TZL - Burke Pemberton and Stok
TZL Open [0:03] Welcome to the Zweig Letter Podcast, putting architectural engineering planning and environmental consulting advice and guidance in your ear. Zweig Group's team of experts has spent more than three decades elevating the industry by helping AEP and environmental consulting firms thrive. And these podcasts deliver invaluable management, industry, client, marketing, and HR advice directly to you free of charge. The Zweig Letter Podcasts elevating the design industry one episode at a time. Randy Wilburn [0:49] Hey folks, and welcome to another episode of The Zweig Letter Podcast. I am your host, Randy Wilburn and I'm excited to be with you today. I'm excited to talk with this next guest of the podcast. We are always endeavoring to bring the biggest thought leaders in the design industry space to the Zweig Letter Podcast and I think today's guests will be no exception. But without further ado, I'd like to welcome Burke Pemberton, CFO, and principal of Stok from San Francisco to the podcast, and I believe you might be in Colorado if I'm not mistaken. Is that correct?
Burke Pemberton [1:24] That's right, Randy. Thanks for having me. I’m in Denver right now at our fastest-growing office. We just got to 20 people out here so that's pretty exciting.
Randy Wilburn [1:34] Yeah, that is exciting. And you guys allowed no hay to grow under you, even during the pandemic. I think you added like 19 people at a time when most design firms were not adding a lot of folks. How did you manage that?
Burke Pemberton [1:48] Well, you know, the word on the street, and I've talked to some of our folks is that I think we've invested a lot in our talent brand and our talent strategy, and our human capital development and we can always be better, but we've really focused first on our culture on just equitable governance and compensation practices, and transparency and good communication. I think in this industry, normal turnovers are around 12 percent for a firm of our size, and we've been well under that the last couple of years and we'd like to attribute it to what we've invested in our culture.
But, maybe there's not enough data yet to answer that inexplicably but that's what we believe at the moment.
Randy Wilburn [2:37] Well, let's roll with that. I certainly would have no problem taking that explanation. For our audience why don't you just give kind of an overarching view of the marketplace that you serve within the design industry?
Burke Pemberton [2:54] So, we were founded in San Francisco in 2008 as a sustainability consultancy, and we've grown to be an interdisciplinary team of experts in the built environment. We work with real estate owners and occupiers to ensure that they're investing wisely in their built environment, and we provide sustainability consulting, energy and performance engineering, real estate, and workplace solutions. And we work across sectors to balance financial performance with environmental and social goals, ideally resulting in high-performance buildings and exceptional human environments. A lot of our clients are like corporate occupier types, but we also do a lot of development work or even AC-driven and lead work. Randy Wilburn [3:41] You guys have worked with Salesforce, Uber, and Google so you've worked with all the big names and I'm sure you've worked with a lot of smaller firms as well that can appreciate the breadth of experience that you bring to a particular project. How have things changed for you guys from ’08 to 2022? That's 14 years. I don't want to short-change you any time that you guys have been in existence. That's 14 years of making it through the worst financial meltdown that we've ever experienced and actually, you guys were birthed during that financial meltdown and now a pandemic. So you guys have made it through? You guys are survivors. Burke Pemberton [4:24] A little bit opportunistic, but a little bit of strategy in there as well. We grew up with LEED for sure. LEED Gold was a code requirement in the Bay Area when we got our start. I don't think you can say enough about how much those regulatory drivers have driven our industry. And LEED was very smart with how they sort of ramped up and kept moving the bar up and up so that a market could develop for all the materials and supplies that were needed to meet that level of certification. And so we started off doing a lot of LEED certifications and grew to be the ancillary services that come along with that, from an engineering standpoint, you have commissioning, you have energy modeling, so we had to grow our energy engineering practice. And a lot
of that work was either with developers or building owners, or sort of working with architects to help them deliver on their design scopes. And that's how it was in the beginning. And I want to say until like 2014, 2015 when we really started to do a lot more strategic work that was with the corporate sector. And that's just such a different type of engagement when you go from sort of meeting a code compliance to really trying to do something that's cutting edge, right? And we really wanted to push ourselves to be advising on the most high-performance healthy spaces that were being built in the world. And what happened with the corporate sector was that they wanted to do more than compliance and their employees and their shareholders and their stakeholders were demanding high-performance buildings. And that started with energy and then it moved more broadly to carbon and embodied carbon. And now we have teams of materials analysts that vet all the different types of materials and build databases for our corporate clients who have standards that we've helped them strategically develop to align with their own commercial corporate sustainability goals and to make sure that their real estate fleet is helping them meet their carbon goals. It's been an organic growth but sort of the demand for the business came initially from the regulatory environment. And now it's really coming from the market, I would say, and now that was we were founded in 2008, literally, our founder was driving across the country that day to start this company up with his partner the day that Bear Stearns went under, and he's listening to it on NPR on the drive across the fast Ford. It's like being an auto mechanic, if you can help to build owners save money. You know, people fix up their cars during a recession instead of buying new ones, right and that's exactly where we started. But through this last pandemic what was really interesting was, even though people started and have continued to reduce their real estate footprint, what we're seeing is a huge influx, part of this is again being driven by the regulatory market where the SEC is starting to mandate scope one and two and eventually three emissions and it's going to start requiring these public companies to look at their ESG impacts. And the investors want to know that the buildings and their portfolios are thinking about not just sustainability, but the social impacts and the governance impacts and their supply chains, and so that piece of the business has really grown for us what we would call like our ESG, consulting, reporting and carbon services. Randy Wilburn [7:53] And as I think of that, I'm thinking of companies that want to take a much more holistic approach to, not only the buildings that they acquire, but the companies that they acquired to make sure that they are those new entities, those new physical properties are in alignment with how they want to do business, and to do it in a sustainable way that lasts for the long term. I don't know about you. I don't know how many kids you have but I've got three kids, and I want to see them be able to appreciate things in the future and we have to be good stewards of what we have right now. We're
