Gerry Kraines The reason they titled it not your usual Requisite Organization is because the way they have organized, the way they lead is not classic requisite organization, but every one of their principles is based on requisite organization principles.

Bruce Ballangee  So with that in mind, thank you, Jerry, and thank you all for having us here. It's a real privilege. Am I blocking too much of this? I'll stand over here. It's very much a privilege for us to be here. And Jerry gave you a pretty good idea that we kind of backed into being here and being part of Ro and understanding Ro. Let me give you some context before even this. So Paryaveda Solutions, which is Sanskrit for reaching for complete knowledge, which you know is an asymptotic slope and you never get. So it was in the search for how do we develop people better, faster, cheaper, more successfully, all those good things that led us into finding Elliot Jackson and that led us to Jerry Kranus and then he led us to Geo. So thank you so much. And that little chain of causality if you, you know, Pariveda is an It consulting company and you're going like, well, that doesn't tell me a whole lot. You're right. It's a 600 billion dollar global industry. What do we do? What we try to primarily sell is to sell custom application development. We also do a fair amount of what we like to call technology strategy that can be pure management strategy, typically for a technology company. And we do a lot of we call it change management type things within side the It organization, et cetera, et cetera. So it's fairly eclectic. What we don't do very consciously is we rarely ever do anything with enterprise resource planning. And I'll talk about that a little bit more later. I don't know why holding the clicker closer makes the mic better, but let me move the mic up. I'm not the loudest talker. Okay. Is that better? A little better. Okay. And if it's not good enough, you just raise your hand and I'll feel like I'm shouting for a little bit and then I'll dive back down and just raise your hand again and it'll work out. Now why would we be like that? Our mission, our whole purpose is to develop talent to its fullest potential. And largely that's our employees and ourselves. But it's also our clients and the users of our systems who happen to be all our clients and the users of our systems happen to be at the companies that pay everybody's bill, all our bills in those cases. So that is why we're doing what we're doing. That's kind of the context a little bit and then let me just go ahead and get into it. So with this mission of developing our people to the fullest potential, it requires certain things. So certain things become requisite. Okay? So this could be a marketing slide for any great company is going to ought to have a slide and talk about sustainability and transparency and talk about talent development, because those are all really good things. But if your mission is to develop talent, then these other two things become requisite. For example, sustainability. If you're going to very carefully select the best and brightest and then pay, of course, the high going lease rates that it takes to lease someone's employment for a year, if you will, you think about it as their asset, their hours, and you're leasing it for two weeks at a time and a paycheck. But let's just say for a year. And your intention is that you want to lease them because you're going to develop them and you really to get your full benefit, that you need them in your company for 30, 40, 50 years from dawn last night. 50 years, you need them in your company. Then you better be thinking about being sustainable or you're going to leave some serious ROI on the table. It's that simple, right? There's goodness in sustainability, but it's really critical in this model. Transparency is somewhat similar. When you're hiring the very best and finest people out there, you are going to have to deal with conspiracy theories. I mean, really bright people come up with all sorts of amazing, incredible ways that they may be suffering or not understanding something or whatever. So it behooves one to be as absolutely transparent as you possibly can be. Just as, for example, this presentation. There is only one slide in here that hasn't been seen by almost everybody in the company. There are only a few of Elliot Jack's Curve slides that have not been seen by everybody, but only seen by the top 101 hundred people in our company, versus 300 and 380, probably more like 150. Probably about half the people have seen that. So this is an employee internal presentation for the most part, except for the very last slide, and Carrie is going to do that one. So that's an example of transparency. And we have many, many other examples. We just live and breathe these know, it's kind of like, well, why this talent thing that sounds really expensive. We have trouble, I'm sure, as consultants and practitioners and as CEOs, it's even hard to justify to investors and to other people at times, why this emphasis on talent that's so expensive? You're paying extra money for extra hard to manage people that create all sorts of challenges for you. So in our industry, It services, It consulting is essentially an industry that believes best, standard, right, practice, whatever word you want to use. That the way that you succeed in our industry is by thinking about the world as being demand constrained. There is only so much demand for services that's going to happen in any given year that occurs on a transactional basis, usually in the form of a request for proposal. There is then a Dutch auction in which it is a winner take all, typically situation winners and losers, a Dutch auction to find the lowest cost provider that will meet the minimum expectations for quality and functionality, et cetera. I'm being a little bit cynical about it, but not hugely so, right? That's a lot of the reality. That's considered best right practice by the customers and by the industry. So if it's demand constrained world and you're trying to work within that, you're trying to operate as an entity within those constraints, that constraint, then you've got to relax some other constraint. So that in our industry, the best in the right practice is just in time hiring. I can always go find the appropriate level of labor with the appropriate technical skills to meet the needs of my client, my customer, and in fact, they're going to ask for resumes. And it's just a perfect world, and we're all in this kind of joint with our head buried in the sand method and way of thinking about this, and that's how we're going to solve problems. So if we get into trouble on the demand side, easy peasy, we just let some of that supply go heck fire. In two years those skills will be out of date and we need to hire new skills anyway. So this is just very convenient. And that is considered the scenic in our industry today, in the last couple of decades at least about how you should run your business. So when we were designing pari veda and setting up for the first time, it's like we want to look at the world differently. We assume that the world is supply constraint. It's not demand constraint, it's supply constraint. Here's two aspects of it. One is people don't see the problems well enough to know that they have a problem to solve. People don't know how to solve the problem sufficiently enough to articulate it in the form of a request for services. So it's like a couple of different angles on it without even getting into all the things about risk of implementation. So what we lack is really supply. We lack in the Ro context, four spies, sixes, seven, eight, enough of those sorts of folk people of that kind of capability to actually go out and solve these problems. So when you're buying It services in your company, for example, if you would, and you might be a level five person, level six person, but are there enough of those level people inside your organization so that you can actually affect this change a lot of times? No. So the world, we believe is supply and strength. Which takes us back to of course why our mission is about developing talent. Once you decide that, many things follow and we're not going to cover all those things. But that is a massive constraint on how you design your enterprise. We're going to talk about it in the context of talent development though, and how we think about it in kind of a backward way of getting into Ro like I start about. So if you're going to try to find these people lots of luck in the just in time world, it is merely by chance that in most cases people are able to develop these kinds of capabilities. So it's something less than 1% of our industry's workforce is capable of doing this kind of work for a variety of reasons. It just doesn't happen by chance very often. Okay? Now in that world, that's plenty. 