Lessons in Growth and Humility: Atomic Object’s Failed Expansion
In 2011 as we celebrated Atomic Object's 10-year anniversary, the question of our next strategic move loomed large. With a strong culture and thriving team, we wanted to share Atomic with more clients and practitioners than those in our home base of Grand Rapids, MI. This is where our journey into opening a second office–and eventually deciding to close it–began.
Atomic Object is a custom software and design development firm. Our first CEO, Carl Erickson, founded the company in 2001 and shortly thereafter, I joined the consultancy as its first software developer. In 2019, Carl passed the baton to me and Atomic’s other co-CEO, Shawn Crowley, but in 2011, I was still relatively new to leadership. Nevertheless, Carl gave me and Shawn the opportunity to drive the implementation of our next strategic move; it was an early test for us.
Our first ten years of offering our services in Grand Rapids demonstrated a real market fit, and we wanted to share what we’d learned about crafting reliable and beautiful software with more people. As an Evergreen® company, we favor Paced Growth over explosive growth. This made us a bit of an odd duck in the software space. We liked the idea of being excellent instead of big, and we saw growth as a side effect of our quality, rather than an end in itself. We considered a few different ways of sharing more Atomic with the world: creating our own product, diversifying our offering, or perhaps venturing into a new city. The challenge lay in finding a way to evolve while preserving our culture.
Part of Atomic’s culture is working in pairs. The agile concept of pair programming in software development extends into other ways of working. I am co-CEO, for example, and I find that working with my counterpart Shawn improves the way each of us manages and leads. Wherever Atomic employs pairing, trust and communication flourish, and we make all major business decisions with at least one other person. This isn’t always the most efficient way to run a company, but I believe it’s a great practice for making enduring decisions that serve us long-term.
As we honed in on the idea of setting up a second office in a new market, we thought hard about our long-term future. Early in our history, Carl set a goal for Atomic to reach its 100th birthday. This encourages us to examine all of our major decisions using a long-term perspective. As we grew, we knew we needed to keep a careful eye on avoiding decisions that would cause us to stray from the core of who we are.
We crafted a plan and identified Detroit as the new Atomic location. Detroit was undergoing a revival, and we saw the opportunity to be part of the city's resurgence. The city's proximity to Grand Rapids made logistical sense, and the idea of contributing to Michigan's economic prosperity resonated with us.
Our excitement soon met reality.
One early challenge we found was attracting senior talent to our new downtown location in the sprawling city; senior talent preferred living and working in the suburbs rather than commuting downtown. This made establishing strong office leadership a challenge. If we were able to find one good person for a given position, we could rarely find two, which compromised the Atomic pair structure.
From a client perspective, we were finding more success winning work from massive companies. This strained our historical product-centric approach that allows us to serve a wide array of clients. Slowly, we realized we had allowed for a situation where the client’s culture risked supplanting our own. And of course, having so much business focused on so few clients exposed us to huge risk. Despite the hurdles, we continued on.
At this time, we were presented with the opportunity to acquire a struggling software consulting firm in nearby Ann Arbor. The allure of a new market and talent pool led us to seize this chance. We figured our early lessons from Detroit would help us avoid some of the pitfalls we were still encountering there. Over the next couple of years, the Ann Arbor office flourished while Detroit’s continued to struggle. In 2015, we made the difficult decision to close the Detroit office by consolidating its team into Ann Arbor’s.
When we took a step back, it was clear that our only option was closing the office; that didn’t mean it was easy to do in practice. When Carl, Shawn, and I discussed the coming closure, we had real fears: would our team lose trust in our decision making? Would the news media ridicule our about-face? Would the move tarnish our reputation in the business community?
In reality, none of these came to pass. We learned that concern over others’ perceptions played an outsized role in our predictions about the future. And anyway, we couldn’t let concern over potential ridicule prevent us from making the right choice for Atomic.
As time passed, this experience surfaced some competences we needed to develop if we were going to continue to grow thriving offices. To make our business work, our offices needed strong local balances of experienced and junior talent from which we can recruit. We also needed to mature in how we identified, onboarded, and trained leaders—whether that’s from outside the company or through promotions. And finally, we needed to learn how to measure the financial performance of an office. Our subsequent office expansions benefitted from these new competencies. Today, with four thriving offices, our co-CEO model and shared leadership approach deepen our commitment to responsible growth, while preserving the core that defines us.
