Thriving as a Non-Family CEO in a Family-Owned Business
I am the non-family CEO of Victaulic, a 104-year-old family-owned company. I’ve been at the company for 14 years and have been CEO for almost three years. My initial decision to join Victaulic was grounded in our shared values and Evergreen® perspective on business, and my experience leading the company has been wonderful for largely the same reasons. I am often asked what it’s like to be a non-family CEO of a multi-generational family company, so I have spent some time thinking it through. I believe our success rests on a few key, foundational factors which are specific to Victaulic.
First, Victaulic is unique in that it has never had a family member working within its ranks. It was decreed from the beginning that this would never happen. Our legacy began with our first patent in 1919 when two men, Lt. Ernest Tribe, a British Royal Engineer, and Dr. Henry Selby Hele-Shaw, an eminent research engineer, imagined a solution to move fuel to the troops on the front line. This innovative solution to swiftly and effectively connect pipes led to the company's inception. The “victory joint,” so named because of its potential use by the British soldiers during wartime, was quickly adopted and early applications were used in the oil and water markets outside of military applications. At the end of the war, Mr. Frederick Bedford, who was working as an executive at Standard Oil, saw the value of this invention and proposed to his boss, Nelson Rockefeller, that they launch a business manufacturing and selling the connectors. Rockefeller was not interested, but he gave Bedford the green light to pursue the idea as an investor, provided he agreed to one condition: no Bedford family member should ever be employed by the company. In 1925, Bedford founded Victaulic Company of America with James H. Hayes serving as chairman and president.
This prohibition of family members ever working in the company removed one potential challenge for a non-family CEO at Victaulic, since all CEOs would always be non-family. There is not and will never be a risk of family dynamics that get in the way of a CEOs ability to run the company effectively.
Fast forward to the present, Victaulic has emerged as a global leader in pipe-joining solutions, with a prominent presence in iconic structures and industrial sites worldwide. Victaulic solutions are installed in ten of the world’s tallest buildings, eight of the world’s deepest mines, across dozens of Olympic stadiums and sports facilities, and in landmarks such as the Hoover Dam, the Louvre Museum in Paris, and Wimbledon Center Court. Even if you have never heard of us, the chances that you are sitting in a building that contains a Victaulic system right now are high. As the company has grown and thrived, so has the Bedford family. A second reason I have had such a positive experience working in this company is the family itself.
The family owners' commitment to and passion for Victaulic are profound. Though they are not actively involved in day-to-day operations, their engagement in board meetings and participation in significant decisions underscore their dedication to the company's growth and well-being. There is a strong ethos of caring for and remaining connected to the company that dates back to the founder, who took great care to educate his family (our current owners) about Victaulic. Family members regularly visit Victaulic facilities and construction jobsites when they travel, and they feel a strong sense of pride in and connectedness to the company. As a result, they see Victaulic as far more than a dividend check, but an extension of their family, and are invested in its success and long-term growth. They are supportive of leadership, which they know will never be their job, and they are eager to ensure that their influence is positive and does not stand as an obstacle to progress and success.
Working with such a family has been a great pleasure; my relationship with the board is positive, productive, and respectful. Maintaining open lines of communication, I regularly share monthly results with the owners and seek their guidance on strategic matters. This mutual trust has fostered a collaborative and productive relationship, enabling us to face challenges and seize opportunities together.
The third and perhaps most important reason my experience at Victaulic has been so overwhelmingly positive has, again, to do with the family owners. One of the reasons I decided to leave a job and a company I loved and join Victaulic was their Evergreen mindset, although we didn’t have the language to call it that at the time. The focus on constant evolution rather than radical changes, long-term and patient strategy, and positive impact in the community and the world resonated with my professional inclinations. This mindset is integral to our operations and has been a driving force behind our sustained growth and success. Our shared core values prioritize people and communities, transcending mere profit-seeking objectives.
Additionally, our owners have been diligent and steadfast in engaging with our workforce of talented associates. They are motivated by the belief that by building employee relationships and taking care of People First, our employees will in turn take care of our customers, suppliers, partners, communities, and their families. This Evergreen value is shown time and again to all of our employees regardless of their level in the organization. From attending holiday functions and business planning meetings to welcoming new employees when mergers are completed and walking the operations/manufacturing floor during COVID, our owners make it a point to be active and visible. They know the best business decisions are never solely about strategy, sales or marketing. At least not directly. They are always people decisions. Those we hire, and how we manage, engage, and develop our employees have far greater impacts on our business results than the things we usually think of as driving success.
