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A Conversation with R.

Michael Princey
The World’s First Billion Dollar Consultant

R. Michael Princey is a Fortune 500 consultant and businessman.


He was a corporate performance consultant at GE during the Jack
Welch years, helping to re-engineer and streamline the company.
He is the first consultant to return a billion dollars of profit on a
single consulting project.
A Conversation with R. Michael Princey
Shanoi Benjamin

Tell us about your early life


I am the second of three children for my mother, two boys and a girl. My
mother, Jean, was a proud seamstress and one of the most beautiful women
in the community. In fact, beautiful women seem to run in the family as her
niece was a first runner-up in a Miss Jamaica beauty pageant. Mom
certainly could have been Miss Jamaica if she wanted. She’s that beautiful.

My mother’s parents are both from well-established landholding families,


notably the Levys and Daleys, who settled in the South Manchester area of
Jamaica. The Levys are among the largest business operators on the island
today and the Daleys still own a bit of land.

When I was 3 years old, mom migrated permanently to the States. At the
time we were living with my father’s family. They were from a different ilk
than mom. They were easy going and fun loving people.

She was concerned about that when she was leaving. She didn’t want me to
think life was all fun to the point where I would be misdirected. She
wanted me to grow up with strict discipline, so she had me board with one
of her aunts, a strict disciplinarian. That was a way for her to have me
brought up under the principled British customs as she had been.

My grandaunt was a very strong personality. She was the principal of the
local all-age school and the most prominent person in the community.
This was in a rural district. To expose me to city life, mom had me spend
summers with another of her aunts in the capital city of Kingston. This
grandaunt, Aunt Harriot, was also a teacher.

It is a background that serves me well today. Things were very formal. I


mean every meal including snacks was served at a formally set table to
give you an idea.

Early school years


When I move to Patrick Town to live with my grandaunt she was the
principal of the all-age school, Patrick Town All-Age. At that time I was
too young to officially register at an all-age.

The normal age to attend “big school” as we called it is as young as 5 years


of age for advanced kids and 7 for normal students. I was only 3 years old.
My grandaunt arranged for me to attend an infant school ran by the local
branch of the Moravian Church. Many of the schools in Jamaica at that
time were established by churches and the Moravian Church was quite
active in this regard.

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The infant school scenario did not work out well, however. I just became a
big problem for that infant school teacher. I refused to participate in the
school activities. I didn’t listen to her at all. I just wasn’t interested. I
didn’t want to be there.

So finally, after two weeks they pulled me out. I guess this was the
beginning of my lifelong career bucking trends.

My grandaunt was left with quite a dilemma. There were no other infant
schools around. I think her plan was to home-school me until I was of age
to enter the all-age school. She was a busy headmistress though, so time
was a problem.

While she was trying to figure out her options she arranged to have me
"sit-in" on the first grade class of her all-age school. The first grade
teacher, Miss Carnegie, was from out of town and boarded with us as well.
The idea was for me to sit quietly where someone could keep an eye on me.

Then something unexpected happened. I was fascinated by the stuff they


were teaching the first graders. It was really interesting to me so I began
doing all the work. It was a real shock to them all. This early start placed
me on a path of accelerated learning that I followed all the way through to
my adult years.

I went on to become the youngest person in Jamaica to sit and pass the JSC
exams (Jamaica School Certificate Examination) the national
pre-secondary certification exams in place at that time. I earned two
certifications on my initial sitting in English and Religious Education.

The funniest thing occurred at that time too. The infant school teacher
that I was such a problem to, she too sat English in the same batch with me
and she failed. She was probably in her 30’s or so at the time. I wasn’t quite
10 yet. So you see after all, she had no business teaching me.

My grandaunt seized upon my appetite for learning and gave me


increasingly advanced material to study. By age 10 I had completed the
all-age school curriculum at a sufficiently high level to bypass most of the
secondary requirements.