As we celebrated Atomic Object's 22nd birthday, we had our experience closing the Detroit office to thank for teaching us how to grow in the right way. Our path to launching a second office took twice as long and cost more than we expected—and it was more than worth it.
Entrepreneurship Within the Family Business
In her native Kentucky, the bourbon created by Carrie Van Winkle Greener’s great-grandfather, Pappy Van Winkle, is legend. Carrie’s older brother stepped into the family business, the Old Rip Van Winkle Distillery, at the start of his career but Carrie and her two sisters, who are triplets, sought their own opportunities elsewhere. Until, that is, they perceived an opportunity to start a new business, and at the same time, enhance the family’s historic brand.
In this Tugboat Institute® talk, Carrie shares the story of Pappy Van Winkle and of the founding of her own company, Pappy & Company. As she and her sisters spun this company off the family brand, she learned powerful lessons about the importance of family harmony, clarity of brand identity, and entrepreneurship.
Watch and be inspired to see opportunities not just within, but also alongside of, your family business.
Pragmatic Innovation and Perseverance in Flyover Country
I live in the “other Minneapolis”- the one in Kansas. I am sure most of you never knew that there is a Minneapolis, Kansas, but there is. As an industrial master distributor and manufacturer of fasteners, being in the “Great American Desert” is sometimes more real than I would wish. With just 2,000 people in our town, at Huyett, we must innovate to find the talent to support our growth.
In 2019, we elected to significantly expand our e-commerce. I was doing some personal recruiting in support of this effort and noted in regional newspaper headlines that Cabela’s - the outdoor retailer - was laying off a significant number of people in Sidney, Nebraska, a town of 6,700 in the panhandle of the state, near Wyoming. I started reaching out to people from Cabela’s via LinkedIn. One such recruit asked me if I was going to the job fair. “What job fair?” I asked.
Two days later, I was standing in the gymnasium of a community center and for five hours I had a line of recruits 40 deep wanting to interview with me. I was blown away. I went back the following three weeks, and the local community college allowed me to use a meeting room to interview people. From that talent pool, I hired a Vice President of Marketing and Technology and a staff of merchants, data analysts, digital marketers, and support personnel. It has been a smashing success. Now our little company out here in flyover country has the talent to build a leading e-commerce experience for industrial distribution.
Because we now had so many team members from Sidney, we decided to open a regional headquarters there last year. Here again, another unexpected opportunity arose; a former JC Penney’s store, the building was being used for meetings and social events by the local American Legion Post, but the Post was losing members. We agreed to buy the building but allow the American Legion to lease the basement for $1.00 per year. Now with some twenty-five employees assigned to the site, with continued prospects for growth, we have helped the community recover some of the lost jobs from Cabela’s downsizing, we revitalized an important building in the downtown, and we have to some extent rescued an American Legion Post. Win-Win-Win.
As part of this journey, we benefited from the mistakes of others. We couldn’t help but pay attention to the factors that had contributed to their distress, and were careful to learn from them. Along the way I learned something besides the power of innovative thinking and the willingness to jump at unexpected opportunities; I learned the value of being Private.
In my interviews of some 200 personnel who had been laid off from the failed Cabela’s, I learned of the risks of a company managed by a revered individual, who through time, moved from pragmatist to patriarch and the entire firm mellowed. Cabela’s went public in 2004 and the focus shifted from long-term to short-term. Layers of management developed, and job titles were inflated to create false career paths not built on increasing levels of contribution, but to justify increases in pay. The dangers of letting ego drive leadership, of greed, and of the subsequent loss of control and culture when a company goes public were crystal clear to me. That is never going to happen at Huyett.
