Having discussed the process of developing their own software and the responsibility of ensuring that the company would have steady leadership following their departure in Part 3 of their interview, Allen and Mary now talk about how they managed the organization, beginning with the idea of Beck Consulting as a “lifestyle company.”
Beck Consulting: Allen, you’ve referred to Beck as “a lifestyle company.” Can you talk a bit more about that?
Allen Beck: It evolved in a way that probably doesn’t evolve in other lifestyle companies. When we moved here and wanted to hire employees, it became very quickly apparent to us that the employment market was very different than what we were used to in the Central Valley because all of a sudden, we were competing for talent against tech companies. At that time, and even today, a lot of the attraction is, “Oh well, I’ve got a cafeteria here,” or, “I’ve got my foosball tables and my basketball court. I play ping-pong and things like that in my work environment.” But we found out that they weren’t paying for health benefits. I mean, yeah, the employee, but that was it. If you have family, that’s fine, you can add them on, but you’re paying for that. Oh, you want to have life insurance beyond $10,000 or something like that? Well, you can pay for that part, too. A lot of other things that actually had true economic ramifications. We also didn’t say, “If we do well, you’re going to get stock options.” One of my brothers who’s worked in that industry for 50 years says, “I have enough stock options from failed companies that I could wallpaper three rooms.” We said, “No, people are going to get a fair wage here, and we’re going to pay for things that make a difference to you economically.”
Mary Beck: And then give them a bonus if the company does well. When you contributed to that, you’re going to do well. But if you haven’t done well or the company is not doing well, don’t expect a bonus.
AB: Simple economics.
MB: But again, that was part of, “Hey, this is where we’re at. Things aren’t looking so hot. We’re fine, but right now, there might not be any bonus money. I’m setting that up way in advance.”
AB: And for the longest time, everybody basically knew how much we took out of the company, and they knew a lot of times, we were making less than they were. So it was like, “Okay, I get it, you’re not screwing me to feather your nest.”
MB: When there was that one recession we let them know we cut our salaries in half and we’re maintaining just fine.
AB: Not letting anybody go.
MB: Not letting anybody go. “But I need everybody to pull as hard as you can, look for work, whatever. Help me out here!” And at the same time, I think part of that lifestyle is that we had clients that would simply expect, say…I remember there was one who wanted us to come and do all the training for the staff in the evenings. Well, they had work to do during the day, right? I thought, well, as a staff person, they probably wouldn’t appreciate having to go to the evening sessions or weekend sessions. I basically told the clients, “Look, I know you do this hopefully not more than once every five to 10 years on a software conversion. We do this every day, so we can’t be there all day and for our other clients and be at your place all evening and all weekend, so I’m sorry. You have to get this done during the day, during the work hours when my staff is available or we can’t do this deal.” They’re, like, “Really?” I said, “Yeah, your staff can work in the evenings, then. If you feel like they have to work in the evenings to make up for it, then they can work in the evenings, but not my staff. We can do test data conversions. That’s different. I realize that has to happen on a weekend oftentimes, but it doesn’t mean we have to be on site, just available. You need to be running this. It’s your project. We do test conversions during a day, but maybe one big final conversion that’s a test, and then another for the go live. Okay, I get that we want to run that over a weekend, but that’s got to be the middle [ground]. That’s not the everyday for us.”
AB: And the other aspect of it too, from a lifestyle perspective, I mean it falls in what I always thought of as lifestyle, and our software partners always hated it, was that we didn’t have a rigid, classic sales compensation model. They’d say, “How are you paying people working on sales?” “We pay them on a salary.” “Oh, you need to put them on commission or base plus commission because that’s an incentive.” I’d say, “It may be from your perspective, but it’s not from mine. The incentive then is to sell something that might not fit, and everybody else pays the price for it in the organization. So I’m supposed to reward one person to cause a problem for everybody else? That doesn’t make any sense.” “Well, all the other partners do it that way.” Yeah, and how many of those implementations do we get called to un-screw after they completely screwed it up because the salesperson promised this and made the million dollar sale and got their commission and then they disappeared? They went someplace else, and left the ruins for everybody else.
MB: There are people that do very well in commissions, I mean, for motivation. They are fine and they stick around because they want things to be good.
AB: Yeah, there are, but we always took the approach that if you’re on a commission basis, then your real incentive is to produce when you run out of money and not keep it continuous, and so we resisted that model.
MB: For a long time. I mean, it’s not that we don’t have goals.
