South Mountain Company

Martha’s Vineyard’s integrated design/build company

This blog provides up-to-date news of goings on at South Mountain Company and occasional musings from John Abrams (and others).

Employee Ownership

Riding Toward A New Future

More than 25 years ago, I was in a room somewhere organizing a conference for the Northeast Sustainable Energy Association. There were two new faces among the group – Marc Rosenbaum and Bruce Coldham – who were engaging and appeared to know their stuff. Not long after, The Wampanoag Tribe asked SMCo to design a new Headquarters, the first building they would raise as a tribe in 300 years. I was excited, but knew we had neither knowledge or capacity to take this on alone. I asked Marc (a mechanical and systems engineer from New Hampshire) and Bruce (an architect from Western MA) if they would collaborate. They agreed; we did that project together and several more after. Although we collaborated deeply on all aspects, at the heart of our shared work, Marc was Numbers, Bruce was Pictures, and I was Words. Together, a seamless composition.

Thus began a relationship that has endured. For several decades, Marc was our go-to consultant about all things energy and systems. He taught us so much about buildings that we wouldn’t have known otherwise. He still does!

Ten years ago, our relationship changed. Marc and wife Jill moved to the Vineyard. He became an SMCo employee, and later an owner. His contributions to the company, to our buildings, and to our institutional knowledge ever since have been entirely remarkable. He thinks in a way that is unlike anyone I’ve ever met. The thing about Marc is – he cares. About truth, excellence, people, life, and impeccable data-driven information. It matters to him to make a difference; he’s committed to improving conditions for people on our planet. He does – consistently, relentlessly, and generously.

At the end of this year, our relationship will change again. Marc recently announced to our leadership team that he will end his time as an employee-owner and transition back to being a trusted consultant. He has other endeavors he wants to combine with his SMCo work, so he wants to be more independent and flexible and . . . well, you know, unemployed. He’ll still work with our architects, engineers, solar team, and production staff on most of our projects. It really won’t be much different (since he’s not in the office these pandemic days anyway). We’ll still be asking “Hey Marc…” on a regular basis. He’ll still be finding the best intelligence, dreaming up new solutions, and teaching us all. We’ll still have the benefit of well-filtered know-how from his extraordinary nationwide network of experts. He’ll still be pointing out my typos and making bad puns.

He’ll still be here. We’re very lucky and very grateful. We all hope that his path forward is all-the-way fulfilling, as we’re sure it will be. After all, he’s never been one to waste opportunity.

Our mutual friend Jamie Wolf illustrates this point with an early NESEA conference story. He remembers this guy in the front row at every presentation. Invariably, his hand would shoot up to ask penetrating questions. “I first met the back of his head,” says Jamie. “Inquiry, scrutiny, mastery. That was his method. He embodied that – it’s the NESEA ethic, but we learned it, as much as from anyone, from Marc.”

About SMCo, Marc wrote after his announcement, “ . . . This community of people is extraordinary in so many ways. . . . . I’ve never been in a group where dedication to excellence, and doing the best one can, has been so prevalent. The richness comes from the diversity of what we define as excellence. That diversity leads to differences of opinion about what should be prioritized, but the commitments we bring are the foundation of goodwill that allows us to, together, create something profoundly better than any of us could do alone.”

The first time I visited Marc and Jill in New Hampshire, decades ago, I stayed in their finished basement. Hanging on a sheetrock wall in the hallway at the foot of the stairs, where you’d expect a painting to be, was a bicycle. I asked him about it. “Oh, that’s a bicycle I built for my senior thesis at MIT. At the time, it was the lightest bicycle in the world.”

Buildings are one of his passions. Bicycles are another. He’ll surely find time for both in this new chapter – The Rosenbaum Chronicles, part three.

Carver Ken Left His Mark

As we steadily approach a Nex Gen Transition that will culminate two years from now, a two way migration is occurring at SMCo. Elders migrate out, and new faces/new talents migrate in. In the last decade, six longtime employee-owners have transitioned to new careers or retired. Collectively, they represent 168 years of employment

The most recent retirement was that of Ken Leuchtenmacher.