In terms of the ways the culture was eroded, I learned of large pay inequities between men and women. As these management layers increased, silos began to develop. Innovation with the goal of quick growth resulted in short-term success, but eventually the public ownership caught up and all attention shifted to quarterly, financial performance versus Pragmatic Innovation and Paced Growth. I looked carefully at the systems and the pay structures we had built within Huyett and took steps to ensure we were not at risk for any of these problems. Being private, we can stay focused on the long term, stay true to our values, treat (and pay) all of our employees fairly, and innovate with an eye to growth that might not be lightening fast, but that will keep us steadily marching forward.
It's funny how Pragmatic Innovation works. It is not just innovation; it is Pragmatic Innovation. In matters here, I am not sure if we were just lucky, but we followed our instinct. It seemed logical. It was pragmatic. I have learned that business strategy is sometimes common sense. But along with common sense you must take risks and invest effort.
Thank God I was standing there when these opportunities arose. Maybe I got lucky once, or even twice, but I was careful to digest and learn the lessons from this experience. Next time, when we get an opportunity like this, it will be more than simple good luck that allows us to step in and make a success where a failure once stood.
Keys to Building Resilience in Your Family, Your Business, and Yourself
Dr. Madeline Levine is co-Founder of Challenge Success and a leading psychologist who has focused a great deal of her work on the mental health and challenges of young people coming of age in our modern society. In particular, in her book The Price of Privilege, she addressed a group that has been largely dismissed as being ‘fine,’ but that is not, in fact, free from challenges: the children of wealthy families.
In this Tugboat Institute® talk, Dr. Levine focuses on a skill that we all now accept as critical to survival in the modern world: resilience. As parents of children and as leaders of organizations, what can we do to foster this all-important skill in those we care about?
Watch and gain confidence as you strive to support and inspire resilience in your children, your employees, and yourself.
The Power of Collaboration: Create Value for Your Business, Your Industry, and Your Community
I run a company – Decipher Investigative Intelligence – that has 26 employees. We work in homeland security and in financial services, but the vast majority of our clients are law firms. We provide data, such as pre-hire due diligence, that helps clients grow more purposefully and profitably. In light of our small size, you might be surprised to learn that we have an established partnership with Thomson Reuters (TR), one of the world’s leading providers of news and information-based tools to a wide variety of businesses. They have over 25,000 employees and are traded on the New York Stock Exchange. The details of why they wanted to partner with us despite our small size are clear, but more interesting are the multiple benefits that this partnership has created – for Decipher, for TR, and for our professional community.
Because of the nature of our business, we have built a store of an enormous amount of data, and data of a very specific and unique nature. When a law firm or a company is preparing to make an offer to their next partner, board member, CEO, CFO, or General Counsel, they come to us to ensure they know everything they need to know about the person they are about to bring on board. We verify the information the candidate has reported, which, in the legal profession, is exhaustive, and we also look for anything that might not have come to the surface. It's our job to crawl around, underneath, over, and in between the words and figure out what kind of person they are. Someone can disclose everything that you’ve asked them, but that's not going to tell you whether they scream and yell at people in the office or do awful things to people after hours. Once we have gathered the information, which we have been doing for eight years now, we find ourselves with what turns out to be a very unique data set.
Thomson Reuters is massive by comparison, but some of their work intersects with ours. They have a branch called Thomson Reuters Legal, which does work in the legal space that is similar in some limited respects to what we do. In comparison with Thomson Reuters Global, the legal branch is relatively small, though still far larger than Decipher. They also have a branch called Thomson Reuters Institute (TRI), which is the arm of their business that mobilizes its own data set to advise its clients. We know many of the folks at TRI, and in particular, the director of advisory services, Brent Turner, has long been a friend of mine. He has watched me found and grow Decipher, and a few years ago, he and I started to see the potential for a powerful collaboration.
When we considered the dataset we had compiled at Decipher and the one they had compiled at TR Legal, we saw how powerful they would be together. We came up with the idea that we would take our collective data and put on a one-hour quarterly briefing for the market on talent trends and activity in the legal profession. TR primarily sticks to the financials, and we primarily stick to talent, so we divide the briefing that way. Brent brings to the table data on things like worked hours, worked recovered hours, billable hours, rates, demand growth, demand decline, etc., and we bring data on the actual people that are doing the work. We mesh it all together on a quarterly basis and we give it away in an hour-long briefing. Who tunes in? It’s the C-Suite: General Counsel, Managing Partners, and other senior executives. They tune in to learn about what’s going on in the market. It is extremely niche.
