James R. Scapa has never been fond of sitting back and admiring what he has built. He has more fun taking a big chunk of it apart and putting it back together in a different way to see if he can make it work even better.
One thing he really likes to tinker with is Altair Engineering Inc., the business he launched more than 27 years ago.
“I tend to reorganize the company every year, which is very shocking to some people,” says Scapa, the founder, chairman and CEO of the simulation technology and engineering services company. “People usually hate change and are frightened by it. But here at Altair, they kind of expect it and it creates a lot of opportunity for people to change, adapt and learn.”
In the early days, Altair had only Scapa and his two partners. They had an idea to operate a consulting business in the new field of computer-aided engineering. The company now has more than 1,800 employees with offices in 19 countries and develops its own software.
The growth has forced Scapa to build a stronger infrastructure to support his business. But it hasn’t changed his view on the value of building a business that can be easily reformulated from time to time.
“As a company grows, you have to add levels of structure to every aspect of what you do,” Scapa says. “But I do find as the company gets larger that people sometimes make decisions that are a bit anathema to the way I would think about things. I still tend to think about things in an entrepreneurial way. When my people get away from that, I just try to bring the culture back and try to communicate to them a different way of looking at things.”
It’s hard to argue with the strategy as the company — with revenue topping $237 million in 2012 — has more than 3,000 clients representing the automotive, aerospace, government and defense and consumer product markets. It also has a growing presence in the electronics, architectural engineering, construction and energy markets.
“We’re very aspirational and we see that this company can continue to grow very significantly for many years,” Scapa says. “That’s not going to happen if we’re doing the same exact thing we’re doing today.”
Promote open communication
It didn’t take long for Scapa to identify his first big change at Altair. The company was doing computer simulations for customers and quickly realized the value of developing its own software to do the work. The change required a different focus from both Scapa and his team.
“We still do a lot of engineering, and we’re one of the best engineering companies in the world,” Scapa says. “But to be a software company, there’s a different level of marketing and branding that goes on to really do it at a high level. It’s very international and originally, we were very Detroit-based doing automotive related things.”
It’s the kind of change that requires a lot of communication and Scapa works hard to create forums for open discussions that will lead to the best ideas. The effort is even more critical when you’re expanding into new locations and bringing new people into your organization.
“If I go to our office in France where there are two major offices with about 60 people each, I’ll usually bring everyone in, and we’ll go around the room and people will introduce themselves,” Scapa says.
“They can tell me what they are working on or ask me a question, and I’ll be very candid and very open with our strategy and answer any questions that they have. I tend to pepper them with questions as well. Hopefully that communicates a persona and a philosophy for openness in our company.”
The focus of the company has been to work with customers to examine different technologies and develop products that will meet customer needs as effectively as possible. It’s often a very fluid process.
“It’s partially because technology is always moving and some of the things we do today will be irrelevant in the future,” Scapa says. “And it’s partially because we’re looking for new opportunities that take our core competencies and allow us to apply them elsewhere. We’re also adding other new core competencies so we can go after businesses that we think fit well with what we’re doing now.”
Over time, strong relationships have developed through this regular communication with both employees and customers. Altair has its own software, but is willing to augment its own tools with those found on the outside. And customers who were used to developing their own simulation tools in-house grew more willing to reach out to partners such as Altair.
“It’s a journey,” Scapa says. “We go out and experiment in markets, and we often fall on our swords. We have lots of failure at Altair. But we regroup and decide how we’re going to make changes either in development or in our go-to-market strategies. We continue to move on.”
Don’t be afraid of risk
So what makes for a good business opportunity? You should begin by looking at the size of the potential market that your idea best benefits.
“If there isn’t a large enough addressable market, then it’s not worth investing to go do it,” Scapa says. “It has to fit in some manner with the larger strategy the company has for its business. We’re looking for an area where we’re going to be able to create some competitive advantage and differentiation. That’s either through the technology or the business model we’re able to bring to market.”