The rules at the time did not permit me to enter into the tertiary system
though. I think they required a certain level of maturity. I instead had to
enroll at a secondary institution which allowed me to take advance math
and science courses at a neighboring teacher's college.

Some time after I was able to enroll in a non-terminal masters program at


West Indies College (now Northern Caribbean University), a preeminent
seventh day Adventist institution on the Island.

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Studying in America
While still studying at WIC I opted to join mom in the US. There I got
into Science Academy where I was formally introduced to computer
science.

Even though I was a business major I spent many hours in the computer
lab. I coded virtually every business problem I could find. I even got the
comp. science teacher to leave her keys to the lab with the security, so I
could get in there off hours.

I remember one of our programming text books had two programming


assignments at the end of each chapter. This was to keep you honest in
studying as you didn’t know which of the two assignments you would be
given. Out of boredom I completed both assignments for each chapter for
the entire text book within the first few weeks of the semester.

Programming became second nature to me to the point where I could


learn a new programming language within a week. I graduated from
Science Academy with a diploma in Business Management and Computer
Science.

I still had a lot of foreign study credits however that weren’t


acknowledged as yet so I thought I would try and have them certified
toward a Masters. To that end I enrolled at SCSC (Southern Connecticut
State University) in New Haven, CT. Again I was a business
management/finance major with computer science as a minor.

My knowledge of computer technology was overwhelming to most people


I came in contact with in those days and once again it attracted the
attention of the department head.

The head of the comp. science department was amazed at the programs I
came up with and how quickly. He thought I should seek commercial
outlet. He also placed his money where is mouth was and he told a GE
recruiter about me. The recruiter called me in and the rest is history.

Early work life


Having by then amassed more credits than was required for a Masters
degree, I thought it would be a good time to enter the workforce. The
company itself made that decision easy.

GE was at the time and still is one of America's best companies. In


academic and business circles GE is called CEO University and widely
recognized as one of the best developers of leadership talent in the United
States and the world.

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I went to GE during the Jack Welch era when the company was
undergoing massive restructuring. I went straight into the FMP
(Financial Management Program) program.

The FMP is one of GE's most prestigious leadership training programs


that only accept a small amount of high achievers each year. It is widely
considered to be the premier program of its kind anywhere.

I could have gone on their CAS (Corporate Audit Staff) but I hadn’t made a
commitment to become a full fledged financial manager, which is what I
understood CAS to be about.

I just wanted the best general management training that would translate
across a number of industries and finance is the core of that.

The FMP is a rigorous two year MBA style program (referred to by some
as a Masters in GE-ology due to the company’s preference for trainees
with superior academic achievement and less than 1 year external
employment.

It combines challenging real work applications with classroom


assignments, underpinned by a 6-month rotational schedule which
exposes you to varied businesses environments often in diverse
geographic locations.

Between getting up to speed on work assignments and studying, the


16-hour days were long and challenging but most of all exciting.

Upon completion of the FMP, I enrolled into another of GE's executive


training programs, the ISMP (Information Systems Management
Program).

I already had an edge in computer science so I thought the leadership


component would round out my skill-set and give me a unique competitive
advantage in the climb up the corporate ladder.

Once again my advanced knowledge of computer technology and


applications came to the fore and the lead instructor quickly concluded
that the technical portion of the curriculum had little to offer me. She
thought I could potentially benefit from the leadership portion of the
curriculum which traditionally started in the second year of the program.

At the time they had no way to facilitate entry into the second half of the
program, so they officially restructured the Information Systems
Management Program into two parts to facilitate direct entry into the
second half by advanced participants.

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The second year of the program was renamed the ISLC (Information
Systems Leadership Curriculum). So I did the ISLC and thereafter entered
"normal" work life at GE.

The training of a consultant


I first started working at GE Corporate in Fairfield, Connecticut. My
initial job was to do complex financial analysis and build financial models
for mid to upper level managers. During this period the first wave of
personal computers had already begun making their way unto corporate
desktops.

