: Tell us about
what led to EMG’s founding.
Smith: It’s an interesting story,
because the impetus for setting up
my own business was that I was both
a success and a failure in a traditional
corporate setting. I was originally an
IT manager, running very large data
centers for Fortune 500 technology
and telecommunications companies
measured on a fully burdened P&L.
Eventually, I ended up at a major
bank, where I discovered there is
a world of difference running data
centers for companies that use
technology to run their business
rather than to generate revenues. It
was very different at the bank where
no one had ever been asked to justify
their technology investment. I, who
didn’t know any other way, continued
the P&L approach to managing my
operation, which caught the eye of
the CEO who then asked me to set
it up as a separate company. Once
it was successfully established, the
business was handed over to another
executive to run. I then decided
to set up my own business in 1992
providing interim CIO services.
: How did the
Smith: We began our Interim CIO
: What is Sustained
business with a unique approach. We
would only perform the service as a
legal agent of the client. This gives
us the ability to hire and fire the
client’s employees where appropriate,
a requirement that generally leads to
a nervous discussion during contract
negotiations. Its relevance becomes
clear, however, as we explain our
value proposition. After several years
of steady growth and outstanding
results for our clients, EMG realized
that the processes we were using to
reengineer IT organizations applied
to the enterprise, as well. In 2000,
we began offering our service,
Sustained Earnings Improvement, to
organizations seeking enterprise-wide
earnings improvement programs,
largely by suspending their culture,
politics, and silos, freeing employees
to uncover opportunities to reduce
SG&A, capital and inventory.
Earnings Improvement (SEI)?
Smith: SEI is both a process and a
promise. The promise is that we will
commit to produce a sustainable
10 percent to 20 percent SG&A
reduction in just ten weeks exclusively
from employee engagement. The
process begins with the CEO,
whose sponsorship is essential to
the successful implementation of a
program designed to elicit employee
suggestions for rapidly cutting costs
through operations improvement.
After an initial rule-setting and
: What is unique
education period with the top three
management levels, EMG works
hand-in-hand with the CEO to drive
the process, including acting quickly
on the employees’ suggestions
through highly visible endeavors.
Rapid, high-profile implementation
sends a message that management
is serious, while rolling updates
create a positive feedback loop that
results in more suggestions. Another
hallmark of the process is holding the
responsible management member
accountable for implementing his
or her own ideas combined with
vetted employee suggestions, then
selling the unit’s ability to continue
to perform its duties in light of their
proposed spending cuts.
about EMG’s service delivery model?
Smith: Fees are tied to reaching the
agreed-on economic goal. We’ve
never had a client take more than a
month to recover their investment.
: How does this
model drive success for your clients?
Smith: EMG effectively flips the
budgeting process from one of
requesting funding for spending to
one of selling ideas for cutting costs.
And because those ideas come from
the employees, there is a cultural shift
towards trust and empowerment that
can be sustained long after EMG
is gone. We leave our clients with a
playbook they can use to implement
SEI on an ongoing basis.
Enterprise Management Group (EMG) is a boutique consulting firm with a unique
approach to operations consulting that leverages the employee experience to drive earnings
improvement. ALM’s Liz DeVito recently met with EMG founder and CEO Jim Smith.