Of course, even if your preliminary analysis finds that there is a sizeable market to be captured for the product or service you want to create, there are no guarantees.
“You have to experiment a bit, and that’s a lot of what I tend to do,” Scapa says. “Some of the experiments, you learn from and they just go away. Some are huge successes. Some transform themselves during the process from what you started out trying to do to something different, but something that actually is going to have traction.”
Key things that will always be relevant to customers in any industry are the ability to make decisions faster and create products that are more innovative.
“Speed to market and the ability for our customers to experiment with different designs is probably the biggest thing we’re looking for,” Scapa says.
Scapa doesn’t want people to get the wrong idea when it comes to his need to continuously transform his business or his openness to trying new things and taking risks.
“That doesn’t mean everyone is running around like a drunken sailor,” Scapa says. “But people have to have the confidence that they can try to do things and if they fail, they’re not going to get beaten up over it.”
Keep building your team
Scapa doesn’t remake his company to make everyone’s life difficult. He does it to adapt to the environment and to give his people more opportunities to grow.
“People are bringing their ideas to the table in a fairly aggressive way, and they tend to be able to have a voice here pretty easily,” Scapa says. “We’re very competitive, and we like to win. But it’s not a nasty kind of competition. This is a competitive place, but with a lot of ethics and people value that.”
It starts with having a clear vision that everyone can rally around as a foundation.
“There has to be a sense that you’re all trying to get to some place together,” Scapa says. “There aren’t people with special advantages. Everyone has the same opportunities.”
Scapa says he works hard to keep politics from becoming an issue at Altair. He doesn’t want people thinking someone else has an unfair advantage or is using information to get ahead in the company.
“I think everyone understands that as an organization, we have to go one direction,” Scapa says. “We make a lot of decisions and in the end, I make decisions where I’m very often wrong. Part of the culture is to admit you’ve made a bad decision and talk about where we’re going to change going forward. It’s all human relations.”
One thing that has kept the culture fresh and lively at Altair is a regular dose of new hires straight out of college.
“They bring excitement and energy into a business,” Scapa says. “I’m just looking for really bright people who are energetic, have ideas and want to learn. When you’re hiring someone with more experience who has worked in another culture, very often they struggle to make the transition.”
As Scapa looks ahead, he says success will be determined by the ability of everyone in the business to keep working together to make the best decision for Altair.
“Decisions are made and people get in the boat and they just row,” Scapa says. “But not before there is a healthy exchange of ideas and arguing and hopefully coming to a consensus.” •
- Don’t fear change.
- Engage people in solutions.
- Promote value of debate.
The Scapa File
Name: James R. Scapa
Title: Founder, chairman and CEO
Company: Altair Engineering Inc.
Born: I grew up in New York. My family is originally from Greece, and I’m the first American citizen. My sister was born in Greece.
Education: Bachelor’s degree in mechanical engineering, Columbia University; master’s in business administration, University of Michigan.
Previous experience: Prior to establishing Altair, Scapa served as an engineering consultant to the automotive industry. He began his career with Ford Motor Co. in 1978.
Scapa on listening to customers: I’m learning from what they are doing. But I will also argue with customers if I think they are not seeing things in the right way. That honest dialogue comes from me either way. We have a lot of technical people who are out visiting the customers, holding their hands, training them, spending time with them and then bringing that knowledge through this communication system that we have in a pretty aggressive way.
Most of our customer interactions end up recorded and broadcast pretty widely here. That makes its way back to the product groups, strategy groups and marketing groups and is assimilated into where we are going.
But not everything the customers want us to do is the right thing for us to do. We absolutely want to understand what their problems are because we’re trying to find solutions to their problems. But sometimes they want to tell us what the solution is. Some of those solutions we listen to and implement. Some we do not.
How to reach: Altair Engineering Inc., (248) 614-2400 or www.altair.com