AB: Yeah. We had goals but then we also told everybody, especially in these meetings where we talked about the financials, if the sales were down, there were usually other factors. It wasn’t who was selling. There were other factors. It was something going on in the economy. It was a number of other factors. Or we just couldn’t generate leads.
MB: I remember there was one version of Navision, there was a costing issue. There was something going on, and we literally decided not to do any implementations until that was fixed. Was it 2.01? I can’t remember. Many years ago.
AB: Yup, it was 2.01 where they really screwed the pooch on that.
MB: So we just said, “We can keep selling, doing whatever, but-”
AB: “We’re not selling any new software until you fix this, end of story.” And we were one of their biggest dealers. They said, “You can’t. It’s going to hurt you.” I said, “No, it would hurt us worse selling crap code. You fix it.”
MB: But I think we had to keep the cycle going, but we just, I don’t know, we figured out a way to push forward.
AB: There is still sort of this rivalry between the implementation people and the developers. I mean it’s like, “Oh, you’re a developer.” “Oh, you’re implementation.” “Oh, you’re a salesperson.” That sort of thing. But we always tried to make people understand that you are in a 100% symbiotic relationship and that there are going to be times when sales are going to suck for a lot of good reasons, and we always said never make a bad sale because a bad sale is always an unhappy client, end of story. There is no way you can salvage that, ever. The relationship may exist, may exist for a long period of time, but it’s never going to be a really good fuzzy feeling relationship. When sales are bad, fine, we need to look at more opportunities within our existing client base, to do those things that we deferred.
MB: Try and get upgrades done, what have you.
AB: Whatever. Because then that way, you’re helping build the client satisfaction, which helps the salespeople. It’s a cycle and it’s a circle. Everybody is holding hands there. I think most people really understood that. For a while, people sometimes went, “I’m putting my hours in. They haven’t sold anything for three months.” That happens.
MB: We explained what was going on. For instance, Y2K, there was just a point where it’s like, “We can’t sell any more. I mean we can’t implement. We have to keep telling them we can’t implement for a year.”
AB: “We’ll just start it in 2003, first thing.” (Laughs)
MB: Yeah, we’ll get to it first thing 2003. For a period, I think we didn’t even try to do any sales or marketing. I mean if somebody came, like pets.com came to Allen, okay, fine, but we didn’t-
AB: There was no outbound effort whatsoever, zero.
MB: No outbound marketing effort. We couldn’t take on any more.
AB: We were swamped. But the whole idea of the lifestyle [company] was-
MB: Have one. Have a life.
AB: Well, it was to try to make sure that everybody that was an employee had an opportunity to have a life, number one, and that they weren’t bound by a bunch of ridiculous rules about, “You’ve got to be here right at 8:00 in the morning and you leave at 5:00.”
MB: Yeah, clock punching.
AB: If you don’t get in until 9:00, that’s fine. You need to leave at 4:00 for your kid’s baseball game or whatever, that’s fine too. I just expect you to put in your hours. I want to see that, if you’re a developer, implementer, I want to see your chargeability. Because I know you’ve got these things to do, so as long as you’re producing, I don’t care where you do the work. Just get it done. It’s interesting because, I find that the mix of people and backgrounds that Bruno and Dirk have brought into the firm in the past couple of years has been very interesting. In many ways, there’s more eclectic backgrounds, and I think that that brings a greater breadth to the organization. As long as they continue to pay attention to what that talent pool is saying to them, and that group of people are paying attention to what’s going on in the world around them, and reporting it back, then I think that the prospects for the future are really excellent. It was always part of our philosophy that, “Tell us what you’re thinking, you’re not going to get fired because we disagree. We may think you’re idiot, for a while, but we also don’t like to think that we hired an idiot, we just have a disagreement on something.”
MB: I used to say it’s a benevolent dictatorship. We wanted to hear ideas because we got some damn good ideas out of people.
AB: The whole dynamic of the business has always been listen to each other.
MB: At our meetings, that’s what I would think about in advance. “What do I want to ask these people to think about?” Sometimes I’d present the challenges like, “This is the challenge I’m facing. What do you think we ought to do about it?”
BC: One of the things that Bruno and Dirk have always advocated has been, if you want to try new things, you want to take on a new role or responsibility or whatever, you’re always free to.
AB: They grew up with it. (Laughs)
MB: Yeah, because we started it, yeah. Otherwise they’d be still doing development, right? I think sometimes business owners have to decide things on their own, but I think a lot of times there’s a real benefit to reaching out to the great minds that you’ve hired. I think that’s probably the biggest challenge the whole way through, finding the right talent.
