The Drucker Difference

Brand Velocity's Knowledge-Worker Innovation


Brand Velocity may well be the smartest company you've never heard of.

Jack Bergstrand, who used to oversee information technology at Coca-Cola (KO), launched the consulting firm five years ago with a goal of more than just making money. He wanted to take on what Peter Drucker identified as the single greatest business challenge of our day: enhancing knowledge-worker productivity.

"The most important, and indeed the truly unique, contribution of management in the 20th century was the fiftyfold increase in the productivity of the manual worker in manufacturing," Drucker declared in 1999. "The most important contribution management needs to make in the 21st century is similarly to increase the productivity of knowledge work and the knowledge worker."

But figuring put how to lift the output of those who use their brains more than their brawn—a group that now accounts for at least one-quarter, and perhaps as much as half, of all employees in the U.S. and other developed nations—is no easy feat. Most organizations, even as they engage in knowledge work, continue to rely on processes that come straight out of Frederick Taylor's "scientific management" principles of the early 1900s.

It's an awful fit. "The underlying system that made manual work successful is the very same system that constrains our ability to move forward faster in the Knowledge Age," Bergstrand writes in his newly published book, Reinvent Your Enterprise. (Full disclosure: Bergstrand is donating a portion of book sales to the Drucker Institute, the nonprofit think tank that I run.) In fact, the differences between old-line manufacturing and knowledge work are stark: Manual work is highly visible; knowledge work is largely invisible—it happens between people's ears. Manual work is highly specialized; knowledge work is, as Bergstrand points out, much more "holistic."

Manual work tends to be stable; knowledge work is ever-changing. Manual work focuses on the right answers; knowledge work must zero in on the right questions. Manual work involves a lot of structure with relatively few decisions; knowledge work emphasizes less structure with more decisions.

But this isn't to say there's no structure at a firm like Brand Velocity. Far from it. Bergstrand and his colleagues have taken "a clean sheet of paper," as he describes it, and methodically thought through everything they do: how and where and under what conditions they hold meetings; how they buy equipment, from PCs to paperclips; how they compensate employees; and much more.

Brand Velocity is based in Atlanta, but in some sense that's an illusion. It has no fixed assets. Headquarters is little more than a mailing address and a secure 64-square-foot space it leases to store sensitive documents.

When someone from Brand Velocity gets together with a client—the firm provides counsel on giant IT projects—they rent out a conference room for a couple of hours from Regus, which operates a string of posh business centers around the world. Many of those who are ushered into the appointed meeting place by a receptionist never realize that they're not actually at a Brand Velocity facility. Bergstrand calls this setup "traditionally virtual."

The underlying idea here—and the same holds true for functions such as payroll and legal affairs and data storage, all of which are outsourced—is that rather than own and manage buildings, Brand Velocity is left to concentrate on what it does well. Having no central office also gives knowledge workers the mobility and flexibility they crave. Many at Brand Velocity plug in from home.

Supplies are also handled in an unusual fashion. Every quarter, the 10 Brand Velocity employees are each given $6,000 to buy what they need, from new computers to pens. If they spend more, it comes out of their pocket. If they spend less, they keep the difference as part of their income. (One can't help but wonder whether Merrill Lynch's John Thain would have purchased a $1,400 trash can under such circumstances.) Besides reducing paperwork—at Brand Velocity, you file only four expense reports a year—the point is to give workers exactly the tools they need to do their jobs. You perform best on a PC, but I prefer a Mac (AAPL)? No problem. We each get what we want, and the company doesn't find itself struggling (and paying a fortune) to standardize everything.

Brand Velocity offers employees a base salary. But much of their remuneration is determined by a points system, with points awarded for three—and only three—things: selling great work, delivering great work, and recruiting and developing great talent. Under this arrangement, says Bergstrand, "highly productive knowledge workers don't need to be a partner to be compensated like one. At the same time, the most senior people aren't guaranteed the highest compensation." This is more than a theory. Though he's the CEO, Bergstrand himself often doesn't make the most dough.

If this all seems a little freewheeling, it's not. Bergstrand and his team are rigorous in the way do most everything, including reaching decisions. On any given project, they solicit lots of input throughout the organization but leave no doubt who the final decision-maker is. That person then acts—and acts quickly.

"The pursuit of consensus becomes the Anaconda snake of large enterprises," Bergstrand maintains. "The Anaconda doesn't bite. It kills its prey through suffocation."

The bottom line: Brand Velocity is profitable and growing. It claims that its costs run 20% less than the industry average. And most notably, it says it delivers to clients the same high-quality results they would get from much larger consulting firms—but in half the time and with less than half the manpower, resulting in huge customer savings.

The real question is how big Brand Velocity can get. It's one thing to do this at the firm's current size and quite another to pull this off with a staff of thousands.

Bergstrand says that, having generated about $15 million in business to this point, Brand Velocity is ready now to move beyond the "prototype" stage. He has hired top executives from major corporations—Kimberly-Clark (KMP) and Ernst & Young, among them—so that as Brand Velocity has tested various knowledge-worker productivity concepts, "we could factor in the need for scalability."

The effort certainly bears watching. If Brand Velocity thrives—and teaches others along the way—the implications could be nothing short of revolutionary.

To see a full-length video of Jack Bergstrand in conversation with Rick Wartzman, click here.

Rick Wartzman is the executive director of the Drucker Institute at Claremont Graduate University.

Wartzman
Rick Wartzman is the executive director of the Drucker Institute at Claremont Graduate University.

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