Bradley Mallory takes Michael Baker Corp. to new levels Featured

7:00pm EDT November 25, 2010

When Bradley L. Mallory took over as president and CEO, Michael Baker Corp. was a two-headed business.

There was the engineering business and there was the energy business — completely different in nearly every regard.

“The two were not a good fit for one another,” Mallory says. “We were constantly being torn in one direction or another. At the end of the day, quite often, we didn’t end up focusing on either, because we were so torn between the two.”

Mallory and his team decided transforming Baker (Amex: BKR) into a purely engineering business was in the company’s long-term interest, so in October 2009, Baker Energy was sold to John Wood Group PLC.

The question that remained was, what did the future hold for Baker’s nearly 3,000 employees, the company investors and customers? Mallory and his management team set out to define Baker as an engineering company by creating a new statement of strategic intent.

“What you should do is convene the top management team of the organization and walk them through a structured process,” Mallory says. “It doesn’t make much difference how you do it, as long as you have a process that really provides people some opportunity to participate and get their feelings and thoughts on the table, and then, in some way, process them. Then create — five years is about the right window — an aspirational goal. It ought to be a bit of a stretch goal. It ought to be expressed in very concrete terms. You ought to be able to write [it in] a paragraph.”

Set the tone

Mallory asked the top 35 managers — his direct reports and their direct reports — to join in the decision-making process.

“I would expect the academics would tell us that 35 people is way too many; they like to have about eight or 10 people in the room,” Mallory says. “The fact of the matter is those people have a vital interest in what’s going to happen. If they’re just sitting there paying lip service or they haven’t had a role in it, they’re just going to sit back and say, ‘This too will pass. All of those crazy guys at the top of the company are at it again.’

“That happens every day across this country in a whole lot of organizations, and it’s why, very often, things don’t get done. I wanted there to be a sufficient number of people who actually bought in to what we were identifying as our goal.”

When it comes to developing a goal for your company, it’s also best to commit to a time frame and hold yourself accountable to doing what you set out to accomplish.

“We said, ‘We’re going to spend a day and a half working on this,’” Mallory says. “‘We’re going to run through the steps of this process we identified ourselves and what comes out of the pipeline at the end of the day and a half is going to be it. And we’re all going to agree to pursue it. If we need to improve it in the future based on what we later learn, we’ll improve it.’”

The danger in not following through with your commitment is the possibility of chasing perfection.

“At various times in the past, we’ve had these kinds of exercises — and the perfect is the enemy of the possible — and people would be sitting at the table or in the room genuinely, passionately debating these points of views and would say to themselves, ‘This isn’t perfect,’ and would literally at some point in time walk away or conclude the process and say, ‘Well, we couldn’t get there. It’s not perfect, so we’re not going to do it.’

“If you set perfection as your standard, you will never do anything.”

Along with a time limit, Mallory stood in front of his team on day one and outlined his expectations.

“You set the expectation and the tone,” he says. “‘When we leave here, we’re going to have a statement of strategic intent that is going to drive the business of this company for the next five years. We are going to do it in a collegial process. You are going to have the opportunity to be heard, and it is your obligation to participate and be heard. If you think you are squelched in the process, that I am not giving you the opportunity, it is your obligation to stand up and say so. If I am not a good enough person to take that appropriately, then shame on me, but if you sit there and just keep your mouth shut and don’t participate and then complain about it afterward, shame on you. Then it’s your fault. It’s your fault completely at that point in time. Don’t let that happen.’”

Mallory decided against using an outside facilitator and walked the group through the process of creating the statement of strategic intent. The fact that he was recently named CEO and was leading Baker in a new direction carried weight in his decision, because he was trying to establish validity with his management team. Mallory says that if you have a larger group and need to break into subgroups to accomplish the task at hand, you may want to use an independent facilitator. But even if Baker goes through the process again in another 10 years, he expects he’ll lead the process.

“I have a lot of respect for professional facilitation and have seen it used very, very efficiently in some very difficult situations,” Mallory says. “At the end of the day, the CEO’s job is simply to lead. If you can sum it up in one word, that would be it. You’re either going to lead or you’re not. We oftentimes let circumstance and coincidence divert us from that fundamental truth.”

Set the statement

The Baker management team started the process by setting a purpose, vision and a set of values. Basically, it was a foundation to build off of when creating the statement of strategic intent.

“Another place where people often get in trouble in this type of exercise is that they go to the substance too fast,” Mallory says. “When you get into the nitty-gritty substance of something too quickly, oftentimes, people start arguing about it. They get very, very concerned because they think, ‘Oh my god, we can’t say ‘a,’ ‘and’ or ‘the’ there, it has to be ‘and,’ ‘or.’ They get into wordsmithing almost immediately.’”