still a long way away from getting to that place of global acceptance of understanding that we only have one Earth and we've got to treat it well. And we've got to do things the right way today, make the investment today for tomorrow, but you guys are kind of at the forefront of that investment that is taking place for those people that actually get it. And some of it has become because of regulatory purposes, but then other people that are just like, we just want to do the right thing. Burke Pemberton [9:01] I think that one of Stok’s market differentiators is that we are real estate finance people first. And we've always been able to put the financial value in terms that decision makers in real estate organizations can hear about how investment in sustainability is going to make their investment a more viable one and that's been a differentiator for a long time. But what we're seeing now is the capital markets are starting to wake up to the fact that having good sustainability business practices, and good risk mitigation is just good business practices, and you can see it in the companies that are doing it. They're outpacing the S&P 500 They're outpacing the market. How many times have you talked to your financial advisor and they send you that annual thing that says past performance is not an indicator of future success. It's like that great disclaimer, right? But the sustainability risk reporting is an indicator of future success from a financial standpoint. These businesses and investors are waking up to that fact and so we're really seeing a shift in the market. Randy Wilburn [10:11] It kind of lines up with the mission, vision and values that Stok operates from. On your website, it says that Stok is led by core values. The values that guide every decision we make and actions we take on behalf of our partners and clients. And you have a number of things on here that you mentioned, autonomy, equity, grit, sincerity, and stewardship. These are not words that are normally been shared or emanate from a typical design firm website. And so, I would be curious to know, because it seems like this all came organically. I would be curious to know how you developed these core values and was it founder led, or was it just as you kept adding people, everybody brought something to the table, that you said, this looks good, let's add this to the mix of what we're doing as a company.
Burke Pemberton [11:12] The core values themselves were developed with a small founder group, some of our, what we call our active members, some of the principles in the firm in the early days when we sort of decided to take a nonconventional business path. We all felt pretty strongly that conventional organizational structures and
hierarchical business models were broken and we wanted to subscribe to the belief that people are inherently innately good and want to do good work if you just, provide them with the tools and resources to be able to do good work and to develop professionally and then get out of their way. And I think what so often happens in traditional structures is we hire people because they're professional at a job and then we sort of take all the power away from them and tell them here are all the rules, here's how we expect you to work and how you expected to do things. We just didn't want to do it that way anymore. It stifles innovation and productivity and we feel like the workers have the knowledge economy, have a lot of their base, you know, the layers of Maslow's hierarchy of needs for this new generation of workers. They have a lot of their needs met now and so, they want the opportunity to be able to be creative and explore and innovate, and really pursue their own passions. And so that autonomy piece is probably one of the more prominent of our core values. And what we've really done is try to create a firm that has structured autonomy where you're not required to be in an office if you don't want to be. You don't punch a clock. You're not here nine to five. Everybody in the firm has KPIs that they know that they need to hit. They have a billing number they need to hit so it doesn't matter when you work, where you work, or how you work. And we try and provide everybody with good standards and strategies and resources that they can use but then they can go out and work the way they want to work. And, you started off by saying how did you grow so much through the pandemic? I think, when everybody started working from home, we were like, well, that's what we've already been doing. We have three offices in Denver, San Francisco, and San Diego now, but we've got team members all over the globe and we found a way to make that work. And that works in a consulting environment when, obviously, like our engineers have to go on site, sometimes, and our project managers that are doing ‘T’ eyes or are on site. But a lot of our consultants are mostly working on their laptops and on Zoom anyway, so that transition wasn't a challenge. And I think, really just that shift towards the results focus and allowing people to have that structured autonomy has been what's enabled us to sort of power through that transition to this new hybrid work environment. And then just some of the other values you mentioned, they're just ingrained in who we are. You do those core visioning exercises, and you say, would you work for a company if it didn't subscribe to this value? If the answer is no, then you know it's a core value. We are all passionate sustainability people. We care about the stewardship of the environment. We wanted equity and social justice and that's the impact we want to have on the world. And so, building an organization around core values around a purpose and a mission that way where people feel like when they wake up in the morning, that they're going to go out and have an impact and do what they want to do. I think it's kind of a winning formula and it's really exciting to be a part of.