1% is plenty because it's all about leverage. It's all about leveraging a lot of people. That's because the work isn't that complex. The more complex the work is, the smaller the team needs to be, the more productivity output throughput however you want to think about it. Problem solving ability, capacity that each team member needs to have because you can't tackle a really complex problem with a very large team because that is going to guarantee failure. Because you've added on too much risk with the human complexity of interactions of humans, et cetera, et cetera. So again, another reason why very large vendors and the best and brightest in our industry, the names, they would tend to stray away from this. There's not enough work there, they think. So how do you get more of this 1%? How do you turn it into 5%, 10%, 20%, 30% of your workforce? At some point the mass goes critical. What you want to have are solution architects and enterprise architects. Okay? So think about in the whole enterprise, if you did the entire value chain, you could say there were three domains. And this is kind of our view of the world. We say that there's a business architecture and there's other business architects for that. There are people that understand people process structure. And you think about those, each of those is its own discipline. So it's very broad, it's very deep. There are technology architects and they understand the applications, they understand the framework sets of both those applications and the infrastructure on which it all runs. There is a third area of architecture, the product. So that could be a good or service economics definition of product. And that involves understanding customers, suppliers, competitors, and all the interactions, et cetera, et cetera, at the intersection of any two of those architects architectural domains. So an architect that can span any two, we call that a solution architect. That is kind of the minimum threshold to be a sustainable, extremely effective It executive in the context of an It services company, able to craft mean shape solutions and then craft and deliver them. That's a minimum. When you put all three domains together, then you get an enterprise architect. So that's very special. Fernando Flores, who I'm sure many of you read some of his works, he would call that sort of person an entrepreneur in the entrepreneur sense of a Henry Ford or a cyrus McCormick. I don't know how many of you have heard about the McCormick reaper, but the mechanical reaper, that's another example. Thomas Alvis Edison is a phenomenal example. We think about him inventing the light bulb and all the time he spent inventing the light bulb. But while he was inventing the light bulb, he was creating and inventing the entire value chain for electricity delivery. Right. Consolidated edison this. Consolidated edison that. All that was Edison. I mean, here's a guy that invented a technology and an entire industry to manage it. Right. Just entrepreneur uber. Right. The uber entrepreneur. Kind of Nietzsche esque? Almost. And then of go, you can go on and on, and then you can argue about people that are still alive today. Bill Gates is probably in my mind, bill Gates is an outstanding example of an enterprise architect. Okay? So why wouldn't you want as many of those people as you could possibly have? So in a regular corporation, that could be kind of hard. It's like, well, we don't need 17 CEOs or we don't need 17 GMs for five divisions. I'd be willing to take that problem on myself. But when you're a professional services organization, you have an ability to basically support those folks in that capacity virtually infinitely, if you scale correctly and you think about it correctly and earn the rewards of that. Kerry will cover that more after I pass it off to him. All right, I'll let him talk about that. So these enterprise architects are essentially working in what we like to call white space so that you can think about it as empty space. Right. Blank paper. You can think about that as being between the lines, which is also, of course, white space. Right. It's blank, too. Sometimes people don't see between the lines as being blank space, but it is. So it's this ability to navigate the space. So there's a lot of things going on in this graphic that are worth mentioning. So over on the left hand side is basically our hierarchy of roles by title. At the major level, you come in as a consultant, ideally right out of college, and someday you become a vice president. So become an executive in say, ten to twelve years. That's kind of that. On the other side is this idea about how you're maturing in your mastery of becoming an enterprise architect. And the entry point to be an executive at our company is that you have to be a solution architect. But you start out as a novice, and then you become competent and then proficient. And of course, you can't just aggregate it as one single skill or capability. I'll break it down on a later slide, and then the problem to be addressed is to close this gap, the business of It gap. For 20 years, CIOs and CEOs have been surveyed about what are the top issues facing you. And for the past 20 years, the number one or number two issue, depending on the year, has always been trying to align the business with It. Now, frankly, if you ask anybody but the CEO in a company, who else might ever feel like they're aligned? Because Booz Allen Hamilton's done that kind of survey. The CFO, the CFO thinks most of the time that they're aligned with the CEO. Does the controller think that? Nay. Does the CMO think that? Nay? No. So this is a general problem, right? That's the big problem that's really driving everything is that things are discombobulated. Hey, they're not using Ro. I mean, just the start, right? Not everybody's using that. So if you think about there's the business on one side and there's it on the other. How I do get that wrong? The business on one side and it on the other. You can tell I don't usually do this as a professional Ted level presentation on this business side. At the highest level, it's a function of what business are we in? What is going to be our strategy? Whether it's three years, five years, ten years, 100, right. What's technology going to be in 100 years? So that also gets pretty hairy. Well, you can't have a college kid do that right out of school. You wouldn't be crazy enough to do it, and no client's going to pay you even what you charge for a college student per hour to even get close to that. But wait, when you're doing custom application development and there's some other activities like this, we can put a young person on a project that millennial that several of you have mentioned, and we can give them a business It alignment problem. It's called here's a user Story. As a manager of RND, I need a report that shows me the effectiveness of my research in Area X. Hey, it's a business requirement. That's the business college student. Here you are. You've got your employee badge. It's your first job. Here is a laptop computer. It has an integrated development environment on it, an IDE. You can actually write a program with that and tie it in. Hey, that's that whole technology stack just delivered right here at the tip, right? So you have a tip of a business requirement and the tip of an It requirement. And in between is white space. It's nicely scoped, correctly done. It's beautifully scoped. It's white space, which they can learn to navigate. Now, here's the added beauty. It's also in a white box. They're working in a white box because it's custom application development. They're exposed to everything. It's all right there. It's nicely scoped, but it's all right there. If they were putting in a package like, say, an Enterprise Resource Planning and ERP package, it would be a black box. It's like, hey, set this switch and X comes out. Set this switch and this switch and Z 75 comes out. Well, that's intellectually stimulating for a little bit. But it's not the same as working with a white box. So here you are right out