an entrepreneur and founder of two tech companies, I have come to see my work as deeply similar to that of an artist. Both are creative endeavors, both require vision, focus, skill, and determination, and both need space and freedom to thrive.
I didn’t see it this way when I founded my first company, Lohika Systems, in 2001 when I was not yet 30 years old. I followed the playbook I thought I was supposed to, and I created a Board of Directors populated with former successful entrepreneurs/investors who would, I thought, lend welcome expertise and advice to me as I built the company. The Board members had partial ownership of the company and, as a result, I did not have a majority stake in my own business. It didn’t take long for me to realize that I was in a bad situation. Probably in great part because I was such a young woman, my Board members started second guessing me. They stepped in and micromanaged me all the time, and I quickly realized that I was no longer in charge; my vision for the company I had set out to create could not flourish. Within just two years, it became clear I had to leave, so I did.
Although losing Lohika was painful, it taught me very important lessons. I didn’t waste time and set out to start again; in 2003, I founded Svitla Systems. Like Lohika, Svitla is a digital solutions company that serves clients globally. Our mission is to advise and implement modern, sustainable solutions for our clients, using the power of digital, cloud, data, and intelligent technologies. As I built Svitla, I was careful not to make the same mistakes I had made with Lohika.
To begin with, I am the sole owner. I don’t have and never have had any investors. This meant that I had to bootstrap the business and pay for everything myself, but it was well worth the difficulty that posed. As a result, I don’t answer to anyone else. It is up to me to decide if I want to start another division, if I want to allocate money this way, or allocate it that way. It gives me freedom, just like the freedom an artist has when they paint and decide which paints to use, what the canvas is going to be, and what the subject of the painting is going to be. This kind of freedom is unique to a private, Evergreen® company.
It goes without saying that artistic inspiration is not the sole driver of my company, of course. The freedom to create effectively requires smart strategy as well. You have to know your market and you have to do your research. I have surrounded myself with smart people who are experts in their fields and who can help advise my vision and make it practicable. First, there’s my team. I have very experienced people on the team, people who know more than I do, and they provide me with critical input. Because of their expertise and the collaborative culture we have created, in many cases the team makes the decisions on strategic issues. I have the final say, but because I have been able to build this team myself, I have all the confidence in the world in them.
A second, equally important group whose input is invaluable for me is our clients. We learn constantly from our clients. This of course is not unique to an Evergreen company, however the freedom to choose the right clients and to build processes that create feedback loops only exists when the operator and her team are truly running the show. In a public company or in a company with a powerful board or investors, they can say, "No, you cannot do that because it doesn’t align with other financial interests." They will almost always choose whatever they perceive as the biggest bang for the buck, and you can have all the substantiation that you want, but if they decide that's not where they get their best ROI, they're going to kill it. At Svitla, we can de-prioritize short-term gains when necessary if we think a project has long-term value, or if we think a certain client can teach us important lessons.
A concrete example of a decision we have made recently that we would not have been able to make in my old company is the creation of our Center of Excellence on AI. I presented this idea to my team, and we have run with it. We are doing it because we see the future opportunity and we need to be ahead of the curve, but when we created it, we didn’t have any clients yet. Therefore, we were spending money without the certainty of a return in the near future. But it was the right thing to do. Honestly, I made this decision together with my team. In this way, perhaps the parallel with the artist is not perfect, because I do not operate in a void. I take their input, I need their buy-in, and I work with them to design the products and processes we set out to create.
In the case of Svitla, the way I have chosen to build my team is another example of the freedom I would not have if I was controlled by investors or a board with a majority share of the company. Our team is very international. Our original team of software engineers is Ukrainian, like me. They are overseas. We also have team members in Mexico, Costa Rica, and Argentina, as well as here in the States. Outside of the software engineers and technical leadership, the majority of them are in sales and recruitment. This diversity sometimes creates challenges when it comes to communication and culture creation; language barriers and different cultural norms can present challenges within an organization. But since I am fluent in Ukrainian, English, and Spanish (my husband is Spanish), I did not have the limit of language and culture as I built our team. I was able to recruit and hire the absolute best people, no matter where they lived and what language they spoke. If my company is going to last 100 years, of course, it can’t always depend on me, but I am in the process of creating a culture and a series of norms that will allow this international team to function effectively far into the future.
Founding and building a company is hard work. There is no way around that. However, in the 20 years that Svitla has existed and as it has grown, I have come to see a certain elegance in my work. Like an artist, as the CEO of an Evergreen company, I truly have the freedom to create and make decisions as I build and lead. I have felt the pressure from outside investors and owners, and I have experienced the frustration of having this freedom taken away; it’s awful to watch something you envisioned and created taken over and changed by people who do not share your vision and whose objectives are so different from your own. At Svitla, with the freedom to create as I choose, I have been able to build something extraordinary. I don’t think that could have happened any other way.
FUNomenal Innovation at Radio Flyer
It is rare and challenging for businesses to last beyond the first generation of ownership and leadership, and rarer still for them to last into the third generation and beyond. There are many reasons for this, but a common one is that a company, once it has created its breakout, successful product, will cease to innovate and change. When vigilance on this front diminishes, it is nearly impossible for a company to remain competitive and survive.
When Robert Pasin started work for the very successful company his grandfather had founded, Radio Flyer, he was surprised to discover that his family’s company had fallen prey to just this. Innovation was minimal and as a result, the company was in danger of a decline. He undertook to rebuild a culture of innovation and discipline, and was remarkably successful; Radio Flyer was recently named to the top ten Fast Company list of Most Innovative Companies for 2023.
Watch Robert’s Tugboat Institute® talk and learn what strategies he employed to turn their biggest weakness into their greatest strength.