I was a power user of the technology, having built my own personal


computer some time back from a kit consisting of parts imported from the
UK. This computer was called the Altair.

At this time hundreds of GE managers began buying the new personal


computers, with many of them installing the popular financial analysis
program of the day, Lotus 1-2-3.

A problem quickly emerged however as the MIS (Management


Information Systems) department, the group responsible for maintaining
the company's large mainframe computers, shunned the new disruptive
technology and users found themselves unsupported.

Word quickly spread of my expertise with both the technology and


financial analysis and I became overwhelmed by demand for my expertise.

As the use of personal computers mushroomed across GE, I found myself


spending more and more time supporting managers with the technology.
Eventually I was given a small two office area from which to work and I
turned that into a PC Solutions Center.

This was later expanded to two centers (located in the company's


Bridgeport and Fairfield locations, both in Connecticut).

Prior to the PC Solutions Center, disparate groups purchased and


supported their own systems and applications. This led to difficulty in
inter-system communications and lack of standards in application
procurement. Support quality also varied widely.

My PC Solutions Center standardized procurement and service quality


and enhanced intra-company communication. This ultimately became a
model that was implemented throughout the company nationally and then
globally.

The PC Solutions Center model has since been adopted by other


companies and is the de facto standard at many companies in the world
today, in some cases replacing the traditional MIS department.

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The consulting years
Although I had been consulting unofficially for some time, I was not yet
officially a part of GE’s consulting group. As word of my expertise spread
however, I ultimately got recruited into the company's elite internal
consulting unit.

The consulting group I entered was comprised of less than 1/10th of 1


percent of GE’s employment pool and staffed by highly-talented and
exhaustively trained business trouble-shooters.

I was at the time still in my early twenties and the youngest consultant on
staff. My extensive training in finance, management and technology
became an instant asset that the consulting group relied on heavily.

The particular combination of finance and technology made me a fixture at


GE's financial units during my early years as a consultant. These were
principally GE Capital, less than a 40 billion dollar entity at the time and
GE Investment Corp., the company's pension fund management unit. I
designed all kinds of decision support systems during those days for the
company’s management team.

Word of my expertise continued to spread until it reached beyond GE's


borders. The consulting group started getting offers to bill me out to
other companies, mostly other Fortune 500 corporations.

My non-GE clients became a diverse list of America's top corporations


including large investment firms, banks, manufacturers, distributors,
service providers and even the US Federal Government.

A master consultant
After a decade of large corporate experience, I decided it was time to
further develop my entrepreneurial aspirations. I tendered my resignation
in pursuit of this ambition but I was asked by the company to reconsider.

We started negotiating and finally agreed that in lieu of outright


departure, I would instead take a leave of absence with no loss of tenure
should I return to the company as an employee within ten years.

Most significantly GE agreed to retain my expertise by hiring me through


my new company as a consultant to their consultants or a master
consultant. This was the first such relationship structured by the
company. GE in effect became my first client.

Being a master consultant changed the mix of projects that I would get
involved in. It would be far too expensive to call me for every little thing
so I would be called mostly on the big problems. I would often be called on
to deal with the group's most challenging encounters. Those situations

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that proved difficult even for seasoned experts.

This is precisely what I needed as I was easily bored with the petty
problems back then. Furthermore, the greatest challenges have within
them the greatest opportunities. With this move I truly became a
full-fledged corporate performance engineer.

It was during this period that I was called upon to formulate a solution to
one of Chairman Welch’s edicts (to substantially lower the cost of
meetings at GE without reducing the number of meetings or the
effectiveness of the meetings).

The group responsible for the follow through on this mandate had initially
experimented with virtual meeting technology as a possible solution.
When it became clear that virtual meetings didn't reproduce the dynamics
of face to face meetings, I was handed the challenge.