of school and you're solving a business it alignment problem using a white box. Hey, think about that. You learn something, you move on to the next thing as you progress up through this series of thought, this could be a set of concentric rings of systems. And you could think about the technology systems as being the hardest. Not hard like difficult, but hardest. Most tightly defined systems that you have. And then above that are the processes, right? The processes are fairly well are well defined systems. I mean, they're very human controlled and very human, very human design. Both of those. Now actually in truth and in fact, those are really complex systems. But somebody else figured it out and they gave you the tip, right? They gave you the tip, they gave you the integrated development environment. There might be 50 years and tens of millions of lines of code behind that, but you don't have to worry about that. It simplifies you. You just have this simple little interface like you're a bee going to a flower to pollinate it, right? You're going to get some nectar and you're going to pick up pollen. It's just that simple. So you survive all that. You can write nice programs. Two, three years later, you're running a little team. Your team is encountering a problem with that user story. It said the R and D manager needs that report. Well, if you're a creative problem solver, you might figure out that, Mrs. Client, if you let us change the process, we wouldn't need to do that report at all. Or we could do this report that we already have. You could use the report you already have, or we could do the report in half the time, or we could do the report that was five times more accurate. If we change the process, you keep moving up through the stack and then it's like you get to the point where, well, if we relax the constraint on the structure, which is where Ro starts to kick in, right? If we relax the constraint on the structure, we could change the process and then we could change the program and you could have it, yada, yada, yada, and so on and so forth, people in terms of their roles, responsibilities, and all that kind of good stuff, and then ultimately the strategy. So as one's moving through one's career, ultimately you have learned using the same practices over and over and over again, expanding the scope, adding new tools, but essentially the same fundamental practices of, let's just say, clever thinking to master the world and be a solution architect or enterprise architect. So that's kind know that's the idea. So mastery comes from building all that up. So, all right, that sounds very ideal. Bruce, how do you and Kerry possibly think about you could possibly pull that off in a practical way? Well, the answer is that we have what we call our expectations framework. It was actually the first internal deliverable we ever did, following shortly, the first external deliverable we ever did. So we had a little bit of money, a little bit of cash, we didn't have to worry about how we were going to pay for food on the table the next week. And we're in our third version of the expectations framework. It's morphed over the time by adding, I'd say, making things increasingly explicit, but in fundament, it hasn't changed. And it is essentially an Ro oriented or grounded in Ro device in the absence of having any knowledge of Ro, except until this version, version three. So we've set out a cohort scale that says we pay one salary at this level regardless, regardless of your race, regardless of your sexual preferences, regardless of your age, if you're at this level, and regardless of where you are, with some exceptions for very expensive cities, which is all published on our website internally for all our employees to see. We pay the same thing. If you want to get a raise next year, you might get lucky with the cost of living increase. We have a good year. Inflation went up, our competitors are raising. You might get lucky, might get a percent or two. We're probably headed back to 3% someday, but not anytime soon, where that's happening all the time. But if you want that 10% pop to 20% pop, what you'll need to do is get promoted. What does it take for me to do that? Hey, it's totally transparent. We lay out all these expectations and say at each level, what do you have to do? So if I'm a consultant, a second year consultant, typically a C two, and I want to get promoted to associate to get that 20% increase in pay, which says, hey, I can be a powerful solo performer and I can manage a small team of one or two people. If you want to think about that as a team, but let's just say part of a team, be a team lead, however you want to think about that, then you are going to have to meet these expectations. And we set those up across five, we call them roles. Ro would probably choose different terms, but then we say, we want to evaluate you in your maturity as a professional. We want to evaluate you in your maturity as an architect. Think back to the previous slides. We want to evaluate you in your maturity as a leader, as a player, coach, and as an advisor, those five things. And we have five maturity models. So basically five states, where essentially when you make a state change from one level of maturity to another, it's palpable, it's noticeable. So if you go to, let's say, leader, it's very straightforward leads, self, okay? So until you make that first leap from C two to a one where you become an associate and you might have people. We want you to demonstrate that you can lead yourself. Hey, that ain't ever changing, Bruce. Carrie, we need to show every year that we can lead ourselves, too. It's a maturity model. Each maturity level builds on the other one, right? It inherits the properties of the earlier level. It's classic conformant to nature maturity, maturity model at the next level. So now I'm leading others to be a manager, which is that M two. So M one is the first year you're a manager. And we promote people. Remember, we're trying to get as many people promoted as quickly as possible to their highest level of capability based on their potential. So we take chances on promoting people to manager. I like to say, which is again forbidden inside our company for me to say things like this, but I could say it to you. It's like, hey, what does manager level one mean? Or principal level one, the P one. It means we think you're ready to be a manager. And the only way we're really going to know and you're really going to learn anymore is we promote you there and then we'll find out. And sometimes it takes a little bit longer than a year for a manager to make it to manager level two. But when you're a manager level two, we're like, we know because we're assessing you that you can lead a team. Hey, it doesn't matter, Carrie. Bruce hey, we have to be able to lead teams, too. You can do all that strategy stuff and all the other cool stuff and figure out financials and make all these, but you better be able to lead yourself and lead your team and so on and so forth. So we've got five models like this. They all converge on solution architect, enterprise architect. If you're going to be Henry Ford or Cyrus McCormick or Thomas Alvarez Edison, when you say entrepreneur or you say enterprise architect, it's not just the technical thing, right? Those guys were capable of enabling. Enabling in the case of Alvis Edison, in the entire value chain. They were clearly thinking at a know, multiple systems level in terms of our thinking. They were leading leaders. They were probably coaching coaches and coaching old coaches and new coaches. They were probably doing more than that. And they were counselors. They were probably counselors to other people. They were more than just partners or trusted advisors. So that's kind of the unbundling, right? The unbundling. And of course, people progress on these things at different paces depending on their roles and responsibilities, right? So the power of ro for us is that we use it. So it came late to us. It's like, oh, well, now we have a tool to really see. When we say we expect an M one who at pace, at expectation is going to be a manager four years out of college, they'll be a manager, and they might be running a half million dollar, million dollar project as a manager that they're able to meet all that stuff. Okay, so how does that fit in with the complexity model? Is that reasonable? So is that level appropriately sized from an Ro perspective becomes