Scaling cultures without breaking them

Frontier Economics is a consultancy that specialises in the fields of competition policy, Regulation, dispute support, public policy, and business strategy. Founded in 1999, with just a few economists in a tiny London office, they now have almost five hundred staff and seven offices across Europe. Offering economic advisory across major strategic, regulatory and policy issues, their clients are diverse and include global organisations, regulatory agencies, and government departments. Sector agnostic, Frontier, is known for its work in energy, technology and digital, telecoms, financial services, retail, transport, water, health, and education.

 

We asked Frontier's Managing Director, Phil Burns, to share his experience about scaling their business internationally without breaking their core culture.

 

How we broke the norm

 

When I describe myself as an entrepreneur, I can tell that most people are thinking. "An economist who's an entrepreneur? Really?" which makes me smile because they're right, economics is often seen as a rather dry academic field, the "dismal science.". But as founders back in 1999 when Frontier began, we were.

 

In those early days, we realised that we had a bunch of economic skills that were highly marketable in a world that was quite staid and academic, and far from service driven or commercially minded. We thought this created a wonderful opportunity. When you think about the decisions that government agencies make around whether to let a merger go through, or what happens in the water sector over price controls. For example, these matter massively to an organisation's bottom line and strategic direction. So, we worked entrepreneurially to provide economic advice and support that was tailored to a client's problems, communicated with clarity, so it could be easily translated into the client's decision-making.

 

We prided ourselves on blending very high- quality economic analysis with this level of client care. In terms of the offering to clients, this was how we broke the norm in our particular field. Today almost all the consultancies in the markets we work in have upped their game, so we must of course stay ahead of that and also find new ways to differentiate ourselves from our rivals.

 

Dealing with abandonment issues Throughout the 1990s we saw the collapse, break-up, and failed sales of many professional service firms, which some of us as founders personally experienced. Because many founders focused on sale rather than sustainability, and ran their business as an autocracy, staff felt abandoned when decisions were made that affected their livelihoods and careers, with zero say about how they felt about a merger or an acquisition.

 

It was not pleasant for those of us hit by this kind of leadership that takes its core assets for granted, but it's why we were hell-bent on making sure Frontier was different. Major energy went into thinking how we could grow into a sustainable and high-performing company where we could all flourish.

 

Merging siloes and devolving leadership

 

The original four directors each had a particular specialism and we managed our clients as we saw fit. At the beginning we mainly worked independently of each other, head down ploughing the furrows, yet we trusted one another to plough away for the benefit of the whole firm. Culture was not something we sat down and built a strategy for but came from how we worked day to day.

 

The somewhat independent way we worked for the first year or so meant devolved leadership was there from the off. However, with that came a centralised form of leadership too. Each week, we got together in the pub opposite our office for an exec meeting. This kept us connected with one another and was how we forged a sense of mutual understanding around the direction of the firm.

 

As we thought about the business at large and our vision for it, we began investing time in working out how we would develop as an entity and what the right governance measures might be. We knew from experience that if we didn't establish our cultural roots, there would be fragility.

 

Why we said no to external investment

 

The two key ingredients to our culture successfully scaling were clear from the start: first, every employee would be a shareholder. This meant saying no to external investment and the external shareholders that always come with it. This has built a strong sense of affiliation in the firm, and a sense of shared endeavour and commitment.

 

The second ingredient was clarifying our values. We didn't do this through an agency coming in to "do" our branding and tell us which values would sound good: we did this as founders based on who we were and why those values mattered so much to us.

 

We identified that being open, interesting. profitable, and fun were what drove all of us and as simple as they sound, they just worked because we know how and what they feel like in the business day to day. Whilst some might challenge us on economics being fun, we had a blast from the off and to this day, nothing's changed.

 

Values as a market edge

 

Frontier's values and culture encourage everyone to bring their whole self to work. By not having a structure that equates being successful with knowing how to play a political game to climb the corporate ladder, we can just get on with our jobs. Our culture requires us to be engaged and entrepreneurial; to ensure that all parts of the firm strive to achieve their full potential; and that each part makes a strong contribution to promoting our culture internally and enhancing our reputation and brand externally. This is how our culture has become a competitive strength: we focus on what matters and reject anything that doesn't.

