"Look for islands of positive deviance. Start with a small team. Change is evolution, not revolution. "
This is supposedly the easiest way to build a free company. At least according to Martin Palička, Chairman of the Board of Etnetera Group and until recently its long-time CEO.
I didn't give up and bothered Martin with more detailed questions. It seemed too simple. On the other hand, Martin certainly knows what he's talking about. After all, he and his team have built a half-billion-dollar holding company that has long offered more than just custom software development.
I was interested in Martin's motivation as well as practical guidance in management. What did we discuss?
🔸 Why does Etnetera Group build on the principles of a free company?
🔸 Will the principles of a free company survive a long-serving CEO?
🔸 How to balance free enterprise and hard business principles?
🔸 How much is free enterprise about "me" and "we"?
🔸 When is the leader of a free company most important?
TRANSCRIPT OF THE INTERVIEW
Martin Hurych
Hello. I'm Martin Hurych and this is Zažeh. Today's Ignition will be about how to build a group of companies and still choose a slightly unconventional management style. We'll look at how to incorporate elements of a free company into a group of companies with a consolidated turnover of around half a billion Czech crowns. If we're going to talk about these topics, it'll be with none other than Martin Palička, hello.
Martin Palička
Hey.
What does it solve when running?
Martin Hurych
Martin is Chairman of the Board of Directors of the Etnetera Group of companies. Before we get into these relatively heavy topics, you wrote in the preparation that you are a former athlete and you like to run. When the pounds allowed, I used to run as well, and I always had big question marks about whether I should run with myself, or whether I should work at it, or whether I should listen to something. How about you?
Martin Palička
I hope I didn't write in the prep that I like to run, but that I go for a run every now and then to be precise. I did athletics for a long time, and by having knee problems afterwards, I rather throwing, javelin, discus and so on, so solo disciplines. I usually go for a run by myself, I rarely have headphones on, so I'm really more of a runner and it's what ever. Sometimes I really switch off completely and sometimes when I'm running I'm thinking about some stuff from work. It's true what a lot of people say, they think of some solutions to problems afterwards. That has worked for me at times, I just clear my head and maybe find some new perspective on solving a problem. Much better for that though is more like walking, so when I go for a walk I think in peace and it's better.
Martin Hurych
So if you're running around and something comes to mind, give me some advice, I had a bunch of things coming to mind too, then I came home and because I had nowhere to write it down, I quickly forgot about it and it was gone again. How do you write it down, or where do you put it?
Martin Palička
Good point, that's exactly what I was going to add, but I didn't want to be long. Sometimes I get an idea, then I come home and forget it. So sometimes I actually come in and immediately write it down on my phone as a note, and sometimes I go take a shower and then I can't find the point. So I totally agree. I can't put a percentage on it, but I'm sure it's about half and half, because it's not like I'm honest, I come in and write it down right away.
Why does Etnetera Group build on the principles of a free company?
Martin Hurych
My friend said if it didn't stick in that head, it didn't deserve to stick in that head. Come on, then, introduce us to Etnetera. You are referred to as Etnetera historically, however, you are now a conglomerate of companies. Let's introduce who you are, who you represent and how you got there.
Martin Palička
Etnetera Group was formed around Etnetera a.s., a joint stock company that has been on the market for 26 years. It was founded as a classic web studio by two students, Vasek and Martin, at the Czech Technical University. What may have been different from the start was that they realized within the first two years that if they wanted to continue to grow, they needed to build quality management. I think a lot of owners at that time didn't have that kind of mindset, so for example two owners pulled it off for an awfully long time on their own. They realised that right from the beginning, so they started building that management and I was lucky enough to be there very early on, in 2000, and Etnetera was founded in 1997. It was simple, they needed to manage the finances, I was an economist, so they asked me if I could help them with that. The first courtship didn't work out because I just got a call from Vasek, the co-owner, the moment I signed a contract with a brokerage firm. Being into stock investing, I wanted to try my hand at it there, doing analyst work, so I apologized to him that it was stupid, but I had just signed a contract that morning and I should stick to it. Then we saw each other occasionally and after a year it finally worked out. As Vasek likes to say, I managed the finances in such a way that when I found out that I didn't have enough money to pay salaries, I went around the company to see if we could issue some invoices and it worked. We gradually grew and built a team that I think was stable for the long term. In 2011, after some discussions, we came to the conclusion that we did not want to build one big company, but it's more natural for us to build a group of companies. We were afraid of a certain hierarchy. We even had ISO in place at the time, which I was implementing, and I think I can be proud of that because there was really a minimum of artificial things. It really was such a narrow folder of paper, it was really described processes, but it caught up with us that people started hiding behind it. So, we just... realized that it was not quite right and we were inspired by Tomas Hajzler. We read The Weirdo and books like that and we found out what a free company was and that it was very close to our hearts. Since then, we've been building a free company, trying to bring those elements in and build that group of companies because that's what freedom is all about. It's not one boss telling everybody how to operate, but it's about giving those individual owners the ability to build their business a little bit in their own way. What we have in common are values and the fact that we respect each other as much as possible, we've been together for a long time, but everyone does it a little bit differently. So if you were to talk to the individual leaders of those companies, each one would be completely different, but I believe that the most important thing that connects us is how we work together, our values and that we know what to expect.
