As Phil Harrison prepared to become the CEO of Perkins+Will Inc. earlier this decade, he discovered that the plan that had originally grown the company was now pulling it apart.
Throughout the 1990s, the architecture design firm underwent a growth strategy that included four acquisitions and the opening of three offices, but it hadn’t gone through a cultural alignment. It’s not that leadership hadn’t tried, but the firm’s leadership in the late ’90s was more passive, and there wasn’t confidence that they could effectively drive a cultural change.
“There were quite a few all-firm principal retreats, and we’d all go off to a nice resort for a few days and talk about this, and nothing would really happen with it,” Harrison says. “It took getting to a point where there had been a series of acquisitions, and we really felt like a surrealist painting where the head was on a different body. A good analogy is a Mr. Potato Head — it really felt like the parts were disconnected and didn’t add up to a whole.”
When he took over as president in 2003, the firm had, in just three years, done three more acquisitions, a merger and opened four more offices, and he still saw these cultural problems. At that point, the board of directors and firm leadership did not see the danger.
“Even though they were pretty high-performance people and were capable, the disconnect on the values side was very destructive,” says Harrison, who now serves as president and CEO. “It took us longer than it should have to recognize that.”
He knew he needed to lead a cultural change, so he set out to identify and communicate the firm’s values and then build on them through more acquisitions.
Identify and communicate values
While Perkins+Will didn’t know what it was culturally, there was no denying it had a strong brand. Employees took pride in their design abilities, and the firm consistently won design awards.
“We sort of thought we knew who we were, and the market sort of thought they knew who we were, but we hadn’t been very explicit in listing, one, two, three, four, five — these are the five things that are most important to this company,” Harrison says. “That’s one of the lessons learned is just the importance of things that seem obvious are often not if you don’t state them.”
First, come to agreement on what your company represents. Harrison and the team engaged people in different ways to find out what people thought they were. Some of that happened in all-firm leadership retreats with opening a dialogue.
“You have to step back and look at fundamental human values — in particular now — and by that, I don’t mean business values, but I mean deeper sort of ethics or social factors — something that’s actually going to mean something on a broad social context,” he says.
For example, Harrison looks at Ray Anderson of Interface Inc. as an example. Years ago, he went through an epiphany about the environment and completely redesigned his carpet company around sustainability — long before being green was in vogue. It redefined the company and made it very successful.
“Companies need to be able to articulate their position in more sort of human and socially relevant terms,” he says. “You need to strip away the business jargon and really get down to what makes a difference to people in the world, and if you can get to that, then a lot of other stuff is easier to make decisions about.”
When identifying values, it’s important to be realistic, yet balanced with looking toward the future.
“Be honest with yourself so you don’t try to be someone you’re not, but on the other hand, you have to have aspirations,” Harrison says. “It’s a combination of being realistic and pragmatic with being a little bit of a dreamer, but you can’t be such a dreamer that you’re switching from being, say, a Ford to a BMW overnight.”
In addition to having conversations internally, Perkins+Will also hired a firm to do research.
“They did an external audit on our brand where they spoke with our clients, both existing clients, and they spoke with clients who we would like to work for but aren’t working for,” Harrison says.
The research firm also spoke with the Perkins+Will’s competitors and with the press to get an idea of where the company stood in the marketplace. Then the company had to reconcile between what the outside thought and how the company internally saw itself.
One of the biggest values Harrison saw that employees weren’t buying in to was business performance. They saw it as something conflicting with design as opposed to something supporting it.
“We had to go through a ridiculously lengthy process to create a language whereby people could accept that high business performance could actually lead to a more thriving design company, …” Harrison says. “It’s simplistic, but it was an important turning point — it was a ‘both and’ as opposed to an ‘either or’ mindset.”
That language and communicating it is crucial to getting buy-in for a cultural alignment.
“You just have to talk a lot and talk and talk and talk, and you have to repeat yourself,” he says. “That’s one of the most important roles of leadership. I’m not an extrovert, and I thought you just say it once, and everyone would understand it. Or put it in an e-mail, and they would understand it that way. Or have an annual address, and they would get it that way. I’ve learned that you have to communicate the same message in a lot of ways — forums, large groups, small groups, etc.
