Stephen Mcdonnell insists that he stays home four days a week because it's good management--not because it's fun. The performance of his company, Applegate Farms, seems to back him up.
Open the June 2004 issue of Organic Style and you will come away thinking you know why Stephen McDonnell likes working at home. A 10-page spread entitled "It's a Wonderful Life" features McDonnell, his wife, Jill Kearney, and their three daughters at their 200-year-old stone farmhouse in Bucks County, Pa., bought in 1994 and lovingly restored. There's a gigantic dairy barn that's been converted into a family play space with a new wood floor for in-line skating, a badminton net, a Ping-Pong table, a sound system, and a stage. Factor in the pool, a home gym/yoga studio, and a sunken hot tub surrounded by a vegetable garden, and it's tough to see how McDonnell ever tears himself away. But suggest this to him and he goes off on a rant. "I don't do this so I can be at home and have the perfect life," he says firmly. "I do it so the company can grow."
While most entrepreneurs dive into their ventures with a zealous passion for their product or service, few start out with a clear idea of what kind of company they want to build. But McDonnell did. From the outset, he wanted Applegate Farms, his Bridgewater, N.J., organic and natural meat company, to be the kind of business that could grow and thrive on its own steam, not on the power of his own adrenaline and charisma. And so he made a radical decision: Even in the company's infancy, he chose to limit his physical presence at headquarters to one day a week. He's continued to do this for 17 years now, and it seems to be working. Applegate has been profitable from the beginning. Revenue has been going up 30% a year. Productivity, measured by weekly sales per employee, goes up every year. Labor cost per pound of goods sold goes down every year. McDonnell figures that Applegate's 120 products, which can be found in such high-end grocery stores as Whole Foods, Wegmans, Wild Oats, and Trader Joe's, now provide 1.5 million servings a week.
All because he avoids going into the office? Well, yes. "I'm a controlling boss who has anxiety and I channel that anxiety," concedes McDonnell, who doesn't dispute that he can be "hot-blooded." The more he talks, the more it sounds as if he's protecting his company from his own tendency to micromanage. "Yes," he says. "That's exactly what it is."
An Experiment in 21st-Century Leadership
Applegate Farms lives and dies by its information systems. Fifty-four employees are connected to 120 Lotus Notes databases that can give them just about every piece of company data they might need. Among other things, they keep track of 300 family farms, from Uruguay to northern Quebec, that raise animals for Applegate; 12 slaughterhouses; 18 processing plants; and 350 wholesale customers. As a result, even working mostly from home, McDonnell says, "At 5 p.m. on Friday, I know more about my business than most CEOs of much larger companies."
That's not an idle boast. Jay W. Vogt, a former Hampshire College classmate of McDonnell's who has been consulting for Applegate for the past four years, says the company's "data-driven architecture" could support a much bigger company than Applegate is today. "When I tell some of my clients what Applegate does," says Vogt, "they think I'm talking about an alien entity because some very large companies don't have what Applegate has." While Applegate's sales have doubled since 2001, its head count and infrastructure costs have remained strikingly low. And that's probably why it looks like a $10 million company when, in fact, its revenue is more than $35 million.
And yet, McDonnell clearly has work to do. His company is filled with young, homegrown employees; it has no board, no human resources manager, no codified employee policies; it has a compensation system that's loosely defined and highly subjective. In other words, it's a company that has grown but that hasn't quite grown up. McDonnell knows this, and he's determined to do something about it as he pursues his goal of $100 million in annual revenue. But he's certain that one thing won't change: He'll still come into the office just one day a week.
Even people close to McDonnell think that will make his job harder. "Establishing a company culture from afar is very difficult," says Gary Hirshberg, who is president and CEO of organic yogurt-maker Stonyfield Farm and McDonnell's friend and adviser. "There's going to be some give and take between your own wants and desires and getting the business to the point where it really reflects the atmosphere that you would like to see on a day-to-day basis." McDonnell frets, for example, that his own obsession with meeting goals and then immediately moving on to the next project leaves his staff little time to enjoy and celebrate successes. He'd also like to see his employees lighten up a bit. "This company will find itself when it finds its sense of humor," he says. Toward that end, he brought a hot-dog costume into the office a couple of months ago, planning to put it on and traipse around. But he didn't; it just didn't feel right.
It doesn't help that there are few role models for what McDonnell has done. "More and more of my colleagues can be found in their home offices," says Hirshberg, "but I don't know anyone else who has worked this way from the very beginning." Neither does Jay Vogt or Stefanie Heiter, president of HeiterConnect, a training and consulting firm based in Townsend, Mass., that specializes in virtual work. "I know lots of seconds in command who work virtually because they travel so much," she says, "but I'd be hard-pressed to find a CEO who does this." And so McDonnell is on his own with what he calls his "experiment in 21st-century leadership."
Get Out of the Way
Stephen McDonnell stumbled upon his company in 1987 when he was contemplating the next step in his career. He had been a management consultant and had spent time with his brother-in-law, Simon Pearce, at Pearce's glassware and pottery company in Quechee, VT. "He was having trouble managing growth," recalls McDonnell, "so I said, 'Let me see if I can turn it around.' I got addicted to small-business adrenaline." McDonnell asked Pearce to let him buy into the business, but Pearce was adamant about holding on to his equity. So McDonnell considered going to work for Hirshberg, another Hampshire College pal, and he also entertained the idea of going back into consulting.