Martin Hurych
Does that mean that the group has the same values across those companies?
Martin Palička
I firmly believe that it is, or so we always say, and you can see it in the way it works. We never vote on the key things, we always come to a consensus and if someone feels that a particular view prevails, we do not try to push them over, but they themselves say that it is better that way. So that is terribly important, that there is not some kind of hard management and that is how we work in the long term. We have never voted, we always come to an agreement, and for those key things it cannot happen that, for example, three shareholders are in favour and one is fundamentally against and pushes it through. The last one always adapts, which I think is important.
What are Etnetera's corporate values?
Martin Hurych
Many people say they have corporate values, but few can name them. What are your values?
Martin Palička
It's a little tricky, I know where you're going. We don't have them spelled out exactly, everybody would tell you a little bit differently, but it's the same thing. It's being as transparent as possible, being fair to yourself and to your clients. We've always said we're not going to sell tomorrow for today. So that kind of longevity of relationships, that kind of stability I think is part of the foundation. Certainly there's total trust, that whole free culture can work when you bring a lot of trust in there. Of course, there is a certain risk with that that sometimes somebody will take advantage of it, but you can't stop and say we better start managing it differently. There are also some mistakes associated with it that we all have to expect to happen, and that control is not as strict as it is elsewhere. Then there is the coupling, which for us means coupling technology and people so that the technology brings something to those people. I can think of an introvert, an extrovert. It's awfully easy to make a team where it's all extroverts, they're going for it, and the introvert feels bad. I've had to spend many years learning how to work with programmers who are introverts. You get the feeling that we've got a deal and then I see somebody in there who doesn't talk much and it's scrappy and only the next day they give some kind of reaction to it. Then I find that if it had been voiced earlier, it could have changed the decision dramatically.
What does Etnetera do?
Martin Hurych
I interrupted you about what Etnetera actually does when it's not building a conglomerate of companies.
Martin Palička
What's important to say is that Etnetera is really being created from within, so it's not a patchwork of companies connected from the outside, but it's an incubation of companies from the inside. That's terribly important because at some point there we feel that we have to give some part of it more freedom and more responsibility and at that point we go through the process that we went through last year. We separated the mobile development business, Etnetera Flow, from the biggest Etnetera, which also went through a rebranding, so it's now Etnetera Core. It was actually a multi-year process where we talked to the current leader about it, we knew we were rushing there and we were looking for the right moment when everyone was ready for it. You could see how it went through the company and it had a lot of support, but at the same time it didn't damage the relationship with the parent company because there's a lot of mutual respect. At the same time, we realize that we're going to continue to make those projects extremely interconnected, but each of those companies has a slightly different mindset as well, and that will support that. So those are terribly important things to me and that freedom, as they always say, is very much linked to responsibility. The good thing about those leaders is that they have to be people who have a great deal of responsibility because they realize that from day one they're suddenly responsible for payroll, for cash flow, and there's nobody behind them. That's where I see the importance of that co-entrepreneurship because we create other co-entrepreneurs who form that group with us.
When can I think about my own spin-off?
Martin Hurych
As a potential leader of an internal Etnetera spin-off, what do I need to have in my hand to make it work, to get away with it, to get something I can be properly proud of that will have a badge on the Etnetera noticeboard?
