The Employee-Driven Remodeling Company
“When we build a business we build a community that has a life of its own. Just like children, we must prepare it to stand on its own two feet (and provide for us in our retirement!).” -- John Abrams, description for The Art of Small Business, a course at the Yestermorrow Design/Build School in Waitsfield, Vt., April 21 and 22.
editor’s note: Do employees with a stake in their businesses care more and work harder? Absolutely, says John Abrams, founder of South Mountain Company, a 37-year-old design/build firm in Martha’s Vineyard, Mass. In 1987, the company was restructured to become employee-owned, and it has since flourished as a model of sustainability and controlled growth. For a chance to win a signed copy of Abrams’ critically acclaimed book, Companies We Keep: Employee Ownership and the Business of Community and Place, see today’s Answers discussion.
d5R: Your Yestermorrow course is called "The Art of Small Business." Many remodeling company owners would say their success is based more on science (charging the right amount, running a tight ship) than on art. Are they mistaken?
JA: The numbers are important -- that goes without saying. But my view is that if we re-work our emphasis and pay more attention to collaboration, democracy, kindness and a wide variety of stakeholders, the numbers will follow. Sometimes in our desire to "run a tight ship" we constrain ourselves, miss opportunities and fail to get the most out of people.
The Balinese have a saying, "We don't have any art. We do everything as well as we can.” As the Balinese imply, everything can be done artfully. In business this is sometimes overlooked. And sometimes the seeds that grow the greatest success lie in the artfulness.
d5R: Your business has been highly collaborative since even before it was restructured as an employee-owned cooperative. That was radical thinking then and still is radical by most business owners’ perspectives.
JA: Maybe, but I am 62 years old, and I love knowing that South Mountain Company will continue long after I have retired. Many people actually do value the quality of their workplace as much as the size of their paycheck, sometimes more.
Happily, I’m in really good company these days. When we restructured, there were two million people in this country working for companies that they owned a part of. Now there are 30 million.
d5R: Many small business owners fear collaboration because it means relinquishing control. It’s not that they don’t trust others, but they feel that nobody else can care as much as they do about their business or know it as well as they do.
JA: I think they're answering the wrong question. It may or may not be true that nobody can care as much about their business, or know it as well, but it is absolutely not true that others cannot care or know as much about, or do a better job with parts of the business.
I have spent my entire career learning to do things and then hiring people who do those things better than I. I would say that people who think that only they can do it are seeing the world from a very limited, fear-induced perspective. It's actually quite a thrill to learn that all of us are much smarter than any of us.
d5R: The recession hurt even your business, even on Martha's Vineyard. What accounts for the fact that South Mountain Company pulled through while other builders did not?
JA: Martha's Vineyard was spared no more than any other place. I attribute our success to four reasons:
- Our diversity: architecture, engineering, building, energy.
- Relentless evaluation of our practices and personnel, and changes when necessary, no matter how tough.
- Expansion of the types of work and location of work we are willing to do. This has had the effect of greatly expanding our horizons, bringing a more interesting mix of work and introducing us to lots of new and exciting learning.
- Major expansion of the breadth and reach of our energy work.
d5R: What's the case for diversifying? Many remodelers dabbled unsuccessfully by diversifying into niches like energy and handyman. So now they're trying to focus on their core strengths.
JA: It's one thing to try. It's another thing to take the bull by the horns and try. It's always hard to move out of our comfort zones, but we are finding that the rewards are great.
d5R: In your Yestermorrow course description, you wrote: "As we move into a New Economy that is based less on more and more on enough, the ability to collaborate in new ways and employ new (and not-so-new) democratic structures – those that encourage widespread ownership and community accountability -- will become essential." What is the business case -- the capital-C Capitalist's case -- for democratic decision-making and community accountability?
JA: As small businesses, we live or die on two essential factors: 1) the productivity and commitment of our people, and 2) our reputation. It has been proven that people who share a voice and share ownership are more productive and committed. And our stature in the communities we work in has a direct relationship to our ability to thrive and prosper as a business.
d5R: Do you feel that we as a society have hit the tipping point of continually acquiring and expanding?
JA: I believe that was the fundamental underlying message of the crash of 2008. John Fullerton, JP Morgan’s former managing director, said, “At the beginning of the 20th century scale did not matter. In the 21st century, scale redefines our economic challenge. The world may be flat, but far more critical in terms of its implications, the world is full, and that changes everything.”