 

We converted our values into a practical reality to live by. This is why we devolve significant leadership power into our practices, offices, and business management teams. We believe this encourages personal responsibility. entrepreneurialism, innovation, creativity. collaboration, teamwork, and respect. It can also create some inevitable confusion and messiness because we operate in a trust-based framework rather than a transaction-based model. So, especially for new joiners, this can take some time to navigate, but that can also be a positive learning experience.

 

Our central leadership ensures that our devolved leadership aligns with our values and purpose. And ensures the enablers are in place to build long-term sustainability so that the whole is greater than the sum of the parts.

 

Critically we saw growth as a function of how successful we were in living our values in building a strong culture, brand, and reputation. We never set a growth target - we felt that we would get the growth we deserved, and that we would trust ourselves to manage our business smartly to adapt ourselves for the growth we thought we might be able to achieve.

 

Seeing organisations as dynamic living organisms

 

This sense of growth - and success more widely emerging naturally from the fundamentals of the business and the marketplace, and not something to be forced chimes with a broader view I take of our organisational design. And this is to think of a firm like ours as a dynamic living organism rather than an organisation to be led via rules, processes, power centres and command and control.

I see the task of leaders as to nourish the healthy development of this living, evolving organism, so it flourishes and is high performing. But this doesn't mean that we can simply let everyone do what they want. That would most likely lead to a chaotic. dysfunctional, and unsuccessful business. Equally, for our business to develop in a healthy way, we should avoid veering towards the other end of the spectrum. As a self- managing company, we try to avoid swinging between each extreme in the following ways:

 

One - Ditch comfort blankets

 

We definitely do not want to cover everyone in a bureaucratic comfort blanket of rules to control the risks that can arise with devolved leadership and self-management.

 

This way of working comes from leaders and managers who fall into three camps: those who simply like to impose rules for rules' sake; those who would like rules imposed on other people but not themselves; and those who quite happily accept the comfort of rules imposed upon them. For all these people, rules create a superficial safety (or power), but they kill curiosity, innovation, and creativity. Unnecessary rules undermine accountability for people to act in the firm's best interests and create bloated management structures where rule-makers and rule-monitors inexorably increase overheads. You end up with managers who manage management and ultimately stand in the way of sustainable development.

 

Two - Resist hierarchies

 

Another comfort blanket is the call for superfluous clarity within internal structures. This we reject as it leads to hierarchical management systems, and a demarcation. between practices, offices, and business management teams which undermine cross-cutting partnerships and organic cultural growth.

 

Three - Stamp out group think

 

We do our best not to indulge another strong human instinct: the need to mix with like minded people. That undermines diversity and inclusion, innovation, builds group think and echo chambers, and puts a barrier in front of value- adding cross-practice/cross-office partnerships and partnerships between economists and BMT staff.

 

The underlying conscious and subconscious motivations that underpin these forces are extremely strong: indeed, they are hard wired within all of us to lesser or greater degrees. The role that both the central and devolved leadership plays is to "hold the space" and resist these forces. If you don't, then safety nets can evolve into a tangled mess that, over time, run the risk of strangling an organisation. Whilst this way of seeing scalable organisational design, and the culture that supports it, was something that grew naturally in Frontier, I was rather pleased to know a leading academic called Frédéric Laloux felt the same. His book Reinventing Organizations: A Guide to Creating Organizations Inspired by the Next Stage of Human Consciousness may sound grandiose but it's a must-read for all leaders interested in how to scale without becoming overly-regulated and getting bogged down in policies.

 

Growing pains when scaling culture All that said, our experience, of scaling our culture as we grew without breaking it, has not been without its bumps. There was a degree of discomfort we had to get comfortable with along the way.

 

When we were relatively smaller, with 50 to 100 people, we scaled our culture by role modelling and being hands-on as directors. We don't run a kind of consulting business where we just fly in a director to have a few words of wisdom with our client and then fly them out again. We remain heavily involved in the coalface. So, through our directors' project work, our ethos, culture, and brand were laid down and communicated through daily, hand- in-hand engagement with junior staff.