This answers the question about why TR would be interested in our very unique data set, which complements theirs so well. But it raises another – what value does this collaboration provide to TR and to Decipher? As I mentioned, we offer this briefing at no cost at all to the viewers. It’s clear that our information has enormous value to the industry, but if we have not monetized this service, how exactly does it add value to our respective companies? There are three main reasons why we feel this is worth our collective investment.
The first is a symptom of our Evergreen® mindset. We aim to be of service to our community and Purpose-led. It’s true that it is a good marketing tool and gets our name out there, but it's also a ridiculous amount of work. To embark on something like this, first and foremost, you have to want to help your friends and colleagues out, whether they're customers or not. Brent and I share this perspective and we are thrilled to be able to offer something that is worth a great deal, even if it is to a select few in a specific industry.
Second, we have something that we do better than anyone else. As a result of the fact that we do this so well, we have created something of great value, and even a huge company like TR can see that. The pooling of our data analysis benefits both TR and Decipher, as it helps us round out our understanding, expertise, and ability to serve our clients as best we can. As you consider potential partnerships or initiatives that might allow you to be of service and add value to your company and your industry, ask yourself what it is that your company does better than anyone else.
Third, in the words of Sy Syms, pioneer of off-price retail in the 1970s and 1980s, “an educated consumer is our best customer.” Whether they pay us for it or not, the better our customers and potential customers understand the industry landscape, the more meaningful the work we do. The single largest expense in any business is people. If you are running a business, you know that the failure rate of newly hired employees is extraordinarily high, even at the senior level, where they make a lot more money and have a lot more impact on the culture and value of the businesses they serve. Every time you can solve this problem – we call this the point of higher solutions ¬– and dodge one of those bullets, you are literally saving millions of dollars. The better our customers understand this, the more we can be of service to them, so it’s ultimately a win-win.
A partnership and an initiative like this might not be a fit for every company. But if you are Evergreen and Purpose-led, if you aim to be of service, if you have something you do better than anyone else, and if you want your customers to be educated, consider looking for opportunities that might allow you to accomplish all of those goals at one time.
Innovating for the Long Term: 1728-2023
Hollingsworth & Vose is the oldest company in Tugboat Institute® membership; they were founded nearly 300 years ago. In their early days, they made paper for customers including Ben Franklin and Paul Revere. Today, they are a global leader in filtration and energy storage systems, and their customers include Tesla and Elon Musk. It goes without saying that to survive such a journey, innovation must be the order of the day.
In this Tugboat Institute talk, the 7th generation leader and current Board Chair of Hollingsworth & Vose, Val Hollingsworth, shares highlights from his family’s company’s incredible journey. He also gives us insight into the spirit of innovation that has driven the company since its founding, and allowed it to remain relevant and a market-leader through sweeping changes to every aspect of our world.
Watch and be inspired to up your game on the innovation front and ensure your survival for 100 years or more.
Lead with Kindness and Optimize Rather Than Maximize Profits
I spent my career working for a large, multi-national, public company, until very recently. It was a very positive experience and shaped me into the person and leader I am today. Five years ago, driven by a desire to lead and grow a smaller, private business by focusing on people, I left this large company and became CEO of Etnyre International, a smaller, private, family-owned, American company. With the help of a great team, a great board, and the family itself, in four years we have grown Etnyre by more than 50% in revenues. As I reflect on this, I feel that it has been a profound learning experience; however, this achievement and my own learning were not centered around how to grow a company or how to run a business. They were around the expression of kindness and improving the lives of people by doing good.
Many business leaders are aware of Milton Friedman’s 1970 New York Times article, A Friedman Doctrine. In it, he states that “there is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception and fraud.” We can argue about the “only one social responsibility” part of this statement, and many have, but less attention gets paid to the second part, “so long as it stays within the rules of the game […] without deception and fraud.” This is especially true since the early 1980s, when the common understanding of this doctrine focused primarily on shareholder return at all costs. Jack Welch of General Electric epitomized this kind of leadership, and was in fact, declared the Manager of the Century by Fortune magazine. His tactics certainly did maximize shareholder return, but with a leadership style that was not compassionate and at the expense of tens of thousands of jobs.
