I would like to draw your attention to a very interesting article in the New York Times. It’s titled “These Workers Act Like Owners (Because They Are)” and it was written by William Taylor and published on May 21, 2006. The article is mostly about an employee-owned company called Reflexite Corporation, which specializes in manufacturing reflective materials, films, and other products. I found the article to be interesting because it showed how a relatively small, employee-owned business could thrive in competition with far larger companies like 3M. A couple of other standout employee-owned companies are also mentioned. Here’s a link to the article:

I have really enjoyed reading your responses to my Week 4 post – I hope you’ll keep them coming. I especially like the specific examples some of you have mentioned. It’s good for me to be able to connect your thoughts about the outline for the book with actual events that impacted your customers or the way you did business.

Click on the comments link to share your thoughts.

- Bob

6 Responses to “Week five: Act like owners”

  1. 1 charley zumba

    I didn’t know this existed until Chuck Zang (the other Z) told me about it here in ABQ this morning. It’s great to have a route to talk to you without being a bother.

    Along with many others, I miss you, and more each day. Fortunately, I’ve wound up with Jurgen Gobien, who understands what SAIC is about.

  2. 2 John Bennett


    Two part Comment/Question:

    1. In the case of Reflexite their ESOP has only doubled in total value in the last 11 years in spite of company growth and contributions out of profit. Thus the intrinsic growth rate of a given investment during this period must be down in the low single digits. Any employee who sunk a lot of money into this investment has to be disappointed.

    2. (Not necessarily related) The IRS now has a big task force uncovering fraud in ESOPs. Apparently a lot of clever entrepeneurs have figured out ways to make the employees fund their companies at highly discounted interest rates.

    So, it appears that the present national environment of ‘easy ethics’ is extremely hostile to employee ownership.

    What can be done to reverse this trend?


  3. 3 Bob Kamen

    Dear Dr. Beyster

    I’ve noticed a disproportionally large share of Torrance [formerly Hermosa/ElSegundo] responces on this site. Some of them are still employees and/or consultants.

    I would guess that all of them are >millionaires, primarily due to the SAIC form of “Employee Ownership [EO]“.

    Many companies have pretended to have EO [e.g., Eastern Airlines, Enron], but only to deceive a Union and/or to obtain low/zero interest funds for a failing company [with over-paid "Executives"].

    Your model of EO is uniquely fair and successful for ALL employees. If you had a Ph.D. in Economics, and if you had Pontificated at Harvard as a “Visiting Professor”, you might get a Nobel Prize {for your theory, but not for your success}.

    I humbly suggest that your [soon-to-be-best-selling] book should include an appendix of Success Stories/Biographies of current/retired/ex/fired employees. I [and I predict many others] would be delighted to contribute.

  4. 4 Dr. Beyster

    John Bennett: I’ll be back to you on this.

    Bob Kamen: I like the idea. I’ll keep this in mind as we work through
    the book.

  5. 5 Dan Cornell

    Dr. Beyster,

    I started out as young man working in SAIC. I was there doing real estate, company valuations and then CHCS. The stock started my company Rational Concepts. Here are the things that I think made SAIC great!

    1. The freedom to learn due to the lack of structure. I was able to develop entire systems to move the company forward because I could and the company did not prevent it due to the decentralization of authority.

    2. The lack of an “overhead safety net”. Too many defense companies have become enamored more and more with ‘coverage mechanisms’. SAIC was never this way. it was produce or leave. Yes, there were politics (more than realized), but you had to have a survival instinct which meant you learned or produced. I think the 5 year plaque from SAIC is one of my most cherished business possesions.

    3. The dedication to the mission. Support the USA!

    4. The in house free form competition that kept everybody on their toes.

    Thanks for the education.

    Dan Cornell
    CEO Rational Concepts

    I woander if you have any idea how many companies you started!!!!

  6. 6 Babette Davis

    I have meaning to send this for a while. Thanks for the great years and making me think about what being successful truly is about.

    While I have only met you a number of times; I have personally benefited from the business environment that you established and ensured was maintained thru most of your stewardship of SAIC. Because of your success, and your allowing me to be successful, I thought I would provide some thoughts on success and the ability of employee ownership to impact or sway a successful outcome.

    First and foremost I weigh my success at SAIC in terms of just some very simple factors – as my mentor Tom Dillon always said “the real answer is usually the simplest one.” So for me the simple answer includes – knowing my clients were highly satisfied, that we provided a value to them, that we were able to grow the business at a rate where we could still maintain client satisfaction as a high priority. Lastly, that we were able to provide the corporation a profit margin to warrant the ongoing investment in our business. But most importantly, SAIC asked little of me other than this. Again, the message and expectations were always simple and direct. So how does this factor into employee ownership, I will get to that below.

    As a graduate student I worked a 2-year internship with many employee-owned enterprises thru the School for Democratic Management. During this time, one of the businesses was a solar company in San Francisco. This company, like the others, was driven by their passion for “different” business structures and services that were good for the world. Thus, entered their belief that if people owned part of the business that ultimate involvement, commitment and performance would follow. As you can guess, the only ones really driven by this message were the founders and not those that came along later. I wondered why this was. What I came to realize was that a number of core factors were missing in these companies, thus their struggle to succeed. First and foremost many of the alternative businesses in the 1980’s forgot that they must first be a business. They must generate revenue, make a profit and develop a client base. They forgot that most people are not going to embrace employee ownership at the risk of not receiving a paycheck. So if we follow Maslow’s logic, business stability is a must before other principles can be talked about. This was especially true when I made a decision to come with an acquisition to SAIC. I was more driven by the financial stability of the corporation than its underlying employee ownership. The appreciation for employee ownership came after we were part of SAIC.

    I also learned during these years in graduate school that a strong leadership structure and a clear path to success, even if it is a difficult path, are absolutely critical. People need to know someone is in charge. Conversely, the founders of many of these employee owned businesses aligned themselves with consensus management, thinking that employee ownership required full involvement and participation in all business decisions; another wrong assumption especially in start ups. The message and directions of the business would get lost in the decision making process itself.

    So what was different at SAIC?

    From my perspective employee ownership at SAIC took on 2 forms – the tangible financial relationship, but more importantly, the intangible credo of the corporation. Both of which were backed by very strong, consistent leadership and a solid (simple) vision for all of us to follow. The financial rewards of being part of the corporation’s success are obvious, look at the profitability over 35 years, the growth the company achieved, and the stock value – why wouldn’t someone want a piece of that pie.

    More importantly, we employees (especially us managers) consistently saw and heard from you Bob. You believed, and you made us believe, that we could impact our work product and that of others. We thought about the simple business principles of growth, profit and most importantly client satisfaction in very personal and basic ways. We owned the client problems like they were our own (and when we didn’t, we knew a failure was coming.) Again, the message was simple, the delivery even simpler and all was continually given by a person that believed it probably more than anyone else.

    So to me, employee ownership at SAIC was a culture that was embraced by the vast majority. It was something that could be internalized on a personal level to mean something different and valued by each employee. All this was supported by strong business practices and financial success. Thus, the ingredients for success.

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