very important because if you don't have it sized right, then you're going to break the development model, the development path, and or you're not going to get as many people as through as quickly as possible. You're not going to have the greatest throughput. All right, sorry. Hit that wrong. So you're thinking, well, this is pretty different. These guys sound kind of strange, a little bit off the wall. And yeah, we've been told for ten years that we could not be as successful as we are in terms of growing and all that, and we've defeated them all the time. But thinking that that's going to happen in the future is just a matter of hubris. You got to avoid hubris at all costs. So that aside, so what are some of the things that happen? Well, in a traditional company? So look at, you can think Jack Welch made famous at GE for this and many other companies, right? This is best standard, right. Practice is that based on employees contribution and potential, you're going to pay them so much. And what you're really trying to do is you're trying to hire the top 50%. Of course you're trying to hire better than the top 50%, but you're pretty much setting your bar where you're going to get the top half. That's going to be pretty darn good. Now, for the 50th percentile to the 80th percentile, maybe the Nintieth as high as the Nintieth percentile, you're saying, those aren't my very best people, but they're really solid. I love them. I want to keep them around, and I'm going to give them small raises and bonuses so that they stay right. Just a little taste, a little taste for the really exceptional people. I'm going to give them big raises and bonuses, particularly in the financial services industry. Classic for that or in sales roles. Really, really classic. Hey, there's no empirical evidence out of 23 studies that says that paying commissions does anything to improve sales. And I think seven of the plus 20 studies actually showed it lowered sales. But that's okay. No one believes those 23 studies. So go figure, right? So that's kind of the way it works. And then for the next 30% so from the 30th percentile I'm sorry, the 20th percentile to the 50th percentile, hey, no pay, no bonuses, better luck next year. It's not terrible if you go, but it's a little bit painful. We got to go hire somebody else. The bottom ten or 20% out the door. That's really considered really great practice. And I mean, later if you want to disagree, please say, but that's kind of the way. We think about most people think in the world and certainly in our industry, that's pretty much the way it's geared. So we look at it very differently. We're trying to hire the top 15 or 20%. Do we always get it right? Absolutely not. No, absolutely not. But I think we and Carrie would agree. So we're pretty good at getting the top 2025. Occasionally we'll get below the top 25%. Usually the more senior, the higher, the more likely it is that we messed up. In our assessment. When you're talking about a young person coming off well, still on campus, but trying to get that first job, it is hard for them to fake it right. And Faking is not really right. It is hard to be deceived or confused. Fred slides right, confused about what level they're at using pretty reasonable interview techniques. So it gets harder, but generally we're able to do that. So what we want to do with the top 20%, which we're trying to target, is we want all of them to get promoted as fast as possible. We want to pay them at those promoted rates, what's appropriate. We know that they're all not going to stay. Our turnover this year is about 10%. It's never been 20, which is considered in our industry really good. And 30, it's over 30. People get worried, but ten in our model is, boy, that's high. To me, I wish it was like five, right? You think about the investment that we're making, so that's what we're trying to do. We want to have those people promote faster and then yeah, there won't be promotions for the next group now. Not ever. No, not ever. But promotions delay. So you don't get promoted in a year. You might get promoted in 18 months, probably get promoted in 24. So it's generally the case. Generally after 24 months, people typically leave. And then of course, sometimes we counsel people out and say, hey, you'll be more than 24 months, what do you want to do? And we'll try to find them another job, et cetera, et cetera. Sometimes if they're a more senior person, we'll actually subcontract them out. I mean, we'll actually work with our client and say, hey, go work with Joe, or yeah, do it directly, or if you need us to bill through you. And it works very well. So we've counseled out people that have continued to work for us as subcontractors for two or three years after they've gone. Anyway, that's kind of that bit. So here's my last slide before I turn it over. So what does that let us do, right? Ultimately? So here's another view of looking at what has it let us do to have these very talented people doing things in relatively small teams, these exceptional people? It lets us do exceptional work. So if you thought about the whole project universe, the whole possible universe of projects, it could range from forget it, there's no reason to even do a project. It's done. I'm trying to set, like, what's the infinitely minimal bar? That's zero because we only can work in real numbers here. And then you can get to the point where, oh, it's outside the universe. At least with today's understanding of science, right? We have to stop there. We can speculate about what's outside our universe, but for right now, we can reasonably call that upper limit. And again, I'd love to talk about that. I could use more enlightenment. But as you move back, as you move back along the impossible, when does something become feasible? So boiling the oceans of the Earth off, no matter what you think about climate change, that's really, really hard and certainly hard to do intentionally short of 100 million to a billion years from now when our sun expands and cooks off the Earth. All right, but what might be possible? Einstein's probably wrong, right? All models are wrong, some are useful. So Einstein's model is wrong. We don't know quite exactly how wrong, but it's darn pretty darn useful. But it's conceivable that we could do faster than light travel. All right, so this is all out of the scope of stuff that Paravedica could do or any It services company, but at some point you get to, hey, it just can't be done. It's too hard, it's too risky. It would cost too much money. We don't know how to do it. So we're not even going to put an RFP out there. Well, now it's into the realm of stuff that you can do with solution architects, leading proto solution architects and enterprise architects, leading proto solution architects and proto solution architects. Now things are possible. So that's the edge, that's the edge of aligning business and technology. That's the cool edge, which is very attractive to the kinds of people that you want to hire people actually call a consultant, at least talk to a consultant about that. As you move back down into, hey, we need to get someone else to do it's, doable you get into the request for proposal land RFP world, hey, we need this done. We don't have the capacity, we don't want to do it, whatever. We're just going to give it to somebody else. Let's put out an RFP. That's the bread and butter of our competitors. So we overlap with our competitors, but we tend to be edged out there a bit. And we could give examples of that kind of stuff, but I don't think you guys need or care, but if you do, we can always talk about that. Anything that's kind of above do it yourself line. So that is what we do. And if you think about it, at the edge of technology, that's where there's change, that's where there's new things happening. That's where the stuff that ages everything else. What's new today or is going to become possible next year in our business and in many of your businesses, no matter what it is, five years, ten years from now, depending on technology cycles, whatever the technology is, that's going to be mundane and it may even be a pure commodity. So one of our sustainability facets, by doing the things that we do, we have to be more sustainable. But we also are more sustainable because we're working further out. We have less risk of commoditization of our value that we deliver, the services that we deliver. So with that, let me turn it over to Kerry.

