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

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.

There’s Deirdre . . . and then there’s Rob…

At South Mountain, there are seven standing members of our Management Committee (which we call MCom). An eighth member, always an owner, rotates onto MCom for a six month stint. This allows all our owners to experience and contribute to the management process and learn to understand the complexity and dynamics of running our business.

Two of my management colleagues, Deirdre Bohan and Rob Meyers, have interesting stories. The rest do too (I mean hey, we all do, right?) but these two are particularly compelling because they took circuitous and unconventional paths to their current positions.

Twenty two years ago, when our bookkeeper moved off-island, we hired Deirdre to replace her. Within a year she had developed robust systems and reduced what was previously a taxing 40 hour job to a reasonable 20 hour job.

She came to me and said she didn’t have enough to do. “What do you want to do?” I said.

“That’s up to you,” she replied.

“No, I mean what do you really want to do?”

She told me she had a long-standing interest in interior design; it was one of the reasons she came to work at SMCo. For years we had done interior design partially and unsystematically; we wished to add a serious interior design practice but hadn’t had the resources and had failed to pro-actively seek them. So there it was: we decided to devote the time Deirdre had created (20 hours a week) to her education. She assembled a well-rounded program that combined the resources of several design schools. She was soon leading a thriving interior design business. We hired a bookkeeper to replace her; Siobhán has now been here 14 years and is our Financial Manager and another of our standing MCom members.

In 2004 and 2005 I spent two consecutive winters on sabbatical, writing a book and seeing how the company would fare in my absence. Deirdre was the person who stepped most effectively and thoroughly into the leadership void. The experience, coupled with her innate intelligence and the computer science degree she had earned at Brown, helped her recognize that there were operations issues that weren’t getting the attention they needed. She articulated this and soon became our COO. The operations job became nearly full time, and we hired an architect, Beth Kostman, to fill some of the interior design aspects of her job.

In 2010 Deirdre and her husband Dave had a son, Declan. She was 43. I think the lessons of parenting refined and strengthened her leadership skills, while softening them at the same time. She already had a deep intuitive sense of what makes people tick, but parenting always adds a special dimension – greater empathy and flexibility perhaps.

Deirdre now chairs MCom, co-manages the company with me, manages in my absence, and would become interim CEO (at least) if something were to happen to me (which we call the Avalanche Scenario). I couldn’t ask for a better collaborator. Quite a journey from bookkeeper to now!

And then there’s Rob Meyers.

Rob was hired as a carpenter in 1997. He was an average carpenter, but nothing special. He liked jawin’ more than sawin’. After a few years he packed up his family and went back to Michigan, where he’d grown up. Short-lived detour. Not so good. He came back in 2002 and has been here since. His carpentry improved, but it wasn’t what he really wanted to do, so he began trying on a variety of new and different roles within the company. The shift fueled his ambition and allowed his latent entrepreneurial abilities to blossom.

In 2007 we decided to devote significant resources to wind and solar. We wrote a business plan (I think that was the first time we ever wrote one, for anything). We did it because we had made a number of faltering attempts in past years to start a solar division but somehow it never came to fruition. I’m amazed to say we carried out that plan, and have gone far beyond it, specifically with solar. Today our lively Energy Services division is producing roughly a third of our revenues. Our solar work allows us to touch the lives of and provide something meaningful for far more people than our architecture and building does. It pushes our mission forward. It diversifies and strengthens our business.

Rob now manages this business endeavor with passion, commitment, connectivity, and competence. His gregarious nature and sharp intellect have helped him become a force in the industry throughout New England. He influences policy, and he has a national reach through our membership in Amicus Solar a member-owned purchasing cooperative and peer group network of 50 of the most progressive solar companies in the country (that’s another story for another time). And his mixology skills and lore are second to none.

These two people, Deirdre and Rob, have become true leaders. They came to South Mountain without the experience or the skills to do the jobs they are doing now. And they’re not just doing them, they’re doing them with remarkable professionalism and constant innovation, making it clear that they (along with others of the managers and owners here), are well-equipped to take the South Mountain juggernaut forward into an unpredictable future. One of the most thrilling aspects of my job – maybe the most – is witnessing the growth and development of the people who have chosen to build their careers here. As I often say, “Every morning I walk up the stairs and say to myself, ‘Hey, can you believe I get to work with these people, all day long, and I get paid for this’”?

There oughta be a law. But if there was, I’d have to break it.

The SMCo Equity Journey

I recently attended the Eastern Conference for Workplace Democracy in Worcester MA.  Worker co-ops from around the country were represented.  As I listened to people relate their struggles to align values with business, it made me think of our good fortune with one aspect of our company:  our owners’ equity fund.

In 1987 SMCo transitioned from a sole proprietorship to a worker cooperative.   Part of the re-structuring was a commitment to profit sharing – we would distribute 35% of annual net profits as cash bonuses to each employee, based on hours worked.  The purposes: to share the wealth (of which there wasn’t much at the time) and to partially mitigate our hierarchical wage scale.

In addition, our new by-laws called for the distribution of annual dividends to internal capital accounts for each of the co-op owners.  Generally, these distributions were (and are to this day) roughly 50% of the remaining net income after profit sharing.

The internal capital accounts are paper accounts; they do not have cash in them.  They are an obligation – the company owes the money to each owner/employee when that person leaves the company.

Read More about The SMCo Equity Journey

Yes, Indeed, it was a Zinger!

