The Fascinating Story of America's Largest Employee-Owned Company
February 3, 1969, was a cold winter’s day in La Jolla, a village on the rugged California coast just north of San Diego. It was also a significant day for 45-year-old scientist J Robert Beyster — a man with a wife, three kids, and a PhD in nuclear physics — who had just decided to quit his comfortable middle-management position at a multinational and strike out on his own.
Dr Beyster was in for the ride of a lifetime, but he weathered the headwinds and sidestepped the pitfalls that line the route to success armed with a simple, central mantra:
Put People First.
Dr J Robert Beyster’s insistence on, and faith in, those three words guided his fledgling company, Science Applications International Corporation (SAIC).
He was a scientist, rather than an entrepreneur, but he wisely remained staunch to his people-first policy. He engineered a simple formula to implement and maintain it:
- Hire smart and motivated people,
- give them the autonomy to build the business around their interests,
- and share the rewards.
Beyster didn’t start out with a grandiose plan; he certainly had no idea that over coming decades, SAIC would go from a tiny start-up to America’s largest employee-owned company, with a staff of almost 40,000 and an annual revenue of $5.5bn.
The SAIC Solution
I first heard Beyster’s tale at a conference held at Rutgers University, where I had been invited by Professor Joseph Blasi, a world-renowned expert on employee ownership. I was fascinated by the concept and the story, realizing there was much to learn from SAIC.
As Beyster pointed out in his book, The SAIC Solution, putting people at the centre-stage led to some uncomplicated organizational principles. That proved good for the company and its burgeoning workforce, soon thousands strong and spread around the world at 150 locations.
The principles Beyster applied were insightful, but we at Corporate Rebels had seen them before. They closely resembled the eight trends we had observed in the 150 progressive companies we’d visited while researching our first book, Corporate Rebels, Make Work More Fun.
The SAIC case provides us with a working example of how trends spring to life. Observing Beyster’s crash-course in organizing and scaling a tech firm can help bring everyone up to speed with our trends.
So, let’s look at the eight Corporate Rebels trends, and how they manifested at SAIC.
Trend 1: From Profit to Purpose and Values
This is all about “why”: Why do progressive organizations exist? Why did their founders start them in the first place?
Spoiler alert: it’s not all about the money. Beyster’s motivation was never purely financial — and it seldom is for leaders of truly progressive organizations. The goal is brought within reach by common purpose and shared values.
This entails more than glib mission statements; we’re talking about establishing a crisp and clear identity that will motivate, activate, and inform people — within and without the organization. It revolves around purpose, and it can empower entire communities.
What, you may be wondering, was the original intention and direction for SAIC? In Beyster’s own words it was “to perform research in a productive environment”. He wanted a company that would attract those scientists and engineers capable of making a difference in nationally important issues.
His definition may seem disarmingly simple, but this was a company founded by a nuclear physicist and initially staffed by a few of his fellows. It wasn’t, in principle at least, a greenhouse for growth. The team at SAIC may have been modest, but the aims were lofty: To make a difference to the entire free world.
The best way to achieve that was, Beyster reasoned, by finding technical solutions that lay beyond the reach of others. He was convinced that would give his people a sense of purpose, and add a spark of energy and passion. An environment that encouraged creative thinking, in a company that wasn’t afraid to take on noble goals, would make staff retention a doddle. Creativity, innovation, and entrepreneurship quickly became core SAIC concepts.
J Robert Beyster used this well-defined ambition to create a stable company that would remain functional even in troubled times and rocky patches. It depended on creative research, not profit. Rewards were important, of course, and in this case, they would be fairly distributed in a radical way: shared ownership.
Everyone at SAIC had a say in major decisions, and enough money came in to allow for business expansion. In a way, Beyster had created the antithesis of the traditional workplace formula, with profit driving success.
Importance of profit
The importance of profit can’t be ignored; money is as important to progressives as it is to traditionalists. More of it means more impact — and that, generally, means selling something. And so it was at SAIC.
It had been dealt a good hand. What it had to sell was brainpower, and there were plenty of clients for that commodity. They included government agencies such as the military, the FBI, and the departments of Defence, Energy, and Homeland Security.
