A Pragmatic, Non-visionary Business Worldview: Lessons from The Outsiders
Will Thorndike is an investor and author of The Outsiders, a study of eight unconventional CEOs who did an exceptional job of allocating capital in their businesses. In this presentation from Tugboat Institute Summit 2019, Will shares the essential lessons of the CEOs he profiled in his book, as well as updated insights.
There’s No Such Thing as Work/Life Balance
When my four kids were young, I would pull into the driveway of our family home after work each day, step out of my car, and hang my blazer on a large lemon tree in our front yard. Having shed my work self, I would take a deep breath and step into the house, determined to be 100 percent present for my family.
Of course, I wasn’t actually hanging my work clothes outside, but I did have a practice of going through those motions and—at least metaphorically—leaving my professional worries swaying in the breeze each night. As any Evergreen™CEO will tell you, when you’re building and growing a business, you can’t ever really leave that part of your life behind.
Despite that seemingly obvious reality, I spent quite a few years engaging in various strategies, including the lemon tree ritual, to create the mythical “balance” between my personal life and my commitment to my executive search firm, Govig & Associates. As a classic Type-A personality, I felt compelled to give 100 percent to all areas of my life, striving to be all things for all people. I spent a lot of time feeling guilty about how I was spending my time—both at work and at home. I was trying to do the right thing, but I was continually torn between the competing priorities in my life.
Here’s the thing I came to understand: There’s no such thing as work/life balance. We’ve all been steeped in that mythology of believing that if we’re doing it right, we’ll find some business-personal nirvana. The reality is that for most of us, the way the world operates today doesn’t allow for that. I used to pride myself in returning all calls within 24 hours; I sent innumerable hand-written notes. Today, the rate of email and other communication has outpaced my ability to respond. I could spend all day answering email, and if I answered my phone every time it rang, I wouldn’t be doing anything but talking on the phone. And that flow certainly doesn’t stop at 5 p.m. when we head home to family.
It’s time for a different strategy.
So, if balance is unattainable, what is the answer to leading a life that allows us to engage meaningfully with our family and friends, devote time and energy to personal passions, and commit to building and growing Evergreen businesses?
In my experience, seeking harmony is a more realistic goal. My life includes a lot of different “instruments”—people and roles and responsibilities that are tugging at me all the time. I'm a father. I’m a husband. I'm a brother. I'm a son. I'm a CEO. I serve on several boards. I'm involved in philanthropic activities. I love to get outside and hike, and I’m also a pilot. The list goes on and on. The concept of harmony allows me to think about those roles and responsibilities as working together, combining to create the symphony that is my life. Sometimes the percussion is louder than the horns. Sometimes it's just the violins and the strings. The music that is created is continually evolving—at some points it’s loud; sometimes it's soft; sometimes it's intense or angry or sad. But, on the whole, when I recognize that all the pieces are contributing to a full, complete life, it’s a better model for me.
Transitioning to this approach wasn’t easy. Did I mention I’m a Type-A personality? I like to be the first one at my desk in the morning. As so many of us do, especially early in our careers, I regularly worked 60-80 hours a week. I left work and changed diapers and did my best to be present at home and in my community. I know what those pressures feel like. But at a certain point, I also felt how unsustainable that approach was.
As I started to understand and experience the value of a life in which my roles and responsibilities coexist rather than compete, I wanted the employees at Govig & Associates to benefit from that approach as well. I began to model the behavior that I hoped our team would also embrace. I committed to coaching each of my kids’ soccer teams—a role I loved and ultimately took on for 14 years—and I left the office every Tuesday and Thursday at 4 p.m. I made a point to foster a culture in which all our employees have that same freedom: maybe it’s coaching, as it was for me, or maybe it’s serving as president of a local non-profit board. Whatever those “instruments” are that bring the symphony of your life to a full and rich experience, do those things alongside your work for us, and we will support you.
Today, that culture is reflected in the many diverse ways our team can commit to a wide range of personal roles and responsibilities and enjoy the passions that inspire them as individuals. We recognize that our employees are parents, caregivers, athletes, world travelers, sports fans, committed philanthropists, among many other things, and we encourage them to embrace those identities and hobbies because it not only makes our organization better, it strengthens families and our wider community.