Personally, I disagree with this message of Friedman’s doctrine and with leaders who embodied it or continue to do so. Profit is important, and undeniably, no company, private or public, should de-prioritize it. What I believe is that the primary focus of a company should be taking care of all its stakeholders, rather than just its shareholders. In addition to its shareholders, the four main buckets of stakeholders for any company are its customers, members (employees), suppliers, and community. And when you take care of these four groups, the natural result will be of maximum benefit to shareholders as well.
This philosophy and focus on kindness and doing good was welcomed by all at Etnyre. Together, we worked on transforming our culture to focus on all our stakeholders. This transformation led to significantly improving our metrics with respect to safety, customer delivery performance, quality, and other business measures. This in turn enabled us to deliver strong financial performance and provide very good compensation and benefits for our members and strong dividends for our shareholders in a period of high uncertainty, especially during the global pandemic.
As we continue to evolve as a company, we are learning and implementing new ideas. Influenced by Jim Collins’ Good to Great, we created our own flywheel. In the center, we placed our Purpose, which is Improving Lives. This is why we exist and why we do what we do. Surrounding this, the perimeter of the flywheel shows how we do this. We design and build superior products and components, which allows us to attract customers and distributors. With our customers and distribution, we work to provide strong support and therefore build brand loyalty. This in turn leads to optimizing (not maximizing) profits. These profits allow us to reinvest in our business and improve more lives, internally and externally.
The point is that even while focusing on our Purpose and not on Profits, we are naturally optimizing profits and returning great results. Now, what does optimizing profits really mean?
Here is an example of this. We have a significant backlog of customer orders in our company today. We could easily move up to 55+ hour workdays for our members should we want to fulfill all the orders. We would produce more and we would maximize profits, at least in the short-term. However, that’s not a decision we are making. Our factories do a lot of heavy metal fabrication, which is hard, exhausting work. It’s physically draining, and we have to think about the safety of our members. When people work more than 40-45 hours a week, they lose judgment, are unable to focus on quality, and more critically, tend to get hurt much more often. Additionally, their family lives suffer, they become unhappy, relationships weaken both at home and work, and eventually, they quit, thereby increasing turnover and impacting the morale of the team. Given this causation, very deliberately and intentionally, we have chosen to keep work hours down and have accepted lower profits instead in the short term. We believe that in the long term, for all the reasons above, treating our people with kindness will ultimately yield better results across every measure.
Besides intentionally limiting our work hours, we have also introduced many new efficiencies. These include redefining our business processes and implementing lean manufacturing. This initiative was not driven by aspirational profits, but rather by a desire to make our people’s lives easier, to give them a greater opportunity to be productive and voice their opinions. These introductions have led to significant improvement in business performance and have allowed us to grow both organically and through acquisitions.
To return to my original statement about my greatest learning at Etnyre, I have learned and proven that doing good with acts of kindness can go a long way. It can lead to greater success personally and professionally. Improving lives yield profits, which is a wonderful confirmation of my Evergreen® path.
Now, one may argue that this philosophy may be easier to implement in a private company versus a public one. To this I will say, unless you try, you wouldn’t know. I do recognize that decades of tacit agreement that business success and kindness are not appropriate partners may make that path very difficult in many public companies. However, that shouldn’t limit one taking a new direction. What is key is the belief and conviction in taking this path to make this world a better place for everyone.
On Time
At Tugboat Institute® Summit 2023, where we celebrated our ten year anniversary, CEO Dave Whorton shared a talk entitled On Time. Dave first set the context of human activity in the broad span of life on our planet; as a species, we have been around for an extremely short time. Then he zeroed in on the timeframe of business, since it truly came to exist. In the past couple centuries, as the pace of change and progress have accelerated, the timeframe of the Evergreen® company stands out as unique.
For a company with outside investors and owners, such as public companies and Venture Capital and Private Equity backed companies, try as they might, they cannot escape a short term mindset, as they must, over and over, ‘make the quarter.’ An Evergreen company, by contrast, can grow slowly, and therefore adhere to much longer timeframes. This long term mindset allows for the compounding not just of capital, but also culture, customer base, and more. Seen through this lens, time stands out as a primary strategic advantage of the Evergreen company.