An extractive economy based on constant growth cannot sustain itself on a planet with limited resources. As we moved toward a steady-state economy, we need to focus on internal efficiencies rather than external growth.
d5R: In the New York Times last week, the You’re the Boss blog argued that most small businesses have little value beyond their balance sheet and thus end with their owners, causing job losses and hurting communities. The premise is that to truly be successful, small businesses must be treated as long-term, stable assets with sustainable and transferable revenue and profit.
JA: That's an interesting article, but it overlooks what many boomer businesses are starting to see, which is that the employees can hold the key to exit, legacy and longevity. Selling a business to the employees who have a stake in it is becoming an important option and growing rapidly.
d5R: What do you think is the fundamental factor keeping most business owners from seeing past their immediate ownership?
JA: Our culture doesn't teach it. It teaches short-term rocketry rather than long-term stability, it teaches competition rather than collaboration. Our political system, as a model, is pure wreckage. Our economic system preaches inequality. We need better models.
The blog you cite says, "It happens one business at a time." My goal with the Yestermorrow class is to provide models that make it happen a few businesses at a time.
d5R: You've taught this course before. Have you seen it have a lasting, positive impact on any construction business owners?
JA: Many kinds of business people have attended this course, not just contractors and architects. I have seen it have major impacts. Just a month ago, three members of a remodeling business came to visit here on the Vineyard. One of them took the course three years ago. Because of it, they are now transitioning to employee ownership, and they -- and several other transitioning businesses -- came for some additional counsel.
[Click here for a video about the Yestermorrow Design/Build School.]
d5R: Many remodelers seem doubtful of the future of the profession. They feel it's simply gotten too hard to make a living. They feel that consumers will never again truly value craft or the things that require them to charge more than the guy down the street. Should these owners still treat their businesses as long-term, stable assets?
JA: We all live in buildings. All buildings need to change and be maintained over time. The work will be there -- we just need to envision what we want to do and figure out how to communicate that in a compelling way.
We can't wait for our customers to come to the right conclusions -- we must be their capable and reliable guides. Henry Ford once said, “If I’d asked my customers what they wanted they’d have asked for a faster horse.” And Steve Jobs didn’t care for focus groups – he said it’s not our customers’ job to know what they want when the things we bring them are things they never even imagined.
On Martha's Vineyard there are 18,000 buildings. Our view is that each of these is going to be brought into the 21st century at some point, or be summarily torn down and replaced. To us "brought into the 21st century" means deep energy retrofit for profound energy-use reduction, increased health and comfort, and better durability. So we are selling deep energy retrofits -- which our customers have never even heard of!!
Some people will always value craft, service and ingenuity -- it's our job to find the people who do.
d5R: There’s also the simple fact that many remodeling company owners are just burned out. How do they evaluate whether their business is worth keeping?
JA: Their business might not be worth keeping if everyone is burned out. But I would turn that question around and say that we should all be developing businesses that are worth keeping. Major league sports teams endure by constantly bringing in young, energetic, passionate people to replace older people. That's our approach too.
d5R: You have identified housing affordability as a key priority for yourself and your business. Do you feel that every remodeling businesses should align themselves with one or more well-defined community interests?
JA: Yes, everybody should contribute to what we call “the Commons.” It's an essential part of being in business. How do we find that interest? Simply by following our passions -- they’re different for everyone.
Join John Abrams at his two-day course, The Art of Small Business, at the Yestermorrow Design/Build School in Waitsfield, Vt., April 21 and 22. Tuition is $320. See video below. Learn more about South Mountain Company. See d5R’s coverage of South Mountain Company’s net-zero housing community.
For a chance to win a signed copy of Abrams’ book, Companies We Keep: Employee Ownership and the Business of Community and Place, see today’s Answers discussion.
2 Comments (Login to Add a Comment)
DB-RemdMA1021 657 days ago
DB-RemdPA1061 657 days ago
Good article Leah.
John Abrams has a philosophy about life and business that not many people have. Most of us are too selfish and want it all for ourselves, John's view "that all of us are much smarter than any of us" is true but most will never find out. I heard John Abrams speak at the Remodeling Leadership Conference a few years back and read his book, Companies We Keep, I've kept it and have referenced it from time to time. It's one thing to begin a business with employee ownership in mind and another to change after a number of years. Spouses, children, key employees are all factors in the outcome. It's sort of like socialism / communisism at their best ideal would be wonderful but greed for money and power get in the way and ruin it.