SAIC sold services by developing and embracing disruptive technology. The pitch, the selling point, was the goal of keeping the nation at the forefront of innovation. That could include making cities safer, defending coastlines, providing financial security, internet security, tracking down terrorists, or searching for a cure for cancer. Any and all of those things could be packaged to fit SAIC’s stated purpose. That became part of the corporate challenge.
SAIC would eventually leverage its knowledge and capabilities to get a foot inside the door of global commerce. Expertise came from some unusual and obscure projects, such as working with the US Navy to help Dennis Conner’s sailing team to win the America’s Cup (he was victorious four times).
Whether working on government projects or commercial contracts, SAIC’s people had feelings of pride, purpose, and the satisfaction that comes with doing work that matters.
But purpose was far from the only requirement. Beyster expected to make a fair profit; losses weren’t anticipated. The possibility wasn’t even considered. He wasn’t interested in making a quick buck at the expense of doing something unethical, though. He was contributing to the national good, while creating a progressive workplace.
All Beyster was aiming for was 3 to 4% profit after tax. A modest target, and one that meant that projects, divisions, and groups all had to be profitable.
SAIC’s profitability was lower than that of its competitors, but the emphasis remained on:
- steady growth,
- customer satisfaction,
- and, of course, the delivery of those beneficial scientific and technical products and services.
Put your money where your mouth is
Sure, many leaders have expressed values along those lines. The difference between Dr Beyster and most of the others is in his conviction: he put his money where his mouth was.
The entire organization was designed to chase purpose before profit, and to perform excellent scientific and technical work. Staff were expected to take the initiative, honour their commitments, and speak their minds in the policies and management of the company they co-owned. They expected fair rewards for their time and effort, and did what was expected of them — which was whatever was best for SAIC.
Short-term pressures were minimised, and any temptation to compromise on goals and standards was resisted. SAIC’s profits were primarily invested in its people — and the future. There were no external shareholders motivated by ROI.
This prompted the installation of two “profit pools”:
- one to distribute bonuses and stock to employees,
- the other to invest in promising projects.
Some employees may have been motivated by bonuses or stock options, but generally, workers at progressive organizations tend to be less motivated by filthy lucre. The benefits they seek go beyond the financial: work of lasting value, independence and autonomy, participation in company initiatives, and recognition for outstanding performance.
Trend 2: From Hierarchical Pyramids to Networks of Teams
This is about structure: think of the old-school shape organizations tended to take. Today's dynamic landscape renders it obsolete. Command-and-control? Too rigid, slowing down momentum and stifling engagement. Static, inflexible organizations are relics of a bygone age.
Enter the progressives, reshaping hierarchies with decentralization. Autonomous groups steered their own ships, seamlessly linking up to form a vast, cohesive collective. Every group had a stake in the outcome. They rode the highs and navigated the lows, fostering a spirit of responsibility, entrepreneurship, and camaraderie. Enhanced communication, adaptability, and mutual support became the norm.
Dr J Robert Beyster understood this half-a-century ago. He wanted his employees as close as possible to customers. He achieved that by minimising management layers and simplifying decision-making. This led to a company with a strong tendency towards decentralization — primarily the result of another of Beyster’s management strategies.
It consisted of four steps:
- Hire smart people,
- Provide them with the freedom and authority to work on things they are passionate about (as long as their performance is consistent to prescribed financial controls),
- Constantly seek new business opportunities, and,
- When an opportunity arises, unite the right people to take advantage of it — and make it happen.
Beyster structured SAIC around groups of colleagues — divisions — with shared or allied interests. Those interests could include a customer base, a business speciality, or indeed any factor that made sense. The new decentralized model was fluid, dynamic, and flexible.
And it stayed that way, even at scale, when the pressures of growth and traditional management-thinking would push for centralized rigidity and inflexibility. As SAIC grew, it kept decentralization in focus. When a division reached a certain size, it would often be divided in two. Those offshoots would grow and divide in their own time — rather like cell structure in Nature.
Entrepreneurship at every level
The resultant company comprised hundreds of diverse divisions of differing sizes — some might harbour 10 team members, others 300. Each and every one was focused on encouraging entrepreneurship at every level.
The divisions enjoyed the freedom to run their own operations; they acted as independent mini-companies. They could hire and fire, allocate rewards, and market their services. They could also invest in marketing or tech innovations within the modest profit-margin goals.