Randy Wilburn [14:58] I got a chance to watch a couple of videos and I certainly encourage anybody listening to this episode. We will put links to some of those videos in the Show Notes, but definitely check Stok out because they definitely practice what they preach. And you had really short videos only like five minutes long that were kind of ushering out 2021 and welcoming 2022, and you highlighted all of the really outstanding things that happened. And some of it was client-related, but most of it was the way that your people came together and all the successes that they had throughout the calendar year and I was really impressed by that. It spoke volumes because you not only say it. A lot of times people write stuff on their website. They put stuff out there just for window dressing, but it appears that you guys really are walking the walk and talking the talk when it comes to all of these core values and that is at the essence, the very essence of who Stok is as a company. So if somebody were to say, oh, I want to work with those guys, I wonder what they’re like. You guys are like wiziwig, right? What you see is what you get. I think that's important because a lot of times people put on a good front, especially in certain industries and certain verticals and markets and the design industry is not immune to this. I mean, it happens, but it's refreshing when you see a firm that really is doing what they say they're going to do and they're not looking at exclusively just how much can they make. What is their ROI going to be, but they're looking at the totality of the impact that their footprint of an organization has on the world, right? I know that's a big statement but it just appears that you guys are putting that into practice. Burke Pemberton [16:48] Well, thank you, I appreciate that and it's good to hear. We're our own worst critics and it can always be better. I think the way to authentically live to an organization's values, the way we strive to is really by being transparent and then listening and then communicating and following up. And so we make a lot of effort to ask our team members, how are we doing? Are we doing what we said we were going to do? Is there a way we could do it better? We have these constant feedback loops. We do it in a lot of different formats, too. We do it in town halls. We do it in engagement surveys, poll surveys, and we have a couple of different programs set up where people have a designated, what we call our people role or a mentor, where they can confide in and say, hey, here are some things I'm struggling with. And we sort of funnel all that into the governing body in the organization that makes sure that we're staying on top from a strategic initiative standpoint, staying on top of these commitments to our values. And it's not easy. We don't do it perfectly all the time. Rome wasn't built in a day. And there's been definitely some iterations, there have been mistakes made. If you're trying to learn, the best way to do it is to make mistakes. Fail early, fast, and often is what they say, right? We've made plenty and we try to learn from them each time and make a little bit less and become more efficient over time. A good example of
that is, Stok is a certified B Corp. And I don't know if you know much about the benefit of Corporation Certification or B Corp certification, but basically, that's a corporate form that allows us to maximize social and environmental impacts in addition to profits, and we can't be sued as business owners for not just being profit maximizers. And so, it allows us to take those risks from a governance standpoint, that might have long-term financial impacts, but aren't having those quick quarterly returns. And, as I said earlier, I think the investment and the impact is a long term investment, and we've been able to really make some riskier moves that if we weren't set up structurally like that we might not be able to and we've seen them pay off over time. Randy Wilburn [19:17] It always pays off in the long run to do good and to endeavor to be good. It always sounds harder to do the right thing but when you do the right thing, good things can ultimately happen. I read an article that you guys put out a while ago about biomimicry, and it was just some really interesting lessons. And there's way more than we could ever unpack in that article on one podcast episode, but since you brought up a couple of the topics that were mentioned in this article, I would certainly like to talk about them, and I encourage everyone to read this article in its entirety because you will find some really strong lessons that you can glean from the information in here. And it will take you back to eighth and ninth-grade science classes that you probably didn't pay as much attention to as you should have. And there'll be some reminders in there about how not far off we are from nature and the things that happen in nature and how those same ideals in situations also happen and you can show parallels to them within the business environment. But you specifically mentioned a short feedback loop, which I really like. I always like to knock the industry from time to time, because I've been in it long enough to be able to do that since the 90s. I know I don't look that old for anybody that's seen a picture of me but I've been around this industry for a while. Back in the day, a short feedback loop was a one-year annual evaluation and that is certainly not what you're talking about. It's funny because as I was reading this, I was like, oh my, that's the thing that Zweig has been talking about for so long. And that was one of the things that we would drive home whenever we would go in and do a strategic plan with a company we talked about shortening the feedback loop, making sure that people know how they're doing, don't wait to the end of the year to give somebody an attaboy or an attagirl and let them know how great of a job that they're doing. Give them information now so they can act on that information and continue to evolve. And I really appreciate the way you laid it out there but since you mentioned that I figured I would let you go a little bit deeper about why feedback is so important.