The solution I was to fashion, Site Factor Analysis™, would create a


paradigm shift in corporate event costing and lead to a large 70+ percent
reduction in meeting related costs for some users.

As I state in Corporate Performance Engineering – A Case Study, this is


still one of the great challenges facing the corporate world today, the
premature rush to apply technology.

Technology often obfuscates the underlying process, so you better be sure


that you are putting technology over the right processes. Otherwise what
you unfortunately accomplish is an increase in your ability to execute
inefficient processes.

The billion dollar solution


The way Site Factor Analysis came about is the way I believe all corporate
performance consulting should be approached. Let me provide an example.

Meetings are a huge cost in the corporate world. Some estimates suggest
that it is the second largest controllable cost the corporation faces.

When I was commissioned to find a way to reduce this cost, my approach


was to first map the process completely. Treat it as if I had never seen it
before. Really get at the anatomy of a meeting to understand the real
drivers of both benefit and cost.

Most people who are trouble-shooting companies skip this process and by
so doing miss the opportunities to find really innovative solutions. Even
though I had over 10 year’s corporate experience, I started the process by
asking some basic, even seemingly silly questions.

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Questions such as, how does a meeting come about? Who calls a meeting?
How are the attendees chosen? I start out with very basic questions like
those. Again I go into the process mapping method in greater detail in the
case study on this corporate performance engineering project.

The discoveries I made were profound. I found out that the biggest cost in
meetings were the business air travel component which is probably not
much of a surprise. My “map” of the process however brought to life the
fact that this only occurred because people are brought to meetings and
not the other way around. The meetings are not brought to the people.
What do I mean by that?

If you are the host of a meeting, you’ll invite all the attendees you need to.
If that means that 10 people will come from California and 6 from Nevada,
so be it. Even if only 4 of the attendees are coming from your location in
Fairfield, Connecticut the meeting is going to be held on the East Coast in
Fairfield, Connecticut because you are the meeting’s host.

If we could find a way to make it just as easy to have the meeting in the
most cost-effective location, which in this case would be somewhere on the
West Coast we could have 4 people travelling by air instead of 16 and
substantially reduce the cost of executing the meeting.

This is the kind of insight that you gain from this brand of corporate
performance engineering. It gives the opportunity to hit huge home runs.
So instead of throwing technology at the problem, we first figure out if
there is a better, more cost-effective approach.

In this case, we also realized that in order to assess other potential meeting
sites the users would need data on the facilities available. We got the major
hotel chains to provide that information. We also got the airlines to
provide data which we used to calculate an average cost per mile for travel.

Only then did I begin to consider technology. I created a decision support


application which integrated these databases. It took as input from the
user, the type of meeting being planned, the number of attendees and their
city of origin and it provided them an instant analysis of the places that
could accommodate this meeting ranked by cost.

It also calculated the cost savings that would be realized relative to the
default location for each one. This is the highest and best use of technology
in business.

Often times, there wasn’t much of a difference between the best place to
host the meeting from a cost perspective and the second or third best. The
lowest cost location may be Compton, California and the second lowest
may be a picturesque suburb close to Compton. Maybe Compton is not the
best choice when a less crowded suburb won’t add much cost.

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This allows the user to make an informed decision on the best compromise
while still maximizing cost savings. It was an instant hit. It far surpassed
the savings goal set by Chairman Welch and became widely adopted, not
just at GE but throughout the Fortune 500.

The amazing thing about Site Factor Analysis™ is that it allowed the user
to make an informed decision they never even considered before, in a
hundred plus years of the modern corporation.

I went on to develop a wide range of these types of solutions to some of my


corporate client's most pressing problems. Many of them became best
practices for those companies and beyond. Some found their way into
patented products and spawned entirely new industry segments.

I was highly regarded as a top flight corporate performance engineer, and


recognized by Who's Who in American Business Leaders, but I still
thought much more could be done.