To avoid jumping into the details immediately, start with a base. Mallory and his team asked the questions: Why does the company exist? What does it want to become? What does it stand for?

Using the newly defined purpose, vision and set of values, they created a 37-word statement that explained what the company wanted to be in five years.

“We had read some academic research that a statement of strategic intent should have about that many words — that is not important,” Mallory says. “It’s the discipline of being able to run the process, to be honest with the process and walk away from it with a relatively concise statement that everybody in the room truly had some piece of.

“This becomes very important — the statement of strategic intent is not by any means a step-by-step plan to accomplish that aspirational or stretch goal. You couldn’t possibly anticipate, effectively at least, the steps it would take to get there all at once. Many people fall prey almost to the notion of trying to predict the future in these planning exercises. What you’re really trying to do is put processes in place that enable you to constantly improve your decision-making in the present.”

In determining the statement of strategic intent, you need to declare how many years it will take you to meet your goal. Mallory and his team discussed it at length. What it came down to was one year was too short to accomplish a large, stretch goal and the 10-year range was almost illusionary.

They went word by word, writing the statement. To make the process easier, they used a flip chart that allowed them to rip off paper and crumple it up if they went down the wrong path or to tear off a sheet, circle the part they liked and tape it to the wall if there was a point they didn’t want to forget.

“In a classic sense, it was a consensus-building exercise,” Mallory says. “You start with the principles rather than the specifics. You agree on the principles and then you begin to develop some more specific language around the principles. You vigorously test the assumptions each step of the way, giving Tom, Dick and Harry ample opportunity to disagree, to derail the conversation.”

If you come to a conclusion in a relatively short period of time, that’s a good sign you didn’t set your expectations high enough. At the same time, that stretch goal needs to be achievable.

There is a basic set of questions to ensure each aspect of the statement is the direction you want to head. Mallory found himself asking: Is this insane? Is it realistic? What is the probability of assembling the human and financial resources necessary to do the job? What in the company’s background or history leads us to believe we can have the particular skills in this area? If we don’t have the skills, what would it take to get them?

Allow everyone to speak

Whether you’re the facilitator or just a participant, as the company leader, you cannot manipulate the conversation. To ensure you’re not controlling the discussion, you need to allow each person in the room to have his or her say.

“That comes down to issues of character and honesty,” Mallory says. “You have to not just take the easy way out when the wind starts blowing in some direction.

“If someone is sitting there with their arms crossed with a skeptical expression on their face, you have to read the audience and you have to maybe call them out very specifically, ‘George, what do you think about doubling the size of the company in five years? Is that goofy?’ You ask questions like that. People have an obligation to participate at that point.”

You want people to contribute. You want them to offer their honest opinion. So when they speak, you have to respect what they say. That’s how others feel comfortable joining the conversation, and that’s how you achieve the best outcome.

“In fairness to folks, very often they’re asked to participate in these discussions and people don’t really want to hear their answer,” Mallory says. “Respect their opinion. Don’t yell at them when they tell you something you don’t want to hear. … They have to understand that their opinion is valued and it has to be real.”

A large part of the process is listening and observing. Mallory allowed ample time for everyone to talk, he called on those who were quiet and he asked questions to understand the thinking of the most skeptical. But he also put weight into what those who he most respects were saying.

“You say to yourself, ‘Every one of these people are good at what they do, but there are four or five people whose opinions that if I was going to be buying a car, sending my kids to school, I’d ask their opinion,” he says. “You want to make sure at the outset those people are sitting there looking vaguely disquieted. They’re saying, ‘Boy, I don’t know, maybe yes, maybe no.’ When you’ve got really thoughtful people in significant numbers going, ‘Oh, maybe yes, maybe no,’ you’re in the neighborhood.”

Mallory and his team ultimately decided that Baker wants to be a top 20 engineering design and construction management firm by 2014. Plus, it wants to more than double its 2009 revenue of $445.2 million to become a billion-dollar company.

Mallory describes what the statement of strategic intent has meant for Baker in one word: focus.

“Every one of us in the company, and I think deep into the company, can say to themselves, ‘I’m thinking about doing this. I’m thinking about changing this process. I’m thinking about buying this. Does it support me, us, all of us getting to that goal?’” he says. “It gives you a tool you can use. Focus is the most important thing.”

How to reach: Michael Baker Corp., (412) 269-6300 or www.mbakercorp.com