Burke Pemberton [21:45] And just for the listeners, maybe the first time hearing biomimicry. So biomimicry is using nature to inspire design decisions. And the premise is that nature's had 3.8 billion years to figure out all of the world's problems. And if you look hard enough there are answers probably already out there. And so, we've really tried to use nature to inspire how we work as an organization. And like you said, feedback is one of the critical components of the evolution of survival, of finding food, hunting, gathering and finding shelter, understanding where the risks are, and understanding where the good stuff is. And so, those feedback loops are critical and they're especially critical to Stok because we are a bossless organization. So that's not to be confused with a leaderless organization, but your boss doesn't give you that annual performance review and tells you you're not getting a raise because you didn't turn in your TPS report six months ago. That performance model is broken. One of the first things we figured out when we decided not to have bosses decide our fate, we really try and focus on results. But we need to be giving each other constant feedback. And so we really work with our team members to break down a lot of the socio logical barriers to give either perceived authority feedback, or if they don't have the same communication style or level of comfort with, maybe they're an introvert, or they don't want to speak to somebody with a more extroverted or dominant communication style. And so we've really invested in a lot of different types of communications consulting, and infrastructure. So, some of the stuff we use is like strength’s finders and the disc analysis, which is more about communication styles, and then we've used crucial conversations training. And we try and have our leaders just model this culture of feedback where, as Brene, Brown says, ‘clear is kind,’ right? Like, we're not doing anybody any favors by not telling them what we're thinking but you don't have to be mean when you say it. And that's the trick, right? How do we communicate our needs and what we're thinking in a way that the other person can receive? And that stuff simply takes a lot of practice and we're always getting better at it all the time. And so we focus on that a lot in our development, and we have some structures in place organizationally where people need to be giving each other at least the five people they work with the most. Sitting down and doing monthly feedback. Everybody gets a credit card. Go out and take your colleague out for a cup of coffee or a beer and sit down and talk it doesn't need to be formal, but if you want it to be. You’re an engineer and you want it to be very structured, it can be, but you can have it be super informal. Everybody's got their own style. The style of how it's done is really up to each of our colleagues. And that in and of itself is a work in progress too. Because when people come over from other cultures in other organizational structure styles, they're not used to being able to have that kind of voice or are expected to have that kind of voice. That's something that we have to break down before we build it back up again. People have to step out of that comfort zone and take those risks, and it's not something that you learn just overnight.
Randy Wilburn [25:26] No, it really isn't. And I love that because as I do leadership training, I always look at people that are chomping at the bit to have an opportunity to be a leader. But it sounds like you empower your folks from day one to operate with a leadership mindset, to take ownership of things and not wait for permission but go ahead and do it. Be intentional about some of your actions which is really important. And I see more firms trending toward that way in the design industry and I'm encouraged by that because I think that's the only way that this industry will continue to grow. That's the only way that this industry will continue to attract the biggest and best talent. It's not always the work that individuals are doing but it's also how you set somebody up for future success. And a lot of that is predicated upon how people are able to develop themselves, right? I always say personal professional development goes hand in hand with everything else you do at work. And if you're not getting that, if you're not being fed that, that aspect of it, you're missing out on a whole side of professionally and personally developing your employees or your colleagues to be the best version of themselves. Burke Pemberton [26:41] Yeah, you hit it dead on Randy, and leadership, it's not about a title. We have a very clear pathway to ownership in our organization. We want to be an employee-owned organization and we tell people that we only hire people who we think have the potential to be a partner, and everybody's a leader in this organization. And we talked about the strength finder a little bit but somebody might have some strong analytical strengths, and they become a subject matter leader. And we focus on how they can become an industry thought leader and become a technical mentor, or to help with technical sales as you know that's a very involved process, or somebody has high empathy and communication and we put them in a role like the people role where they can work with their colleagues to help provide them with resources to learn how to self-manage and solve their own challenges. Leadership is about finding people's strengths where their strengths and their passions align and giving them the tools and resources to empower them in that area of expertise. Randy Wilburn [27:55] You're preaching to the choir here and I love hearing that. That's actually one of my goals with this podcast is to expose as many firm leaders and owners to different mindsets and different approaches to how organizations are run, because there's no one perfect way. But there are certainly systems that if we tap into them properly, because I believe we find success through systems. If we tap into those systems properly, we can find success. And I know other firms that are very similar to