Our commitment to this culture does not mean that we have lowered our expectation around performance. We are a sales-driven organization, an “extreme meritocracy.” That hasn’t changed. At the end of the year, we still need to meet our goals. But our people now know that within that structure, they have the freedom to commit as much time as they feel is appropriate to their other roles and responsibilities. We don’t micromanage. We don’t limit vacation time. We trust our team to conduct their own orchestra.
The extraordinary tenure and low turnover in our organization reflects the success of this approach. I regularly have employees in their early thirties who have worked for us for a couple of years tell me, “I'm going to be here until I retire." In a culture where college students are being told that the only way they will get ahead is to work for 20 different companies and have multiple careers in their professional life, I think this sets us apart. I believe that our commitment to harmony and the culture we have created to support that model will continue to be a significant factor in our long-term success.
Todd Govig is President and CEO of Govig & Associates.
Parenting (and Leading) in the Age of Anxiety
For Evergreen leaders, connection with and commitment to family are essential factors that lead to and support success. In this presentation from Tugboat Institute Summit 2019, Tugboat Institute Chairperson Jeff Snipes shares parenting and leadership insights gained through his work as founder of Millennium Schools, involvement in Challenge Success at Stanford, and as a dad himself, into the epidemic of anxiety among children today and provides three key approaches to support one’s children and, by extension, one’s employees.
Forging Purpose, and Partnerships
To understand the ethos that drives our Evergreen company, MiiR, it’s helpful to know that I was forced to consider my legacy a bit earlier than I would have expected. In 2006, when I was 20, I was in a ski accident and broke my femur. I was aware at the time that a femur fracture can be a life-threatening injury—if you hit the femoral artery you can essentially bleed to death in about 10 minutes.
As I waited for help, propped against a tree in the snow, I was acutely aware of my situation. But instead of panic, I experienced a calm sense of clarity, and I came to two realizations that would chart the course of my personal and professional life. My first thought was of my girlfriend Becca, who I had been dating for about three years. I thought, "Man, if I live through this, I've got to marry her. She's incredible." Second, as I considered the fact that I could very well die, I thought about what people would say about me at my funeral. And I realized that if I were to be eulogized, nobody would have been able to say anything about what I had done to make the world a better place.
Fast forward 13 years, and I have been happily married to my then-girlfriend for 11 years, we have two kids, and I’m working hard every day to build and grow a company that gives back through every product we sell.
I founded MiiR in 2010 with the idea to merge product design and innovation with philanthropy. I had always been entrepreneurial, and when the outdoor industry startup I had been involved in sold, I began thinking about products that could be innovated. I identified bottles as an area of opportunity: there were clear improvements to be made to existing designs available in the outdoor industry marketplace, and innovating the product would serve customers by increasing portability and reducing plastic waste. The bottle was the product that would be our launching pad, our entry into the marketplace. Each product that followed has followed the innovative design principles of that first idea: timeless, thoughtful, beautifully simple, and sustainable.
But I didn’t just want to sell a product; I wanted to make a difference—to do good. To that end, we committed to grant three percent of our annual revenue to impactful projects that would transform communities. We attached a “Give Code” to each product we sold, allowing customers to register that code after their purchase and follow the trail to see where the portion of their purchase dedicated to grant making would ultimately land. In this way, we ensured that every transaction would provide an opportunity to do good every single day. From the beginning, that spirit of generosity was the essence of the MiiR brand, and our mission evolved from that place: “We exist to empower people for a better future.”
It turns out, my team and I were fully immersed in building MiiR, focused on product and Purpose, other companies were taking notice. In 2013, an email that would prove transformative landed in our general information email box: "Hey, this is Paul from Patagonia. We'd love to work with you. Not sure if you've heard of us." We had heard of Patagonia—I had admired the brand and loved their products since I was a kid. From that first outreach, we developed a partnership with the company, which we maintain today, through which our products are co-branded and sold worldwide. Patagonia has been an incredible partner in and of itself, but the partnership has also been very significant in what it signals to the marketplace about our brand—that a company of that caliber wants to work with us.