We first ran into Ken working up on the hill above the Allen Farm at Rob Kendall’s camp. Must have been around 1988. At the time, he was building solar greenhouses under the Solar Sanctuary moniker.

Ken grew up on a farm in Iowa – a true corn-fed boy – who went on to study at the University of Iowa. When the school shut down in 1969 due to the horrific shootings at Kent State, he migrated to Minneapolis and studied art for a while at the Minneapolis College of Art and Design. Afterward, he worked a couple silk screening jobs: first for a bottling company, then for a sign-making firm that created all the posters for IDS tower, the tallest building in Minnesota. The grandparents of his best childhood friend had a camp on East Chop. Upon visiting in 1974, Ken was smitten. He went back to Iowa, dealt with the way-too-early death of his Dad, returned to the Vineyard, and never left. He worked at the hospital for a while before joining Roger Wey’s construction company. They poured the slab in the second house we ever built, in 1976. (I remember that slab. Can’t say it was the best ever.) Soon after, Ken signed on with Burnham and Magnunson, earning his carpentry chops before starting his own business in the early 80s.

In 1993, we began work on our largest project – by some measure – to date: the Kohlberg House at Swan Neck. By that time, Ken had formed a partnership with Patty Egan and Larry Schubert. We hired all three to help us with the endless carpentry in this highly crafted timber-framed house. Shortly after completion, Ken migrated to SMCo. For many years, he was Billy Dillon’s solid second. Quite the duo – Ken was the quiet, steady, curmudgeonly assistant who always kept his talented and rambunctious leader in line.

He would work in the shop on rainy days. In 2005, he became an SMCo owner. A year later, after a long shop tour-of-duty building the Marcus stairway, he stayed. And never left until this May. He was a fixture as Jim’s assistant shop lead. A craftsman through and through, and an artist too, he was always a steady force and a mentor to our younger carpenters and woodworkers.

He also became our resident stairway maven. I have no idea how many times he set up in the annex, crafted a complete housed-stringer stairway over the next month or so, disassembled it, took it to the job site, and installed it.

Ken doesn’t suffer fools gladly, he doesn’t tolerate injustice, and he’s never one to pull a punch. He has a way of giving you (and me!) a piece of his mind that always sticks. Because he is generally quiet, his voice, when raised, carries weight. And for Kenny, nothing ever stands in the way of quality, his one-word guiding star. He is a standard-bearer.

During his time at SMCo, Ken took classes and learned woodturning and wood carving. These began as avocations and became integral parts of his craft. The essence of professional development. He always continued to grow his skills.

Never one to stay idle, Ken was recently recruited by his old partner-in-crime Billy Dillon, and Camp Jabberwocky, to do an extraordinary job.

He transformed a swing pergola (that we built when we did our Jabberwocky renovation in 2018-2019) into a memorial to celebrate campers who have died over the 60 years of Jabberwocky’s storied past. He hand-carved their names – 24 of them – into the re-purposed tree trunks that support the pergola. “When you go to camp [as a kid] , you carve your name on a tree,” Ken said in a Vineyard Gazette article “It’s like they’ve been there and carved it themselves.”

Each day camp caretaker Jack Knower, a former counselor and keeper of institutional knowledge, would tell Ken about the campers whose names he would carve that day. Ken said it was almost a religious experience. “I really feel connected to these people.”

We will always feel deeply connected to you, Ken. You’re an essential part of our history.

The Flip Side of Mitch

Sometimes we are fortunate enough to catch glimpses of progress within our federal government (yes, there is some – despite Mitch McConnell’s relentless efforts to assure that nothing positive happens in Congress, he does not always succeed!) I had this chance several weeks ago.

In August of 2018, Trump signed a 788-page defense bill which authorized $717 billion for the military. Hardly anyone noticed that New York Senator Kirsten Gillibrand slipped in a provision to help workers own their companies – a modest attempt to tackle wealth inequality, and a timely one.

