Truth to Power is a regular series of conversations with writers about the promises and pitfalls of movements for social justice. From the roots of racial capitalism to the psychic toll of poverty, from resource wars to popular uprisings, the interviews in this column focus on how to write about the myriad causes of oppression and the organized desire for a better world.
This interview has been edited for length and clarity.
Steve Dubb: What led you to write your new book—From Founder to Future: A Business Road Map to Impact, Longevity, and Employee Ownership—and what are you hoping readers will take from it?
John Abrams: I see this book as an antidote to the cruelty-rather-than-kindness mentality. I feel like our society has been bedeviled with that kind of thinking at different times, but better hearts and minds have always prevailed. That will happen this time. But it is a question about how long that takes, how much damage is done, and how much suffering happens.
What feels different to me right now is, for the last 50 years, the Democrats have not done much for working people and the Republicans have not done much for working people, and we need something fundamentally different. And that might end up being what history says: Something new was built. That’s my hope. If this book can play some modest role in that new building project, then it will have accomplished what I have set out to do.
SD: One story you share in your book is about how the company you helped found, South Mountain, managed to survive the Great Recession. What can be learned from this experience?
JA: I call 2008 the second-best thing that ever happened to South Mountain Company. It was that new level of collaboration when we were all fighting for something together and finding that people rose to the occasion. They didn’t cower. They didn’t jump ship. They just dug in, all together.
I will never forget the day that we cut everyone’s wages by 20 percent across the board. After that, people came up to me and thanked me.
When people are all in it together in a business…that makes people perform to their highest ability.
And I would say, “Wait a minute. You know what just happened here.” And they would say, “Yeah, but it happened to you too. And you’re losing more than I am. And we are in this thing together. Thank you for that.”
I think that what it says is when people are all in it together in a business, it is just like on a ship. It takes all of us to make it happen and that makes people perform to their highest ability.
SD: How do you see your book playing a role in broader social transformation?
Because of the “silver tsunami” [of business owner retirements], there are three million small businesses with employees with founders over 55. Trillions of dollars of wealth are going to change hands.
We know what’s going to happen to those companies. Some will be passed down in families. Some will close their doors, leaving gaps on Main Street. And some will be very attractive to strategic buyers and private equity; those companies are going to lose their mission. Whether they get moved out of the community or carved up and sold for parts, whatever happens, those original founders are likely in most cases to not be happy with the results.
This is reported all the time. People walk away with seven figures, and they are miserable. It’s what I call “the fat wallets and broken hearts syndrome.”
One reason that happens is that people don’t know that employee ownership is an option. Attorneys don’t know about it. Bankers don’t know about it. Business brokers don’t know about it. Succession planning consultants don’t know about it.
If this book can bring information to the world of small business that is currently less available than it should be, that’s how it can have an effect.
That’s why it is non-academic and story-based. I’m hoping it will reach beyond what we would expect to be its greatest audience.
SD: For years, advocates have lifted up the silver tsunami opportunity. I wrote about it in 2017. But while worker co-ops and employee ownership trusts have grown, ESOP [employee stock ownership plan] numbers have been flat. What is holding employee ownership growth back?
JA: I think what is holding it back is that it is seen as something that people do when they are ready to retire.
I think that making good, strong, healthy employee-owned businesses should be done in mid-career, so there is a long runway to develop internally new leadership. It ends up being a product of long-term thinking, and I don’t think that has been really explored.
SD: You write that transitioning from a single owner or partnership to employee ownership really involves five different points of transition. What are those?
JA: So, not all five transitions are required.
Changing the ownership is essential and is going to happen one way or the other.
People don’t know that employee ownership is an option. Attorneys don’t know about it. Bankers don’t know about it. Business brokers don’t know about it.
Leadership is also going to change. Moving from first-generation to second-generation leadership in an intentional way takes a tremendous amount of work and capacity building, and planning is critical.
Mission preservation: I think that is what most frequently doesn’t happen. And I think it is really a strong key.
The other two transitions are more aspirational: Democratic management—the more democratic, the better you can do that, the better. But it doesn’t have to be complete. And the fifth transition is to B Corp status, but everyone doesn’t have to be a B corp.
If you can do all five, you are probably going to have a great success on your hands, it is going to be impactful, and it is going to influence others. But if you do three or four them or are working on them, that’s fine.
The real goal to start the process of navigating those transitions over time.
SD: You discuss multiple forms of employee ownership—especially worker co-ops, employee stock ownership plan (ESOP) companies, and employee ownership trusts. What are the roles and opportunities for each of those?
JA: By far the most widespread form of employee ownership in the world is the worker co-op. That’s one that has gotten the most traction without a doubt. In the regions where it has really taken hold—like Emilia Romagna in northern Italy, part of Japan, and India—it has influenced the economy and society in big ways.