The success of leading a family-owned company as a non-family CEO lies in the alignment of values. In my unique case, I will never have to contend with a potential family member who might seek to take the reins. That simplifies things, but really, if you and the family owners share a similar value set, the rest falls into place. Open communication, a respectful commitment to staying in our lanes, and a shared, Evergreen mindset are the ingredients that can make any non-family CEO successful in leadership of a multi-generational family business. If you are looking at a potential opportunity and have concerns about how it might work, I suggest you start with these foundational factors.
Uniting Strengths: Collaborative Innovation for Growth
As an Evergreen® leader, I believe deeply in leading a People First organization. As part of that belief, I understand the value of relationships. Taking the time to establish trust and communication – with colleagues, customers, suppliers, and community members – unlocks the doors for collaboration, and collaboration is one of the most effective paths I know to innovation. As the third-generation leader of Crescent Parts & Equipment (CPE), some of the relationships I have the honor of maintaining exist not simply between individuals, but between the company my grandfather founded and people in his sphere who have been friends for more than a generation.
CPE is an HVACR (heating, ventilation, air conditioning, and refrigeration) parts and equipment wholesale distributor in Missouri, Illinois, and Iowa. The nature of our business means that we often partner with service technicians, builders, and other professionals, so collaboration is necessary and frequent. Some of our relationships, however, date back farther and are stronger than others. Hoffmann Brothers is a great example. They are a prominent HVAC service provider based in St. Louis, and we have been their primary equipment supplier for quite some time. Their CEO is also a fellow member of Tugboat Institute®! Hoffmann Brothers is one of our largest accounts and their family and ours have been friends for over a generation. I spend a lot of time outside work with Robert Hoffmann and his sons Chris and Joe, who are the current CEO and GM-St Louis Operations. I have known Chris and Joe since they were kids.
Our business with Hoffmann Brothers happens in two primary ways. Let’s say you wake up in the morning and your house is too hot or too cold. You call Hoffmann Brothers, or a similar company. They come and evaluate the situation, and they either need to replace an old part with a new one, or they advise you that the unit is too old to fix, and you need to replace it entirely. Either way, they come to us for the part or new unit.
A few years ago, I was out on a hunting trip with Robert, Chris, and Joe. In the evening, after a long day in the field, we started talking shop. We saw some inherent inefficiencies in the process we were using, and we knew that if we could figure out how to enhance our respective positions in the marketplace, we would all win, so we started brainstorming ways to improve. We hit on the idea that if we could figure out how to handle the product less, we would both see improvements.
When we got home, I reached out to a professor who is a supply chain optimization expert from the University of Missouri-St. Louis, with whom we had worked before. The collaboration was a collective effort, with Crescent and Hoffmann Brothers working closely together throughout the process. Ultimately, we designed our solution together. The vision was simple yet powerful: a dedicated, shared space inside of a Hoffmann Brothers' location, solely dedicated to handling their HVAC requirements.
Our primary goal was to streamline processes, reduce handling costs, and optimize inventory management. We knew that our expertise in lean principles and supply chain optimization could be instrumental in achieving this vision. In April 2022, we officially launched the collaboration. We stationed two Crescent employees within a Hoffmann Brothers' building, providing easy access to the parts and equipment needed for daily jobs. The Crescent section of the approximately 18,000 square foot building occupies about 2,400 square feet, so it’s a significant footprint. Every afternoon, our employees prepare the materials for the next day, ensuring that Hoffmann Brothers' technicians have everything they need when they arrive in the morning. By about 3pm, our team starts packaging and staging the materials that each Hoffmann Brothers team will need for the next day – air conditioners, furnaces, parts, and components. They set them in the area dedicated to each team, so when the Hoffmann Brothers employees show up for work at 6:30 or 7am, they just grab their pallets and go.
The most significant and immediate benefit of the collaboration has been the improved customer service experienced by Hoffmann Brothers' clients. With our dedicated employees on-site, the response time for obtaining parts and equipment has been significantly reduced. This streamlined process results in faster turnaround times for repairs and installations, ultimately leading to increased customer satisfaction. By reducing the distance and time involved in sourcing parts and equipment, we made the entire process more efficient. This approach eliminated waste and redundancies, making the overall system leaner and more cost-effective for both our companies.
The collaboration and subsequent innovation were built on a foundation of trust and friendship between Crescent and Hoffmann Brothers. The fact that we are both Evergreen companies is an easy way to articulate what really underpins the success of our partnership: a shared set of values, similar long-term mindsets, and a deep commitment to improving the experience of our employees, customers, and partners.