Better Together
In Mexico, we have a saying that goes like this; “Educa a un niño y educarás a un hombre. Educa a una niña y educarás a una familia.” In English, “If you educate a boy, you educate an individual but if you educate a girl, you educate the whole family.”
At Shasa, the fashion company I founded and lead with my brother Armando, we believe deeply in the power of empowering women. It has informed our growth and identity over the years, both in terms of how we manage and grow the company, and in terms of how we give back to our communities. As I look back over the last 20 or so years, in fact, I find it hard to separate which came first, our intentional focus on women within Shasa, or our work with a girls’ orphanage we have helped build, Casa Hogar Alegria.
Armando and I worked hard for many years to build Shasa into the large company it is today. You can read about how we did that in an article he published with Tugboat Institute’s Evergreen Journal in 2022. From the beginning, once it was clear that fashion was our focus, we focused on women’s clothing; I suppose the connection to women started there. As we built the company, between the people who designed and made the clothes to the ones selling it in the stores, to the ones helping us devise strategies around marketing and growth, it naturally happened that we grew into a company populated mostly by women. Today, over 85% of our 2000 employees are women, and we are proud of that.
When we were in the earlier stages of building Shasa, our wives became involved in an orphanage for girls that was founded in 1997 – Casa Hogar Alegria. Not long after, we had grown the company to a place where it was clear we had a future, and where we began to understand clearly what kind of company we wanted it to be. In essence, though we didn’t have the language for it at the time, we knew we wanted to be an Evergreen company – one that intends to endure for the long term, that is committed to staying private to retain independence, and that cares deeply for the people in the organization and in our communities. Groups were starting to approach us to sponsor their community projects and we wanted to make a choice that would align with our Purpose and be meaningful for our whole company. We looked at what they were building at Casa Hogar Alegria and decided to make that our exclusive focus; we understood that we could have far more impact by focusing all our efforts on one project, and this one aligned so perfectly with who we had become as a company.
First, I’ll share some history of the evolution of this beautiful project. Then, I will explain how deeply integrated it has become to our Purpose and our identity.
When Casa Hogar Alegria was founded in 1997, it took in eight girls, and looked after them in a rented house. The group that founded it was responding to a need that was sadly increasing in Mexico – an abundance of abused and abandoned young girls who had no one to take care of them and were living on the street. The state in Mexico has projects to support orphans, but the budgets are badly insufficient to care for these children in a meaningful way. It was clear from the start that housing was just a small piece of the support that would be needed to raise girls who were strong, balanced, and prepared for the world. In addition to food and shelter, the girls need emotional and behavioral support, they need education and support in their schooling, and they need the social skills and training to grow into successful, productive women. Therefore, at Casa Hogar Alegria, the girls are supported by an interdisciplinary team of pedagogues, psychologists, educators, and administrators. This comprehensive model is quite unique in Mexico.
From the beginning, we supported Casa Hogar Alegria financially, but we quickly become interested in this unique model. Once we had decided this would be the sole focus of our service to the community at Shasa, we became deeply involved. For the first ten years, Shasa was by far the largest donor to the project. In the years since, my brother and I have managed to recruit a number of other values aligned and purpose driven companies to join us, and Casa Hogar Alegria has grown to encompass four different houses in three locations, supporting 213 girls and employing over 90 people. I became the president of the board of directors in 2020, and while I will be passing the torch to someone else soon, I have helped set the mega goal of serving 500 girls by the year 2025. It’s a stretch goal, and we might be a few years late in getting there, but we are on our way.
How does all of this align tightly with who we are at Shasa and what does that look like? First, like I said, most of our employees are women. Further, many of them are women who came from challenging circumstances, and for whom their role at Shasa has allowed them to build a stable and wonderful life, raise their children and care for their families, and grow and be fulfilled as people. At Shasa, it is important to us to develop our team, and we prefer to hire from within when at all possible. We have many, many employees who started out in entry-level positions, at the store, in the manufacturing facilities, or in our offices, and who have developed and grown into leaders. For this reason, the work with the girls at Casa Hogar really touches them personally. Even if they were never orphans, they can relate to the plight of a young girl with few resources and prospects in today’s society.
Conversely, it is incredibly meaningful for the girls to interact with the women on our team. They hear their stories and are inspired to see possibilities for themselves. Most of them come from a place where they have no role models who are successful, independent women, and when they meet the women on our team, they start to be able to see a better life for themselves. It motivates them in school and beyond, and they start believing in the possibility if their own success.
These important interactions take place in lot of different places and ways; our team’s involvement with Casa Hogar takes many forms. Our employees elect to spend time with the girls at Casa Hogar in both formal and informal ways. We host big celebrations at the houses for holidays, such as Christmas and Children’s Day, which is big in Mexico. At these celebrations, we have all sorts of activities for the girls, from cupcake-making to jewelry-making and more. Everyone wears costumes and it’s so much fun. We also have two collections per year at Shasa that are designed and sold specifically in support of Casa Hogar, one of which launches at Christmas and one that launches on Children’s Day, so those celebrations incorporate those launches as well. As often as possible, we invite the girls to our stores, to see what our company has created and what it stands for, and also to see what kinds of opportunities exist for them in the world.
As you can see, the meaning and the benefit of the relationship between Shasa and Casa Hogar is reciprocal. The director of Casa Hogar Alegria tells a story that illustrates perfectly the symbiotic relationship between our two organizations. When people come to visit the house where the babies live, she brings them to see two little girls who share a crib. She says, “Why do you think these two babies share a crib?” People’s first guess is usually that they are twins or somehow related. “No,” she replies. “They are nothing to each other. They have no shared history. However, when they are alone, they cry. When we put them together, they are happy. It’s like Shasa and Casa Hogar Alegria. We are better together.” What could be more People First than that?