August 01, 2003
Appeared in Consulting-Specifying Engineer
Staying in business as an M/E engineering firm, especially in today's economic climate, is no small feat. Staying in business for 70-plus years, however, must mean you've really got a formula for success.
In compiling our annual Giants ranking of top engineering firms by M/E revenue, four particular firms merit extra attention: the SmithGroup and HarleyEllis, both of Detroit; Syska Hennessy Group, New York; and the Durrant Group, Dubuque, Iowa.
Each firm is celebrating an anniversary: 150, 95, 75 and 70 years, respectively. For those aspiring to such longevity, hitting such milestones requires vision, talent, ambition and also a bit of luck. So how, exactly, did they do it?
The Motown experience
Founded almost a decade before the Civil War, the SmithGroup boasts the title of oldest, continuously practicing A/E firm in the nation. In speaking to the challenge of maintaining a business for so long, its president and CEO, Carl Roehling, FAIA, points to its Detroit roots. By planting itself in a hub of the industrial revolution in 1853, what would later become the home of the automotive industry, Roehling explains, the company was able to grow and develop in the "fertile soil of technology."
An active player in the buildup of Detroit's skyline, including the Buhl Building and the Union Trust Building, among many others, the SmithGroup made a crucial decision in 1907 that helped separate it from much of its competition: It would partner with a couple of young engineers to become one of the first multidisciplinary firms in the country.
During the latter part of the 20th century, the firm took its technical expertise, some of which was cultivated in automotive plants, and applied it to NASA projects and other high-security government facilities.
"As a company, we have a culture of looking toward the long-term," explains Roehling. "We don't take shortcuts or go with fashion. Instead, we've always focused on integrity and timelessness of design."
Motor City rival HarleyEllis, known in it's earlier days as Harley, Ellington and Day, also attributes much of its success to its Detroit heritage. "We feel like we're unique, growing up in the automotive business," says Jim Page, P.E., corporate executive for the firm's Detroit office. "These clients have always been very demanding of their design professionals, and this has raised the bar for all of us, as there is a lot of competition in this industry."
For instance, in 1999, HarleyEllis went through ISO 90001 certification, mainly for the purpose of meeting automotive industry expectations.
Serve and serve some more
Back East, for three-quarters of a century, the Syska Hennessy Group grew with an ability to survive the nation's ever-changing economic and political tides. Their strategy has been twofold: "The first is to do our best to deliver the best service possible to our clients so that when the economy is not as robust, we are still looked on favorably by our clients, and they will give us whatever work they have," explains John F. Hennessy III, P.E., CEO and grandson of one of the firm's namesake partners.
The second approach, he notes, is to develop a diverse practice in terms of both markets and services. "We have found that when the economy is slow, it is not slow in all markets and for all services," he explains.
Currently, the firm's main market focuses include aviation, education, energy, government, health care, media, real estate, science and technology, sports and assembly. But one of their biggest growth markets is what they call "OnlinEnvironments" — mission-critical facilities where "flawless functioning is essential to the enterprise." Besides delivering these facilities, the group, with 11 offices nationwide, is equipped to service building owners throughout the life cycle of that particular building.
Hennessy also notes that the firm's international efforts, a portfolio that includes completed projects in 45 countries, has provided work during the U.S. economy's slower times.
In 95 years of doing business, diversity is a lesson HarleyEllis has also come to embrace. The company, being tied intimately to the car industry, has weathered many economic booms and busts, to the point that the experience has made the firm somewhat recession-proof. "Over the past three years the national economy has dipped somewhat, but we've been able to be successful even in this downtime," notes Gary Skog, head of corporate marketing.
But engineering longevity is not reserved for the East or the North for that matter. The Durrant Group has been serving the Midwest and West for the better part of 70 years. According to Frank Roberts, the firm's director of marketing, much of its success stems from simply knowing what it's doing. "Clients want us to walk through the door of their office knowing about their business. Our business has become knowledge-driven, whereas in the past it was more artistic-driven."
As a matter of fact, Roberts says a recent Society of Marketing Professionals study concludes that the main factor building owners use to evaluate prospective design firms is their knowledge and insights into particular market. "But you don't stay in business for so many years unless you have good people with the right attitude," adds Tiffany C. Zinn, the firm's national marketing coordinator.
Of course, a prestigious name and history only gets you so far. The SmithGroup, for example, has placed an emphasis on market research as a way of anticipating trends, staying close to clients and improving their ability to plan strategically, explains Randy Swiech, P.E., chief operating officer.
Consequently, leaders in each of the firm's market groups — research/labs, health care, universities, offices, cultural facilities, historic preservation and waterfront planning — are given healthy budgets for the exclusive purpose of market research. SmithGroup researchers then seek out experts — even Nobel Prize winners — and funding sources in the federal government, to put together what Swiech describes as "PhD."-level reports.
The next step is the firm's annual "Strategy Council," a gathering of 30 to 50 current and future firm leaders. "This market research information is reported back to management, and then decisions are made about where to invest," explains Swiech.