Last week I traveled to Portland Oregon.  It wasn’t only to get a wonderful day of skiing at Mt. Hood with my fine old friend Jonathan Orpin.  It wasn’t only to stay with Jonathan, Maxine, and son Jake River at their beautiful Vermont Street house.   And it wasn’t just to get a dose of Portland culture, hang with the downtown dirtbags, and sample some of the great food from the hundreds of food carts parked around the city (outta- this-world food and teeming with life – it makes you feel like you’re in Kowloon).

All those were good.

But the reason for the trip was to meet with the 19 members of the Partners Group who own the Zingerman’s Community of Businesses in Ann Arbor, MI.  Zingerman’s is one of the great stories of today’s business world, a hopeful harbinger of the Next Economy.  The partners manage nearly 600 employees and the eight distinct businesses have combined annual revenues of $46 million.  They are all food-related (and educational) and they are all in Ann Arbor.

Over time the Zingermans (Paul Saginaw and Ari Weinzweig, the co-founders, and their partners) have steadfastly resisted the temptation to franchise their stellar brand.  Instead they have expanded at home, and they now consist of the following:  the flagship Deli where it all started in 1982, Zingerman’s Bakehouse (bread and pastries), Zingerman’s Creamery (cheese and gelato), Zingerman’s Roadhouse, Zingerman’s Mail Order, Zingerman’s Candy Manufactory, Zingerman’s Coffee, and ZingTrain, the education business which “shares the Zingerman experience with forward-looking organizations around the world.”

For the last 6 months I have been communicating by phone and e-mail with Ari.  He and a small group of partners have been designing a plan to transition Zingerman’s to an employee owned worker co-operative.  When the plan is implemented they will become one of the largest worker co-ops in the U.S.

The partners were gathering in Portland for a three-day offsite retreat, partly to discuss the co-op design.  Ari had asked each of them to read my book, Companies We Keep, and asked me if I would come to react to their governance and business transition plan.

I was thrilled to have the opportunity to meet and think with such an extraordinary collection of people so brimful of honest intelligence.

It was quite a day.  The dialogue was good.  Although I was the only outsider in the room I felt comfortable there.  It was relaxed but productive.  Funny and philosophical.  They work together with remarkable flow – tackling big issues with such passion and commitment to excellence (using first-rate meeting facilitation provided by Fran Alexander of Alexander Resources) that they are able to allow the great and the grungy and the elegant and the messy to all co-exist at once in the service of a greater good.

They’re not only competent and principled; they’re courageous too.  For several decades all policy decision-making has been by consensus – not an easy thing to do in a large dispersed network of businesses.  The two co-founders have veto power, but they have never used it yet.

And now they’re transitioning to a worker co-op.  That takes courage too, or (as in our case when we did it 25 years ago) pure naiveté!  And naïve they are not.

When I asked Ari and Paul if I could write about what they are doing (given that they are still in process and I didn’t know if it was public knowledge) Ari thought it would be fine and queried Paul who said, “Sounds just fine to me. That’s the power of putting the vision out there. It imposes accountability on us all to execute, preform and succeed.”

Now that’s the way to run a business, isn’t it?  Fearless and transparent.

They also have a publishing house, called Zingerman’s Press.  Ari has been writing consistently for at least the last decade.  Two of his most recent books are ZINGERMAN’S GUIDE TO GOOD LEADING, PART 1: A Lapsed Anarchist’s Approach to Building a Great Business and PART 2:  A Lapsed Anarchist’s Approach to Being a Better Leader.  He’s a good one, and these are thoughtful and engaging books that mix humor and wisdom as they introduce the reader to the methods and madness that led to Zingerman’s emergence as a powerful force in progressive business.

Paul reminded me that we had met once before, at a Business Alliance for Living Local Economies (BALLE) conference about five years ago.  I remember that I was immediately impressed when he was talking about principled business and said, “But principles aren’t really principles until they cost something.”

Like everyone else, apparently, I asked Ari where the name came from.  It’s a long story, and a good one, and he gave me the whole thing.  You can hear it from him, but I’ll tell you one good part.  After they had finally decided on the name Zingerman’s, says Ari, “one thing we still weren’t sure about was whether we should spell it the European way, with two ‘n’s or with one.  Paul called his grandfather to ask his opinion.  Didn’t take him but a second to decide:  ‘with one ‘n’, of course, so it’ll be easier for them to write the checks.’  Paul’s grandfather was a very wise man.”

And so are the folks at Zingerman’s, who represent long haul, next economy thinking at its best. We at SMCo appreciate this new association.

And we appreciate another one, too.

In December we hosted Blake Jones, CEO of Namaste Solar, – a 100-person worker co-op solar company in Boulder, CO – for several days of information exchange between our two companies.   Namaste is far younger than Zingerman’s, but equally inspiring.  Next post I’ll talk about Blake’s visit.

 

 

Good Year for Worker Co-ops

On the last day of 2012 our 25th year as a worker cooperative (and 37th in business) ended.  It was an extraordinary year – rich, full, profitable, demanding, restorative, and uplifting.

It was a year of many “first-evers”.  On November 1st we welcomed three new owners at SMCo – the most ever at one time.  When DonE Turnell, Marc Rosenbaum, and Aaron Beck became owners, it meant that 21 of our 30 full-time employees are now full owners.   DonE worked here for 20 years before taking the buy-in plunge, our longest journey-to-ownership ever.  And it goes back further – I can remember him as a 14 year old skate punk back in the early eighties. He hasn’t changed much.  After his first SMCo Board meeting, he said, “It was kind of like a road association meeting but with less stupid people.”  Less stupid people?  Hey DonE, what are you trying to say??

Read More about Good Year for Worker Co-ops