As the President of Crescent, I am proud of the steps we have taken to foster collaboration and innovation. The success of this partnership has taught me valuable lessons about the power of trust, lean principles, and customer-centricity. Moving forward, I am excited to build on this experience and continue exploring new ways to enhance our relationships with customers and drive positive change within our industry.
Create a Space for Your Team and They Will Come!
At The Motz Group, like so many of you, post-pandemic we found ourselves wrestling with the challenge of many employees choosing to work remotely or on a hybrid model. And like many of you, we discovered that there is a significant cost to culture when the team is not together. We are perhaps unique in that, even before 2020, our team was fragmented, and therefore we were already searching for a solution to this problem when the pandemic hit. This turned out to be a great advantage as we sought to solve this challenge.
We are a sport field construction company, and we also provide products that go into synthetic turf sport fields and landscape applications. Our workforce numbers about 120, half of whom work out of a Cincinnati facility. The rest are either field-based sales reps or part of our field installation crews. We have experienced significant, steady growth over time, and as we grew, we added new space to our headquarters vertically, creating a series of different floors with different offices and different micro-cultures. This on top of the fact that so many of our employees are not office-based at all led us to prioritize finding and creating a new space where as much of our team as possible could be together. Moving into 2020, we had made a few moves to this end, including flattening the organizational structure and starting a search for a new space to allow for more collaboration. We were still talking about future real estate options when everything came to a halt.
The spring of 2020 saw everyone leave the office and go home, but as we moved into summer, we started to get back to work. Like everywhere, people who work in offices were largely working from home, but there was enough activity that we felt emboldened to make a move some may have seen as risky; in the face of all the uncertainty, recognizing that collaboration and teamwork were pivotal to our success, we decided to forge ahead with our plan to buy and start work on our new space.
Through the rest of 2020 and into 2021, we were deep in the design process for the new space. In the meantime, as work picked back up, we welcomed everyone back to the office, but we never forced it. Our mantra was always ‘office first, with flexibility.’ If you were better that day to work at home, do it. If you felt you could be more efficient and highly productive by being remote, do it. But we knew that for some things, like one-to-ones, team meetings, cross-departmental meetings, and huddles, something was lost when we were not all present. There we were, preparing to invest enormous time, effort, and money into this new space and we asked ourselves, “Are they ever coming back?”
As we considered this dilemma, it became clear that if we wanted everybody back, we had to earn it. We had to create an environment where people wanted to be there, where they wanted to fill the seats, to collaborate, to see their buddy. We realized that our new space would either be the key to the solution or, if we did it wrong, make our remote situation permanent. We set to work with this goal in mind.
Ultimately, we looked at this process as a great opportunity to declare our identity as an Evergreen®, People First company and to separate who we are in this community. As an employer of choice, you’ve got to earn people’s time; they have choices now. The design process was really cool; we brought in not just the folks that were actually going to inhabit the office on a daily basis, but also our field personnel, and we did collaborative brainstorming sessions of what the space could be.
In the end, the transformation of our space was driven not simply by our desire to return to the office, but also to create a workspace that aligned with our values. The result was a vibrant hub that symbolizes humility, inclusivity, and renewal. The architecture combines elements of concrete, steel, glass, water, and fire. This is a place where employees from all walks of life can come together – from those in collared shirts to those with mud on their boots. And for those stationed in a different city, we invested in technology to ensure that remote employees could connect seamlessly, which further fostered a sense of inclusivity, even for those who could not be physically present. As people started to return to our new space, we reinstated practices like monthly birthday lunches, happy hours, and quarterly in-person meetings. We did everything we could to make the office a place where our teams felt comfortable, inspired, connected, and at home. As an employee-owned company, we strove to construct a building that truly belonged to the team.
The transition was not just about the physical space; it was also a pivotal moment in Motz’s succession story. Joe Motz, our Founder, returned from sabbatical right at the start of the pandemic and we began the gradual process of my transition to CEO. In 2020, he named me President and I took all his direct reports, but he was still heavily involved with running the business. Then, through the building project, for which we broke ground in 2022, Joe detached from strategic touchpoints and immersed himself in physically building and renewing the property, to the point of literally jumping onto a bulldozer and doing site work himself. In a symbolic move, we built the new building without an office for Joe in it; he spent those years building something he ultimately would not have a home in. However, his presence is strongly exhibited throughout the building, inside and out. From hand-built wooden features, a koi pond for calmness, and beautiful landscaping, his legacy will stand strong and forever be an inspiration to our current and future team. Thanks to this, his transition to Founder felt natural and complete.
