We are Family: Values, Culture Carry Consulting Firm Through Tough Times

I recently came across an article entitled “The Small-Business Die-Off Is Here” [1] that discussed the profound negative impact of the COVID-19 pandemic on small and independent businesses in the United States. Author Annie Lowrey observed that, “Small businesses went into this recession more fragile than their larger cousins: Before the crisis hit, half of them had less than two weeks’ worth of cash on hand, making it impossible to cover rent, insurance, utilities and payroll through any kind of sustained downturn,” and reported estimates from credit card processing firms that over 30% of small businesses had already shut down as of May (a recent economic study [2] estimates that 43% of small businesses are at least temporarily closed).

And we are clearly not out of the woods. Not yet.

Rent, insurance, utilities and payroll are all things that I used to worry about on a daily basis. Back in 1994, I started a consulting firm called Onward with Rob Luenberger and Stergios Marinopoulos. We were all still in our 20s, unencumbered by mortgages or families, and largely guided by a belief that mathematical models would play an ever-larger role in the business world. More than a decade before Tom Davenport and Jeanne Harris introduced the notion of “Competing on Analytics” [3] to Corporate America (and nearly two decades before data scientist had been dubbed the “Sexiest Job of the 21st Century” [4], we were very much making it up as we went along.

My partners and I agreed from the very outset that making our company a great place to work would be a high priority for us. Soon thereafter, we found ourselves engaged in ferocious competition to hire people with strong technical training, excellent interpersonal skills and a desire to work in a business setting. Over time, we learned that our company’s values and culture helped to set us apart from bigger, more famous companies and from sexy, well-funded startups. Ultimately, almost all of the employees at Onward came on board because they explicitly valued being part of a small, familial environment. This very much shaped our work environment and enabled us to attract excellent people even as the dot-com bubble was inflating salaries and expectations for new hires throughout the San Francisco Bay Area and beyond.

Happy Ending

In those years, I often felt like I was in over my head. There were many reasons for this. First of all, as a self-funded small business, we were vulnerable to both micro shifts (a small change in a big client’s budget can have an outsized effect on a small company’s finances) and macro forces (we lived through many challenging historical moments, including the collapse of Long-Term Capital Management, the bursting of the dot-com bubble and the terrorist attacks of 9/11). In addition, we were relatively short on business experience and training – and so by necessity we were constantly learning.

Most significantly, I also felt a strong sense of obligation to our staff to make good on our implied promise of providing interesting, challenging work in a healthy and respectful professional environment. Looking back now, it is clear that my overdeveloped sense of personal responsibility, lack of professional seasoning and low emotional intelligence level produced a great deal of nonproductive stress.

The Onward story has a happy ending. My partners and I operated the company together for eight years, growing it to about 30 people before successfully selling our business, freeing me up to become a business school professor and Burning Man aficionado. Rob, Stergios and I are still connected with one another, friendships that now span nearly 30 years. Our Onward alumni community also features many strong enduring connections.

The idea of being part of a “family” is a common cultural element at many consulting firms and technology companies. Inevitably, there are times when the business realities collide head on with the “we’re all in this together” ethos, and we certainly had some difficult moments at Onward. However, given the swiftness and scale of the economic downturn precipitated by the COVID-19 pandemic, over the past few months I have often wondered what kinds of challenges we would have faced and how we would have responded.

Best Place to Work

This curiosity led me to a conversation with the leadership team at Elicit [5], a consulting firm that I have followed from afar for years (co-founder and COO Chuck Densinger is a friend from our undergraduate days at St. Olaf College). Elicit’s focus is on helping clients capture, organize, analyze and leverage customer data to drive their strategies and operations; their client base features an impressive array of business-to-consumer brands including Southwest Airlines, Sephora, Neiman Marcus, Fossil, Best Buy and Polaris.

Speaking with Densinger, co-founder and CEO Mason Thelen and CMO Brooke Niemiec earlier this summer (the three of them are also the co-authors of a 2017 book entitled “Geek Nerd Suit” [6]), I was quickly struck by the similarity between the values and culture at Elicit and the environment that we had fostered at Onward. From Day 1, co-founders Thelen and Densinger told me, they had sought to create a company at which they themselves would want to work. While travel is an essential part of consulting, Elicit has always sought to keep these demands on its staff as reasonable as possible.