“Things that I said three months ago to everyone, I feel like I have to go back and repeat it. It’s not necessarily a bad thing, but it’s the process of repeating it, articulating some very fundamental aspects of the vision of the company or the values the company has or the business objectives of the company — basic things that could be easily communicated in a short period of time.”
And he’s not talking a three-day retreat. It’s shorter things, like 30 minutes of talk.
“You can get into quite a bit of depth in that period of time, …” Harrison says. “It’s the importance of overcommunicating the things that seem like they should be obvious but maybe aren’t if you’re not overcommunicating.”
The more you do this, the more the people below you will communicate, as well.
“That sort of builds,” Harrison says. “If the executive leadership is doing that, then other people in the company begin to sort of take it on. What you really want is multiple layers of the company doing the same thing but in a parallel way so they’re reinforcing each other.”
Build on your values
After identifying and communicating values, Harrison next wanted to shake everything up by going back toward the very thing that had threatened the culture of the firm: acquisitions.
“Even though acquisitions are disruptive, in our case, at that time, we thought a little disruption is a good thing,” Harrison says. “If you’re smart about it, you can use an acquisition as a change tool.”
The acquisitions would drive
growth for the firm but also help him bring on better leaders, people and ideas.
“You can buy it much faster than you can build it,” he says. “It’s just more efficient, so if you can figure out how to go through the cultural change process and learn how to effectively integrate acquired companies, then it’s a much more efficient process than trying to do it homegrown.”
He looked for companies that had similar values as Perkins+Will but that also represented what the firm aspired to be.
For example, sustainability was a core value the firm’s leadership embraced, but the people hadn’t. They found a Vancouver company that excelled in this area, so they came on board in 2004 and functioned as a rapid change agent.
But you have to make sure that any company you look to acquire will align with your culture.
“It’s an expensive way to make a mistake if you find out that you don’t agree on fundamental business practices with someone you’re trying to integrate into your own operations,” he says.
Most leaders start with the financial implications instead of the cultural ones.
“You start off on the values side and make sure it is integratable,” Harrison says. “In other words, you want to be integrated, so you talk about what their aspirations are as a team and also as individuals, and you make sure that the prospects for integration actually make sense.”
Acquisitions are a little like dating in that after you get to know each other, you only move forward if you see a high level of compatibility and a great potential future together.
“Don’t do an acquisition if you can’t tell yourself a compelling story or the people inside your company a compelling story because you can’t tell your clients a compelling story,” he says. “It all starts there, and if there’s a compelling reason — a business reason, a cultural reason or whatever — it needs to be both to combine companies. Then you can be successful. If there isn’t, it will very likely not be successful.”
If it’s a match, then you have to look at the company top to bottom and do integration planning.
“Look at every element of a company’s operations,” he says. “We figure out how those items might change and develop sort of an integration map, if you will, where we anticipate those operational issues might change at this point in time or these roles might change or these financial matters might change.”
Once you decide it’s a fit, then it goes back to the communication factor with both your company and the one being acquired.
“You tell the story of the acquisition in the context of the power that is generated of the two firms coming together and how that can directly impact their lives as individuals and as a group,” Harrison says.
Then you have to integrate quickly. Sometimes companies want to retain their names, because they believe it has recognition, and that may be true, but the longer you operate as two — by name, function, culture or any other way — the longer you hurt the combined company.
“If there’s some compelling reason to combine two firms — it’s not just that you’re trying to get bigger, but you’re trying to get better — and there’s some qualitative objective that you’re seeking out, the more you keep those two firms from being integrated, the longer it takes you to realize that benefit,” Harrison says.
And Harrison is now realizing the benefit. Since 2003, the year Harrison took over as president, Perkins+Will has acquired 11 firms and opened four new offices, all while reaching $400 million in gross revenue. But the benefit isn’t just new offices and increased revenue. The acquisitions have helped propel the cultural change that Harrison wanted by bringing in new leaders and employees who embraced the identified values. With 1,500 employees now, he’s confident in the firm’s future.
“The change is more organic now,” Harrison says. “It used to be that it was inorganic. It was an acquisitional strategy. Even though we’re still doing acquisitions, it doesn’t feel like they’re changing us as much anymore. There’s enough momentum and resonance in the company itself that the acquisition is actually not viewed as a change force anymore. Change is already sort of built into the organization and it’s part of our DNA right now, so people are more comfortable.”
How to reach: Perkins+Will Inc., (404) 873-2300 or www.perkinswill.com