Martin Palička
Good question. First of all, it has to be a clearly defined service, product, so that it is a group where the companies are complementary and not competing. So there has to be a fairly clear essence, which is why I said mobile development, for example. We are still doing web development, there are some interconnections, but in principle it works. We want to do more web analytics, emailing, Etnetera Activate, we want to be consultants and so on. At that point, when the client then gets the portfolio of services, they should very quickly find out what they want. There's a market relationship there, so it's not that we're pushing that client into taking everything from us, because I think that client may then feel uncomfortable at some point. I say it's up to them, we have a menu, they can choose the company that suits them. Of course, we're happy to work together because if you have it from one group, we'll sort everything out internally, whereas if it's three companies that are still competing, it doesn't work as much. There are many clients where only one firm is working and of course there are x number of clients where we have two or three firms working together.
What does business look like within the Etnetera Group?
Martin Hurych
One other thing occurred to me in terms of trading. How do clients react to the fact that you're more or less falling apart, that it can sometimes be opaque to some people who's doing what? The other thing is, so when you grab a client for multi-platform development, or for a broader range of services that you provide, how do you then manage collaboration within relatively independent firms?
Martin Palička
I still realize I didn't finish the previous question. Of course, it is still important for the leader to have strong support in the team. So it's certainly not some decision from the top, but it's been discussed a lot with those people and there has to be that fairly high level of agreement from all those people that the department makes sense and that it motivates them. That's important and then of course the personality of that leader is important so that they're able to take that responsibility and it's not that I want the positives but as soon as the wind starts blowing I start hiding.
Martin Hurych
So let's break it down, so it's not hard for you. How's the deal, anyway? A lot of companies at one time are addressing what I call the master product with clients, so that the client understands what's even in that hierarchy, so that it's graspable. So how do you do the business and is it done at a group level or do the individual groups or those individual spin-offs have their own businesses as well?
Martin Palička
I'll start with the second one. Each company has its own business activities and that is a prerequisite for that company to be able to separate. If it wants to be separate, it has to have some penny on its clients and its contracts so that it's not just separating something that's supposed to work together. It has to be self-contained and it has to start blowing on it and be able to take care of itself. Each of those companies is very independent in that respect and those joint projects are something that connects us, but it's not a must. There are some firms that have a much larger percentage of their own contracts and some that are more connected. Obviously, most of it goes after those development contracts that Etnetera Core does, and then the smaller ones are added to that. Sometimes those contracts come from the smaller ones and we join them with development, but certainly for that client I don't think it's confusing in any way. On the other hand, in tenders for large e-shops, for example, I know that it has helped us repeatedly to make it clear for that client. Suddenly he found that if he wanted to, he could really get full service from us. The client can choose, we don't push them into it and we're ready to work with them. To make sure the client understands what we do, that's why we did a transformation of the whole group a couple of years ago, where we still had startups that we had bought over the years hidden in there. For example, we founded a startup called VRgineers, we founded Virtuplex, and sometimes those clients, with the way some of those things were being seen in the media, suddenly didn't know what Etnetera was doing. We realized we needed to get that in order, so we kept Etnetera Group as a full service group that does those digitization projects and guides clients through digital transformation. Next to that, we put the startups under some PIE Ventures brand and we're already trying to promote Etnetera Group without the startups so it doesn't make a mess. Since then, I feel like it makes a lot more sense to clients.
How are projects coordinated?
Martin Hurych
The other half of the question was how do you then coordinate internally and how much pressure do you put on upsells, cross-sells, if any.
Martin Palička
This is, as you can guess, the hardest part and very long-term, where you want to maintain the freedom of those individual companies, which is the basis. The moment you start pushing it from the top and telling it what to do, then you can put it back together again. On the other hand, you need to give maximum reasons for those firms to work together and the bigger the project and the more firms, you can imagine that the more friction there is. Those people don't mean badly, but there are different priorities at any given time. There are situations where it works great and I often say it's very much about the people and not so much about any processes. There are two people who always agree and find common ground. But then again, there will be two people who find that path harder, I won't disguise that. At that point, you need some escalation mechanism in there to say that these people are unable to come to an agreement and need to address this in some way. It's actually a never- ending run, we're learning, we're learning to do joint deals effectively, to get along better, but as I say, it's always closer to the shirt than the coat. When I'm playing for my company, I'm a lot closer there, so it's a lot easier than when I'm playing for the group and suddenly it's a little bit more distant. The effort from us is there and I think that's where it's a lot about those owners giving as much support as they can and explaining that even though the path is sometimes difficult, it's the right path and those people overcoming those challenges. If we learn that, then I think we're building a unique group in the Czech market because a lot of groups are really different, the cultures are different and a lot of times those people don't like each other. We try to catch that first and foremost so that when there are problems, they're not personal. People have different priorities, but they should like each other and be able to get along and that trust is there. I firmly believe that if we continue to do that, we will expose a group that is very interesting to that client, not only in the services but also in what's behind it.