Watch and learn how and why time is on the Evergreen company's side.
Partnering with Customers to Innovate and Thrive
If you are looking to stay relevant in the ever-changing tech industry, innovation is key. Too many tech companies begin with a great idea, have initial success, and then fade away as their product or service becomes irrelevant. Proctorio understands this well, as we had the right timing and product when we launched the first AI remote proctoring solution ten years ago. It was ground-breaking at the time, but we know we’d be long gone if we hadn’t found ways to stay relevant.
To keep our business flourishing, we believe in staying up with the times and listening to feedback from our users. Every successful company should make it a practice to do this, yet it is not the norm. This is why we launched Proctorio X, our user conference, in 2019. We have been iterating and growing it ever since (aside from a year off due to COVID).
Every year, we invite people to join us for an exclusive three-day event in beautiful, sunny Arizona. The idea is to create an atmosphere that expresses our culture and values. As an Evergreen® company, we aim to do everything possible to help our communities thrive. As such, we strive to be equitable and sustainable in all that we do. These are the two drivers that shaped our thinking as we built Proctorio X.
In order to get the right people in the room and ensure that they are engaged and ready to share, we knew we had to make the event special. Once a client receives an invite to the event and books their flight, we take care of the rest. This starts with the electric car service to the beautiful hotel, the curated meals, as well as the planned events. We also host a special event for the attendees’ ‘plus ones’ so they feel included. It’s our way of saying thank you for trusting Proctorio. The attendees are a mix of customers, vendors, and partners, who interact with our products and services from their own, unique perspectives. Many attendees work at universities worldwide.
Our goal at Proctorio X is to learn and grow as much as possible, and we can only do that when diverse thoughts and opinions come together. That’s why we offer many learning opportunities during the conference, including breakout sessions where attendees can engage with our team and products and brainstorm together.
For example, we host “Meet the Engineers” where our team can show how the product is evolving based on feedback. Our engineers and product designers are right there in the room, so people can ask any questions. To make it easier to find the person you want to speak with, we have a unique system where the Proctorio team wears a specific color t-shirt to represent their role in the organization. We tell everyone, if you have a question for someone in sales, look for a blue t-shirt. If you need to talk to an engineer, look for a red one.
One of the products that has evolved through this process is our alternate identity solution called GreenKey. This change grew out of a need we perceived that was on the rise; when a test taker is transitioning and needs to update their government-issued identity documents, the process can be difficult and time-consuming. This can cause problems for test takers trying to access exams under their dead names. However, with GreenKey, a multi-factor verification process, they can take exams without the worry of having proper government issued documents, all while protecting the integrity of the exam. Originally this product was just designed as a security solution for the Proctorio results center, protecting the security of the recorded exam content from unauthorized access. Based on feedback from clients, it was suggested at a Proctorio X event that the same multi-factor authentication could be used to speed up the test taker identity check process. GreenKey was born out of conversations with our clients and can be found on Amazon today.
Proctorio X is a substantial investment but it’s necessary for the improvement and development of new technologies in our company. At Proctorio, we go all in, leading with our values. We believe that finding ways to innovate, stay ahead of the curve, and be better than the competition is not just a goal; it is the key to our success.
Debunking Growth Myths
Before joining the team at Tugboat Institute®, Dr. Gary Kunkle spent many years consulting with companies, in the United States and abroad, on growth. Following a stint at KPMG and then as the leader of his own company in the Netherlands, Gary returned to the US to earn his PhD. He wanted to understand what truly drove company growth, since his experience had led him to believe the conventional wisdom had it wrong.
In this Tugboat Institute talk, Gary tackles several of the most pervasive myths around company growth - the factors that are most often trumpeted as the keys to successful growth but that have not, in his vast experience, proven to be true. His work is grounded in thorough and exhaustive data, and as he debunks each myth, he offers an alternative truth that can help get you on the path to sustained Paced Growth.
Watch and learn how to tweak your strategy to increase your chances of successful, long-term growth.