In addition, the company’s tradition of regular evening “office hours” at the hotel bar during business trips has served to humanize the time away from home and foster friendships within the firm. Niemiec also described joining the firm in its early days at a time when her children were still not yet in elementary school and really never having felt the pain of compromising between work and family. And the world has noticed: In 2019, Elicit was named an Inc. “Best Workplace,” and in 2020 the firm was voted the No. 9 “Best Place to Work in Marketing and Media” by Ad Age.

And then came the pandemic. “It all happened so fast,” Thelen recalled. “As of early March, we were on track for the best year in our company’s history … and within nine days we had first ‘grounded’ our consultants [eliminated business travel due to COVID-19 concerns] and then had three of our biggest clients all hit the pause button on our work.” With very little warning, its leaders were suddenly faced with the challenge of reconciling operating costs – primarily the salaries of their talented staff members – with a radically reduced revenue forecast.

To its credit, Elicit’s leadership had been financially prudent in the past, correctly anticipating the possibility of some type of unexpected economic disruption after years of growth. Still, the pandemic found them facing a classic “Hobson’s Choice” [7]: how to ensure that the firm could stay solvent through a massive economic slowdown of unknown duration while also wanting to respect and honor its people, who were their close friends as well as the company’s most valued assets? For me, simply listening to them describe the situation triggered powerful and painful emotional memories.

True to their values, the Elicit leadership opted for transparency and generosity, while quickly making the difficult decision to lay off several of their staff members. The entire company was made aware of what was happening, and each consultant who was ultimately let go received two months of severance pay.

In addition, all of the employees who were laid off retained medical insurance for themselves and their families for all of 2020 at the company’s expense. “This is a global health pandemic that none of us fully understands … How in good conscience could we send our friends and their families out into the world without health insurance right now?” explained Thelen.

Uncertain Future

Like the rest of us, Elicit is still facing an uncertain future. The team that has remained on board has spent time upgrading the company’s software tools and product offerings while also thinking and writing about what the post COVID-19 landscape might look like for its clients [8] (“all of the historical customer related data at your disposal is likely a poor indicator of what is actually happening in your business right now”). And after several months of somewhat eerie silence in the marketplace, there has also been a recent uptick in client work. For Elicit’s leaders, this has been encouraging news, because meeting the company’s dual objectives of creating better experiences for their clients’ customers and for their own team is now more important – and more uncertain and challenging – than ever.

As for me, long removed from the emotional and financial challenges of running a consulting firm, I also suddenly feel more vulnerable. While there is much to like about being a tenured professor, my job security ultimately depends on the financial solvency of my institution. Scott Galloway (serial entrepreneur, professor of marketing at NYU and noted gadfly) recently made some dire predictions about the impact of COVID-19 on nonelite colleges and universities, many of which were already facing structural challenges prior to the pandemic: “There will be a lot of zombie universities. Alumni will step in to help. They’ll cut costs to figure out how to stay alive, but they’ll effectively be the walking dead” [9]. Despite some significant financial challenges in the near term, I think my school – and my job – will ultimately be OK. But given what we know – and what we do not yet know – about this virus, it is still too early to be sure.

We are clearly not out of the woods. Not yet.

References

1. https://www.theatlantic.com/ideas/archive/2020/05/bridge-post-pandemic-world-already-collapsing/611089/
2. https://www.nber.org/papers/w26989.pdf
3. https://www.amazon.com/Competing-Analytics-New-Science-Winning/dp/1422103323
4. https://hbr.org/2012/10/data-scientist-the-sexiest-job-of-the-21st-century
5. https://elicitinsights.com/
6. https://geeknerdsuit.com/
7. https://en.wikipedia.org/wiki/Hobson%27s_choice
8. https://elicitinsights.com/blog/customer-recalibration-amidst-an-economic-crisis/
9. https://nymag.com/intelligencer/2020/05/scott-galloway-future-of-college.html