Will the principles of a free company survive a long-time CEO?
Martin Hurych
You've mentioned the principles of a free company several times here, some call it a turquoise company, a lot of accountability, and I'll add a second level to that. You stepped down a few weeks ago as both CEO of Etnetera Core and CEO of Etnetera Group. Will the group and the free principles in the company survive without a long-time CEO? Because I'm often impressed that these principles are very much tied to the founder or the face, and if there's anything critical to these types of companies, it's a change of face at the top.
Martin Palička
If I could answer that, I would be very happy. I, on the other hand, wish that under the new leadership the principles had been deepened and I thought I should have done even better. I sincerely hope that the answer will be that that will not happen. I will, of course, do my best from my position as chief executive and co-owner to continue to help those leaders and make it work. It won't be as much of a day-to-day operation, but it's already working I think significantly more without me anyway. Those principles and that spirit I hope won't change because it's about all the owners honoring those principles, that's how we actually picked that leader. My colleague who runs the Etnetera Group, I believe he has those principles in him as much as, say, I do, so I wouldn't worry about it there. I think the problem is mostly about the little compromises along the way. I know that the path that we chose many years ago is the harder path, often the longer path, but one has to know internally that it is good. The moment he makes it a little shorter and easier, he starts making compromises that then add up over time, and that is the detour from that path. I did my best not to stray too far, but in retrospect I realize that if I had been even more consistent in some things and taken an even harder path, we would be much further along. So that's something that I would wish for the new leader, that they would instead go down those harder paths, because that's where I think the company gets even stronger. I haven't been as consistent in some things lately as I would have been, say, a few years ago, and at that point some of those leaders weren't making decisions that I internally felt were good. By actually tolerating that, I've already allowed myself a little bit to allow the company to digress and do things that I would have much more drastically limited before. These are of course the thoughts that keep going through my head, and internally I keep convincing myself that it was the right move because I've been at it for so long and needed someone younger. My colleague is 10 years younger and has a lot of energy. I believe it's about the energy and trust he has from us maximum and the support we give him. After that, I don't think there should be any fundamental reason for the detour. It's about those tough moments where the CEO needs to know that he can take the harder path, which may mean worse financial results, but that we will support him in that. That's the bottom line for me, is that I've always felt as free as I can be when I've made a decision that had a short-term effect on lower dividends, so I knew my colleagues fully trusted me and knew it was the right thing to do. I will try to carry this forward, of course, so that colleagues are not afraid to make those tough decisions that may look like they will take some money away from us in the short term.
How to balance free enterprise and hard business principles?
Martin Hurych
For much smaller companies that have followed a similar path, it could be that they started building on too sunny and too hippie principles and forgot a bit about the hard fundamentals of business. Then the first crisis comes along that rocks the company, and suddenly everybody's not so great friends and it starts to creak a little bit. You obviously managed to do that, because I suppose you couldn't have grown into a hundred million dollar company otherwise. How did you balance that right at the beginning, when were you still friends but when was it hard business to give it some economic fundamentals?