Applied research
Now at the height of my consulting career, I became convinced that the
standard tools of corporate consulting (acumen in finance, technology and
management) had taken me as far as they could. I remained convinced that
much more performance could be extracted from the corporate world's
most under-utilized asset, their people.

My personal estimates are that the average knowledge worker contributes


on average, less than 30 percent of what they potentially can and this area
is the key to unlocking the next wave of productivity growth in the
corporate domain and the world beyond.

Even when the effort of the employee is at a hundred percent, the yield is
likely to be substantially lower (usually below 30%) because of specific
gaps in knowledge that aren’t traditionally addressed.

This led me to re-enter a program of formal study in the areas of


Psychology and Economics. I first considered the Ph.D. route, but that
was a poor fit.

The single disciplinary research focus was not consistent with my


background as a professional practitioner and I did not want to become a
professional researcher. I opted for the Science Doctorate instead.

After reviewing the programs and faculty of the top Ivy League
institutions, I settled on the Harvard based curriculum. Here again I
would have to buck the trend of the day.

Harvard did not award multi-disciplinary degrees at the doctorial level,


despite having extensive executive multi-disciplinary programs, so I chose

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to do a locally supervised, student centered needs pedagogy based entirely
upon the Harvard curriculum.

This cross-disciplinary program of study would take longer to complete


than the traditional Ph.D. but would give me the depth and breadth of
knowledge that I sought. It would also allow me to integrate extensive
applied research into the syllabus, akin to the GE style training programs.

As part of the program and to satisfy the requirements of Harvard to be


acknowledged in their alumni roster, I would also have to complete the
Harvard Advanced Management Training program at the university's
campus in Cambridge, Mass.

It was overall a more expensive route but it was the best approach for what
I wanted to accomplish.

The behavioral economics models


My applied research studies proved fruitful as I began to identify areas
where I could merge the traditional tools of consulting (finance,
management and technology) with more advanced social sciences such as
behavioral economics and corporate psychology.

This would give me even more powerful levers to drive corporate and
institutional productivity.

These applied research projects led to the development of the Princey


Honor Scale™, the first behavioral economics model to codify Integrity
facilitating systematic management.

Other behavioral economics models were to follow including CRIB


(Creative Industries Behavioral Model), a model designed to be used by
creative industries entities to guide their enterprise to its fullest potential
but especially at the governmental level to guide the development of a
nation's creative industries.

Billion dollar consultant


As my second decade of corporate performance consulting drew to a close,
one of the systems I designed, the Site Factor Analysis™ method, surpass
the 1 Billion dollar per year mark in value returned to its corporate users.

So far as it is known, this made me the first consultant to return in excess


of a billion dollars a year in profit on a single consulting project.

In the meantime I had turned my focus increasingly toward developing


franchises and emerging markets, the clients who really have the most to
gain from corporate performance engineering, especially in a global
economy.

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I had also developed a niche in private consulting: consulting to an elite
group of high net worth individuals who aspire to leverage part of their
wealth into creating lasting enterprises.

Did I abandon my Fortune 500 roots? Not quite. Since the dawn of the
recent global economic downturn in 2006, I have extended my availability
to select corporate and governmental clients.

I also believe this economic downturn provides the best opportunity to


remind the business community of the importance of extracting greater
productivity from the corporate workforce in a way that is mutually
beneficial.

Far stronger balance sheets would emerge and there would be less of a
need for the “creative” accounting practices designed to give the façade of
performance that we’ve seen at the heart of some of the financial crisis.

There are plenty of tools to generate real performance. I am proud to


count among them the Princey Honor Scale, CRIB and methods being
pioneered by Harvard University among others.

Recent activities
I have recently created the Billion Dollar Consultant network to draw
attention to the efficacy of the methods I learnt in the greatest corporate
re-engineering exercise in history, Jack Welch’s GE.