The ESOP is entirely a creature of the United States, and it is a creature of tax law. It’s important. I think the mechanism needs improvements. But it is certainly one piece of this.
The employee ownership trust is not actual employee ownership. A trust owns the business, presumably for employees’ benefit. One of the good things about that it appeals to some [exiting business owners] to whom the other models are just too foreign to their way of thinking.
I think all three of them appeal to certain types. And that to me is a good thing. There are even ways to use private equity that I think are big pluses, though mostly, the involvement of private equity in employee ownership is highly detrimental.
This is probably very simplistic, but I think of everything in relation to how much like a cooperative it is. Take, for example, Apis & Heritage Capital Partners, which is using private equity to make ESOPs that serve underserved populations. This is a great example of private equity being used to do something very positive.
There is a lot of experimentation going on. Some of these efforts like Teamshares and Apis & Heritage, Evergreen, and Obran—some of them are going to be successful and provide examples for others. That so much experimentation is happening right now is a big plus, I think.
SD: What does democratic leadership require and how does it differ from less democratic forms of leadership?
JA: It requires tremendously skillful leadership. There is this myth that in a worker co-op, for example, there is no leadership, it’s just a bunch of good people making decisions.
That doesn’t happen in the real world. We need leadership and we need structure. Democratic leadership has two aspects to it. First—building a collaborative culture. You need people working together in teams, who like to work together in teams, and know how to work in teams. And that takes training.
People think consensus decision-making is when everybody agrees. It is not. It is when nobody strongly disagrees.
And second, decision-making—we need to understand what it means to make consensus decisions. We need to understand how to make utterly productive meetings that people enjoy, instead of: “Oh, my god, another meeting. That’s the last thing I want to do.”
There is a reason for that. Nobody has learned how to do it. Nobody teaches us in school. We spend half of our life in meetings. Have you ever seen a class about meeting facilitation and meeting participation? No.
I think it is really important to train ourselves to conduct good meetings, to learn how to make decisions by consensus. And to make the distinction between what are management decisions and what are owner decisions. A worker co-op without a decision-making matrix, I think, has little chance of success.
I think that’s one of the reasons why conversions are easier and more successful than worker co-op startups. Worker co-op startups sometimes come with a misinformed sense of what democracy is. But also, there is no history.
My sense is we all like hierarchies of expertise. We don’t like hierarchies of power. And often the two are confused. In startup co-ops, it is harder to make that distinction because people don’t have a previous experience of it.
SD: What principles do you think are most important for having joyful, productive meetings?
JA: You need clear agendas. Great minutes. And for people in meetings to feel completely included with nobody talking over other people and nobody dominating . And that takes skillful facilitation, and that comes from actual facilitation training.
The great thing about facilitation training is that it also trains people to be better meeting participants, not just leaders of meetings.
SD: One common criticism of democratic decision-making is that it can favor inertia over change because of the difficulty of building consensus in groups.
JA: I think that can be true. People can become risk-averse.
A worker co-op without a decision-making matrix, I think, has little chance of success.
My own experience, though, is that it is more effective to build consensus than it is to take a vote. Going through that process of achieving consensus means you have a group of people with all the wood behind a single arrow. They are pointed in the same direction—whatever the decision is, they want to make it work.
Whereas with majority rules, maybe you got 49 percent of the people who can’t stand the idea.
Consensus is worth it. I think it leads to more engagement, which leads to more innovation.
In worker co-ops, because the owners make decisions together and use a consensus decision-making process, there is a greater likelihood that you will have a leadership team managing the company that also makes decisions that way, that is super-aligned. You’re getting better decisions. A group that really processes all the possibilities.
SD: What needs to be done to develop effective consensus-based participatory governance systems? The knock against consensus is “well, that just takes too much time.”
JA: I think the answer is actually quite simple. It begins with a basic understanding of what consensus decision-making is. People think consensus decision-making is when everybody agrees. It is not. It is when nobody strongly disagrees.
Let’s say that you just arrived at a decision. You’ve got people who believe that is a great decision. You have others who say, “I am going to go along with this because you made a persuasive argument, even though I am not sure.” Then you have people who actually disagree, but only mildly so. And they say, “I am not going to stand in front of this train because I am not certain of my disagreement.”
And then if you have at least two people (you should never have consensus that can be blocked by a single person) who say, “In the face of all that, no way,” that is powerful. That decision shouldn’t go forward.
Another great subtlety of consensus decision-making that is used too rarely is a sunset clause.
Even those of us who are strong advocates of a decision, we don’t necessarily know if it’s going to work. Let’s do it for three years and revisit. The key to good workplace democracy is informed processes about how to make decisions.
SD: Is there anything else you’d like to add?
JA: I hope some readers, when they read a story in the book about a form of employee ownership or an experiment in employee ownership, will go, “Oh, my god. That sounds like me. That sounds like us. That sounds like my future.” And be inspired to move in that direction. That’s my goal.