yours in terms of how they operate. Their footprint might be different, they may have more people or less, but when they operate with a systemic approach to how they deal with a lot of what we've been discussing throughout this podcast, with mission vision values, and following a blueprint that has had success over time, it pays off in the long run. You just have to be willing to take the journey. Everything that you've discussed on this podcast is not a short-term thing, it's all long-term, very long-term view of where we're trying to go and where we are today, and where we want to be 10 years from now. Burke Pemberton [29:10] I'm a Systems guy too. Systems thinking is my sweet spot that I love and you nailed it. I'll give you an example because I presented on our org structure and some AC industry forums and the first question people always say is that it just really pings. They're like, wait, did you say you have transparent salaries? How does that work? I don't know if you want to grab on to that every time I talk about it. Well, we didn't just like pull back the curtain and show everybody salaries. There's a system. Because you can tell everybody what everybody makes as long as you can tell them why they make that. And so, we have very clear KPIs, very clear objectives. Everybody goal sets at the end of the year and puts down their strategic initiatives that they are going to achieve for that time that they've created themselves and that we all agree to as an organization, and then we hold ourselves accountable, and when we meet our objectives then we justify the compensation. It's pretty prescriptive. It's very objective, and it's very data-driven; it's not fluffy. It's kind of interesting because we set out to do this, that sort of no good deed goes unpunished, right? Like, we set out to do this stuff with very altruistic motives, but in order to try and create equitable systemic structures, it puts a lot of things that people want to be subjective and emotional into very objective and data-driven analysis. That's a lot of how inclusivity and diversity are achieved by looking at the numbers and saying, we need to change this because there's no parity across these different stakeholders. And so, that level of objectivity can be a little bit foreign to people who are, I always mix it up, but I think they are a little bit more left-brained and is the less analytical types. They're like, hey, I'm being reduced to a number, but it's equitable now and that's not to be confused with equity. We're not saying that everybody needs to be treated the same way for everybody's unique and everybody is afforded the same amount of autonomy and the same amount of opportunities to succeed in this organization, but that shows up in a lot of different ways for a lot of different people.
Randy Wilburn [31:41] You know, it's funny, as you mentioned that and as I was thinking when you were talking about transparent salaries. I've actually taught a couple of classes on motivations and one of the things that I always talk about and bring up is
just this idea of, it's a lot easier to have a conversation with two people that work in the same group and theoretically, may have similar titles and how you articulate why somebody might be paid a little bit more than what you're paid when you institute or incorporate the idea of fairness into the conversation. Because a lot of times we want to just reduce it down just to the number. Well, why is he making 5,000 more than I make and we do the same job. It's like, okay, well, let me articulate what this person does on a regular basis. It's not so much the value that they bring to the table that you don't bring, it's just fair for us to pay this individual X amount because of these things that they're able to accomplish on a regular basis. And it's not to say that that individual that you're talking to can't achieve those as well but it creates an easier platform for you to operate from when having those conversations, because they can be difficult conversations. But once you start instituting fairness into the conversation, and articulating across the spectrum of an organization, why people make what they make, then it's a much different conversation than just reducing it to ones and zeros and saying, Bob makes the X and Sally make X and that's just why it is because that doesn't always compute for people. Burke Pemberton [33:18] That's right. It's always a challenging conversation compensation. It's never an easy conversation but if you can point to some sort of guideposts and make sure you're putting all the expectations out there ahead of time so that there are no moving goalposts and try and make sure that the data is visible for people to see their progress and how they're doing. All that stuff is really important. And that doesn't mean that we don't get into the situation or nuance of the salary conversations. That's one of the things that we set out to get rid of. There's a method and a reason and rationale behind transparent salaries and the process behind it. And that's because historically marginalized workers have not felt as comfortable negotiating what would be considered a fair salary. And so we wanted to take the negotiation out of the process, and we do. We make salary decisions, and then we send people a letter and say, here's your updated compensation for the year a and if you want to sit down and talk about it, let's do that and so you'll know what to do next time. And so we get folks engaged in the process, but it's not a discussion because people aren't going to stand up for themselves necessarily and ask for what they deserve and so we need to put a little bit more thought into making sure that people are being compensated equitably. And we have a whole committee dedicated to that, we call it our membership and compensation task force. And we've got members of every team in our finance in our HR groups to sit on there, and anybody can sit on this group and we make all the decisions about compensation, profit distributions, the pathway to ownership, benefits are just in the culture of HR group itself. But as far as the more monetary types of compensation, anybody can sit in that group and anybody can put forward a proposal. And so the
policies aren't coming on down from on high, they're coming from everybody in the organization. And then we look at a guideline, and we say, well, if we did that change, we wouldn't be able to meet this guideline of X percent gross profit, or whatever it is so we're going to have to tweak the policy this way. But once again, it provides that transparency into how we're making these decisions and if you have an issue with it, you can be a part of the decision and that's more of that feedback loop. It's like, okay if you have something you're concerned about, we're providing an outlet for you to plug into to basically express your concerns. You might not get what you want. You might not have all of the contexts of the organization. It's like when my toddler uses a swear word, and I tell her she hasn't earned the right to say that yet. You find out that there are a lot of reasons why things are the way that they are because you didn't know about it but at least now you're educated. I think having that ability for anybody, whether they're straight out of college, or they've been working for 30 years, to sit in that group and say, hey, I think we could do something a little bit different to be more equitable with our comp. I think that's a big part of it.