I have authored several white papers for those interested in understanding


how to get more out their enterprise. One important one is The Three
Keys to Unlocking Great Corporate Performance. Another one for those
interested in my brand of corporate performance engineering is the white
paper series on trouble shooting your organization.

In the Three Keys, I outline the three inter-related obstacles which


prevent great performance.

(1) The knowledge gap which shows up as a performance gap


between your best performers in a group, say your sales crew, and
the worst performers in that same group;

(2) The technology trap which is the misguided mindset that


implies that the more computers you have the more computerized
you are and;

(3) Disconnects – largely a function of organizational integrity or


what you promise yourself and your constituents versus how that
promise is translated and delivered on the ground by your people.

Most people misunderstand the connection between Integrity and

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performance. If maximizing productivity is the goal, it is
imperative that they understand this area.

The great thing is that all three of these areas, the knowledge gap, the
technology trap and the “disconnects” are addressable.

Knowledge Gap: We are having major successes closing


knowledge gaps of all kind using little known techniques being
pioneered by Harvard. This can often lead to exponential increases
in the productive output of organizations.

Technology Trap: As the Site Factor Analysis example amply


demonstrates, it is best to thoroughly evaluate where you propose
to apply technology. First determine if there is a better way to do
what you propose to computerize.

Overall performance of the organization is often undermined by a


false notion that more computers equal a higher level of
computerization.

Many organizations computerize highly inefficient processes that


should have been streamlined or even eliminated in the first place.
In this case all they’re making more efficient is their ability to do
things inefficiently.

The Disconnects: One of the largest and least understood areas of


performance loss is in the area of disconnects. Disconnects are
largely a matter of organizational Integrity – the difference
between what leadership and marketing promises and what
employees on the ground are truly acculturated to deliver. I write
extensively on this in Codifying Integrity.

Addressing these areas aggregately lead to a dramatic increase in both top


line output and bottom line value for virtually all companies in the
developed world and often an exponential increase for companies in
emerging economies.

Here is a mini case study of how one area alone could dramatically improve
productive output. You can extrapolate what addressing the areas
collectively would contribute to your organization.

The Sales Force Example – Closing the Knowledge Gap


Let’s assume a distribution company offers a variety of products and has a
sales staff of 100 salespersons.

If 20 percent of this company’s sales force is responsible for selling 80


percent of the volume of the company’s business, then the bottom 50
percent are contributing less than 20 percent of their potential productive

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output. That is the output they would have realized if they knew what the
top 20 percent knows and did what they did.

Notice the re-classification. There is no assumption that they are “bad” salespeople.
There is simply a knowledge gap which leads to a performance gap.

We’ve found a little used set of learning tools being pioneered by Harvard
extremely effective at closing the knowledge gap.

In this example, a company with a 100 person sales force that successfully
closes the performance gap could potentially increase productive output
beyond 1,500 percent on aggregate for those performing way below the
top performers.

That is a 30% percent increase per person x 50 as the gap between the top and
bottom performers are systematically closed. I’ve have found this wholly achievable.

Even with a 30% increase those formerly in the bottom 50 would still only
be contributing at 50 percent of their productive potential with further
room for improvement.

Where the market wouldn’t bear such an increase in productive capacity,


the company still benefits with vastly improved asset utilization. They can
dramatically reduce overhead with the increased ability to accomplish
more with less staff.

This is an oversimplification of course but I trust the point is made.

The bottom line is there is no reason to lose this productivity. There are
known methods to close the performance gaps which more people should
incorporate into their consulting practices.

The smartest companies are deploying this knowledge with great effect.
In time to come, more companies will have to wise up or be put out of
business.

R. Michael Princey provides corporate performance engineering expertise to


corporate and governmental clients around the globe.

When not busy implementing what his adherents call his billion dollar brand of
corporate performance engineering he makes available time to lecture, speak and
mentor others in the areas of business development in competitive global markets
and corporate performance engineering.

He may be reached at michaelprincey@gmail.com

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