Kerry Stover  Thank you, Bruce.

Speaker D So then when we let's see if I can get the clickers right. What this provides us is what we consider a perpetual engine for our business opportunities. Technology continues to move and make changes. We heard it about this morning with the RAA and the impact of Google driverless cars on the road, and what you do when you don't need help anymore, or you're calling Google for help. Maybe we think about the tram system. We think about manufacturing or mining for gold. Every one of those has the opportunity for technology to impact it over time. And as a consulting organization, professional services, that is our opportunity. We have the opportunity if you have a smartphone in your pocket right now. In 1975, when I graduated from high school, that smartphone was the equivalent to a $5 million mainframe computer. It now costs $400 to purchase or manufacture. 1983 ish IBM PC came on board. The industry for personal computers is barely 30 years old. In the evolution of time, the Internet then standardized a number of things made more possible. But it's not just that. It's not just the technology, but it's also the manufacturing of it. Technology is more than just information. The manufacturing of the devices miniaturization the ability to create wafers that are thinner and thinner, to put more stacks upon them. All that continues over time. And if we're working out at that edge of what is doable, it continues to move every year, every year. In 2005, nine years ago, the thought of a mobile technology was very complex. iPhones introduced. The thought of mobile technology is now standard in every company. At this point in time, you're considering, what do you do with mobility? You wouldn't have done that a decade ago. It would have been a rare commodity. We face that opportunity. So what do we need to do? One, as Bruce said, when we're at the It is doable, it's going to be something that people will pay value for. Because if you do it first, it is your edge is the place where you can create competitive advantage before others seek to do it. Well, if it's doable, it means that it certainly hasn't been done that much. So the patterns aren't really existing in work that's done before. So you need people who are able to go in and solve in the white space to stay at that high value space when you get down to the point where get someone else to do it, yeah, we often do that, but we do it because it's relationship based. We do it because it might be a training ground for some of the things that a proto architect might need. But for the most part, what we want to be is out on that leading edge. Well, why do we do that? Well, when technology advances to make what was infeasible now feasible, our bright people are challenged to figure that out. Think about the level threes, fours, fives that you have, the sixes. They want to solve these problems, so they see that technology as an opportunity that change, as something where they can create thought leadership. And then they take it to their clients. Well, they take it to their clients, to their clients, like, you can do what's doable now. The infeasible is now feasible. Great. Let's go figure that out. Well, it might take some well, I don't want to write a $10 million check for something that you're saying is not used to be unfeasible. Now may be feasible. Let's do a small team. Let's do a prototype. Let's sort of work in the white space to figure it out together. Our senior Fins are growing by figuring out that technology, figuring out the strategy for it, and then gradually, as that goes through the process, it becomes less, as Bruce said, the tip of I've given you enough of what the requirement is, and, you know, enough about the business opportunity that we can grow. Our junior people, we call them Fins, our logos, dolphins. Sorry for leaving that in there from the internal slide. Junior fins. We grow them because that is that opportunity. Once they do that, we created value our trust in our relationships. We work as a relationship based company. 85 plus percent of our work every year comes repeat and referral business. We strengthen the trust, which then emboldens us to go look for more. Because if we've done it once, it teaches those younger to move up the stack and learn how to do that. It teaches those who are more senior. The only way I maintain my relationship is to continue to do that. If I stop providing thought leadership, eventually my client will not look for me for the it is doable anymore. And somewhere they're going to start getting a taste of it, and they're going to want to do that with someone else. So I can't rest on what I've sold you year after year. I have to continue to put myself out there and find that thought leadership. We consider that the perpetual challenge, always having to learn more. And when we did a brand distinction project ago, probably about four months ago, we have our core values integrity, professional. We have them. But when we got into who we are, we said, you know what? It's really not our core values. And there's a theory going around right now. It says if your core values that you list on your website can be repeated on your competitors website and on your competitors competitors website, they're really just table stakes of playing in the game. And we have integrity. What consulting firm says they don't have integrity? Right. Raise your hand. No, you don't do that. What did we find? Learning. Learning is the thing that we seek in people we seek to hire that they want to continue to learn, which drives this perpetual engine. So how does this relate then to the roles? Well, when we go on campus and look for a hire, we think when we go through the process, our screening process will yield a 20 some year old level three candidate. Someone who has proven to master the process of getting through college while working through multiple different social organizations, while offering, maybe working on the side. Their life is complex enough that they have shown that they're able to do that, and they have the behavior skills to show that they can also grow and coach others. That says, well, if we hire them, they are working above level the day we hire them, sorry, below level. Because the entry level work of writing code, and even if it's navigating white space, is still not thinking very far into the future. It's not until they get up to what we call principal level one that that level three is actually working to their capability at that time. And we have to do that by forcing their development. We can't just leave it to chance. Now they've caught up and they're on track to make VP in somewhere in the 1520 year range. Well, let's take another one. We don't know if we had a level three or maybe it's a high level three. If that's the case, and we do the accelerated development, we actually catch them. They don't really work at level till they make VP, and they've done that now in a shorter time frame. And oh my gosh, what happens if we found a level