Martin Palička
Super point. I totally agree with this, because even the label of whether someone is a free company or turquoise is awfully hard for me after all these years. We can load those principles in different ways and we can check off somewhere what I do and don't meet. I think it's exactly about that inner conviction that this is the right way. These people have to trust me that I'm not saying this because I've loaded it somewhere or because I want to make more money. That's when the problem comes, those people have to stand behind you and know. For the first few years there were debates in our country that we didn't even know what it was and where we were going. You always have to take something apart to put it back together again. At that point it was really about that conviction, that leadership, that those people, even though it was difficult, had to believe that it was the right thing to do and that we could handle the problems. If the company believes in itself, we believe in the people, and they believe in us, hopefully in some reasonable way, then every crisis will overcome. Since we have another not-so-easy year ahead of us with big challenges, that's what I always say, that those challenges have moved us forward. I feel like we've performed much better in times of crisis than when things are going well. So I'm more of a manager who felt better when the year was tough because that's when it's really about pulling those people down. It's when things are going well that the biggest mistakes are made. Being a finance guy originally and having managed finance for 10 years, I never forgot the fundamentals. But it's true that I've been running it very much by feel lately, and that's something that the company needs to get better at, because I had a couple of spreadsheets and that was enough. Even though I'm a finance guy and I should have cool tools to analyze everything, I said I just need a couple of Excel spreadsheets and some feeling of that company and I believe I'm not going to make hardly any mistakes. Of course, the colleague who is taking over can't build on that because he's been there a shorter time and he's not a finance guy, so it's clear he's going to have to change the reporting. I'm willing to help him with that so that the follow-up is maximized. I definitely think we're not a group that doesn't build on hard data as well. There are quarterly reviews, or semi- annual discussions over business plans. But I've never liked long presentations, for me it's always about what we want to accomplish that year, so that those people know what we're going for, and that can be done in a couple of slides.
How much is a free company about "I" and "we"?
Martin Hurych
Now it has been said several times, I should have, I did, I didn't need, so I was wondering what the decision-making mechanism is within Etnetera. Because I would expect more of us.
Martin Palička
Thank you for your feedback. As I'm reflecting now on how I've been functioning, it's not about me of course, on the contrary I try to let most things flow. Talking about us, it's that I'm now taking the feedback that maybe I should have reacted differently at certain times. It's a very decentralized operation, so I always remind people of that when they go on vacation. You go on holiday and whoever is managing it in any sensible way doesn't get the phone to ring. So, on the one hand, he might feel for a while that he's actually useless there, it took me a while too, but then I started to enjoy it. When I went on vacation, I hardly ever get a call telling me what to do. They all know what they have the ability to do, at most they get a call if I had to sign some kind of contract. What I perceive, for example, in difficult moments and what we are still learning, is that the company is not yet able to make that decision at some point, that it is debated. At that point, that leader is still there to take that debate somewhere quickly and make those uncomfortable decisions.
Martin Hurych
So there is still an individual at the top of the pyramid, not a management committee like in some other companies.
Martin Palička
I've met a lot of people over the 10, 12 years that have a committee and stuff like that, and in the end I know that it always comes down to the individual. The leader is the one percent, half a percent, but it's usually the most difficult, the hardest decisions where they're expected to take that responsibility.
When is the leader of a free company most important
Martin Hurych
When I observe this from the outside, because I am a typical corporatist, I see that the leader, wherever he is hidden and whatever his calling card, is always the most important in small or big crises. Isn't that right?
Martin Palička
That's what I was trying to imply. For that company to work, I think when you're running in some sort of normal mode, I think that he's kind of sanding the edges. The leader is from the fact that some people don't quite understand each other, but in the end you feel that you just need a little bit and they'll get along. With those crises, when it comes to, say, key people leaving, when I've had a chance to influence that, I've always tried my best to help in that so that we don't lose people we love.
How does the joint venture with Škoda Auto work culturally?
Martin Hurych
I will not forgive myself for one thing that interests me terribly. You have a joint venture with Skoda. That must be crazy clash of cultures, isn't it? How do you bring that to life and how does it work?
Martin Palička
It was a huge challenge, I enjoyed about a year of negotiations. This is also the biggest challenge because both sides have realised that two very incompatible cultures are coming together. Each has its own added value and some respect, because we respect the fact that this is a big company that obviously has to operate in a different way than we can operate. But again, we felt respect from the other side, from what we have built and how we operate. So it started off quite
nicely.