Not only does this approach help the firm stay ahead of the game, according to Swiech, but the fact that the SmithGroup includes its younger designers in the process keeps them excited about their careers with the firm. Although it's difficult to measure the individual effects of their working group structure and other initiatives, the firm seems to be doing something right, as revenue from 1996 to 2001 grew from $40 million to close to $140 million.
On the subject of planning for today and tommorrow, HarleyEllis tries to be innovative by responding to clients' interest in improving their processes at a time when many corporations and organizations are lacking capital funds for building projects. For example, by opening a new business arm — Spectrum Strategies — HarleyEllis now offers services in strategic facility planning and program and asset management.
The firm also moved into the design-build business in 2000, enabling it to bring a full portfolio of services to its main clients in the automotive and industrial, health care, science and research, corporate, university and civic markets.
Syska Hennessy, on the other hand, has tried to make itself unique by building a reputation for being first to try a number of technical innovations. "Over the years, we were one of the first firms to provide elevator consulting, in the late '40s, and lighting consulting in the '60s," claims Hennessy. "In the more recent past, we were the first firm that brought the consulting engineering approach to telecom and datacom systems."
Other firm "firsts" were in its design of two hotels in Brazil in the early 1940s, where the engineers claim to have pioneered the use of alternative forms of energy generation by incorporating solar energy as the hotels' primary source of heating for domestic hot water. And in 1952, when the firm designed the United Nations headquarters, they utilized combination lighting fixtures, strip-line air diffusers and the use of river water for cooling — all cutting-edge technologies of the day.
Like all successful firms, it has also created programs and policies that promote both its client relationships and its people. In addressing the former, Syska Hennessy's approach has been to free up its lead people from responsibilities such as producing design documents so that they can spend the majority of their time focusing on client needs. The firm uses detailed client satisfaction surveys, in addition to annual employee surveys, for which there has been a response rate of more than 70% which has led to changes in benefits packages based upon employee requests.
Professional development is something all four firms agree upon as a foundation. For example, the SmithGroup made a decision a number of years ago to change its structure from a matrix organized by professions into what's called a studio setting that's organized by market groups.
"By focusing on client type, more creative designs come out," notes Swiech. In addition, stronger one-on-one relationships are fostered between firm leaders and A/Es as staff ratios remain relatively small, with one supervisor overseeing 10 to 15 designers inside these smaller "boutique" groups.
Taking a broader view, Roehling observes that over the last decade, the industry models for successful practice have been either large A/E firms or smaller specialty boutiques, while mid-size firms have had a harder time. Consequently, SmithGroup's recent strategy has been to emulate the strengths of both large and small specialized practices. "The studios in the different offices function as boutiques, yet have the resources of a national firm," says Roehling.
Such creativity, adds Swiech, is one of the main reasons he's stayed with the firm so long. "I've been with the firm 29 years, and probably one of the reasons I stayed all these years is because I've been given the opportunity to push the envelope in electrical engineering," he says.
It is also through this company structure that the firm is best able to react to the effects that world events and changes in government policy have on the building and construction industry, claims Roehling. "Our response time has to be quick," notes Swiech. "We need to be able to pull teams together from different offices and put together proposals."
Tough times, and the ability to respond, definitely set firms apart. Hennessy remembers well some years of hardship that really tested his firm's mettle.
One of the most challenging was in 1988, where in the space of nine months, both the president and the chairman of the firm passed away. In addition, several senior executives left to start their own practices, and then, a fairly deep recession hit. "It was almost the 'perfect storm,'" he quips. But because Syska Hennessy had managed to emphasize succession planning and employee development over the years, the firm's new leadership was equipped to take the reigns and lead the group through this challenging transition, he notes.
Such a succession must involve younger members of the staff. Durrant, for example, has made it a policy to include its younger designers in the process of setting the company's direction, explains Gordy Mills, AIA, Durrant's CEO and chairman of the board.
For example, every year the board of directors meets with a number of younger stockholders who are part of Durrant's Futures Group. "We use these meetings to position our direction and to proactively adapt to changing markets," notes Mills.
In addition, the firm makes a concerted effort to take care of its employees personally and professionally, notes Zinn. "We really enjoy employing people who have a passion for what we do and work hard to create opportunities for those people," adds Mills.
In fact, Durrant's CEO claims success in this arena by pointing out how the firm's A/Es don't just design buildings, but a number of them are leaders in their particular areas of expertise, serving on professional committees such as accreditation boards in different industries.
While these Giants are celebrating their longevity, they certainly aren't interested in resting on their laurels. Working in a competitive industry during challenging economic times, these M/E firms will need to continue making tough decisions about which markets to invest in, which geographic regions to expand to — or pull back from — and how to keep their clients happy. They also need to focus on forms of technology to invest in, and probably most importantly, how to continue challenging and satisfying their own designers—probably the biggest key in their success stories.