That connection was the first of what has become a series of impactful partnerships—others have included Blue Bottle Coffee and Stumptown Coffee Roasters—with companies that are value-aligned with our mission. These collaborations have allowed us to build our brand in a powerful way over time, and they have also provided additional opportunities to give back. The fact that we are an Evergreen™ company, committed to pacing our growth over the long-term, has allowed us the patience and space to embrace these opportunities selectively, at the rate that feels right for us.
Almost 10 years after that first email from Patagonia, we receive offers regularly to partner with other companies, but because we aren’t looking to meet VC or Wall Street’s quarterly expectations, we have the luxury of always returning to our mission to clarify when to say yes. And we are committed to continuing to say yes, to continuing to grow, because when we do, we earn more money to grant to people and organizations around the world—that’s a pretty powerful motivator.
As we take this patient view, we are excited to see how future partnerships will continue to grow our brand and how and where we can make a difference in the world. As a social enterprise, this opportunity to transform lives and communities drives us, but product innovation remains the core of what we do. Every product we create must be able to compete in the marketplace and be the best possible product for its intended purpose. When we are able to reach that mark, we earn the right to be generous.
Bryan Papé is Founder and CEO of MiiR.
What are the Key Characteristics of Evergreen Leadership?
What are the defining traits or behaviors of an Evergreen leader? What values or perspectives shape the way they build and steward their companies? At Tugboat Institute Summit 2018, members shared their thoughts about what distinguishes and Evergreen approach to leadership.
Featuring: Mac Harman, Stacey Orozco, Ricardo Cervantes, and Courtney Kingston
Growing an Evergreen Company Takes Grit
In 2000, four years after founding my engineering firm, Civil Design, Inc. (CDI) in my basement, I partnered with two fellow engineers to broaden the services and project scope of the work I could take on. Under the umbrella of my business, we worked together for several years—they were moonlighting while each working for other firms, and I was able to work at home and raise my young family. At the time, it seemed a practical solution for all of us.
Then we had an opportunity to take on a project inside the St. Louis district, which required we move our office space out of my basement. I emerged kicking and screaming from the house—I had loved my years working from home—but the move proved advantageous for growth, and we soon had a team of eight employees. But, as we expanded, we grew into a tangled mess of a dysfunctional partnership.
As our team grew, it became clear that we needed to implement infrastructure and programs to support our employees. We couldn’t just run things by the seat of our pants any longer. People were depending on us.
Taking on this responsibility felt natural to me. I've always been focused on people and trying to give them what they need. My partners, on the other hand, were focused primarily on profit. I would try to bring up issues related to employees or bring them into other management conversations, and they refused to engage. We started to clash and became siloed.
Without input from my partners, I sought other advice and insight—and it was a good thing I did. I learned that, given our partnership structure (each of my partners had bought into my company with a minimal investment when we initially joined forces) I should have a buy-sell-agreement in place. I spent months creating an agreement, and I handed it to my partners in end of 2005 with an employment agreement.
The firm was designated as a woman-owned firm from the beginning because of the advantages and incentives around minority- and women-owned firms in the engineering space, and the agreement outlined that I owned 60 percent of the company, and they owned 20 percent each. They had each bought in with very minimal investments, and they were aware of their minority ownership from the get-go. But they both bristled at the agreement.
From that point forward, they both started acting like entitled owners who didn't have to show up for work. In fact, it came out later that they spent the bulk of each day playing ping-pong. I had no idea that they weren’t pulling their weight because I was on another floor of the building trying to keep the business running and growing. Always a hard worker, I was pushing myself, trying to get through what felt like an impossible situation for the benefit of the employees.
Within a few months of their signing the buy-sell agreement, the three of us were hardly talking. Early in 2006, one of the two partners came to me and told me he had some financial problems and wanted out. I realized that buying that partner out would mean that the remaining partner would acquire an additional five percent of the company, which was crazy to me. Our relationship had degraded to the point that it was just a mess.
So, in November of 2006, I took a week to really think through what I needed to do to save the company; it was the longest week of my life. It was very painful—literally. I came down with shingles from the stress.
I can still remember the day that I came home after being diagnosed with shingles. I was crying and talking to my husband, and I said, "I really hate my company." And as I said the words, it dawned on me how bad things had become. If I hated my company, how did my employees feel? I knew then, definitively, that something had to change. I decided that not only did I need to buy out the partner who had requested that, I had to fire my remaining partner.
