Enterprise Management Group (EMG) is a boutique consulting firm with a unique approach to operations consulting that leverages the employee experience to drive earnings improvement. ALM's Liz DeVito recently met with EMG founder and CEO Jim Smith.
ALM Intelligence: Tell us about what led to EMG's founding.
Smith: It's an interesting story, because the impetus for setting up my own business was that I was both a success and a failure in a traditional corporate setting. I was originally an IT manager, running very large data centers for Fortune 500 technology and telecommunications companies measured on a fully burdened P&L. Eventually, I ended up at a major bank, where I discovered there is a world of difference running data centers for companies that use technology to run their business rather than to generate revenues. It was very different at the bank where no one had ever been asked to justify their technology investment. I, who didn't know any other way, continued the P&L approach to managing my operation, which caught the eye of the CEO who then asked me to set it up as a separate company. Once it was successfully established, the business was handed over to another executive to run. I then decided to set up my own business in 1992 providing interim CIO services.
ALM Intelligence: How did the business evolve?
Smith: We began our Interim CIO business with a unique approach. We would only perform the service as a legal agent of the client. This gives us the ability to hire and fire the client's employees where appropriate, a requirement that generally leads to a nervous discussion during contract negotiations. Its relevance becomes clear, however, as we explain our value proposition. After several years of steady growth and outstanding results for our clients, EMG realized that the processes we were using to reengineer IT organizations applied to the enterprise, as well. In 2000, we began offering our service, Sustained Earnings Improvement, to organizations seeking enterprise-wide earnings improvement programs, largely by suspending their culture, politics, and silos, freeing employees to uncover opportunities to reduce SG&A, capital and inventory.
ALM Intelligence: What is Sustained Earnings Improvement (SEI)?
Smith: SEI is both a process and a promise. The promise is that we will commit to produce a sustainable 10 percent to 20 percent SG&A reduction in just ten weeks exclusively from employee engagement. The process begins with the CEO, whose sponsorship is essential to the successful implementation of a program designed to elicit employee suggestions for rapidly cutting costs through operations improvement. After an initial rule-setting and education period with the top three management levels, EMG works hand-in-hand with the CEO to drive the process, including acting quickly on the employees' suggestions through highly visible endeavors. Rapid, high-profile implementation sends a message that management is serious, while rolling updates create a positive feedback loop that results in more suggestions. Another hallmark of the process is holding the responsible management member accountable for implementing his or her own ideas combined with vetted employee suggestions, then selling the unit's ability to continue to perform its duties in light of their proposed spending cuts.
ALM Intelligence: What is unique about EMG's service delivery model?
Smith: Fees are tied to reaching the agreed-on economic goal. We've never had a client take more than a month to recover their investment.
ALM Intelligence: How does this model drive success for your clients?
Smith: EMG effectively flips the budgeting process from one of requesting funding for spending to one of selling ideas for cutting costs. And because those ideas come from the employees, there is a cultural shift towards trust and empowerment that can be sustained long after EMG is gone. We leave our clients with a playbook they can use to implement SEI on an ongoing basis.
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