Ernst Volgenau - Geeks, mush heads, and the IT revolution : how SRA International achieved success over nearly four decades

People

Business success is all about people. As an old military expression goes, Care for your people, and they will care for you. And business success also depends on how you treat customers, business partners, and the general public. Hiring and motivating capable professionals is absolutely essential. Relationships are vital within the company and in dealing with customers, suppliers, and even competitors. Do not tolerate organizational or personal conflicts. Develop a sense of comradeship and company unity. If you or your team criticizes others, eventually some of them will seek revenge. If, on the other hand, you treat everyone with dignity and respect (even those whose personalities or actions offend you), then you will be much more likely to achieve your goals.

Values and Culture

Values are vital; capable people want to be part of something great. Focus on a clear set of values and a culture that supports them. Articulate these values and culture in a way that is inspirational. Honesty and Service remain the values of SRA today; the corporate culture evolved from that theme. Honesty implies highly ethical performance. Service has three components: doing high quality, useful work and ensuring customer satisfaction; taking care of employees; and serving society in other ways. Having clear statements of corporate values and culture is just the beginning. Actually achieving these ideals requires continuous management emphasis. Train employees in ethical behavior, other values, and the company culture. The board, CEO, management team, and line managers must walk the talk; their behavior must reflect company values.

Leadership

Noblesse oblige implies leadership for the good of society. Never miss an opportunity to show that you care about people. It is essential to the success of an enterprise and requires continuous attention. Mechanistic and bureaucratic procedures cannot replace leadership. Noblesse oblige is a good concept to help inspire leadership everywhere. Humility is a vital ingredient.

Selecting People

Hire bright, energetic people, who will bring long-term value to your organization. While the people you employ should usually have capabilities in the market that you serve, resist the temptation solely to fill positions on current jobs. All should share your idealism. Do not give preference to your relatives and friends. Capitalize on the power of diversity; never underestimate the potential of women, minorities, and new young employees.

Cultural Incompatibility

Cultural incompatibility can cause businesses to suffer. When hiring anyone for a company (director, executive, lower-level employee), be sure to consider cultural compatibility. Many young people are inspired by lofty values and a distinct culture; but some people, who have worked in other organizations, are products of their environments, and it is difficult for them to adapt to a new culture. This happened to us on many occasions, not because SRA was right and the experienced employees wrong; rather, the two were fundamentally different and, therefore, incompatible. A talented senior candidate may be worth this risk, but it is important to assess the degree of potential incompatibility.

Incentive System

Make rewards proportional to output, not input or seniority. Be aspirational in your goals; stretch the executives and the organization. The incentive system should be heavily oriented toward results; simply working long hours is not enough. Create an executive system that reinforces the business vision, values, and culture. Do not pit executives against one another. Sometimes people must sacrifice a personal or organizational objective for the greater good. Make the incentive system as transparent as possible so that all employees have the opportunity to clearly understand how incentives are earned.

Quality Work and Customer Satisfaction

Quality work and customer satisfaction are essential. Encourage employees to exceed customer expectations, create value for customers, and not simply satisfy the terms of a contract. Strive to do more important work. To empower employees in this way requires careful selection, extensive training, and job progression so that promising professionals can stretch in their personal development but not be assigned to jobs beyond their capabilities. Even when work goes well, continuous communication with the client is essential to avoid misunderstanding because sometimes customers have unrealistic expectations.

The Best Ideas

In an entrepreneurial company, the best ideas win. Continuous dialogue is necessary to find the best solutions to problems, and this inevitably leads to disagreement. Instill in your organization the habit of listening to everyones idea regardless of his or her position. When you disagree, do it with dignity and respect, and do not be paralyzed by indecision. Committees do not manage successful companies.

Succession

When the founders retire, watch out for problems. Plan for succession (the loss of key executives). The more successful a company, the more important it is to develop leaders for the future management team. Successful firms tend to be dominated by the CEO and other senior leaders. When they retire or are recruited to other companies, there is often a power vacuum. Recruiting a new CEO from outside the firm is always risky. He or she will require time to learn about the company and its markets and will ultimately demand the right to select the management team. During this process, key people will leave, and the firm may falter. It is far better to plan for succession of the entire team (not just the CEO) than to deal with such problems spontaneously.

The Board

Hire a capable board that provides more than fiduciary oversight. The board should demand that good systems for performing corporate functions exist and are followed. Accounting and finance are particularly important, but other processes also deserve attention: job execution, human resources (particularly compensation), protection of corporate information, and overall governance. The management team may conscientiously follow good processes, yet the company can be headed for trouble. For this reason, the board must also insist on a good strategic plan and a table of key performance measures. Hire board members who have had first line management experience, who understand your business, and who operate effectively as a committee. Planning for succession is particularly important. Start with an advisory committee so you can find out who is really effective.

Criminals in the Company

Be vigilant because, sooner or later, a crook will join your team. Idealism may blind you to criminals in your company. Others may not share it. Trust but verify; ensure appropriate business controls are in place, and expect someone to commit larceny. Practice healthy skepticism.

Hard Work and Perseverance

If you want to be successful, expect long hours of very hard work. If you are not willing to contribute a lot of time, sometimes at the expense of your family or social life, then being an entrepreneur is probably not for you. Despite your best efforts, there will be times when everything goes wrong, and you just want to give up. You can quit your job or sell the company, and life wont be too bad. However, if you really crave the satisfaction of success, then you will continue when most rational people would not. If you can persevere while working hard under duress and still maintain a positive attitude, then you are truly unique.

Other Personal Virtues

Cultivate your personal virtues, including self-discipline; without it, you will court professional disaster. Be organized; you can save a lot of time and money. Write and speak simply and directly. Demonstrate humility. Continue your education; it is vital to success and the process never ends.