Did it work? Have people come back to the office? I don't keep stats on it, but overwhelmingly, people are here. We don't have any mandates around it; we still don’t say you have to be here a certain number of days. It's still the same - flexible. But people are coming in to take part in the experience. Our field crews come in in the morning for coffee, we have a hoteling space for our salespeople when they are here, and we have spaces for project management teams to work together. They walk in and they think, "I helped envision this, and I helped to design it. This is my place."
The space we created has allowed for more advantages than simply bringing our team back together. We have opened our space for our customers to use for meetings and gatherings. Recently, over 30 athletic directors that make up the Southwest Ohio Athletic Directors Association (SWOADA) hosted a meeting at Motz. Truly a win-win, they get to have a productive work session in a collaborative, inspiring environment and we get to deepen our relationships with our valued customers. Another is the adjacent property we gifted – a brand-new synthetic turf field to a local community church. Motz’s Purpose is Moving People to Better Lives. In addition to showcasing our most recent technologies right outside our front door, this means that now we can look out the windows every day and see our purpose in action - 100 children playing on the field.
The lesson we see in this story is that the best way we found to bring our team back together in person was to create a space that exemplified and embodied our values. We built a space that invites a culture that people want to be part of. The rest is falling into place – our place.
Tugboat Institute @Meijer: Persist with Purpose and Create Something Extraordinary
While not well known outside of the Midwest, Meijer is a remarkable Evergreen® company founded by Hendrick Meijer and his son Fred Meijer 90 years ago. If the Meijer family wasn’t so humble, many more would know about it beyond the states in which it operates and in which Hendrick and Fred introduced the one-shop-stop superstore concept in 1962.
The purpose of Meijer is “Enriching Lives in the Communities We Serve.” Last week at Tugboat Institute® @Meijer, Tugboat Institute members were able to see how this Purpose comes to life. CEO Rick Keyes and his outstanding executive team welcomed us to Grand Rapids and inspired us to keep believing in the power of the Evergreen company to grow from modest beginnings and make a staggeringly positive impact on its employees, customers, suppliers, and communities over decades. We were treated to three inspiring and interesting days of learning, connection, and celebration.
In 1934, Dutch immigrant Hendrick Meijer opened the first Meijer grocery store as a way to utilize a building he owned for his barbershop. He passed leadership to his son Fred, who started in the business at the age of 10, and who grew the business into one of the largest and most influential companies in the country.
Rick Keyes is the CEO of Meijer and works with the 3rd generation of Meijer stewards, who serve on the board and remain committed to Meijer’s values and growth. Rick started working at the company 34 years ago as a pharmacist in a store in Columbus, OH, and he quickly fell in love with the complex, energetic, and fast-paced model of the superstore. He moved rapidly into leadership, first in the pharmacy division, and then store management, at the age of 24. He served the company in many leadership roles over the years and was named CEO in 2017.
Under Rick’s leadership, which is characterized by humility, commitment to excellence and the founding values, and a profound desire to perpetuate Meijer’s positive impact in its communities, the company has continued to grow and thrive. Among other notable accomplishments as CEO, Rick has moved the company from a pattern of growth in fits and starts to a more regular cadence of growth, through which they aim to open 5-7 new stores per year, while refreshing every store once a decade.
As is our custom when Tugboat peers gather, we began our week with a celebration. Reconnecting with old friends and to discovering new ones always sets the stage for an energetic and inspiring week. We spent the next few days hearing from Rick, his executive team, Hank Meijer, and Mark Meijer at the impressive Fred Meijer Corporate Office in Grand Rapids. They covered topics ranging from the history of the company, the role of the family in the company today, the many ways Meijer takes care of its team, new innovations in the works in marketing and store experience design, supplier inclusion, pragmatic innovation, and more. We were all struck by the collective generosity and trust that characterizes Tugboat membership as Rick, his team, and the Meijer brothers candidly offered a deep look into the structures and processes that drive their impressive company, as well as the challenges they have faced over the years. Then we had the opportunity to visit one of Meijer’s superstores and see for ourselves how deeply aligned and cohesive the whole team – from executive leadership to store directors to cashiers – is across the organization. The level of excellence, care, and positivity that Rick and his team presented are abundantly evident in every aspect of the stores themselves.
In the evenings, we spent time celebrating in downtown Grand Rapids, and we also had the opportunity to visit the Frederik Meijer Gardens & Sculpture Park, which stands as the embodiment of the Meijer family’s deep care for and commitment to their community. Fred Meijer had been collecting and warehousing sculptures and when the idea of creating a botanical garden was raised by a local non-profit, they took the opportunity to create something unique for their Grand Rapids community. In addition to beautiful greenhouses attached to the main building which hosts a museum on the site, the 158-acre botanical gardens are home to one of the world’s most important collections of outdoor sculptures, including pieces from Fred and Lena’s personal collection, pieces on loan from other collections, and pieces commissioned for the gardens themselves.
