Feb 26, 2001

No! I refuse to let pop culture permeate this temple of good management! It doesn’t matter to me whether it’s Jerri, Mad Dog, Kel, or Edna who gets booted off of the island. What I do care about is whether or not any of our clients get booted off the island (i.e., get run out of business), especially if the food supply starts to run thin! What I’m referring to is sustainability— long-term survival and prosperity for the organization. It’s going to come to those firms with certain capabilities in place that they can maintain over an extended period of time. Here are four of them: Ability to generate capital. Any company that wants to stick around better be able to generate its own capital. This means that the firm has to be profitable and pay out profits to owners (why invest otherwise?). The more consistent this profitability, the better the investment, so a good year followed by a bad year doesn’t do it. The firm also should have stock that appreciates. Since we know for a fact that stock value is most closely aligned with revenue as opposed to assets or profits, how internal value is determined can have a huge impact on appreciation. If the only way to get stock appreciation is by not paying out earnings (the way many companies in our industry do it), you will eventually kill stock sales (unless you give it away). The whole ownership transition/capitalization issue is one that 98% of companies handle poorly. And it will have huge ramifications for these firms’ ability to survive over the long term. Ability to create your own leaders. Again a big area of weakness for many companies, particularly smaller firms, but also some of the larger ones. Most every time a new leadership position comes open, you should have internal candidates to fill the job. There are certain exceptions, of course, such as when a firm wants to establish itself in a new market sector or discipline area and needs a star to head it up. But for business lines, geographic markets, or positions that have been around for a long time, there had better be good internal candidates to fill the jobs created by departures, retirements, or unsatisfactory performance by the person who was (or is) in the job. The way you develop this talent is by using open-book management and sharing information on how the firm makes money with everyone. You also do it by true mentoring and the kind of coaching that comes only from having an open culture that encourages immediate confrontation. (Does that sound like your firm?) Finally, you get it by giving people a chance to do a job that they aren’t qualified for and seeing how they perform. In any case, firms that can create their own leaders always have a leg up in a long-term race. A good planning process. It has to be both top-down and bottom-up. It has to involve a lot of people. It has to allow everyone to contribute. It has to be known to all. It has to be something that is done on time (before the new year starts). It has to be something that is used to guide decision-making. It has to be something that is both broad and philosophical without turning the stomachs of the workers in the firm, yet also specific and tactical without being just a “do list.” This process must be something that is used and refined continuously and is imperative to a firm’s ability to survive in the long haul. Again, at the risk of being called overly critical, I find very few companies have any kind of process that even remotely does all it could do for them. Most firms in this business have very weak planning capabilities! Institutionalization of lessons learned. This means capturing the data and making it available for everyone else in the company to learn from. It’s so much more than weekly project meetings to discuss what went right and what went wrong. That may help pass “lessons learned” down to those at the meeting, but that’s where it will die. It has to be much broader, and it should involve some sort of permanent record. The client database, which should be available to all employees, is one critical component to this institutionalizing process. So is the intranet. So is the organizational structure. If the firm is not organized around client types, much of what is learned won’t be internalized. Again, as a group of companies, A/E and environmental firms are horrible at this. It is in direct conflict with so many ways that we do things and with the whole notion that overhead is bad. It takes major investments in overhead to be able to do this! Originally published 2/26/2001

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