They could also decide where to locate. With the emphasis on being close to the customer, divisions often established small offices nearby — and sometimes even in the same building as — their clients.
In its heyday, SAIC had some 500 offices scattered around the world.
Divisions enjoyed autonomy, but it was not unlimited. And, as stated so often, freedom brings responsibility. The autonomy accorded to a division was directly related to its proven capacity for good judgment — bearing in mind the company’s interests. Any discord here, or when lines were crossed, and there would be consequences.
The company heeded requests for help and would allocate resources to solve problems. If all efforts were unsuccessful, well, some people would have to move to other roles. There was no patience shown by SAIC if anyone who was struggling failed to reach out for help; nor did they suffer anyone fool enough to avoid transparency. Those individuals would have to look for a position elsewhere — sooner rather than later.
A lean and sensible set of controls
SAIC put in place a lean and sensible set of administrative procedures to control its distributed operations. Divisions were given tight financial guidelines and controls. Headquarters provided legal, administrative, and financial support in areas that divisions had little interest in handling themselves.
But a great idea and a bunch of happy customers wouldn’t be enough to cut the mustard. A division had to be able to financially support itself. Profit and loss was calculated for each, which would report its results using basic accounting and reporting metrics.
And, in SAIC’s eyes, results should either be positive or come with a really good explanation. Each division had to pay a “P&L tax” at corporate level. This portion of the budget was invested in grassroots initiatives considered important for tech and business development.
The doctor believed it was best to grant operational staff autonomy, and back them with resources — whatever they needed — to satisfy customers. Hence that lean central organization, providing autonomous divisions with essential guidelines and support.
Beyster introduced market-inspired mechanisms to facilitate collaboration and motivation. Divisions made internal agreements, aka memoranda of understanding, to ensure clarity on deliverables and contract schedules.
Employees had similar contractual relationships with the divisions to which they were assigned. If necessary, divisions would follow client contracts by moving where the action was. For intra-division co-operation on some matters, a deal would need to be struck. These agreements were taken as seriously as signed contracts.
Motivation spooled freely from the concept of employee-ownership, based on proportional market-inspired incentives. The better a division performed, the better the company performed. That would boost the stock price and bring more opportunities.
Beyster believed in rewards for good performance, but not for their own sake. They had to be earned. The reward mechanism at SAIC had two vital components:
- it was performance-based,
- and available to all.
There was some healthy competition between the more entrepreneurial souls at SAIC, and the company didn’t mind that at all — as long as it didn’t become ugly or unethical.
Bonuses were linked to performance by something known as the “F-factor formula”. This comprised the key metrics that drove the success of the company. The most important were the profit rate and revenue growth. These figures were plotted on a chart to provide, at a glance, individual divisions’ contribution to the stock price. Each set its own targets for revenue growth and profit. Hitting the mark meant an F-factor score of 1.0. Exceed expectations, and that could go up to 2.0 — and a higher F-factor would earn the group a higher bonus.
Revenue growth and profit rate were considered equal in importance. The F-factor accounted for a direct trade-off between the two. This was seen as fair; divisions that were active in established markets couldn’t generate the kind of revenue growth that those in new markets could. They could, however, compensate by generating a higher profit margin. High bonuses were still possible if the profit rate was jostled along a bit.
What’s important to note is that rewards were made for actual performance, not for the difference between planned KPIs and actual performance — as happens in many traditional companies. That meant there was no motive to sandbag results or negotiate conservative targets.
The company went a step further by establishing its own broker-dealer subsidiary, called Bull Inc. This provided a limited internal platform for co-workers to buy and sell stock. This in turn created an internal “stock market” to arrive at a fair stock price. That was important: people who left SAIC were required to sell their stock back to the company.
As such, the company became a place of shared wealth, shared risks, and shared responsibilities.
Trend 3: From Directive to Supportive Leadership
Traditional command-and-control set-ups thrive on directive leadership. From team leaders to VPs, the game there is about “directing” — often involving self-promotion and dimming the spark of those lower in the hierarchy.
Leaders in the landscape of progressive organizations wear a different mantle. We’ve chosen to use the term “supportive leaders”, but they could equally well be called servant leaders, authentic leaders, or participative, humble, ethical, empowering leaders.
These are the torchbearers who stand shoulder-to-shoulder with those at the front line. They don't just question the "this is how we've always done it" mindset, they torch it, along with other outdated processes and procedures.