It was a traumatic time. But I never considered not persevering, not seeing it through. That has always been my way. My childhood was difficult, and from an early age I just had to persevere. If I didn't stick to my gut and persist, I wasn’t going to get anywhere. That's all I've ever known. So, though this situation was incredibly challenging, I didn’t know any other way but forward.
Having made the decision to assume full ownership of the firm, I was worried about how the change would affect morale. Would employees be worried about the future of the company?
I knew I needed to be able to say to the team, "We're going to stand on our own two feet. When these two are gone, we're going to be okay." If not, I knew I could lose people and, potentially, the company. So, I gathered several of our senior project leaders, and we went off site for a two-day strategy and coaching retreat. We needed to be able to define who we were, what we stood for, and where we wanted to go as a company. With the help of a professional coach, we were able to create our four core values over those two days: continuous learning and growth; mutual trust and respect; personal ownership; and, responsiveness. Those four values still guide us today.
Having done that work, I was able to come back to the company, share the news of the partnership change, and know that we would be okay. And, we’ve been more than okay in the now 13 years since. We are a thriving Evergreen™ company, employing 75 people across offices in three states and poised for continued growth.We are attracting top talent because we are guided by People First policies and embrace a culture that emphasizes quality of time spent working versus quantity—we want people to work in a way that allows them to be happy and well, to spend time with their families, and to avoid stress as much as possible. I believe if our team members go home happy and I have done my job helping them create a happy home, then the CDI influence will hopefully help their kids think about working for an Evergreen company themselves.
As we move forward, the lessons of those early years are clear and present for me. Had I vetted my partners to know if they shared my People First values, I would have seen from the beginning that our visions for the company were not aligned. Now, when I interview employees, that’s what I’m looking for first: engineering skills are essential, of course, but anyone who joins our firm must first share our commitment to People First and to maintaining the unique culture we have developed.
I wouldn’t want to live through the trauma of that partnership scenario again, but I am grateful for the key learnings I received. Now, when I take the long view and consider what I want for the company and for our employees, I feel confident that the culture we have created will see us through any future challenges.
Vicki LaRose is President of Civil Design, Inc.
The Importance of Evergreen Values to Our Community
How do Evergreen business leaders make a dent in the universe? How are they impacting their communities through the Private, Purpose-driven businesses they lead?
In this panel discussion, presented at the Fourth Annual Olin Family Business Symposium at Olin Business School at Washington University in St. Louis in October 2018, Ricardo Cervantes, David Kemper, and Michael Van Houweling discuss their approach to leading impactful businesses.
Featuring: Ricardo Cervantes, La Monarca Bakery, David Kemper, Commerce Bank, Michael Van Houweling, Van Wall Equipment, moderated by Spencer Burke.
How to Grow While Saying No
Joining a family business is not always an easy decision. When my father, Tom Larkin, and I initially discussed my working for The Larkin Company, the business he founded in 2001, I was hesitant. How would the child-parent dynamic play out in the business? Was joining what was then a relatively small business—at a lower salary—the right move for my young family?
Ten years later, I can say that the decision has been unequivocally positive. Stepping into the business, an administrator for employee leaves of absence and self-insured, short-term disability benefits, has provided me the chance to grow and scale a company from what was then a team of six or seven to our current 90+ employees. My father and I worked closely together until he stepped away from daily operations to become Chairman in 2015, and we have had the satisfaction of owning and operating a business built by our combined efforts, to our values.
Now, since assuming the position of President and COO, I am looking ahead to continue the managed growth strategy we developed together: we have plans to grow the company to 150+ employees over the next 2-3 years. As an Evergreen business, we embrace the principle of Paced Growth, and we have the luxury of creating a tempo that allows us to maintain our values and the differentiating level of service that sets us apart in our industry.
We compete against a lot of big insurance carriers and other administrators, so ensuring we maintain the differentiating service level as we scale is our top priority. We've built our reputation on our service, and we’re not willing to make any compromises in that area. To maintain that signature service, we’ve been intentional about the rate at which we add new clients. Twice over the last few years, we’ve delayed adding new clients for a full quarter. The impact of each of those decisions has meant about five months of no new revenue because it takes us about 60-90 days to bring on a new client. But, for us, the pause is essential to protect service for our current clients and, importantly, to make sure our team is not overworked and continues to have a good work-life balance.