As baby boomers reach retirement age, we are undergoing a “Silver Tsunami” – several million small businesses in the U.S. stand at a crossroads: What will happen to them when their founders move on? Some will be passed down to family members. Some will be absorbed by larger companies (and likely, moved out of town). Some will close their doors. Others will explore the increasingly popular notion of selling the business to those employees who helped build it.

There are obstacles. It’s not uncomplicated. Gillibrand’s bill – the Main Street Employee Ownership Act of 2018 – was designed to help employee-owned companies gain better access to technical assistance and capital. On February 12th of this year, the House Committee on Small Business held a hearing to examine how the bill is working, how it’s not, and how it can be improved.

I was invited to testify as a representative of the worker cooperative model, along with two individuals who represented ESOPs (Employee Stock Ownership Plans) and one who represented a cooperative bank.

The experience was an eye opener.

The room held a significant sampling of the Democratic and Republican representatives who comprised the Committee. Chairwoman Nydia Velázquez of New York opened the hearing with this remark: “At a time when income and wealth inequality are at record levels, real wages for middle class workers are nearly stagnant, and retirement security is no longer guaranteed, one way to combat these problems is through the employee-owned business model.”

She displayed a firm grasp of the issues and a strong commitment. She knew her subject. I was impressed.

Each of us had five minutes to testify. My peers were knowledgeable and passionate advocates.

Mark Gillming, senior vice president at Messer Construction in Cincinnati, praised the tax advantages (passed by congress 45 years ago), which have caused the ESOP model to become widespread:

When I began working at Messer Construction, it was a medium size, family-owned construction company with a long history and a good reputation; but, like most companies in construction, it had little in the way of employee benefits.

In 1988, the last son of the company founder died, and we found ourselves with an uncertain future. The grandchildren of the founder wanted access to their wealth and, having no connection with the employees, were not committed to maintaining employment at the company. In 1990, the Messer employees were able to buy their future from the Messer family, using the ESOP structure. We could not have purchased the company if not for the important tax advantages that the ESOP model afforded us.

Our country’s investment in ESOPs allowed ninety-nine Messer employees to purchase their future; and the engagement that opportunity created, has resulted in growth. Messer now provides quality jobs and predictable retirement for over 1,200 individuals and has company-funded retirement assets for those employees totaling more than $400,000,000.

R.L. Condra, VP of Advocacy and Government Programs at the National Cooperative Bank in Arlington, Virginia, spoke to the changing nature of cooperatives and those who stand to benefit:

A prohibitive policy requirement by the Small Business Administration (SBA) is hindering the growth of the cooperative business sector. If this issue is resolved, lending institutions, like the one I work for, will be able to make loans that will help to grow small businesses, create quality jobs at increased wages, and provide healthy food and grocery options for communities throughout the country.

Cooperatives have evolved since the 1960’s when the SBA recognized them as buying clubs. There are now over 40,000 cooperatives in the US and the top 100 generated $222 billion in annual revenue in 2018. Some notable cooperatives include REI, ACE Hardware, Ocean Spray, Land O’Lakes, and Congressional Federal Credit Union.

Since the great Recession, worker cooperative numbers have doubled, and have become a business option for young people, women and minorities. According to the 2019 Worker Cooperative Economic Census, 50% of owners of worker co-ops are Latino and African American, and 62% of women make up the majority of the workforce.

Daniel Goldstein, President and CEO of Folience, a media company in Iowa, advocated for regulatory clarity that would lower the risk for businesses making the employee ownership transition:

I submit that the biggest obstacle to the formation and expansion of ESOPs is the chilling effect of the U.S. Department of Labor’s (DOL) actions. DOL has perpetuated an absence of formal regulatory guidance, while simultaneously pursuing a litigious approach to oversight. The effect has been a deep chill on the market.

Every year, hundreds of business owners who want to learn about ESOPs attend educational events hosted by The ESOP Association. And once exposed to the lack of clear guidance, many turn away out of fear that some unknowable misstep will invite never-ending DOL scrutiny.

