A New Model for Organization’s Growth

When we completed 25 years of my company – Environmental Management Centre LLP (EMC), many friends asked “Dr Modak, what’s your plan now going ahead?”

Well, I never had made plans as such. EMC grew organically. Like an amoeboid it took different shapes as the circumstances changed, as new opportunities emerged, and as new challenges were faced. There was never a business plan in place. Perhaps my insights and passion, and support from friends were good enough for navigating this small and boutique company in all the rough weathers.

So, when I said that there was no plan before and there was no plan going to be, most friends were upset with this short answer – and perhaps more with my attitude. They said

“Dr Modak, please grow up. You cannot continue running an  organization as if you are instructing students in a classroom and giving them interesting assignments. For your own interest and that of your team members, you must now get serious. Hire an MBA professional to assess EMC and come up with a strategic plan for its growth over next 5 years”

Hiring of an MBA would be the last thing I thought. MBAs are essentially overrated  commodities. But I thought that I do need to define what does growth mean to an organization.

For many organizations growth means increase in the annual turnover. Plans are often made how to increase the turnover to X million and in Y years. This is just like planning for an increase in the national GDP that sadly does not reflect the true growth as  costs of environmental damage are not included. So, growth in profits after tax seems to be a better parameter to assess organizations growth.

Many listed companies look at the share prices on the stocks as measure of growth in terms of market capitalization. Some add to the financial growth, non-financial indicators such as social impacts and brand creation. Now most talk about growth in the improvement in ESG rating or ESG performance. Some organizations measure growth in terms of their expanding geographical base and increasing number of employees with a gender balance. While all of the above are important for measuring organization’s growth, I was not convinced that I should use such metrics to EMC.

I remembered my first ever course that I taught in IIT Bombay way back in 1984. It was a course on microbiology for masters’ students of environmental science and engineering. I had followed a book written by Anthony F Gaudy and Elizabeth Gaudy titled “Microbiology for Environmental Scientists and Engineers”, a  classic1980 publication by McGraw Hill. The book discussed growth of microorganisms in terms of  size of the microbial cell and the growth in the number. (Those from the environmental engineering field will recall that Gaudy and Gaudy used this definition of growth to distinguish the contact stabilization process and the conventional activated sludge. Unfortunately today not many understand the fundamental difference in these two biological processes).

I thought that most of the parameters on growth related metrics, discussed earlier referred to size e.g. reflected in turnover, profits and employees. How to tactically increase the number remained a moot question. Would increasing the geographical presence by setting new offices or making acquisitions reflect growth  in numbers? I was not fully convinced. I was looking for something innovative – that will encourage and facilitate creation of independent organizations imbibing EMC’s expertise and culture and its mission statement “Practicing Sustainability to the Advantage of All.” In this multiplication process, having an umbilical cord with EMC was very important. I decided to ponder over and discuss my ideas with my Professor friend.

We met at a new place this time that was recently opened. We chose a table in the courtyard under a tree.

I started explaining.

“Professor, my plan is to open up an entrepreneurship cell at EMC and admit say 5 bright entrepreneurs every year after a competitive selection. These entrepreneurs like the Young Professional Program (YPP) at the World Bank will get trained over 2 years at EMC to open up their consulting businesses in some of the frontier areas of environmental management and sustainability. In this period, they will work on EMCs diverse projects and get trained in the necessary knowledge and skills and learn the importance of maintaining quality and professional ethics in delivering services. A modest stipend will be paid to this cohort. During the period of “incubation and acceleration,” the entrepreneur will form his/her own company or even in a group addressing new services that EMC does not currently handle. EMC will facilitate the process. After two years, five new companies in environmental and social arena will be born offering  new services with backing of EMC.” I ended saying  that this could be an additional measure of EMC’s growth.

When Professor heard about this plan, he was shocked. He said “Dr Modak, this definition of growth is crazy. Don’t you realize that you are creating competitors to EMC in this process? In next five to ten years, you would have created at least 20 such companies who could well be ahead of EMC”

I had anticipated Professors reaction. So I explained further.

“Well Professor, in all these companies, EMC will hold a sweat equity of 10% and may even invest more in companies if the new service has the right innovation, impact and the market.  Someone from EMC will be on the board of these companies. That will be umbilical cord with EMC. And this is how Team EMC will get involved in company’s growth”

Professor lighted his cigar, pulled the ash tray towards him and paused as if lost in his thoughts. He then spoke slowly as he usually does while making the final point

“Now it makes a sense to me Dr Modak, I understand your plan now. It seems like a good business model. You want to grow both in size and number. You also want to shape the market by creating more competent and ethical consulting organizations. This will be impacting. Well,  but this is easier said than done. Running such an entrepreneur cell in a consulting company is generally never seen, because probably it will not work”

He patted on my back and whispered –Selection of right entrepreneur who will join the cohort at EMC is going to be most crucial task”

Just then a waiter came to us with his iPad that flashed the menu for the evening. The menu looked great, but we noticed that each item on the menu, had a sustainability score next to the price and a button called “trace.” The sustainability score had a link  to “learn more” on how the sustainability score was computed. The “trace” button revealed the story on how the food was sourced, transported and cooked/processed and how the waste was managed. It opened up some nice video clips too. All those who ordered had an option to subscribe and read up later. We were simply stunned.

I asked the waiter whose idea it was. He pointed us to a young man sitting at the cashiers desk conversing with a customer.

“Oh, that’s your target Dr Modak, you need to work with such young guys who are passionate about sustainability and importantly understand the sustainability business!”  Professor patted on my back and grabbed the iPad for ordering.

I told Professor that the bill is on me today as I decided to pay at the counter and start conversation with that young businessman. He was selling sustainability.

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