Randy Wilburn [36:39] I love that. So I'm assuming because of this conversation that we're having, is it safe to assume that you guys practice open book management from an accounting perspective?
Burke Pemberton [36:50] Yeah. Most of our financials are transparent. There's some stuff that's like, we have what's called our human capital contribution. And basically, what that is, it's a 360-degree performance review that we give our peers. So we pick who's going to review us twice a year, and they take an HCC (Human Capital Contribution) survey for us. Like that data isn't public. To me, that's like ‘Lord of the Flies.’ It starts to get real, like, how is that adding value by making everybody just know that like so and so needs to work on their communication or something; that's not helpful. That's helpful for them and they compare their results to themselves, and they work on becoming better as an individual. But as far as company-wide financials, you can go on our intranet and see our P&L, you can see our valuation, you can see our budget, all the margins. I get financial updates all the time. Our controllers give them quarterly. We send out reports to the whole company with how everybody's doing on all their KPIs. Everything's out in the open. Again, when you don't have bosses, the hive mind, it's peer pressure that holds people accountable. That is like self-management theory 101 in that there has to be this sort of peer pressure mechanism which is another form of biomimicry.
Randy Wilburn [38:10] Yeah, absolutely. And just to add to what you shared, it's kind of like what you were describing. It's why everybody doesn't need to know everything. It's kind of like in life too, where you're only going to have a core group of friends or people that you can confide in and share a lot of information with. And those are the people that can hold you accountable, just like what you were saying earlier about smaller groups of four to five people that work with each other and are able to have that kind of feedback, encouragement, motivation, and even sometimes discipline or, an admonishment that exist in a much safer space with smaller numbers. Burke Pemberton [38:53] You're not wrong. The other side of the coin is too much transparency can do more harm than good. I love my wife, but I close the door when I go to the bathroom. So, each of our governance groups has certain fiduciary accountabilities that are delegated to them. And they get to decide what they think is confidential to the group, confidential to individuals, or what can be shared with the company about each and all the decisions they make. We don't publish our partner capital accounts. We don't really feel like everybody needs to see who owns how much and what their net worth is and all that. How does that help anybody in the company? Some things like that just don't make sense but we try and provide as much context as we can and what ends up happening is there's just way too much information out there. And so now, if you had asked me, what's the next iteration, I think it's just having really clear, concise dashboards where people have all the information they need to do their job. And if you want to venture outside of that world, you can, but you're not overloaded with information. I mean, look at your phone, and look at your email. There's just too much. How do you focus How do you make a decision, right? Randy Wilburn [40:08] I have to shut this thing off from time to time just to keep my sanity. So, I get that. All right, well, I want to try to land this plane. I did have a question to ask you because I'm curious to know how you guys, and this is not a hypothesis that I've come up with. I know for a fact that the knowledge transfer in our industry is not happening the way that it should be happening from one generation to the next. What are you guys doing. I'd be curious to know because you guys are kind of on the cutting edge of the work that you do and some of the things that you're focusing on, how are you guys successfully transferring knowledge from one generation to the next and how much time and effort do you put into that? Because I think it's an important aspect of what design professionals do and I don't think a lot of design professionals have satisfactory answers for the best way to do it. Because we have a graying population of design firm leadership, designed firm experts, engineers, architects, you name it and these guys are guys and gals are retiring out and leaving the industry, and all of that knowledge is going
with them. And so I would be curious to know what is Stok doing to ensure the preservation of that human capital and knowledge so that it doesn't go away or dissipate?
Burke Pemberton [41:31] I'm glad you asked. That's a pretty high priority for us right now. We've sort of been in this rapid growth phase for a while and if you aren't paying attention, you can develop a lot of inefficiencies where everybody's got their own way of doing something and then somebody leaves and nobody understands how they're managing their projects or the subject matter expertise related to that. Have you ever had Chris Parsons on this show from KA Connect?