Those fears are not unfounded.

Today, more than 45 years after ESOPs were established with the passage of ERISA, the Department of Labor has yet to finish its rulemaking process. They started. They nearly finished in 1988. But they never issued final regulations.

Operating without clear guidance is a risk ESOP companies should not be forced to bear; it is a risk that negatively affects the wealth and security of the 10.6 million employee owners DOL has been tasked with protecting.

But here is the travesty: It is impossible to prove how many American workers have lost the opportunity to become employee owners as a result of this chilling effect. And, due to the rapidly escalating retirements of baby boomer business owners, there is urgency to reduce the chilling effect this lack of regulatory clarity is causing.

And then it was my turn. I emphasized the value of employee ownership in our culture and the importance of sharing what we have learned:

I believe that owning our work is as essential to a good life as it is to own our homes. As former Treasury Secretary Lawrence Summers once remarked, “In the history of the world, no one has ever washed a rented car”. When employee owners are making the decisions, it is more likely that companies will stay rooted in place and be positive forces in their local communities.

Economist Richard Wolff says, “if our workplaces had been democratized, long ago, would the workers have stopped raising their own wages? Hardly. Would they have destroyed their own jobs by moving production overseas? Doubt it. Would they have employed technologies that pollute the local environment? No, they live there. Would they have allowed some to earn astronomical salaries while the rest got no raises? No way. Our economic history over the last thirty years would have been radically improved if we’d had a different way of organizing our enterprises – with a more cooperative community-focused method that is democratic at its core.”

Growing the worker cooperative approach has the potential to positively affect the economy, our democracy, and the quality of working peoples’ lives. It is not a stretch to say that the benefits of the democratic workplace may even aid and influence the essential repair of our battered civic landscape – it could change, in effect, the chemistry of our culture. If you spend your days working in an environment of collaboration, mutual respect, and shared power, it is bound to spill over into other parts of your life – better parenting, more civic engagement, kinder relationships.

The value and benefits of employee ownership continue to fly under the radar, and you can’t take this important step without knowing the option exists. So perhaps the greatest need is extensive education and publicity – the stories of employee ownership successes need to be shared and celebrated. Employee ownership “ambassadors” should be funded to visit companies who are considering transitions – to teach, train, advise, and inspire. Widespread technical assistance should be made available. Employee ownership should be the number one business succession planning option.

But it’s not. I hope this committee will build on the good work it has begun and I am grateful for the opportunity to make this request.

After our testimonies, the representatives asked questions. Good questions. Engaged questions. It felt worthwhile.

Government can work. We know that; we can remember when it did. My experience in Washington amped up my resolve to work hard this year to elect a real president, help democrats take back the Senate, and increase the number of voices involved in decision making. There’s never been a moment when it mattered more. Not in my lifetime.

As for South Mountain’s commitment to employee ownership: we make our Operating Policies, Bylaws and Employee Ownership Toolkit available online and are always happy to help other companies find their way. If you have questions, feel free to contact me at jabrams@southmountain.com – but please read our Toolkit first. It may answer some of your questions. Or it may answer some and provoke others.

Entering the Neutral Zone

On November 19th, at our annual Day of Business, we unveiled the Transition Plan that will lead us to the next iteration of South Mountain. It was a threshold moment, a new hinge point in our 45 year history.

Are you ready? (This may take some time to tell.)

Over the next three years, our company will gradually transition from first to second generation leadership. At the end of that time, I, as founder, CEO, and president, will retire and continue to work very part time for several years. Deirdre Bohan will become CEO and president, and will work in a “first-among-equals” arrangement with the four other members of our strong, capable, dedicated, and well-aligned Leadership Team (comprised of Ryan Bushey, Rob Meyers, Siobhán Mullin and Newell Isbell Shinn). We are tremendously excited, and very confident, that this Transition, which we have been planning for many years, will assure the long term success of the company. It will allow us to continue to serve our clients and our community in the way that we always have.


