Our Story is in the Latest Boston Business Journal

Mary Adams and I were featured in this week’s Boston Business Journal in an article entitled Setting the Right Growth Gauge is a Challenge for Startups.

The reporter, Keith Regan, did a good job of weaving the story our firms (Trek and I-Capital Advisors) together with the story of our new book, Intangible Capital. Please read his version which is woven together with the story of Quality and Productivity Solutions in Oxford, MA.

It felt funny to have our story told in public. The bankers in us were not happy with a decline in our business last year. But the consultants in us saw it as a calculated risk that could pay off big—and already has started to this year. The citizens in us saw it as a no-brainer: our country and our globe are at a critical moment. The challenges keep racking up. And the solutions will only come through innovation–leveraging our collective intangible capital to re-create every corner of society in a new, sustainable, smarter way.

Hope you will join us on the journey.  

If you are interested, here’s a longer version of the story we prepared as background:

Our story can be told in terms of three trends that we saw/see:

Trend 1: Our financial background helped us see the early warning signs of the recession in our clients’ businesses in late 2007 and early 2008. If you go back to our newsletter Trekking (published continuously since early 2004)…around that time, we started to advise businesses to think about what a downturn would do to their business. During the summer of 2008, we took our own advice and had a serious conversation about what a recession would do to our business.

Trend 2: Our business had always been focused on helping New England–based companies with challenges like growth and change. This work gave us a great view of emerging business practices for the knowledge era. New England is a really interesting place. We see the economic history of our country all around us. In a short drive almost anywhere in the Boston area, you can see the legacy of the colonial agricultural economy, the American industrial revolution and the early information/knowledge era. The knowledge era isn’t just about high tech and computers. These technologies are beginning to fuel change in every corner of our economy (these changes are in their infancy—eventually every industry will be re-made in a knowledge era form including energy, transportation, agriculture, manufacturing, construction, education, healthcare, services and, yes, information technology).

The implications of the shift to the knowledge era on business will be profound. Management practice as we know it will change dramatically. We had begun collaborating with partners in Sweden in 2005 to try to introduce intellectual capital methodologies already in use in Europe and Asia that help managers see the knowledge intangibles in business. The U.S. market wasn’t really ready for the approaches in use in the rest of the world. In hindsight, we now realize that the housing boom covered up a lot of the structural weaknesses in our economy in the past decade.

We learned incredible lessons from our research and collaborations—lessons that we applied in our consulting work. Mary became more and more interested in this field and began participating in conversations and work on a global level. In early 2008, she developed an article for the Emerald Business Strategy Series called Management 2.0: Leveraging the Growing Intangible Side of Your Business that pulled together all that we had learned about how to help companies make the most of the knowledge economy.

Trend 3: We have also been watching and cultivating a strategy around a third trend: the baby-boomer demographic. Baby boomers have created an extraordinary amount of wealth through private companies. And most are now at the point where they should be thinking about what happens to their companies when they exit. We say “should” because many, many private business owners haven’t thought seriously about that exit. In 2006, Michael co-founded a networking organization called the Exit Planning Exchange. The concept is that every exit requires a variety of expertise (legal, accounting, wealth management, consulting, even psychology). XPX took off in Boston and is already spreading to new chapters in the Eastern U.S.

To us, the exit planning story is also an intangible capital story. The average merger in 2007 was 70% intangible, most of this booked to “goodwill”—which basically means that no one involved in these transactions could identify the source of the value of the company. That’s pretty screwed up. Especially when that “goodwill” represents decades of investment in knowledge capacity that could be identified if people stopped thinking about this as a soft abstraction instead of what it actually is: hard dollar investments.  No wonder so many mergers fail to deliver on expectations.

So…when we sat down in August of 2008, we had to make some decisions. We knew that our traditional consulting would be hurt by the recession. We have both worked in turnarounds before and don’t like them. We are much happier creating than destroying value. We knew that not positioning ourselves for turnaround work would hurt our business. But we both believed in the long-term prospects of the knowledge economy, especially here in Massachusetts. We decided to make a bet on the post-recession economy.

Mary gives Michael the credit for saying that August, 2008 was the moment to make a move. She had been invited to a small conference of the early leaders of the Intangible Asset Finance Society in September. In preparation for that, she put up a blog and website using WordPress in the space of about a week’s time and branded a new practice around intangible capital. Michael redoubled his efforts in the exit planning space with XPX and private businesses. In the meantime, the Emerald article won an award for one of the best in the publication for the year. Using the ten sections of this article as proposed chapters, we developed a book proposal and took it to market. By early 2009, we received a book contract from ABC-Clio (owner of Praeger/Greenwood) for Intangible Capital.

So what happened in 2009? We got the book written. Michael spent a considerable amount of time evaluating a partnership opportunity (he ultimately passed on it). We launched (or re-launched) three blogs/websites and a community, including:

• www.SmarterCompaniesBlog.com
• www.TheEndGameBlog.com
• www.IntangibleCapitalBook.com
• www.ICKnowledgeCenter.com

But our revenues took at 50% hit. We were ready for it. That didn’t make it easy. And as the recession wore on, we worried that we wouldn’t be able to come back. But in the first four months of 2010, we have made a strong return. We have some amazing new clients who found us through our social media activities. These included:

• Health services company that found us on the internet–to help them optimize their human capital and IC for growth
• The Washington Economic Development Commission–who also followed our work on the internet and asked us to lead an afternoon session with State business and economic leaders to map their intangible capital as an innovation ecosystem.
• A long-time client that asked us to lead a deep dive into their IC to identify the opportunities to fuel scalable growth through optimized shared knowledge and processes (structural capital)

And this time, we are aiming for a whole new game. For now, we expect our revenue to continue to come from speaking, consulting and high-profile workshops. In this service offering, we sell our minds to solve specific client challenges. These services can be very lucrative, But they are on the low end of the type of products that can be produced by knowledge entrepreneurs. As we explain in our new book, the real promise of knowledge is when you can convert your knowledge into scalable, re-usable forms. We see a lot of future opportunities for creating more scalable delivery vehicles for our ideas.