AB: Overall we were pretty damn lucky. There were a few turkeys.
BC: It’s going to happen.
AB: Right yeah. Even out of season you can find them in the grocery store.
BC: But overall, they really do a fantastic job of hiring, not only good talent, but good talent that integrates with what’s already there.
MB: That is the challenge.
BC: Making sure that it’s a fit, as opposed to just, “The resume is spotless.” If that person doesn’t work well with the group, it can become an issue.
AB: That was something that was kind of passed on to Dirk and Bruno, too. Of course, the European model is very different. It is that; education, experience, who you worked for. They were treated more like just employees, not part of the organization. They weren’t treated as true resources for the organization other than as a revenue-producing resource. When we started bringing Dirk and Bruno into doing interviews, sometimes we’d say, “I don’t like that person.” They’d say, “Why not?”
MB: “My gut feeling.”
AB: Yeah, you got to just gut feel that they’re really not going to fit here. “Look at this [resume].” Yeah, that’s on paper, but it’s the interactions, it’s whether or not you feel comfortable with somebody. You really have to go with that because they have to work with everybody else. This isn’t a factory. Over the years, everybody makes some bad hires, and we ended up with some people that didn’t end up fitting well for one reason or another, or didn’t really live up to their potential. In most cases it was their own demons, and in some cases we probably didn’t help the situation, but we always tried to fix it. Some people, you just can’t fix it. They’re not comfortable. In a lot of ways, the organization is somewhat touchy feely, and it was more so going back to when everybody was in the same office. There was a lot more sensitivity to each other, and each other’s feelings and concerns, and their own personal issues, because it was largely shared. Some people don’t like that. They’re really, really uncomfortable with that environment. We had a couple people over the years that just didn’t work. They were uncomfortable, and they didn’t participate, and they didn’t produce at the level they should have.
MB: They didn’t want to think. Sometimes in the interview process, you try to ask a lot of questions to see if people can think. Because [you] can teach people. You can teach them how to run software, you can teach them how to do development, whatever. You can’t teach people necessarily to think, to be analytical thinkers. I did pretty good definitions, I’d get pretty darn detailed. I knew with some people I had to get much more detailed than others, and that was fine. But once in a while I’d find somebody who just couldn’t get there from here. It’s like, “I don’t know if they are too stressed,” and I’d try a different approach. I found that’s one thing that was very hard. If somebody really can’t think outside the box at all, they can only-
AB: Follow instructions.
MB: It’s hard to be in this business if you can’t be an analytical thinker.
AB: We’ve had developers that did great at a high level, but if they had a challenge where they had to, say, “Okay, I’ve got these data points and I have to figure out how to get…I’ve got A, D, F, and Q, and I have to get to Z,” they could not figure out how to get to Z. Even though they had all the other knowledge they needed to, but they couldn’t really think things through, which of course is a disaster from a development standpoint because then somebody else at a higher level has to lay it out in excruciating detail for them to be able to get to Z. It’s completely inefficient.
MB: It’s like, if they get stuck, “Fine, just come on in and let’s talk about it.” You know, if they’re always having to come in and talk about it, then it becomes a problem. You’ve ought to be able to get past that. I would say the biggest challenge is the people. Technology will change, and you have to adapt to it, and you have to be looking for the changes coming. That was something Allen and I were always trying to do, look and see what we thought might be the next thing coming. The real challenge was the people, hiring the right people. Also, getting in the right engagements, too. Sometimes Allen and I, we decided a ways back, if our gut feels, “I don’t trust those people. I don’t like them,” and we both get that gut feeling, let’s just find some way-
AB: Just won’t return the phone call. Give them the $750,000 proposal for a $50,000 job. Something for pain and suffering. (Laughs)
MB: Yeah. That’s usually what we would do. We’d take a quote and make it just ridiculous. They’re like, “Wow, that’s a lot of money.” “Yeah.”
AB: “A lot to do here.”
BC: “I think a couple of other places are cheaper. The one down the road.”
MB: We learned to trust our guts both with people as far as employees, and possible clients. Whenever we went against our gut feeling, like somebody would convince us to do something, it usually didn’t turn out well, or it was mediocre at best. It was just not real good.
In the final installment, Allen and Mary speak to how changes in technology altered the way in which they ran their business over the years, and speculate on what the company will see and experience in the future.