Their philosophy is more in the spirit of “if it doesn’t exist, invent it”. Such leaders don't preach; they live an ethos. They are the embodiment of the mission, that stone tablet of values; they are the architects of culture. Their mission? Tear down barriers and help every individual to flourish. Authority isn't a job title; it’s leading by example.
Do unto others
SAIC bosses were expected to act in service of the people for whom they made decisions. They were not expected to direct them. “Do unto others” was an unspoken company philosophy — and that went for the bosses, too.
Leaders had two main roles:
- to bring in business,
- and to play a catalytic role in getting that business done.
Then the other leadership job started: Recruiting the right people to get the work done. Leaders had to understand what workers did to bring them together in high-performing teams, and know how to encourage them.
A demanding CEO
Beyster was a demanding CEO, but he understood the value of granting — and sharing — authority and autonomy. He expected results, and kept his finger on the corporate pulse.
He designed the firm around people: customers, employees, and shareholders — in that order of importance. He guarded against creeping bureaucracy to ensure the company stayed nimble and flexible enough to respond to evolving markets, and even quicker-changing technology advances.
He saw his role as catalytic. He set the bar high enough to keep people on their toes, while being a role-model himself in terms of effort, attitude, and ethical standards. Moreover, he was also a man who held people to their promises.
Trend 4: From Plan and Predict to Experiment and Adapt
Agility, in business terms, is so important it should perhaps always take the upper case. The old-school "plan and predict" playbook involved annual budgets, resource allocation, and strategies which would trickle downwards — despite often being rooted in overconfidence of “tomorrow”. As complexities mount, prediction falters.
The game-changers? Adaptability and Agility. Progressive companies avoid precise forecasts. They champion experimentation at every turn: in products, workflows, organizational frameworks. Change isn't an annual agenda, it's a daily pulse. Adaptive pioneers share a core belief: it's better to try and fail than never to try at all.
SAIC had had a culture of experimentation in its blood since it was founded. A premium was placed on it. It could be viewed as an in-vitro experiment, mainly because Beyster applied a scientific approach. He considered every decision to be an experiment, not holy orders from on-high.
The firm was growing, increasingly complex, and a long-term test-bed for combining people, projects, programmes, and strategies. If something worked, it was replicated in other parts of the organization, or scaled with more funding. No experiment was seen as a failure. Each was an opportunity to learn something, and to gauge which of those lessons could be applied to future projects.
Long-term planning was avoided. SAIC relied on the entrepreneurial skills of its people — following their interests, with an emphasis on flexibility. Taking the initiative was rewarded; slavishly following an unworkable plan was not.
Instead of wasting time with multi-year roadmaps and PowerPoint presentations, Beyster relied on his instinct and that of his workforce. When a promising business opportunity came along, SAIC would open a temporary new office close to the clients to help a division win the business. If all went according to plan, the office would become permanent. If not, it would be dissolved, and its people would start hunting for new opportunities on fresh ground.
This trial-and-error approach allowed the company to act quickly. Small experiments would sometimes erupt into major business opportunities; others came to nothing.
The system wasn’t without boundaries. To counterbalance autonomy and authority, Beyster implemented disciplined, systematic financial planning. There was still zero tolerance for breaches in ethics, integrity, or ill-informed risk-taking.
There were still no multi-year plans — but there were quarterly, mid-year, and end-of-year reports. These added a sense of a direction to assist decision-making as well as monitoring progress. These financial planning sessions and reports were taken as seriously as formal contracts.
A lack of long-terms plans doesn’t necessarily mean a lack of long-term strategy. This was Dr Beyster’s domain. He set out broad objectives, put out regular communications to remind people what kind of company they were creating, and supervised co-operative efforts. It was all written down in a handbook called Principles and Practices of SAIC, which was continually revised and updated.
Beyster met with a small group of experts — internal and external —at least once every two months to brainstorm and debate strategy. The think-tank helped Beyster to keep tabs on developments in the firm, and in the outside world.
The outcomes of these meetings would sometimes sway the future of the collective. What they didn’t do was draft random documents filled with orders to be followed. They identified potential areas for new experiments that could improve and grow the firm.
It turned SAIC into — Beyster’s term — an “idea factory”. This was a work culture never lacking inspiration; ideas flowed, with the best often coming from the front-line workers.
