How can I grow my engineering services business?

Q: What can I do to grow a product-development engineering services business that serves customers in the Department of Defense and the defense industry? My partner and I enjoy our independence and want to keep it privately owned.

Jul 1st, 2008
Th Mchang

Milton Chang

Q:What can I do to grow a product-development engineering services business that serves customers in the Department of Defense and the defense industry? My partner and I enjoy our independence and want to keep it privately owned.

A: It is admirable that you want to structure your career in ways you like to work, so I will do my best to be helpful. First off, you may want to adjust your expectations, based on the fact that you said “growth,” “enjoy,” “independence,” and “private” all in one breath. Growing the business without outside investors, assuming that’s what you mean by private, is likely to limit your growth because of a lack of investment capital. Growth and independence are often not congruent—as owner of a company, you have to see yourself as working for your employees if you want the company to be successful. You have to take care of their needs, and your life will get complicated in a hurry as the number of employees grows. That also means you will not enjoy some parts of the work. Another important point is that the way you work either with or without an outside investor is going to be, well, just different. A positive approach is to choose investors carefully and learn to work with them as partners.

Now, onto the question you want answered. In a service business, the number of jobs you can take on is dependent on the number of capable people you can hire to do the work; therefore, you have to compete for potential employees against traditional established companies. You can provide certain attractive benefits for employees that are difficult for traditional companies to replicate—a family-like culture, flexible work hours, telecommute, and even a share of portion of the income from their billable hours You can also get more work done by working as a team and improve the quality of work by mentoring, which is also perceived as a benefit.

One successful company you might want to emulate is SAIC, which was an “employee owned” company until it recently went public. The company has 40,000 employees and serves customers in the defense industry and various government agencies. As I understand it, during the early days, the company grew by “acquiring” individuals or small businesses for their technical expertise, reputation, and contacts in the government circles. The attraction to work for SAIC was that the company would provide financial stability and relieve them of administrative chores. The primary point is that the focus should be on your employees rather than on you and your partner(s). You have to provide employees what they need to make it attractive for them to work for you to grow your business.

Q:How do you compare an executive MBA, which I can get while I work, with a regular MBA?

A: From learning standpoint, most MBA programs offer a similar curriculum, most of which can be learned on your own. The important benefits of a particular program are the perspective you get from professors and fellow students and the network you build in the process.

Very late in my career I attended the Harvard OPM (Owner/President Management) Program, which has been tremendously beneficial to me. I have since recommended the program to many people in the optics industry and they all feel likewise. Considered an MBA equivalent, the program is taught in three-week sessions over three years, at the same time, and with the same “students” who are owners or presidents of companies from all over the world. As its promotional material says, “… you’ll leverage the extensive HBS network for advice and peer support.” Not only did I learn from professors, but also from fellow students, who, as you can imagine, had lots of opinions on just about everything. The benefit is that it made me see a broader range of possibilities and provided me with a valuable network of contacts.

The best course of action is to go for a regular MBA at a top business school, if at all possible. Students at such a school are likely to be more diverse because they come from a broader region of the country/world. I also think perception is reality—most people who matter to your career are likely to believe an executive MBA is the “next best thing.”

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MILTON CHANG is managing director of Incubic Venture Fund, which invests in photonics applications. He was CEO/president of Newport and New Focus, and currently sits on the boards of Precision Photonics and OpVista. He holds a B.S. degree from the U. of Illinois and a Ph.D. from Caltech. He is a Fellow of IEEE, OSA, and LIA, a former president of LEOS and LIA, recipient of Distinguished Alumni Awards from both universities, serves on the board of trustees of Caltech, and is a member of the Committee of 100. Visit www.incubic.com for other articles he has written.

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