I grew up in Kununurra, on the edge of the Kimberley, in north-east Western Australia. In the 1960s and ’70s, my parents ran a number of small businesses and were very conscious of the stakeholders in the community — although this is not a word they would use. I was educated more by my mum and dad than by school. Mum would read British philosopher Bertrand Russell while we watched the thunderstorms roll in.
My parents were genuine about having a go and giving a fair go. They had an understanding that business and life are part of the same thing. Watching my parents operate had a big impact on my building and running a business.
I got a cadetship in surveyor mapping and computer science with (then) Australian Anglo American. Following graduation, I spent about 12 years as a software engineer, solving mining problems for Metech, which became acQuire. We founded acQuire in 1996 in Perth. At the start, it was Andy Schoemack, Colin Legg, Geoff Forbes and me, but eventually acQuire grew to have 31 employee owners.
We had discovered that geoscientific data collected by resource and mining companies was not well managed, yet was the foundation for every economic and safety decision these companies made. So we built an information management system for geoscience data. We were typical of a technical niche software company. We were never going to be Google, but acQuire grew to have more than 120 people in seven offices in six countries and our software was deployed in more than 50 countries.
I wanted to work in a company with a high level of personal responsibility — one of which was the sustenance of the system that supported us. Business operates in a system and that system’s health is important to the company. It took me time to recognise that the foundation architecture of organisations has a significant impact on how the company evolves and behaves.
Boom & bust
The foundation customers who started with us in the late ’90s are still acQuire customers today. We saw that companies tended to pay the market in a boom and reduce their workforce in a bust — and did the same to us as a supplier. One large company wanted us to reduce everything by 20 per cent; another time, they tried to stretch payment terms from 30 to 90 days. They would be demanding and destructive in a bust and forget how supportive we were of them in the past. They seemed to have no organisation memory and were missing a fundamental point — you are building and nurturing relationships over time.
I did not want to end up in the same situation as my customers. We survived on the sum of the intellectual property held by our people, therefore building a team that could collaborate for a long time was essential. Also, the succession of knowledge became one of the challenges for the team. A lot of people talk of innovating around product and services. We took our entrepreneurial craft and innovated around the organisation and stewardship. In 2006, we set up a small team that we called commercial R&D — as distinct from product R&D. This team helped in our understanding of how we were going to govern acQuire.
The craft of entrepreneurship is just running truckloads of experiments and being able to process the data. What dictates success is timing, team, funding and then the idea. There’s always luck and serendipity, but relentless experimentation and the discipline of listening
to the data is the thing.
Changing the model
In 2008, we started an employee ownership scheme for acQuire. To be a Total System Leader, you had to be in the company for at least three years and invest $25,000 or more. We had a proprietary limited structure that worked well for building our Willing Buyer, Willing Seller model. The idea was for me to sell out of the company to employees by the time I was 60. We won awards for our succession model in 2014.
We made lots of mistakes as we changed our governance approach. We decided to collapse our executive and board into one, a peer-to-peer team running the business, akin to executive directors. If we wanted external advice, we paid for it. Business is about building robust high-trust relationships. Everyone has a responsibility for the sustenance of the system and should be trained to look after it like a founder.
The most important thing a leader can do is be focused on culture. How do you build culture as a system? How do you ensure it persists across boundaries and lives beyond your tenure? This is all about working on the business.
In 2013, I stepped back to start ADAPT by Design, a platform to help entrepreneurs and company leaders build sustainable companies based on adaptive business principles — aspiring to fairness for all stakeholders. I sold out of acQuire (to Vela Software) in 2018 and this is now my life’s work.
We help companies build capabilities so that they can take the hits and bounce back. Based on our desire to build ADAPT by Design as a value-creation company, we’re providing the foundation capital through a debt rather than an equity model (the debt funding provided by Andy and I). The intent is to then provide distributions to the value-creating network (employees, customers and suppliers). A key benefit of this is that we don’t need succession of ownership and can sustain for a long time without ownership churn or exit mindset. We want to work on our purpose for decades and this provides the infrastructure.
We help founders build leadership, culture and team frameworks that enable succession of the total system. By doing this, the founder can hand over knowing that the philosophy and knowledge have [also] been handed over. We help them mitigate this risk of this transition, and build a more resilient organisation in the process.
Small to medium enterprises (SMEs) have a different set of characteristics that can be consciously harnessed. A lot of business education tends to group publicly listed corporates, not-for-profits (NFPs) and SMEs into the one category. However, they are distinctly different types of organisations, which need appropriate governance models. Being big was a requirement in the 1970s; today it’s a distinct disadvantage.
SMEs have an incredible opportunity to harness the characteristics of their business and build for resilience. To do this, we need governance models that recognise the SME as a system. Systems thinking is holistic; it attempts to derive understanding of parts from the behaviour and properties of the whole, rather than derive the behaviour and properties of whole from those of their parts. Twenty-first-century SMEs have the right characteristics to use systems thinking to underpin their governance. We can create companies that build rather than extract value.
We need to innovate different stewardship models for corporations, NFPs, co-ops and SMEs. Their architecture is completely different.