Everyone seemed to be looking for a new way of finding customers, a new way of working, a new business opportunity. To encourage experimentation, annual “pockets of money” were set aside for people to invest in their ideas.
Sometimes, this initiative led to major successes — like SAIC’s acquisition of Network Solutions. Mike Daniels was the employee who spotted the potential of a rather small internet-domain registry —before the internet was really a thing.
Network Solutions was in financial strife, and Daniels convinced his colleagues to snap it up. In 1995, SAIC did that, buying the 400-employee firm for about $4.7m. The business was scaled and resold in 2000 to VeriSign — for a cool $3.4bn.
Mike Daniels’s story shows the power of strategic thinking, and the wisdom of encouraging entrepreneurial employees to act on business opportunities, rather than relying on top-down planning processes.
A Darwanian slant
A key thing Beyster understood was that experimentation rarely went right the first time. He was fine with that — as long as lessons were learned, and a more suitable approach was found. He didn’t appreciate foxes being caught twice in the same snare, nor would he suffer any waste of resources. This forgiving but firm methodology could apply to tinkering with company structure, trying out a new technology, or entering a new market.
Formal feedback loops were established to share lessons learned, and gather feedback from those experimenting with initiatives. Information was shared across the company at regular meetings and via the in-house IT network.
Although everybody had the right, and the development money, to try out new ideas, the company tended to rigorously test each one first. There was a culture of high personal responsibility, and healthy levels of peer pressure. To take a punt on an idea was to accept personal responsibility for it, and a duty to keep honouring the commitment.
People continuously had to prove and validate themselves to ensure a future at SAIC. It was a competitive environment, but not in the hierarchical sense, in which people vie for limited positions. This was a workplace in which the “winners” were those with the brightest ideas — cost-effective, and technically excellent.
SAIC motivated divisions to keep experimenting; fail to do so and another division may swoop in. Multiple divisions could even compete against one another for a contract from the same customer. It took on a Darwinian slant: the strongest ideas survived.
This had a downside. A row between divisions sometimes left lingering resentment — which could end with one group refusing to work with another. Beyster accepted this as an unavoidable side-effect: it was a division’s role and responsibility to grow its business, not look out for others. People were rewarded for building up their division — so co-operation usually made sense.
Trend 5: From Rules and Control to Freedom and Trust
We all love freedom, right? And yet, traditional organizations build up thick layers of bureaucracy to keep employees within prescribed lines. The temptation to draft policy for every conceivable event or scenario, to micromanage, stifles engagement, hampers innovation, and suppresses creativity. It becomes an anchor rather than a safety net.
Progressive organizations operate with the refreshing premise that employees are responsible adults deserving of trust. Control isn't the key: autonomy is. The workforce must be trusted to shape the working routine with decisions on where, when, and how things should be done.
Beyster had built his company on the very notion of freedom. It was designed for autonomous work — coupled with passion, energy, motivation, and creativity. Employees could pursue their own business interests as long as they were in line with the company’s. They were asked to help improve on the freedom and autonomy they enjoyed, and take the company to the next level.
The far-reaching freedoms at SAIC came with strings. Employees were treated as corporate citizens, expected to evaluate how their decisions would impact their work, the customers, and the company. There was an overriding, if unspoken, expectation that everyone would operate legally and ethically.
While people were encouraged to grow their divisions under the parent company umbrella, they were referred to institutionalised guidelines. And everything, always, had to be in the company’s best interests.
No abuse, please
Freedom was not something to be abused; the company could not be put at risk, and nor could there be unfair competition with colleagues. The routes leading to success were important — and not all were acceptable.
SAIC’s philosophy here is noteworthy. Traditional companies try to control risk by restricting freedom and introducing bureaucratic mechanisms of control. All this was aimed at the few — the famous 3% — who might abuse their freedom.
Beyster’s thinking was that over the long-term, control upon control would lead to stasis. SAIC hired and retained people who had shown good judgment. They were free to pursue their work as they wished —within budgetary restraints, complying with legal requirements, and doing no harm to anyone.
SAIC aimed for a minimum of processes, regulations and policies that would limit what people could do. It was building an intentionally autonomous and transparent working environment.