LEADERSHIP
To thrive, prosper, serve, and endure, an organization needs effective leadership. So does a family. So does a country. Leadership is both a skill and an orientation. Everyone has some leadership skill, just as everyone has some athletic skill and some musical skill, and some of every other kind of skill. Even those who claim no musical skill can still sing a song to their child at bedtime. In the same way, everyone has leadership skill. Some have more of it than others, just as some are better athletes and better musicians. Some people have an orientation toward leadership; they think about it and practice it. Some work hard to learn it and cultivate it. Some have natural leadership ability. Most good leaders combine all three.

As the leader and CEO of this company, I have, over time, had the great good fortune to gather a group of stellar leaders here at SMCo (and people with other essential skills, too – those who can design, and build, and craft, and engineer, and practice finance, and administer, and manage). This has been intentional. In my own career, I have learned to do all of those things, but in most cases, only well enough to recognize and attract people who can do them better than I. That’s what our company consists of – people with 38 unique skill sets and orientations that comprise the whole. We couldn’t possibly flourish without each of them.

Few of my colleagues arrived here as skilled leaders. Our current leaders – Deirdre (our COO) and Ryan, Rob, Siobhán and Newell (our four department directors) had some innate leadership skills that they brought with them, but more importantly, they had a leadership orientation, and they developed those skills here at SMCo. There are other people here besides these five who have a strong leadership orientation and will develop those skills further over time.


BUSINESS TRANSITIONS
According to the Small Business Administration, there are approximately 30 million small businesses in the U.S. Many of them were founded by baby boomers who are aging out. Some will be passed down within families, but fewer than in the past. Most businesses will close their doors with the retirement of the Founder. Many others – those with value – will be sold to a new owner or absorbed by larger companies. None of those things was ever my intention or the intention of any of the other SMCo owners, past and present.

A smaller (but growing) number will be sold to their employees and become worker co-ops or ESOPs (Employee Stock Ownership Plans). South Mountain was sold to its employees and became a worker co-op in 1987. Having already made this conversion, we now have the luxury of foregoing the arduous and complex process of figuring out the transfer of ownership, and can direct full attention to capacity building.

Planning for our Transition began six years ago, in 2013. In June of the following year the full SMCo Board (all 19 owners) approved and adopted, by consensus, our first “Avalanche Scenario” (what happens tomorrow if I am buried by an avalanche today) and our “Next 40” projection (what the company will look like/who will lead it in 40 years time).

Despite all of this preparation, I struggled for some time to fully visualize leaving this company. In January of 2019, all that changed. I saw our leadership group taking the bull by the horns and making amazing progress. It was time to give shape and definition to our future.

In Managing Transitions: Making the Most of Change, , William Bridges writes:

Change is situational: the move to a new site, the retirement of the founder, the reorganization of the roles on the team, the revisions to the pension plan. Transition, on the other hand, is psychological; it is a three-phase process that people go through as they internalize and come to terms with the details of the new situation that the change brings about.

Managing transition involves helping ourselves through three phases:


  1. Letting go of the old ways and old identity people had. This first phase of transition is an ending, and the time when you need to help people to deal with [the loss].

  2. Going through an in-between time when the old is gone but the new isn’t fully operational. We call this time the “neutral zone”: it’s when the critical psychological realignments and repatternings take place.

  3. Coming out of the transition and making a new beginning. This is when people develop the new identity, experience the new energy, and discover the new sense of purpose that makes the change begin to work.”

We are just completing phase one.


THE PLAN
After my realization, I assembled a plan and brought it to the Leadership Team. Understanding it requires some background.

It’s important to know that we had never considered, in any meaningful way, hiring a new CEO
from outside. We were encouraged by the King Arthur Flour model of a small leadership group – three in their case– becoming co-CEOs. At the time, our discussions with them led us to believe this was the right model for us.