Intentionally slowing our pace also provides opportunity to reflect, improve our processes, and plan for the next phase of growth. We’ve had the space to ask, "What are we doing well? How are our processes working? How can we do it better? What are our priorities as we move forward?" We will continue to manage our growth in a way that allows us to answer these important questions. We want to continue to add new clients, but we don't ever want to find ourselves in the business of replacing clients we’ve lost because our service has deteriorated.
As we move forward with our Paced Growth approach, we are not only intentional about the rate at which we add clients but also about the quality of these new partners to ensure the relationship will be lasting and mutually beneficial. As we evaluate potential and existing clients, we have made difficult decisions to end relationships or not enter into new contracts with clients who are not the right fit for us for one reason or another. In some cases, these have been very large accounts, and the impact has been significant to the revenue of our still relatively small company. Despite the impact, we feel it’s important to continue to be selective as we grow to maintain our service, our values, and a positive environment for our internal team.
Developing our people and growing our team as we scale the business is another essential aspect of our Paced Growth strategy. It’s also probably my biggest challenge. How will we be able to hire the right people—and as many as we need to meet demand and maintain our quality as we scale? How will we train and develop our people so that we can build a leadership bench?
To help me meet that challenge, we made the decision in 2017—around the time we hit 50 employees—to bring in a consultant to help. Ed Martin, who has held senior HR positions at a number of companies, including Pixar, and has been a close friend of my father’s for years, has been working closely with us to develop strategies and processes that will help us develop and train our growing team. Specifically, we’ve been working to both train managers and also create non-managerial career paths. We’ve been focusing on developing career ladders for people across the organization, defining paths for employees that will allow us to retain our talent, and providing coaching and training to help them succeed on their paths.
Working with Ed has been invaluable to me. He has helped us create structure and ask the important questions. Having him on site regularly has also benefitted me as a leader, through informal conversations and mentoring around my own development. He’s helped me clarify what I need to be thinking about as the leader of the business and how I can best communicate our direction and values to our people to maintain culture as we grow.
Looking forward, I’m excited about the prospects for our company. Having the opportunity to lead an Evergreen business has been incredibly fulfilling. It’s both exciting and challenging to consider the big questions and develop solutions for growth. And, knowing that we can pace that growth in a way that allows us to maintain the values and service that set us apart provides me, as a leader who is learning and growing myself, great comfort and confidence.
Jack Larkin is President and COO of The Larkin Company.
5 Evergreen Perspectives on Finding Balance
For Evergreen leaders, finding time to commit to family, health, and wellness is essential. While it can be a challenge at times to step away from work, the result is greater harmony in business and in life. Tugboat Institute members share their strategies for finding balance between in their professional and personal lives.
Featuring: Lester Thornhill, Dan Turner, Pamela Kan, Erik Muller, and Mac Harman.
Power to the People
In October 2013, I resigned from Boloco, the fast-casual restaurant chain I had founded in 1997 (originally called The Wrap), as a result of a philosophical standoff between myself and the private equity group that owned the majority of the business at the time.
Though I stepped away, I never lost my love for the brand, the people, and the mission of Boloco. So, In June 2015, I bought the business back. It was in near bankruptcy at that point, and I knew that stepping back in would mean fully committing to an aggressive turnaround strategy. I also knew that I wanted that turnaround to be built from a foundation that would support our mission: to positively impact and transform the lives and futures of our people through bold and inspired food and practices. To honor that commitment, notwithstanding our fragile balance sheet at the time, we became a Delaware Benefit Corporation and within a year received approval as a Certified B Corporation.
It was fortuitous timing that I was soon introduced to Tugboat Institute and the Evergreen path. As I learned more about the Evergreen 7Ps, the ideas resonated deeply, and I came to see that these principles could further serve me and my team as an ideal framework—not just for an “Evergreen turnaround,” but, more important, a return to pragmatic growth. We would rebuild our foundation and chart a course forward toward a sustainable future.