But the doctor was anything but naïve. He knew a few bad apples would probably try to play the system to their advantage — but he also knew they were the exception rather than the rule. And he had confidence that the organization would identify them before they do any major harm. On the rare occasions that a person would show poor judgment, SAIC leaders would step in.
Instead of creating rules and processes that would bother the 97%, they focused on solving the problems of the 3% — without slowing collective progress. Beyster felt it was more logical to replace one person than to implement controls that would affect others.
To make this balancing act work, clear boundaries were needed. Next to the legal and ethical boundaries were implicit expectations about financial accountability: the responsibility to deliver results. And there were performance guidelines to ensure and verify that was happening.
SAIC provided its people with a management performance tool based on a set of key metrics. They were simple to understand, and could be directly influenced by action in the workplace. There were at least five of these metrics:
- Revenue growth (typical targets of 12 to 15% per year)
- Profit before tax (6 to 7% for government contracts, 7 to 8% for commercial contracts)
- “Timesold” (a minimum of 75%)
- Total value of proposal submittals (typical target of four times revenue)
- Accounts receivable (a maximum of 60 days of revenue).
The metrics of timesold, the total value of proposal submittals and accounts receivable, needs explanation.
Timesold represented the fraction of time employees charged to billable hours versus company overhead, over a specific period. Beyster believed that for a division to be successful it would need to run at a timesold minimum. People should be spending at least 75% of their time on customer contracts. The remaining 25% could be used to cover overhead activities, such as managing the division and writing proposals.
That brings us to the next metric: the total value of proposal submittals. Each year, a division was expected to submit proposals for new work worth at least four times its current revenue. This was motivation to continually construct fresh proposals. Fail to do that, and you were unlikely to meet your revenue and profit targets. It wasn’t only about writing and submitting proposals — it was also about winning them. A strike rate of 70% became the standard.
Accounts receivable was another important metric, representing money billed to customers but not yet received, or “in the air”. Divisions had to limit this to the equivalent of 60 days’ revenue to maintain liquidity, and keep cash-flow positive.
Track of performance
The performance of all divisions was tracked, with results published every two weeks. It was easy to see which were outperforming — and to help others to learn their tactics. It was equally easy to tell when a division was in trouble. This gave the leadership the tools to take action, and to understand why some divisions were struggling.
Numbers don’t always tell the whole story. There might be legitimate reasons for a division to miss its targets. But in the absence of any, it was time to come up with solutions. As such, tracking financial results was an effective means to control risk.
Autonomy became a lever for motivated, talented, and entrepreneurial employees to build their little businesses, attract customers — and share in the rewards. That could be achieved without anyone issuing orders — but not having someone telling you what to do can have its downside.
If you could come up with ideas, and possessed the drive and passion to turn them into profitable business, then SAIC was the place for you. If you performed and made your numbers, you could do pretty much what you wanted.
But if you were looking for somebody to take you by the hand and show you the formula for success, you’d be on thin ice — or in hot water.
Trend 6: From Centralized Authority to Distributed Decision-Making
Traditional organizations have long championed centralization — suggesting that a position higher in the hierarchy equates to superior decision-making prowess. And that’s a flawed notion.
Forward-thinking companies lean into decentralization. They recognize that front-line employees, with first-hand insights into customers, suppliers, and production, are best suited to make pivotal decisions. In such arenas, authority and decision-making are dispersed across ranks. It's not laissez-faire — it’s about responsibility and accountability, remember?
SAIC created a culture that aimed to engage all employees in decision-making. They were expected to contribute ideas to improve the collective — and to make the right decisions when putting those ideas into action.
SAIC had to push decision-making authority to the lowest possible level. While a formal hierarchical organization was in place, it went to the people closest to the customers. The idea was to minimise red tape and shift decision-making authority to where most opportunities (or problems) arose.
The right to make decisions was important to employees, their customers, their division, and their bottom line. It encouraged them to act like “real” owners. They would seek out ways to improve their financial performance, improve their products and services, and cut back on unnecessary costs.
Decision-making authority comes with guidelines. Embarking on initiatives that were outside the box was fine, but so was avoiding any action that could make others feel uncomfortable.
Decisions as experiments
Being basically a bunch of scientists, SAIC tended to treat decisions as experiments — and would be more interested in the outcomes of certain decisions. That SAIC was a science and tech firm was reflected in its identity and culture. Decisions were based on rational thinking, analysis, and deliberation.