But after further consideration, it didn’t make sense to have five co-CEOs (too unwieldy and confusing) and there weren’t two or three individuals that outshined the others. The five have great complementary skills and personalities, and are uniquely well-aligned. Four of them are department directors and Deirdre’s job has been co-managing the company with me – her job has been like a co-CEO for a number of years. The answer was clear: Deirdre should be the CEO, but in a first-among-equals arrangement with the Leadership Team.

I proposed this at a meeting. I expected some pushback or resentment from those who might have expected to be one of the co-CEOs. There was none. Everyone recognized the impracticality of five people sharing CEO responsibilities and the need for the company and community to have someone that is ultimately responsible for South Mountain Company – a face for the company and a place for the buck to stop. It was as clear to them as to me that Deirdre was the right choice. Since joining our team in 1995, at the age of 28, she has moved from bookkeeper to interior designer to COO to co-manager, developing into a confident, dedicated, skillful, compassionate leader and friend. She never aspired to this position; in fact, for years she did not think herself suitable. Now she knows that, with the support of the others, she is.

Deirdre will not absorb all of my responsibilities; rather she will continue her COO work while adding some new responsibilities. For several years now, we have been working to distribute some of the particular skills and experience I have accumulated to other members of the Team. We meet regularly to develop the details and work on implementation. Each Team member has completed a personal capability analysis and statement – outlining what they could provide and what they need to learn. We continue to work on these together.

For example, one of the key areas of need is in “sales” – the complex process of cultivating in prospective clients a deep understanding of who we are and what we do that leads them to believe we are the perfect fit for them. I had always done that alone.

These days, Ryan accompanies me to nearly every initial meeting and is growing into this role in leaps and bounds. Newell has been having more and more client contact and is starting to have a much larger role in the interface between design and construction. We are finding that both are particularly well-suited to these roles.

As we develop these capabilities, and many others, we think we are also developing the confidence, optimism, and vision which will lead to a prosperous shared future.

From this work, a plan has emerged.

The design of this plan becomes a model for future transitions which will come far sooner than this one has. As a seasoned company, we will never again have a 25 year old leader who remains in the role for nearly half a century. Deirdre will be taking the reins at the age of 55 and anticipates inhabiting the role for 10 or 15 years, at which time we will have developed a new Leadership Team and a robust system of transition for the next time around. Hopefully the CEO to replace Deirdre is with us today.

This transition is a work-in-progress. During the three years from now until the transition, we will conduct further capacity-building, flesh out the details, and test ideas and methods.

For those of us who have been working on it, this endeavor has become a great adventure. Ultimately, I think it will become that for all of us. I personally have one goal, and one goal only: to leave this company, this company I deeply love, in the best shape it’s ever been, ready to go forward as it never has. And to leave the people in this company, who I deeply love as well, in a position to succeed.

In a way it’s like watching a mostly grown child venture out into the world. But vastly different too: the child is young, adolescent, unformed – there’s very little certainty about how things will go. But this “child”, this company, is led by mature, capable, empathetic, passionate, dedicated people. It’s hard to imagine anything but success.

After the Day of Business, in response to a request for feedback, one of our employees, Chris Wike, wrote, “I am grateful to have come to this company when I did, to get a taste of what is was, but I am truly excited to be a part of what it will become.”

I think we are all feeling that way. We will move forward toward this new beginning together.

Peter Blackstone Ives, Friend & Partner

Pete Ives retired last month. Of the many long term employees/owners who have made this company what it is, Pete had the longest tenure (except for me, last man standing, apparently). His illustrious career here spanned 41 years.

He came to SMCo in 1977, just two years after my former partner Mitchell Posin and I came to the Vineyard and South Mountain began. At the time he was an accomplished mason, painter, drywaller, floor sander, tilesetter, and surfer. He’d never done a lick of carpentry. He said, “Just tell me what to do. I’ll do anything, as long as I don’t have to tell anyone else what to do.” He was loyal, dedicated, and skilled, but he feared responsibility.