four following the same pattern? We make them a VP. The start of the entry of the executive team, the executives ranks, they don't even catch up till they're managing other VPs many years later. They're always working below level. We are always constantly challenged for them. We work through the process with the levels. We've aligned it. Jerry helped us with this chart many years ago, says, let me try and transpose what you've done into the world as I see it. So we sat down and tried to organize how do we do kind of mentoring processes, et cetera. And we realized we offer our VPs at the time. This is five years ago or more. We didn't offer them enough challenges. As a smaller organization, we had all the focus at the lower levels. Well, what are we creating? That enterprise architect or even a solution architect who's proven their ability to take thought leadership to clients and work in that space of it is doable and grow younger. People beneath them is essentially an economic unit, their own business unit. They can drive their own value worth their being. They can keep ten people working at clients, growing them, developing to be the next vice president. We create our own business unit every time we create a vice president. Well, if we organize them all together, everybody's got their clients. You need somebody to kind of manage the vice presidents, but those might be more geography related. Well, what happens when somebody's really a thought leader in an area, something like mobility? Well, let's let them do this and let's give them room to grow. What if somebody's really great about taking on large clients and doing a lot of work at that, and they could have other vice presidents working for them? That's another growth area. So we have learned that our growth opportunities didn't stop as you got to vice president. They actually just got more personalized to where you have proven your capabilities. What that offers us then is thinking about the strategic, the value that we create over time in the marketplace is the sum of what our vice presidents are able to do. Our younger vice presidents are out there working in the two to five year, five year space of thinking about things. Our more senior vice presidents then are adding value to them by thinking out beyond their viewpoint to help navigate those five years with the thought of what's past that from their ability to be a level five or level six or level seven, one stratum ahead of where the vice president is. And at each level we expect that to be offered back to the level below in terms of thinking ahead for that to create the value for us over time. Two slides left and then we'll move to questions I asked Jerry. So we're an It consulting company. We're not your normal Ro organization, so why would you want to hear about us, right? What is it that would matter to you? Well, we have our own issues. We have our own constraints in some ways, okay? What people find as their source of self value defines whether they'll fit. We can't do this with everybody. Not only do we need the level of thinking, but we need emotionally, what do they hold on to? A specialist who derives their value from being the absolute best at X. We need you to drop X and learn Y. When Y is now the new technology. We need to see patterns in that so we can't hire people who have an emotional attachment to what they know. We find that, as Bruce said, the more experience you bring to us, the less likely we have our chance for success. Because you get framed by the way you view work that places you've done before as one vice president when he joined us, said when I came here, I realized you said it was different. It's sort of like everything I learned ever before. To be a consultant, I have to turn upside down because we're focused on developing people first, less so about what happens with the client other than creating great value. Oftentimes our clients are difficult to choose. They take value in proven capability let me see your resume. Versus working with bright minds who can solve problems. If a client values the bright mind and wants to work in white space, we're the firm. If a client is making a defensive decision where they have to show their CEO they chose the best firm, you don't buy that proven white space capability and say, well, I know these guys can do it. You want to see the resumes so we can't work for everybody. We also have to teach our people a balance. You're growing yourself. But the second key distinction, core value that we have that we don't articulate on our website is that you coach others. So you need to give back. It's not just about what you get for self, but how much do you give back to the company. So there is that balance that we have to have, and someone who is only in it for themselves is not a fit for us. Someone who also doesn't grow themselves but wants to keep giving to the company. We struggle with in having that. It's a nice problem, but it is something we struggle with. And finally, being a relationship based company, we want to be able to grow relationships over time, yet we do want to serve the company as a whole. That self versus tribe well, that also manifests itself in a local versus global conflict. These are tensions. These are things that we must balance as we grow our people. How do we know we're successful? We're ten years old. We have 100 year plan. We're 10% of the way there. Most people say, you ever start a project and you ever show a red line, the project's in red and you're 10% the way through. It probably a big mistake, but most projects 10% the way through, they're mostly green. On your stoplight indicator. They might have a little yellow in some places, but they would do that. We've got a long way to go. It's going to take us from our 100 year. Aspiration for people who are going to work here for 40 years, who have learned from listening to Bruce, from hearing my thoughts, they're learning essentially at the feet of the founders. It's a common proven business problem that folks who work at the feet of the founders are pretty good about carrying on the core values of the company. Carrying on the thoughts of the company. The DNA is pretty well established. It's only proven when the founders are gone. And those who come to work now under the direction of the people who are at the feet of the founders. The founding generation is no longer there. Did the people in that second generation really get it to pass it along to that third generation? Did they really get it? So we're not going to know the answer for a number of years, bruce says this word, this is being recorded. I'm going to get in trouble for saying it, but in many ways, this is what you might call an experiment. Will it work? We believe so. We've got a green light on our things. We also know they're in the Mervy yellow places. But we believe that we're setting up something that is sustainable through our transparency, focused on talent development. So thank you for that, Jerry. I'll turn it back over to you. At this point.