This move to participative decision-making encouraged people to engage in matters that could impact the collective. While, in the end, the leaders made most of the major decisions, all employees were expected to provide suggestions, recommendations, and honest opinions. Feedback was welcomed, and valued.
For such a process to flow freely, there can be no censure for whatever input is delivered. Beyster wasn’t looking for consensus. Leaders listened, took all views into account, then carefully crafted their decision. Their actions would impact all employees, even those who were not necessary in agreement.
Committees had a role to play, here, and at one stage, SAIC had more than 100 of them. One might be dedicated to exploring and establishing a new reward mechanism, another to introducing paid-holiday policies, a third to reviewing bonus programmes. Others considered upgrading planning and review processes, exploring new opportunities, or implementing technology.
Starting a committee was simple enough; those interested would pitch their idea to top-leadership, who would approve or veto it.
Trend 7: From Secrecy to Radical Transparency
Information-sharing can be a touchy subject. Traditional organizations tend to restrict information to a select few. For authority to be distributed, transparency is a must. Without that, potential risks being stifled.
Progressives champion the “Open by default” mantra. This takes transparency from a concept to a tool. With universal access to data, documents, and financials in real-time, individuals are empowered.
The result? Enhanced decision-making, swift problem resolution, and amplified collaboration within and beyond the company walls.
Such openness is core to progressive organizations, and to science and tech’s cardinal ideology. It enables evidence-based peer review, and building upon another’s ideas — something of great importance for these fields.
Transparency by default
Ideas must be shared. Discoveries must be, too, with the protection of the patent system — and not just out of curiosity. There should always be free and open debate, with no falsification.
Allowing people to share ideas and discoveries with peers engenders feelings of pride, status, success, and legacy. And, of course, it advances the company mission.
At SAIC, where the lines between science, technology, and business were sometimes blurred, the culture was geared to default to radical transparency. SAIC’s culture of participative decision-making, mutual accountability and swift responses hinged on open communication.
All employees were kept up-to-date on issues affecting the collective. If they couldn’t resolve an issue, they at least had a rational and entrenched method to start seeking a solution. Feedback was always sought, and seen for its proper value. Even with their performance and financial feedback loops in place, SAIC ensured there would be transparency about regular committee meetings and formal and informal forums.
SAIC relied on IT innovation to create the requisite openness and accessibility. It used every suitable device and channel to help its employees to freely express themselves. New ideas could be picked up, flaws detected, and issues with current projects discussed.
It may have started with landlines and mail, but — as everywhere — things now hinged on videoconferencing, internet communications, and an in-house, company-wide knowledge-sharing platform called ISSAIC.
ISSAIC was essentially a proprietary intranet with the tools people needed for effective autonomous work. It was the primary means of communication to record contracts and tasks. It was also used as a time-keeping tool and as a training platform. Members were connected with one another in real time, wherever they were, and there was the bonus of increased transparency.
ISSAIC acted as digital glue for the company’s loose federation of divisions.
Trend 8: From Job Descriptions to Talents and Mastery
This final trend is about getting things done. The traditional allocation of tasks is based on static job titles and rigid descriptions — most of which quickly become obsolete. This outmoded approach confines individuals to the posts to which they are assigned, rather than letting them work towards something with passion.
Passion and prowess make good bedfellows, and progressive companies recognize that. They’re quick to harness the talent sprinkled across their teams. By allowing workers to handpick tasks and sculpt roles according to individual strengths and interests, engagement is fostered, cultivating the sort of mentality that can come up with masterpieces.
At SAIC, this trend started the moment a newcomer joined a team. The number one quality the company was looking for was an ability to take the initiative. That one thing could make a difference for customers and the company.
The "right" people
There were no rigid job descriptions, no search for the “right” person to fit a defined mould. Hire the right people, give them the freedom they need to do their jobs well, and things tended to fall into place at SAIC. The employees were allowed to pursue their interests to drive the firm and build their careers.
So, who were the “right” people for SAIC? The company looked mainly for high-achieving self-starters, people who could take initiative, drive things forward, and contribute to the collective.
Also sought-after were people who could demonstrate prowess in their role — another thing that can make a difference for customers and company.
A scientific and/or engineering bent was useful, as was a knack for using the latest technology, and a habit of finding the best solutions to client problems.