Randy Wilburn [42:01] I know Chris Parsons very well.
Burke Pemberton [42:03] That guy is my hero.
Randy Wilburn [42:05] Yeah, he's one of my heroes. Chris, if you're listening you got to come on this podcast and I know that you have an open invitation. I know he's working on something with KA connect that's really important to him. And he's the kind of guy that does deep work. He's like the design industry's version of Cal Newport. So he's hyper-focused on what he's hyper-focused on and I can't wait to see what he's got cooking in the lab and when he comes out with it, but no, I know exactly who you're talking about.
Burke Pemberton [42:35] So Chris Parsons, KA Connect knowledge architecture inspired a lot of our data-driven knowledge management approaches. I saw him speak at a conference and it was like 2016, maybe and I was just like, wow, he's got this periodic table of knowledge management, if you haven't seen it I’ll send it to you.
Randy Wilburn [42:54] Oh, I've seen it. It's impressive.
Burke Pemberton [42:57] And so, we might have seven of those elements and there's like another 40 on there. And so, we're trying to figure out where the most value add is by biting those off one at a time. I'd love to be doing better knowledge management. I think some of the stuff we do really well is, and it is part of this self-managed structure is we have this culture of what I call working out loud. And so what we do is we encourage people who are subject matter experts to get up in front of the company and present what they're working on, whether it's a cool project or the latest accreditation in their field that they're working on, and how they achieved it or something. And so they'll put together a deck and they'll present it to the company and it gets recorded and it gets filed in our knowledge management system, and it's searchable, and if there's a taxonomy. New hire comes in two years from now and they want to see a presentation on ESG, or carbon accounting, or whatever it is, and that stuff lives in there and it exists. The other piece, and it's not sexy, but it's standardization. We've looked across the firm, for example, and been like, oh, we've got like, we've got box, we've got Dropbox, we've got SharePoint, we've got like 12 different file sharing programs that we're using, let's pick one. How many different task management softwares that we're using Smartsheet and SketchUp, or whatever all the different things are blue beam or PDFs. It’s standardizing. It's not going to have all of the features that everybody wants but if you pick neutral platforms that you can develop on that are going to have staying power in the industry and aren't going to get destroyed by updates, and be tech agnostic enough that you can build on an infrastructure. Getting everybody working on the same platform so that there's a seamless transfer from when a person applies for the job all the way through their lifecycle with the organization; it's all in one place. That's the kind of stuff we really try and focus on and build those inefficiencies in there. But, I think you were talking about succession planning. Stoks, is a pretty young organization. When we think about succession planning, we think about long-term employee ownership. Not as much so as to knowledge transfer but that's become an issue as we've grown really quickly, and we have people moving quicker into senior leadership positions. And it's like, how do they impart their knowledge to others while they're trying to take on this additional responsibility so that they can pass off their old responsibilities. And so once again, it's about standardization. It's like, here's the way we do this. Here's a template for that. As I said, it's not sexy, but it's a huge investment. We have an entire committee. Every team has a person, we call it our Kaizen group. And, every team has somebody that sits on this group that is constantly updating the knowledge base tools and systems, making sure everyone has access to them, making sure they're updated. I hope that answers your question.
Randy Wilburn [46:07] It definitely does. And I'm glad to hear that you guys are thinking about it with some intentionality. Because I think there are a lot of design
firms, a lot of your peer firms out there that are behind the eight ball when it comes to this and hasn't come up with a way to transfer this information. I love the lunch and learn idea. I think firms should consistently and always be professionally and personally developing all of their staff. Aside from the fact that it's a great retention tool, you just want to put the best product out there and because people are your product, you want to make sure that you're putting the best people out there in front of the client, that they are well informed, and that they know what's going on. As you said, we're lulled into this sense of false security because we have these devices. And for those of you that are listening, I'm holding up my Apple iPhone 12 or 13, or I don't know, whatever it is, pick the latest phone, and we have those, but there's so much more that needs to come and a lot of it is transferred individual to individual, not a phone to individual or data or technology to individual, but it's transferred from one to another. And I think the firms that are going to find success in the future is going to really take knowledge transfer very seriously and make sure that they have a system in place to afford everyone the opportunity to gain as much knowledge and understanding as they can within their area of expertise and knowledge. Burke Pemberton [47:41] Yeah, and I think what you've probably seen in our industry that's pretty common is as a lot of these AC industry firms grow, you see that sort of principle led regional model, where there's not a sort of a central brain, which in a biomimetic system like the starfish, you chop off a spider said, instead, you chop off the starfish’s arm, and it's fine, it grows back, and I think there's a lot to be said for that sort of agility of that model. There are certain systems that need to be centralized. And I think marketing, knowledge management, and HR, for sure need to be central. And I would say finances as well, just because the data is so valuable. And so, when you've got all these different offices operating on all these different systems, there's a lot of inefficiencies there. And then like you said, there's a lot of knowledge loss, because you're not archiving it in a central way so I think there is an argument there for some central governance and some centralized standardization. Randy Wilburn [48:45] Without a doubt. I always ask this question, because I really do want design firm leadership to be thinking about this all the time because it is one of the challenges that we face. It's one of those questions that you need to be asking early and often as opposed to randomly during some breakout session that you have once every two years.