But to simplify, these large companies are often used to acting from a position of strength. So there have been situations, and there hasn't been one, where I was convinced that we were going to end this negotiation, that it probably wasn't going to happen. But we got through it, and in the end I believe we did a balanced deal, which at one point seemed almost impossible. I thought to myself there that it shows that at least we have some respect, because even the Skoda company is backing down from things that they are pretending that they are not going to go through. It was important that we used the environment of Etnetera, which was very important for Skoda at that time, to incubate the new company and it really started to attract interesting people from outside. We didn't want to pull people from the inside and suck the Etnetera Group to incubate the joint company faster. Of course, if someone volunteers from that group really wants to go there, we can't forbid them, but we're not going to actively encourage it, which we have. Vasek Bittner, who is one of the co-owners and founder, took it upon himself to build it and pulled in a team leader from Etnetera who was interested in it, by agreement. With the help of HR, they built a super team with dozens of people and it's really built externally that came in for the proposition of interesting work and the culture that they felt we had. When I can see how the team works today, so it makes me happy, because they manage to bring those interesting projects from Skoda. That was also one of the conditions, because we didn't want it to be just a side department. I'm happy about it in the end, even though I was one of those who was very scared about it. I am still aware of the risks that are there, even the head of Škoda was with us now, and from the way I perceived it, it had a very good effect on him. So you can see that there is an interest on both sides to work together and I think it is very much about that respect that I mentioned. The moment it's from a position of strength, it couldn't work.
Martin Hurych
I have two more questions about this. Did I understand correctly that the culture of the joint venture is more Ethernet than Gloria?
Martin Palička
This was also a request from Skoda, because otherwise they could have built another department or their own company. They were inspired by the little bit of startup culture that we have been creating there for a long time, so it was a combination of that culture and the interesting orders that Skoda has. It brings that uniqueness and I believe it makes sense for Skoda too because it's about keeping the know-how. Etnetera is rather pulling back from that operation these days because it's spilling over into the Green:Cod collaboration. It's actually a big challenge for Etnetera Core now to replace the rather large turnover that was there.
Martin Hurych
So what does Green:Code actually do for Skoda?
Martin Palička
I don't know what they can say, because I was just talking to someone about this and they said they're not supposed to comment on half the stuff, so I'll apologize. I'm usually very open, but I don't want to comment because I really don't know. There are some projects that we're not supposed to talk about, not to say right now a project that we're not supposed to talk about. I didn't prepare for that. It's not something that's super secret, a lot of it was set up for electric mobility, it was set up for some internal projects. I can probably name MyHarm, which Etnetera has been doing for a long time, and which is being completely transferred to Green:Cod.
How to plan sales versus production?
Martin Hurych
I'll forgive myself one more thing, such an evergreen when I have someone from IT here. How do you plan sales versus production? Because in my opinion, nobody has found any formulas for that yet and there are no apps for that.
Martin Palička
That's alpha and omega, I agree. Maybe you're referring to how I was doing the preparation for last year, where we were trying to accommodate clients and we planned bigger projects there that started to affect each other. It was very challenging to combine all of that because you always end up with a certain number of key people in the firm and the moment you have a limited number of people and that number of projects goes beyond some optimal level, you start to run out of steam. So last year we had quite a big problem putting it all together so that we were able to deliver that quality and the moment you want to deliver quality, logically you start to drag it out. Because we are not able to compromise on quality. We tend to go down the route that it's going to take time because it's got some essentials and we're not going to do it with quality otherwise. It was complicated and it's some alchemy, it's obviously enough of the right questions. When allocations are made, you have input from the shops, from project management, and sometimes some of the information was taken almost as confirmed and then you find out it's half and half. It's a huge problem when it doesn't work out afterwards. On the other hand, if I think it's more likely to not work out and then it all works out, the company gets totally overwhelmed. So it's about the long-term experience of the people who are dealing with it day to day, to be able to ask the right questions and put that estimate out there, how much they believe in it. The second thing is shifts in time. The projects don't always have to start as they say. I've always asked my colleagues that if we're going to move it up, to address with the client right from the start whether this deadline is really a must. Sometimes it's a must because there's a marketing campaign for it and the deadline is crucial, but sometimes it's just that Mr. Owner somewhere said April 10 and everybody takes it as a must. But then we find out that it doesn't matter whether it's 10 April or 30 May, but if we don't at least try to do it, we're going to be whipping ourselves. So it is the ultimate in working with data and looking around the corner. This is again about the experience of traders and sufficient communication, because sometimes you can take that information very quickly and sketchily and come to completely wrong conclusions.
Martin Hurych
At the same time, you have in that preparation that if you were to deal with it retroactively, you would cut more projects.
Martin Palička
I was the one who made the unpleasant decisions at the time, that we had won the selections and I said we weren't going to go for it, which I don't think has happened in the past. I felt that way at the time, and when I think about it, in hindsight I feel guilty that I should have gone with my gut and let one less major project into that company.
