by Stanley H. Davis
In 2020 we’re looking into our next recession. From 2008 – 2010, we saw the courage and tenacity of one business owner demonstrate that you can survive and even reposition a company during extreme adversity. As we look back at the fear and pain of that Great Recession, it left us a legacy of one New England business leader on how to deal with extreme economic challenge – like we now face again.
When the Great Recession hit us in 2008, some of the best firms found themselves on the path to closure, or to shrinking their operations. New England-based DiPrete Engineering was confronted by a detour from its long winning course. In its industry, cost cutting became epidemic, but even the largest firms found they could not thrive by just cutting costs. Quality work continued to be demanded by clients; more support services were expected; all while profitability was squeezed between the widespread price cutting and the escalating operating costs.
Trying to build the future of an established business, challenged by the continuing deep recession, was troubling. DiPrete Founder and President Dennis DiPrete was adamant to sustain the best engineering practice and solution to meet each client’s unique objectives. Everything else was open to question. “Our business planning had to be more strategic, and regaining our momentum demanded that we consider every option. But we were now in territory that was outside our business experience and expertise.”
With no clear starting place, the firm engaged its entire staff to reconsider its working model and operations. Then, with the aid of carefully selected advisors they opened themselves to some revolutionary options. Mr. DiPrete committed the business to three core initiatives: extraordinary client service; operational excellence; and aggressive business development.
In their brainstorming, the DiPrete staff began to consider Lean disciplines. Products of the Toyota Production System, Lean disciplines had been used very successfully by manufacturers to drive out wasted time, effort and expense. But Lean disciplines were designed for repetitive mass production, not for creative, unique projects. Could it be deployed in a professional engineering firm? DiPrete committed to make it work.
Also, in 2008, the firm engaged a project resource “to go out and interview our clients”, and to get a current read of what was most important to them.
In 2009 they brought in their Lean consulting expert to assess the firm’s objectives. All staff was given 3 to 5 non-billable hours each week to work on Lean initiatives. Non-billable time was also built into everyone’s schedule to assure that ready and responsive service was always there for clients.
The firm additionally trained its professional engineering staff to develop new business. Those who became good at it were deployed to the field to engage prospective clients. To support its range of initiatives, DiPrete launched training for everyone, and built out a dedicated training facility.
As the recession progressed, some commercial clients were delaying engineering work so DiPrete began to move into other sectors. The firm pursued promising opportunities to align with complimentary firms and develop more holistic solutions for their clients.
DiPrete retained the right people for its future – motivated, talented, educated and now trained – and in the right positions. To optimize the three core initiatives, additional key people were hired. Further, to sustain the transformation, the firm created a chief operating officer (COO) position, an anomaly for smaller service firms, and it engaged a professional search firm to uncover and secure the right COO.
The great recession saw many good firms shrink. So many others didn’t survive. For too many, just cutting costs and extending employee hours didn’t work. By 2013, DiPrete was not only viable, it was profitably growing once again.
But, adds Dennis DiPrete, “Early on, it was very difficult to keep people from slipping back into old habits. The economy didn’t come back as fast as expected. Some valued current and prospective clients remained on the sidelines, or disappeared. While the firm was funding its change initiatives, narrow margins were pinched between aggressive price cutting and increasing operating costs. Some work had to be priced at levels below those of five years earlier. Finally, Lean and the related culture change consumed “a lot more work, time and expense than I ever would have guessed.”
In the midst of recession and uncertainty, taking the risks to aggressively transform this firm was counter-intuitive, and “even a bit scary at times. But, if our income and growth hadn’t eroded, we wouldn’t have had the motivation, we wouldn’t have moved out of our comfort zone, and it would have been tougher for our staff to buy in.”
For so many companies, the great recession was among the worst of times. Yet in its midst, through uncommon courage and real commitment, the DiPrete Engineering Staff developed and followed an aggressive blueprint to successfully reposition their firm.
Stanley Davis is the founding principal of Standish Executive Search. Standish works with business owners, executives and boards to position their companies for accelerated growth, change, and succession. firstname.lastname@example.org