Gerry Kraines  It's not only their mid career hires who feel that their world is turned upside down. The first six months I began working with these guys, I was totally disoriented. It just the principles were the same, but the way in which they executed and implemented those principles were upside down. And it took me about a year to really understand their drivers. The way in which they, as a professional services firm, could actually have a ten person level five Sbu. And that's why they could grow infinitely until you understand that, the rest of it is just almost impossible to understand. So let's open up Q and A. Jerry. Thanks. Jason.

Speaker E I'd be interested in your experience at the intake funnel. Bruce in. Kerry, it seems to me that the It population coming out of universities doesn't have as many mode six and seven people as your model says it needs. And if you can tell me I'm wrong about that, I can see that this will work. But my guess is you're going to have trouble with the intake end of that.

Bruce Ballangee So the short answer is yes. Intake is always a problem, but it is least constrained at the entry level. We actually have more bites at the apple at that level. So if you thought about and I'll give you kind of the glass half empty on both sides of the two most obvious categories right there's. The mis major coming out of the business school probably has a strong preference to be a generalist good, but has been coached and instructed that to learn programming as a pedestrian level one type activity. And you don't need to do that. You'll be fully capable of leading a $10 million or $60 million ERP implementation without understanding the engineering. So you can design a Boeing Seven Seven Seven, but you don't need to know anything about aerodynamics. It makes it a bit tough.

Speaker F Right.

Bruce Ballangee But we find candidates who many who are like, okay, well, I'm going to go get the programming anyway, or, I did enough in high school. And it's like, okay, that's good, that's enough. We need a touch on the computer science side, there's a much stronger tendency to hold to the preference of the specialist pole. So in an engineering world I want to work on airplanes and I'm willing to spend 30 years working on the landing gear, assembly and maintenance of the Boeing Seven Seven Seven and it's going to completely satisfy me. Well that's not a solution architect either, but in between. But as far as, like the sheer if you just thought about from the brain power bit, just the sheer computational power and the fact that they are effective agents in society as human beings at their peer group right. With those table stakes and you put them in the right environment, you can do amazing things and people can develop amazingly. For example, I'll give you like our Dallas summer intern project. So we took two sophomores from a university. It's a very fine university, two sophomores. They've had a few little programming classes, just barely. We put them on a building, a mobile application to basically support all the trails for Audubon in Dallas, which is about 12 miles of trails, and then for one of the suburbs, 120 miles of trails in their plan. So two sophomores, barely any computer study and we put them up with a very effective principle, brand new principal and a fairly new to us, new in that level associate. They delivered and we've supported them with some very fine other experts, a lot of other advisors, user experience pros and that sort of stuff. And in nine weeks they delivered an absolutely stunning, beautiful, totally elegant application, incredibly nice code underneath and it's going to be used by the council of governments all across North Texas ultimately. So it's amazing what's possible with provided with the right infrastructure and support.

Speaker G Some of the big management consultants companies have tried to attract the same kind of people that you are attracting and they have faced problem with giving these most talented people enough challenges because being an advisor, normally you're not responsible for implementation and therefore you work with shorter term tasks. And they have had a lot of dropouts, a high degree of dropouts. Of the most talent people you have partly covered it. But can you elaborate a little bit about that?

Bruce Ballangee Yeah, so the key is the small project. So if you do large projects and most large consultancies want to do large projects because they think about it as a transaction and there are all these costs associated with that transaction, they're not thinking about it. Hey, it's a project in the context of a lifetime relationship with a client either at one company or at multiple companies over multiple decades, right. Which makes the transaction cost the same or less. Right. So that small project lets you do a few things one day, one that even college student on, even a seven person or ten person team, they get hit by a bus, your project's in serious trouble. Gary and I started accenture. We're on 100 person projects. We get hit by a bus, maybe the partner shows up to the funeral, maybe not. It's really not important. It's just call. Now I'm being a little bit it was a very wonderful company, but at the time so they're important. Whether they're competent or not, they're important. Now think about I've got a few people on my project. I'm a project manager. I got a few people on project. So I'm giving them important they got to do important stuff. And hey, I've got important stuff too because I'm having to do more. We're trying to use people's full potential. So there's two basic things that happen. One, they are incredibly exposed to the systems, and I mean the hard systems and the soft systems, I mean to the people stuff, the change, all these kinds of things, they're much more exposed to it. So they have this opportunity to soak and they've got the cycles, they got the free cycles, right to just soak up all this complexity, ambiguity and process it in just by being there because they got all this. And then the other great thing is we can pay attention to them, we can spend time with them, which is another big thing. We spend a lot of time with our people, but we can do that because there's so few of them. We're spreading across ten with the vice president instead of what is 2000, 2000 Accenture today.

Kerry Stover The other part of their business model is that the first five years of a large management consulting firm is essentially a shark bed. And it's designed to let the sharks eat each other. And the best shark is the one that will eventually get promoted to a senior manager, et cetera. We look at everybody we bring on board that our objective is to develop them and we make that investment and drive that investment forward, not at the competition of each other, but in everybody can become a vice president. A vice president drives our business unit. You justify your existence by becoming a vice president. There's opportunity for everyone.

Gerry Kraines We're running out of time

Speaker E It seems like both a clever business.

Bruce Ballangee Strategy and a clever talent approach and clever linkage between the two. So it's unique and impressive.

Speaker E My question is that the model looks.

Bruce Ballangee  Like kind of an upper out model.

Speaker E Which is not unusual in firms.