Since 2015, we’ve been fully engaged in the work of that turnaround. Each of the Evergreen 7Ps have served as a guidepost in that time, shaping the business we are today—as has our commitment to our B Corp status. But, throughout, one central focus has driven our motivation: People First.
My priority when I bought the business back—and the biggest challenge right off the bat—was to redirect as much money as possible into the hands of our people. More than anything else, I wanted to be able to sleep at night knowing we were fulfilling our promise to our employees. At the same time, we had to figure out a way to be more profitable.
At the time, we had a beautiful suite of offices overlooking the Boston Common, and for years it had been filled with a corporate team charged with a range of operational and strategic functions. I looked around in those early months and knew that if we were going to reduce overhead to be able to invest in the livelihoods and meaningful development of the people on the front lines of service, we had to restructure. Over that first year, I was able to slowly reduce the size of the corporate office, through attrition, for the most part, and then finally close it.
We didn't rehire anybody. Instead, the general managers of our restaurants became what is today our senior management team. In fact, our former Director of Catering is now President, and a former GM is now COO. Nobody sits in an office—the senior managers are in the restaurants every day personally delivering high levels of personal service to our guests and team members. Collectively, they are knowledgeable about every aspect of the business they are helping to sustain and grow. All former corporate functions have been divvied up among these managers, and, as a result, we’re able to pay them and their team members more. The result: today, we're a $12 million company that has no corporate headquarters, where everybody is focused on supporting the team that serves our guests or is serving guests themselves.
As general managers became the core of our senior management team, we also returned to open book management. When we originally founded the company, I had been adamant that all the general managers produce their own P&L's, learning Excel along the way, and that they report the numbers directly to me. But as we grew and had more capital, we had invested in systems and technology that took the managers out of the loop—reports were automated, but they weren’t digesting the numbers as they had been. I knew, when I returned to the business, that I had to reconnect our managers in a tactile, visceral way to those numbers again so that they could feel empowered to make changes and fully invest in the turnaround. I did that—and again reduced overhead—by ending contracts with the financial technology companies that had taken the place of the managers’ role in reporting. Today, the general managers have full control of the numbers, and they report their numbers every week to the entire company, so we all see exactly where we are at the same time. The best part: they fight to improve those numbers.
We also had to sell or close a number of locations as part of the turnaround. It was an incredibly difficult choice, but the balance sheet was upside down, and we needed to monetize some of our best locations sooner than later. We had a ton of debt that we inherited (over $14 million in liabilities), and the challenge was too big to overcome without downsizing. Luckily, we had very good buyers of most of those restaurant leases, so we decided to do it. As part of one of the more important transactions, all of the affected Boloco employees in five locations were given an opportunity to interview and take a job with the new owner, which was actually a company I had co-founded and since sold. If they weren’t hired by that company, we pledged to bring them on in some way at Boloco, allowing us to avoid any layoffs.
The restructuring effort, reduced overhead, and strategic (though at the time I’ll admit it often felt desperate!) downsizing were all motivated by the goal of positively impacting our employees’ lives while continuing to delight our guests with high quality and great value. And, together, these essential steps in our Evergreen turnaround helped us offer something else to our people across the board: a livable wage. Paying a livable wage had been our goal for a long time, and we’ve achieved that finally, as an average. The minimum hourly wage paid at Boloco today is $13, and the average is finally over $15, representing a 35 to 40 percent increase versus what they were paid when I bought the business back four years ago.
So how is Boloco doing today? I can't say that we're wildly profitable, but we're healthy these days, with positive EBITDA and Net Income across the board. We have nine restaurants, mostly in Boston, where we are now systematically refreshing and updating the locations as we earn the right (i.e. the money) to do so. Our average manager has been with us 11 years, our average team member for four. We're growing organically again, and we are more than ever dedicated to the Evergreen 7Ps that guided the turnaround from the beginning. The after-effect of putting these principles to work in operations continues to be higher sales and higher profits, along with extraordinarily low employee turnover. But I believe what has really allowed us to round the bend and believe in a sustainable future for the business has been our relentless belief in the Purpose of serving our people. People First continues to be priority one.
John Pepper is the Chairman and Co-founder of Boloco.