Burke Pemberton [49:14] Why bother? You just get everybody's hopes up and then go back to the old way.
Randy Wilburn [49:18] Which sounds like Stok does not do things the old way. And so as we wind this up, how bullish are you about the future? From your lens from Stok in terms of the work that you're doing, the people that you're working with, and the opportunities that are in front of you, how bullish are you on the future in the design space?
Burke Pemberton [49:40] Oh, I’m so bullish and I'm so optimistic. The demand for the type of work that we do is so pressing, and it doesn't matter. I went and saw a really great speaker. I'm not going to promote him because I don't really love his message, but he's an environmentalist but he sort of has this mindset like, it's not as bad as everybody says it is, which I don't necessarily subscribe to that mindset. But I think what we're starting to see is that whether you're on the conservative side of things, or on the liberal side of things are everywhere in between, everybody agrees that we need to reduce our carbon impact. We don't agree with how we need to do that, but everybody agrees and so that is starting to gel. And really, the kind of questions we're asking ourselves are is real estate our boundary? Like, do we want to stay just in the real estate realm, or do we want to focus on broader social sustainability and governance stuff, when there's so much untapped within the built environment from a carbon and sustainability standpoint? Because people are coming to us and they're saying, hey, you look at our supply chain and we're like, you make a phone, we're building consultants. But that's when you're in the sustainability sector, it starts to bleed out into all types of operations, all types of sectors and verticals and business models. And so I think our biggest challenge right now is to focus and to specialize and sort of hedgehog to use a good to great, Jim Collins quote, “do one thing and do it well.” And so I think the challenge is to say, do we go after shiny objects, if so, which ones and so the way to do that is with strategy, and that's where the rubber hits the road and that's where it becomes a lot of fun. And so, the rocket ships taking off for us and it's just a question of where we're going to go at this point. So I would say on a scale of one to 10 of bullishness, I'm 11. Randy Wilburn [52:05] Okay, I like that. Technically, that would be off the charts but I like that. This has been great, Burke. This conversation has gone over an hour now. We've had a lot to share, and we just scratched the surface. We probably will have to have you back at some point in time. [BP – I’d love to]. And certainly anybody that's listening to this podcast, if you're not familiar with Stok, you need to get familiar with them. Their website is stok.com. Burke, if people want to reach out to you, what's the best way for them to connect with you.
Burke Pemberton [52:44] Send me an email, firstname.lastname@example.org.
Randy Wilburn [52:50] And I'll make sure that we put all of Burke's contact information, website address, and some of those things that I shared with you guys from this particular episode, including that really fascinating article on Biomimicry. It's worth your time. Just read it, and certainly, if you have any questions, reach out and ask those questions, because these guys are doing some really great things and I'm glad that we had them on the podcast to share. And so I appreciate Burke you doing that? It's taken a while for us to bring this all together. [BP - It's my fault]. No, no, no, no, totally fine. I must say it was well worth the wait so thank you very much.
Burke Pemberton [53:36] Thank you, Randy. I love what you're doing here and it would be a pleasure to come back anytime. Thanks for the invitation.
Randy Wilburn [53:43] For sure. And when I come up to Denver, I'm going to come to see you.
Burke Pemberton [53:47] Please do. We're right across from the train station.
Randy Wilburn [53:51] I know exactly where you are. There's a nice little Italian restaurant that's right there across from you which is pretty good. Well, Burke Pemberton, CFO of Stok, is based in San Francisco, but technically they have offices in Denver and in San Diego. We really appreciate you coming on the podcast. Thank you so much. [BP - Thanks, Randy]. Absolutely. Well, folks, that's another episode of The Zweig Letter Podcast to learn more about one of the oldest newsletters in the design industry, visit zweiggroup.com You can read articles online, listen to this podcast and sign up for a free subscription to the newsletter and have it delivered right into your email inbox every Monday morning. Sign up today. For more info about Zweig Group's Advisory services or any of Zweig Group's publications, visit zweiggroup.com. You can also subscribe to the Zweig Letter Podcast wherever you listen to it and please consider rating and reviewing us on Apple podcast. I'm your host, Randy Wilburn, and we'll see you soon. Peace.Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19
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