 

As we grow, it is harder for that direct connection with all staff to be maintained. and this can weaken the communication and living of our culture to all. So, we've worked to build stronger cross-cutting networks around the firm that can allow our culture and values to be lived and experienced widely. When feedback via staff surveys suggests we might not be doing that as well as we could, a degree of humility is essential in tackling the good and the bad. Our values have stayed constant but as the business has grown by around 15% per year, how we have lived them operationally has evolved - which has kept us in a constant state of healthy adjustment, forcing us to face into the inevitable tensions and trade-offs that arise.

 

As we grow further, the importance of a strong cadre of leaders who not only have the full set of skills that make them excellent economics consultants, but also the deep levels of emotional intelligence that equip them for the challenges of leading a company like ours becomes ever more relevant and critical to our future success.

 

Scaling globally by behaving locally

 

When we open new offices, we expect that our leadership fosters both an authentic local culture that respects the local environment, clients and people, and also strongly connects to the whole-firm culture. It's not an either/or: we don't want cookie-cutter offices but nor do we want a local office culture that is so dominant it becomes a silo. It's the job of the leaders in those offices to hit both those objectives.

 

An entrepreneurial delegation of responsibility offers people an opportunity to consider how they'd bring a German, Spanish, or French mindset to the organisation whilst retaining connection to the whole firm culture. Happily. this cultural freedom has meant every office that we've opened has been successful.

 

Avoiding a rescue culture

 

Giving responsibility to people for the task that they own, helps us see if they've delivered what they've promised, and if they haven't, then we explore why not without care and open reflection that avoids a culture of blame, hiding, and rescue. It's a case of allowing a business to flourish by empowering people with supported learning by doing. without judgement and that respects our values.

 

Obviously, we have arrangements in place to try to avoid situations where big mistakes happen too late in the day: the way the projects are set up, the access staff has to colleagues and senior staff; the collaborative environment that has been created; and the ongoing QA we put in place are all critical ingredients. Because Frontier doesn't have external shareholders or organisational politics, the culture of collaboration has developed organically and strongly supports the high-quality work that is being done.

 

What we have learnt is that the worst thing in the world would be if we clamp down. micromanage, or give poor feedback that leads to a culture that shames and blames. That pushes people into being risk averse, anti-learning, and undermines the values that we know has fostered our success.

 

So, where does the buck stop? There are several answers to this question. as you'd expect, given the type of firm we are. To those to whom responsibility is devolved, we expect that this will be executed in the service of the firm as a whole. These responsibilities will vary across practices, offices, BMTs, and for each cohort of staff. We don't have detailed KPIs and balanced scorecards to monitor performance, but we do have mutually reinforcing discipline facilitated through open communication, feedback channels and performance reviews, with central leadership playing an important role in this process. And the central leadership itself is accountable to the wider group of Directors. our Board and our shareholders (our staff) for ensuring that our business runs smoothly day-to-day, and for creating the enabling conditions under which opportunities are optimised, risks managed, our culture and brand enhanced, to fulfil our potential and support our medium-term sustainability.

 

What about the money?

 

It's no accident that profitability is one of our values, and as a self-owned business, virtually all our profit ends up back in the bank accounts of our staff. The fairness of the division of the spoils is a critical driver of sustainability, one we work hard to get right. I saw the cost of getting it wrong time and time again with professional service firms in the 1990s and early noughties. Many consultancies grew and then broke apart because their remuneration model ended up completely out of sync with the underlying value generators. And it was quite easy for those divisions to break off because the consultancies were run as silos so there was already no deep sense of connectivity to the whole.

 

At its best, culture embraces and aligns with the commercial realities of the markets we operate in. To attempt to disconnect the two is to invite trouble.

 

Look to the past when building the future

 

When you forget that as leaders your role is to make the business greater than the sum of the parts then you miss some great opportunities. Even worse - as history has taught us - if leaders see it only as a set of parts that can be functionally and transactionally moved about as they see fit, then the business will operate on very shaky foundations.

 

Sustainability requires a sense of shared purpose, with the governance, operational and behavioural elements aligned to that purpose. With this alignment, the inevitable tensions, and disagreements around "how" that purpose can be best fulfilled can be capable of being accommodated and addressed. Without that alignment however, the organism becomes dysfunctional and prone to breakdown. As such, success is not guaranteed: growth, expansion, changes in the market, and big shocks (like covid) require us to continually sense where the alignment is and where it is.