Back then it was just me, Mitchell, Steve, Pete, and Heikki Soikkeli (I think). By 1985 there were ten employees. Steve and Pete came to me and said they wanted to stay at South Mountain and make their careers here, but needed a greater stake and more than an hourly wage. We decided to become a worker cooperative. Pete became one of the original three employee owners when we restructured in 1987.

And he stayed. Over time he began to find confidence in his work and himself. He learned to be a very good carpenter and then a foreman, first reluctantly, then with pride. So much for not telling people what to do. He was the Clerk of the organization, the only one we ever had until his retirement. He also became an essential part of the Personnel Committee for all those years.

His work at SMCo extended into five different decades. He was the responsible foreman for some of our most emblematic projects, like Sagan, Thistle, Hass, Weinstock, Hamermesh, Field, Howes, Cook-Kraus, Davis, and Lake-Hodgson.

His work culminated appropriately with the wonderfully playful Lee Treehouse.

Pete has been friend, colleague, and co-owner. I have seen his three children at birth, growing up, and grown. Clare has always been a constant, his partner in the truest sense.

My wife Chris always said he was the heart of SMCo. The keeper of the soul. The king of casual. Killing it with kindness. Getting the job done in the most stress-free way possible. If Pete was there, it was surely gonna be fun. And infused with craft. Always craft. He had an unbelievable touch with people and wood. Knew how to make both fit together seamlessly.

We are lucky to know him and grateful for all he’s been and done. His spirit will remain a part of this company for as long as the company endures.

Pete with Steve, Marko, and me in some God-forsaken foundation.

The Amicus Cooperative – Stronger Together

South Mountain is proud – and lucky – to be one of the co-owners of the Amicus Cooperative, a collection of 50 of the most progressive solar companies in the U.S.. Amicus exists to support smaller regional solar companies by leveraging national scale purchasing power, sharing best business practices, and combining collective brainpower. My colleague Rob Meyers, who manages our Energy Services division, never misses their semi-annual gatherings. I have gone twice, once in 2015 in Phoenix and once this year in Denver.

It is not an overstatement to say that both times the Amicus group took my breath away. The intelligence, the heart and soul, the culture of civility, humility, humor, inquiry, fellowship, and friendship at these gatherings are extraordinary.

We’re happy to be able to share this piece about Amicus written by Sarah Stranahan, a senior editorial associate at The Democracy Collaborative and a leading member of its Fifty by Fifty employee ownership team.

The Democracy Collaborative is another remarkable organization which does cutting edge research and “works to carry out a vision of a new economic system where shared ownership and control creates more equitable and inclusive outcomes, fosters ecological sustainability, and promotes flourishing democratic and community life.”

Good stuff all around. These are important below-the-radar antidotes to the sorry, sleazy, sadistic mess of national politics today. – JA


Amicus Solar Purchasing Coop Spreads Employee Ownership
Achieving Scale while Maintaining Local Impact

By Sarah Stranahan

Amicus Solar is one of more than 250 purchasing cooperatives in the US, including such well-known brands as Ace Hardware and Best Western Motels. By forming a large national cooperative, small producers or retailers increase their purchasing power and access to project financing, while remaining independently owned and operated. An additional benefit, it turns out, is that a purchasing co-op can be a particularly effective means of spreading employee ownership.

Amicus Solar was founded in 2011 by six independent solar companies, including employee-owned cooperative and certified B Corp Namaste Solar and South Mountain Company. Amicus Solar is led by cooperative veteran and former Namaste Solar employee-owner, Stephen Irvin, who serves as its president. Today Amicus includes 48 local and regional solar photovoltaic (PV) installers and developers who openly share and collaborate on a wide range of business issues, from operational efficiencies to sales and marketing strategies.

Similar to Best Western and Ace, Amicus is democratically owned by its members, 40 percent of which are B Corps and a growing number of which are employee owned. With five Amicus members having joined the cooperative as employee-owned companies, Amicus has made a conscious effort to educate its members about worker ownership. As a result, five member businesses (ReVision Energy, Technicians for Sustainability, SunBug Solar, Positive Energy, and Sunlight Solar) have converted — and another five are considering converting — to either become worker coops or employee stock ownership plans (ESOPs). The purchasing co-op has become a means of “industry contagion” — a way of rapidly spreading employee ownership.

