CEO and Founder George DeMet shares a continuation of ideas presented at DrupalCon Barcelona with his new talk on the benefits of running a company according to a set of clearly defined principles, which he's presenting next week at DrupalCon New Orleans. It's called Finding Your Purpose as a Drupal Agency.

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Transcript

Allison Manley [AM]: Hi, and welcome to the Secret Sauce by Palantir.net. This is our short podcast that gives quick tips on small things you can do to make your business run better. I’m Allison Manley, an account manager here at Palantir, and today’s advice comes from George DeMet, our Founder and CEO, who as a small business owner knows a thing or two about how to run a company based on clearly defined principles.

George DeMet [GD]: My name is George DeMet, and I’m here today to talk about the benefits of running a company according to a set of clearly defined principles. What follows is taken from a session that I presented last fall at DrupalCon Barcelona on Architecting Companies that are Built to Last.

At the upcoming DrupalCon New Orleans in mid-May, I’ll be continuing this conversation in an all- new session called Finding Your Purpose as a Drupal Agency. If you’re able to attend Drupalcon New Orleans, I hope you’ll check it out.

Some time back I came across an article from the early 1970s about my grandfather, who was also named George DeMet. He was a Greek immigrant who spent more than 60 years running several candy stores, soda fountains, and restaurants in Chicago. While the DeMet’s candy and restaurant business were sold decades ago, the brand survives to this day and you can still buy DeMet’s Turtles in many grocery stores.

I never really got to know my grandfather, who died when I was 7 years old, but I have heard many of the stories that were passed down by my grandmother, my father, and other members of the family.

And from those stories, I’ve gotten a glimpse into some of the principles and values that helped make that business so successful for so long. Simple things, like honesty, being open to new ideas, listening to good ideas from other people, and so forth.

And as I was thinking about those things, I started doing some research into the values that so-called family businesses have in general, and that some of the oldest companies in history have in particular.

The longest lasting company in history was Kongo Gumi, a Japanese Buddhist temple builder that was founded in the year 578 and lasted until 2006. At the time that Kongo Gumi was founded, Europe was in the middle of the dark ages following the fall of the Roman Empire, the prophet Muhammed was just a child, the Mayan Empire was at its peak in Central America, and the Chinese had just invented matches.

At some point in the 18th century the company’s leadership documented a series of principles that were used by succeeding generations to help guide the company.

This included advice that’s still relevant to many companies today, like:

• Always use common sense
• Concentrate on your core business
• Ensure long-term stability for employees
• Maintain balance between work and family
• Listen to your customers and treat them with respect
• Submit the cheapest and most honest estimate
• Drink only in moderation

Even though the Buddhist temple construction and repair business is a pretty stable one, they still had to contend with a lot of changes over their 1,400 year history. Part of what helped was that they had unusually flexible succession planning; even though the company technically was in the same family for 40 generations, control of the company didn’t automatically go to the eldest son; it went to the person in the family who was deemed the most competent, and sometimes that person was someone who was related by marriage.

Kongo Gumi not only only built temples that were designed to last centuries, but they also built relationships with their customers that lasted for centuries.

In the 20th century, Kongo Gumi branched out into private and commercial construction, which helped compensate for the decline in the temple business. They also didn’t shy away from changes in technology; they were the first in Japan to combine traditional wooden construction with concrete, and the first to use CAD software to design temples.

And while Kongo Gumi’s business had declined as they entered the 21st century, what ultimately did them in were speculative investments that they had made in the 80’s and early 90s in the Japanese real estate bubble.

Even though they were still earning more than $65 million a year in revenue in the mid-2000s, Kongo Gumi was massively over-leveraged and unable to service the more than $343 million in debt they had accumulated since the collapse of the bubble, and they ended up being absorbed by a larger construction firm.

Principles are designed to help answer the question of *how* a company does things, and what criteria they should use to make decisions. In the end, Kongo Gumi was no longer able to survive as an independent entity after 1,400 years in business not because of economic upheaval or changes in technology, but because they strayed from their core principles, stopped taking the long view, and went for the quick cash.

Companies that want to be successful in the long run need to identify their core principles and stick to them, even when doing so means passing up potentially lucrative opportunities in the short term.

Regardless of whether the business involves building Buddhist temples, making chocolate-covered pecans, or building websites, a focus on sustainability over growth encourages companies to put customers and employees first, instead of shareholders and investors. These kinds of companies are uniquely positioned to learn from their failures, build on success, and learn how to thrive in an ever-changing business landscape.

AM: Thank you George! George will be presenting his session, Finding Your Purpose as a Drupal Agency at DrupalCon New Orleans on Wednesday, May 11. You can find out more on our website at palantir.net and in the notes for this particular podcast episode.

If you want to see George’s presentation from DrupalCon Barcelona last year on Architecting Drupal Businesses that are Built to Last, you can also find that link in the notes for this episode as well.

For more great tips, follow us on Twitter at @palantir, or visit our website at palantir.net. Have a great day!