Software company reinvents workplace

It's not true that you must work 80-hour weeks, trash competitors and gouge your customers to get ahead in today's dog-eatdog business world.

Rich Sheridan and his gang of computer programmers and high-tech "anthropologists" at Menlo Innovations in Ann Arbor, Mich., say so.

They are dedicated to reinventing the workplace, for themselves and their clients, as a means to an ambitious goal: "To end human suffering in the world as it relates to technology," says Sheridan, president and CEO of the software firm he founded with three partners in 2001.

Inside Menlo's offices there are no walls or cubicles. Nobody working long nights or on weekends. No offishoring of work to programmers overseas. And nobody telecommuting.

And if a client is a cashstarved entrepreneurial start-up - is there any other kind? - Menlo might just cut its usual rates for custom software by 50 percent in return for equity in the client's business or royalties from its products.

This radical-sounding departure from today's typical corporate culture isn't a new idea. It's modeled mostly on inventor Thomas Edison's famous industrial laboratory in Menlo Park, N.J., from which Menlo Innovations draws its name.

So far, Sheridan's belief that an innovative company could take root in rust-belt Michigan - and teach others a process and methodology for innovation - appears to be succeeding even in today's trying economy.

Menlo employs 50 people, up from about 30 two years ago, and expects to hire another 25 this year. Revenues hit $2 million in 2006, rose to $2.5 million in 2007 and are running 70 percent ahead of last year thus far in 2008, Sheridan said.

Menlo has made investments in 13 of its clients and has started to receive royalty checks from two. One firm where Menlo has an equity stake is Accuri Cytometers, a U-M spinoff that makes flow cytometers for cell analysis, used by life-science researchers.

"We use Menlo as an extension of our organization. The relationship is unique in my business experience," said Jennifer Baird, president and CEO of Accuri, which was created in 2004 and began shipping its first product this year. Software developed by Menlo has made Accuri's cytometers more affordable and easier to use than competing instruments, Baird said.

Menlo's workplace is definitely different. But it's not very complicated. "It's kind of like kindergarten," Sheridan said, sheepishly.

People work in pairs, two to a PC, in a wide-open bullpen. Partners are changed every week, and a worker might be assigned to a different project from one week to the next.

Working in pairs helps to improve accuracy; partners correct one another's mistakes. Changing partners keeps people fresh, and moving from project to project helps to keep everyone at Menlo aware of what everyone else is doing.

Everything is about collaboration. Job applicants are even interviewed and tested in pairs and advised that they will be judged on how well they help their partner to get hired.

Menlo's so-called anthropologists shadow clients, closely watching every aspect of how they do their jobs, to help design friendly software and easy-to-use equipment. And the customer, rather than ordering software and seeing a final result many months later, comes in for a weekly "showand-tell" on progress.

Every weekday morning at 10 a.m., in another kindergartenlike exercise, a bell sounds at Menlo and everyone present - workers, clients and visitors - gathers in a circle for a stand-up meeting.

A plastic viking helmet is passed around. Every person or pair speaks as they take the helmet. They tell the group what they're working on, what problems they could use help with, what events or new-client meetings are coming up.

The meeting ends when the viking helmet completes its journey around the circle. Uncannily, it almost always takes about 13 minutes.

About 10 percent of Menlo's revenues come not from creating software, but from teaching others about its culture and agile development process. Most who come in for a daylong course are clients, but anyone can walk in off the street and pay $675 for the experience.

AAA Life Insurance of Livonia doesn't buy software from Menlo, but Matt Scully, director of business and technology solutions for AAA, adopted Menlo's methods in his 75-person department last year.

The show-and-tell meetings "have engaged our business partners in marketing, finance and other AAA departments as never before. There are no surprises," Scully said.

Not everything about Menlo's methods is easy to swallow. Scully said his top management at AAA bought in, but the rank-and-file workers were reluctant to give up cubicles.

"You lose privacy. You're sitting closer together. It's a challenge. We're not done yet. We're only at end of the first quarter of the game, but we're winning," Scully said.