Staying Local While Creating a Competitive Advantage

Since the Great Recession, there has been an increased interest in localism (also called subsidiarity) — the principle that decisions should be made at the lowest practical level or closest to where they will have their effect — because small, local mission-driven businesses have three key advantages for nurturing a more democratic and sustainable economy:
They invest locally, capturing and multiplying value, particularly when they sell locally produced goods;
They are more successful at participatory management because it is easier to cultivate personal trust and accountability in small-scale, local organizations; and
They are more likely to care about and be accountable to their communities in terms of environmental health, social equity, cultural vitality, and good governance.
Localism, however, faces challenges when it comes to economies of scale, which can increase efficiency and reduce the costs of production. Scale is also required to meet the needs of densely populated urban centers, where a larger and larger portion of the world’s population lives.

Small solar installers have faced intense competition from large national companies such as SolarCity (recently acquired by Tesla), SunRun, and SunPower. By coming together in a purchasing co-op, the relatively small businesses that own Amicus Solar have leveled the playing field with their larger competitors, particularly in terms of purchasing power, while maintaining the advantages of staying local.

New Ventures

In addition to taking advantage of cost and marketing efficiencies, Amicus members share best practices and develop joint strategies to advance their common goals. For example, in 2016 Amicus won a $358,000 grant from the U.S. Department of Energy to found a new cooperative to provide high-quality operations and maintenance (O&M) support to large-scale solar installations. Today Amicus O&M Cooperative includes 20 member organizations that have set collective operations and management standards to ensure that commercial and utility-scale solar PV systems fulfill their performance expectations over the long term. Amicus O&M Cooperative is being led by another cooperative veteran and former Namaste Solar employee-owner, Amanda Bybee.

In 2017, Amicus members helped found the Clean Energy Credit Union (CECU), which received the first federal charter for a new credit union in Colorado in 31 years. CECU’s mission is to promote clean energy, environmental stewardship and cooperative enterprises through the financial services it offers its members. Using the federally insured deposits of its members, the credit union provides consumer loans to reduce the cost of clean-energy products and services. “We envision a world where everyone can participate in the clean-energy movement,” said board chairman Blake Jones, co-founder of Boulder-based Namaste Solar. This new federally chartered credit union will make it easier for people to both invest in and use clean energy in order to help protect our environment and improve our economy.”

Jones is leading another venture in this growing ecosystem called Kachuwa Impact Fund, which has provided capital in support of multiple Amicus members. Kachuwa’s mission is two-fold:
(1) To provide privately held “impact companies” with mission-aligned, long-term, and non-controlling capital; and
(2) To provide “impact investors” with diversified, impact investment opportunities outside of Wall Street.
Kachuwa’s multiple “impact themes” include cooperatives, certified B Corps, and companies that are owned by employees, women, or people of color. Kachuwa itself is aiming to convert to an investment cooperative structure in 2019 and, among other things, to increase its support for companies converting to employee ownership both within the Amicus ecosystem and beyond. Improving access to values-aligned capital is a critically important part to growing the cooperative and employee ownership movements.

Democratic Governance

According to Irvin, president of Amicus, Namaste Solar has had powerful influence on the culture of the purchasing coop and its members. It was at Namaste Solar that Irvin learned about cooperatives, democratic processes and governance, and the importance of facilitating a process to reach consensus. Like Namaste Solar, he says, Amicus uses an open-book management policy to keep everyone fully informed and a committee structure to facilitate decision making.

Irvin told Solar Pro magazine in 2014, “[Open-book management] is important since the members are equal owners. Consensus building can take time — but once we’ve come to a decision, you see more engagement and commitment from everyone.”
Democratic governance has not only contributed to the purchasing co-op’s success, but has shown members that ownership, mission, governance, and culture matter. Today Amicus Solar is an important driver of employee ownership across an entire industry.