Bruce Ballangee  I'm curious about what happens in terms of people not making it, in terms of continuing to move up and also what tends to happen when that from? It's a great question and it's a debate within senior management. Carrie and I's view is people are fine to park if you're going to stay at level you are going to be exceeding, you're going to be in the top 15 or 20% because that's the way our expectations are set. So if you're a top performing employee, that's okay. But if you think about it, it's not. Particularly stable over long periods of time, especially early in someone's career, like, say, the first five or ten years, because they see their peers passing them by. And so generally they'll leave. A lot of times, of course, they just want to do something else. I mean, they really are they have different passions and different desires and so they kind of move on. But if you're talking about someone who's, let's say, been more experienced, they're at 15 or they're 20 years and they're not moving. There are many people that they're good with that. And we do have people who leave before major promotions because they just say, I don't want to have to work that hard. My peer group is so good and I'm having to work so hard at it. I love this company, I love my peers, but I'm going to go work in industry. Don't have many people go to competitors. I'm going to go work in industry just because I have other priorities. I want to spend more time with my family, all that sort of stuff. So life choices get very much involved.

Speaker H My name is Amit. I have a few questions, not one. Bruce said that your team would encounter a problem with a user story within two, three years and you would change the process. But my question is, why would you encounter a problem with a user story for three years? That's not possible.

Kelly Stover I think the answer is for Bruce, in the context of what Bruce was saying, that same person now has gone to a higher level in the organization, and so it was trying to push them into the future with a different user story, and now you're encountering an issue with that one. So the person has grown in the meantime and is now able to say, I'm going to not just think of this user story as something that must be done, but I'm going to see the opportunity to add more value to your company because we can affect the process to get what you really want rather than doing what you've asked for. So there was a little projection there that wasn't quite as clear.

Speaker H You also talk about balance of processes in it. I think the client prioritizes. You do not self prioritize. What do you have to say on that productize?

Bruce Ballangee  Or prioritize?

Speaker H The prioritize?

Bruce Ballangee  Yeah.

Speaker H It's a client who's prioritizing because that's client's project that he's the one who will give you the priorities. You do not self prioritize.

Bruce Ballangee  Until it.

Speaker H Was an external internal project.

Bruce Ballangee  Yeah, correct. We are a services company. We're partnering. And then really, this gets into a really involved architectural design discussion to really kind of unravel it. But I don't really have a good short answer.

Kerry Stover I think the answer is when we partner with someone and we bring them opportunity, they're willing to see the possibilities and the priorities can change. We understand that the client does decide ultimately what gets done. It's up to us to create the thought leadership that allows them to see the possible and now change their mind on what they want to fund.

Speaker G All right, so I got two questions. I'll keep them short. So the first one is this model of continuous education is awesome because your competitors basically want 100% utilization and if they're going to educate themselves, that's on their own time. So how much of do you generally plan for in your business model for that continuous training? And the other one is do you have any use at all for industry certification like Open Group Distinguished Architect or is that totally meaningless to you?

Bruce Ballangee The training bit, our commitment to our folks is that we'll try to do 120 hours of training with them or for them every year per person and we get pretty closer, a little bit over that. But 90% of all learning is what occurs on the job. So the real opportunity is in terms of crafting the Project Deliverable to make that. And our utilization is generally 79 to 80. 82% carry could get much more 8%.

Kerry Stover Last year as a company and over time was 14%, which is well below.

Bruce Ballangee Industry standards for both 14% for 14%.

Kerry Stover For our consultants, but typically on average. So in other words, people are working about a 44, 45 hours week, something like that.

Speaker F You've blown my mind and I'd like to blow yours, but I've got a page full of questions. For a moment I didn't know where to begin, but perhaps I'm not going to begin. I'm just going to give you one question. It seems to me from what you're doing that you're actually into transformational services. That seems to me to give you different possibilities for monetizing and also for leveraging your capability in all sorts of different areas. For example into your clients business development and product development areas. And there's no set fee for doing that. So I can see the possibility of sweat equity and all of those kind of things.

Bruce Ballangee Yeah.

Speaker F Would you like to respond to that?

Bruce Ballangee So largely aspirational for us, we don't have the brand, we don't have the size, we don't have the history for people to come for us and say please transform us. We do have some clients that will do that, but that's not what party veda means to people at this point. So it's very aspirational. We are building the whole model absolutely builds that capability. One of the key challenges gets to Don's Question, which is okay, but are you going to have people that as they mature in their capabilities are willing to approach the world holistically in terms of how they think about problems and solutions? Because we can go find the clients that will buy that. But can you get your folks to that? Because that's a whole nother level of complexity and ambiguity beyond just what I was showing with moving up the architecture stack of an enterprise.

Gerry Kraines  I'd like to just follow up on Stephen's question. There's a lot of probably not scientific research in the whole field of what experiences result in the most effective people in a company becoming the most effective.

Speaker H People in the company.

Gerry Kraines  And the first figure is formal training and development. And as a company that began as training and development, the figures of ten or 15% contribution to effectiveness is kind of discouraging. The second is really good coaching and mentoring, maybe 2020 5% at most. But the real growth in the people who are most effective came from being put in stress, challenging situations that exceeded their comfort zone, but not their coping zone. So they had the potential to solve them, but not the skilled knowledge. And it was learning how to figure it out is what was really the most important contributor to that kind of high focus, high effectiveness, high learning. And they've perfected that. And so, quite frankly, every time they call me to come out, I scratch my head and I say, what do I know to tell them? Because they've kind of figured out this elegant model, but they're still trying to understand the underlying first principles. And so for me, that's just a wonderful experience as a consultant to be hired simply to help them think, not to implement procedure or mechanism or whatever else. They have a limo waiting to catch a plane. So I just want to thank them again for coming and thank you all for listening.

Bruce Ballangee  Thank thank you.