That last quality was most valuable if the problems were of national importance.
The company put a premium on finding the most talented people to swell the ranks. When they were onboard, they could simply be pointed towards the issue at hand and left to their own devices. SAIC people were, and were treated as, responsible adults.
The trick was sourcing individuals who were secure in their professional selves, able to define their roles in a natural way. As the company grew, employees were given “guiderails” to structure their career paths. Three such were identified, of equal importance to the company:
- the technical path,
- the marketing path,
- and the leadership/administrative path.
These paths were not mutually exclusive, and could be mixed and matched to suit specific talents and interests. People had to find the roles that matched their motivations.
Of course, these things can change over time, and individuals and careers can evolve. In those cases, it was time to reorganize to keep everyone engaged.
There were two flies in the ointment.
First, despite the three paths, everyone was expected to show entrepreneurial spirit, familiar with emerging customer needs, able to develop client relationships and keep an eye open for the company’s wellbeing.
If you won the work, you could own it. You would be responsible for delivering to the customer and growing the business. Some people are better at selling than others; if that wasn’t your skill, you had to find someone to help you.
Second, although you enjoyed the freedom to craft your own work around your passions, you had to be willing to accept responsibility for your actions and the outcomes.
There was still room for mistakes and failures, as befitting of a culture of experimentation. But there was no room for excuses. People needed to take ownership of the way they crafted their work — and of any mistakes made while doing so.
This was all based on the belief that kindred spirits tend to attract and harmonise: highly motivated people prefer to work with other highly motivated people. They like their talents to be recognized, they like to be allowed to work unsupervised, and they appreciate rewards for good work.
Workers who proved unable to show initiative or motivation were swiftly weeded out. The colleagues controlled each other. It didn’t take long for SAIC to gauge a newcomer’s drive and ability.
Those who came from, and liked, strict hierarchies, accustomed to plenty of guidance and direction, were likely to find that SAIC wasn’t the place for them after all. Most left of their own accord. Those who couldn’t see the writing on the wall were shown the door instead. Bad behaviour or poor performance would quickly get you shot down — even if you were a boss.
Colleagues assumed joint responsibility for any “slacker situation” by doing something about it. It was said that at SAIC you could fire your own boss, and that was true. If it was justified, of course.
On the other hand, the people who could thrive in a challenging, rapidly-changing, slightly unpredictable environment usually went on to enjoy long careers with SAIC.
These eight trends made SAIC a progressive workplace with an entrepreneurial culture. It was based on fairness, as it applied to employees, customers, and shareholders.
Beyster described SAIC as “a hierarchy of ideas and knowledge”, with exciting roles for those who could help to grow the company. He also saw SAIC as a meritocracy, in which go-ahead people were rewarded and pushed up the ladder of success.
That was reflected in the ownership and distribution of rewards. SAIC thought both should depend on performance, not entitlement. Each employee had the right to a fair portion of corporate equity, earned according to their contribution to the collective.
Beyster believed that creating value included an obligation to share it with all who played in a part in the process. In his world, nobody could win unless everyone who had contributed won too.
This eventually led to a company 95% owned by its employees. It was a golden formula. For the 34 years (1970-2004) that J Robert Beyster was at the helm, its stock price rose at an average annual rate of 34%. If you’d invested $100 in SAIC in 1970, you would have had a cool $3.4m three decades later.
The end of the progressive culture
But sadly, this is not a story of management perfection.
When Beyster left in 2004, the progressive culture went with him. Within 18 months, SAIC went for an IPO. It was transformed into public company; its entrepreneurial and ownership culture — the key driver of success for all those years — was dismantled.
SAIC lost its mojo, the secret sauce that differentiated it from its competitors. The stock price went into a protracted decline, with losses for the new shareholders. With performance still dropping, it was soon decided to split up the foundering remains.
That was the end of the progressive culture, and of America’s mythical, employee-owned behemoth.
Why bother sharing?
So, why am I telling this story? Well, a good deal can be learned from the past. Corporate Rebels picks up smart ideas from old pioneers and bright young things.
We’re inspired by legendary thinkers and doers, including Dr J Robert Beyster himself. Combining stories old and new is no contradiction. Our ideas are grounded in the past — and future-focused.
This isn’t nostalgia, it’s panning for future gold in streams of the past.
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