Martin Hurych
What interests me about this is the set of parameters on which you decide, or have decided, what to let in and what to possibly not let in.
Martin Palička
It's the type of client, of course. If I have a client with an internal culture that's very close to me, and I have a totally cool corporate commission next door, it's a no-brainer. I always say it's not about the client, it's about the people. We do work with corporates of course and that's absolutely fine, but it's about the team with the people that we do. When it's people who work with us transparently and fairly in the environment that they can, and you can see that they're doing their best to accommodate, that's great. You take that differently than if it's some formal selection process where we might win, but you can see that it doesn't matter if it's us or if it's someone else.
Then, of course, there's the potential of that client. Somewhere it's like a one-off contract where they run out for three years because it's worth x million. Then it might be a client who is going all in on digital and this is their first project, they know what they want to do after that and again the decision is clear. So, when these things were put together, what came out was what has the smallest effect. Then there might be a technological interest, which is again the view of people who are looking at it from the technical side. At the moment when there is a challenge, and of course that comes with more risk, that is exactly what happened to us last year. We picked one project that we shouldn't have done where, although the technology challenges were there, they were many times greater than what those people imagined at the time, which cost us a huge amount of money.
How to start building a company on free principles?
Martin Hurych
Just to wrap things up today, because we'd be talking for hours, maybe I can talk you into another round some other time, let's wrap it up in a few sentences. What would you recommend to people who maybe want to go your way in terms of management style?
Martin Palička
I don't like princely advice from the table, but I'll try to be as specific as possible. First of all, when I've always talked to people at larger companies about this, I've always told them to find that little island of positive deviance. It's not like I'm going to change everything. Find one team, one branch where you try a few things that feel right internally. When it's a company where it's about the owner, it's a lot easier because usually the change comes from the top. The moment the owner says he wants to try those principles, he usually convinces management and that's the easiest way to go. I tend to run into these paths where somebody in the bigger company likes it and says they can't get away with it. However, the moment they convince their boss that they will start to operate a little more openly in terms of, for example, salary transparency, it can work. I always say it's not a revolution, it's an evolution. It has to be very deliberate and a lot of explaining, because anyone who thinks they're going to listen to a couple of podcasts and know how to do it is on the road to hell. It takes a lot of energy, we've been going down that road for 12 years and we've made tons of mistakes. But you can't be afraid to make mistakes. I remember there are stupid examples of a leader going to a conference, the team recognizes it within three days, and he starts applying it quickly. That's where it's important to be consistent so that those people see that it's not because the leader was at a conference. Then that trust falls off terribly because those people feel like it will pass, a month will go by and they'll go to another training again. It's a lot about that internal integrity, that people believe what the person is saying. After those slow baby steps, I believe it works and a lot of the cool thing about it is MasterMinds where those people meet and tune into each other. I've been in MasterMinds for many years and I know it's great.
Martin Hurych
You have prepared a great bonus for the listeners and viewers. It's really good, and I like that it's unconventional. So can you tell us what you've got in store for the audience here?
Martin Palička
Thank you for the introduction. I've been thinking about what I could offer that would have some practical impact and as you can see, I'm very talkative, I like to talk. So, if anyone has tried implementing these principles and is struggling, or is just starting out and wants to have some fun with it, or would like some advice, I have an offer for up to three companies. I can guarantee at least one or two companies who would respond with a short story so we can decide which ones make the most sense. I would like to offer them some sort of three or four hour workshop where we would look at those things and I would try to contribute as much as I can practically to that particular debate in that particular firm. Trying to
I would like to transfer the experience that I hope I have from that trip and help solve some problem in the company or some challenge, to make it as concrete as possible. So if anyone is interested, I'd be happy to share those experiences.
Martin Hurych
Great, thank you very much. First of all, thank you for the bonus and I thank you for coming to see us, thank you for your time and I wish you well in your new position and that you find your floor quickly.
Martin Palička
Thank you and thank you for inviting me.
Martin Hurych
I have no choice but to say goodbye to you and repeat a few things. The bonus and more details will be on my website, www.martinhurych.com/zazeh, as usual. Be sure to like, share, subscribe, build free companies, because in my opinion it is a harder but more sustainable way. None of us want to be just a pebble in the gears anymore, but we want to feel like we're in business for people too, so this is definitely a path to explore at the very least. I'll keep my fingers crossed and wish you success in it, thanks.