Longtime company and family leader Fred Meijer often repeated his aim to “leave the world in a little better shape than when I entered it.” After our week together in Grand Rapids, we can say with confidence that Fred would be astounded by the extent to which his vision is being fulfilled today. Rick, Meijer family leaders, and the entire Meijer team stand as exemplars of the extent to which an Evergreen company can, if it persists and stay focused on its Purpose and the other Evergreen 7Ps® principles, make a dent in the universe.
Building a Structure for Family Governance in Advance of a Generational Shift
I am the third-generation leader of Burger Specialty Foods, with origins going back over 95 years. I wrote an article for Tugboat Institute®’s Evergreen Journal in 2019, where I shared initiatives that our Family Council had undertaken since it was established in the early 1990’s. Our renewed effort to strengthen family/owner governance structures is based on the understanding that, in a multi-generational family business with an ever-expanding family like ours, policies and guidelines need to be carefully thought through and established – not once, but periodically in order to keep them relevant over time. At the time, my objectives were to preserve family harmony, provide a meaningful way for future family members who did not work in the business to become involved, and ensure that a structure was in place that would be effective and efficient in governing all areas of family involvement. Now, four years later, as I plan to pass the CEO torch in a little over a year, my objectives remain the same, but our focus has shifted.
For background, in 2019 the Family Council launched the Family Board consisting of six non-working family members representing each major family branch because the Family Council, representing all direct descendants, their spouses, and children over the age of 14 (totaling 45 people at last count), had gotten too big to be an effective decision-making body. The Family Board has accomplished a lot. It serves as a great forum to inform and educate. They updated our family entry guidelines, are currently working on family exit guidelines, and will be working on a Family Purpose Statement with the help of Peter Boumgarden, a professor at the WashU Olin School of Business. They also organize and set the agenda for the annual Family Council meeting, our biggest, collective family celebration each year. In the future, the Family Board may assemble a Family Constitution to keep track of our governing documents.
Today, Burger Specialty Foods is owned by 18 G2 and G3 family members. The second generation are all retired and most are in their 80’s while many in the third generation, like me, are approaching retirement age. Six members of the fourth generation out of 18 are working in the business. We are blessed with a family that is burgeoning and thriving, so we need to continue planning for all facets of management and owner transition. My successor has been named, and I feel great about that, but owner transition is also critical, and we need to develop a plan.
Determining the rules for G3 ownership eligibility was a lengthy, and quite frankly, grueling family negotiation in the late 1980’s, but we hammered out an agreement, lived by it, and benefitted from decades of tranquility as a result. Now we need to make sure the next owner transition can prove the test of time. It’s a different dynamic today because the size of the family has grown exponentially, which has changed our perspective on some of the guidelines we established for previous generations, such as allowing married-ins to own stock. In order to minimize owner complexity, at least to some extent, the Stockholders voted to limit ownership to the lineal descendants of the first generation beginning in the fourth generation.
In addition, the Stockholders established an Owner Council, composed of six G3 owners, one from each family branch, to grapple with how to transition voting control past the third generation. Our Stock Restriction Agreement allows non-voting shares, representing 80% of the issued stock, to transfer unobstructed to the lineal descendants of the owner. The agreement stipulates that the Company has the right to purchase the remaining 20% of voting shares any time they are offered. The Owner Council mandate is to develop a plan for the transfer of voting control to the next generation and report back to the Stockholders. Should working family retain 100% control? Should the non-working group have the option to own a minority block of voting shares? If so, how much? This is a work-in-process.
I am fortunate that the Management Team is very capable of running the business and that has allowed me to focus on building rigor around our Board of Directors, Family Board, and our newly formed Owner Council. It’s best to develop policies proactively rather than waiting until you have a problem to solve “with a name on it.” It’s important to make sure you get the right decision-makers in the right room, to borrow from Josh Baron’s Four-Room Model.
I’ve heard that family governance in a multi-generational family business is the last of the major governance structures to emerge. That may be true, but as we continue the shift from G3 to G4 and beyond, we recognize that no matter when you start the process, your governance structures and the policies and guidelines they create will need to be revisited and revised at least every generation to make sure it still works for the present and future family, not the one you see in the rear-view mirror. The value in creating and codifying a Family Purpose Statement, as well as in clarifying policies and guidelines, serves as a road map for the future and will help ensure that the spirit and wishes of the family shape the decisions made by the owners, board, and management team.
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.
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.
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.
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.
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.