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Strategic Direction & Alignment: A Practical Application

There are books and books written on the topic of strategic planning. The topic can often be made overly complex and in many cases esoteric. At its most fundamental level, the goal of corporate strategy is about achieving a sustainable competitive advantage in the marketplace. Certainly, Terracon’s strategic plan focuses on the topic of competitive advantage. However, as a practical matter, it is most useful as a tool to set company direction and align our national network of local offices toward a common purpose.

A little background on Terracon is in order. The firm is 100-percent, broad-based employee-owned and provides services to a broad mix of private and government clients in four areas: geotechnical, environmental, construction materials and facilities. During the last 10 years, Terracon has grown from $71 million in annual revenues, 45 offices in 21 states, and 770 employees to annual revenues of $335 million, 98 offices in 34 states and 3,000 employees. About two-thirds of our nearly 500 percent growth has been internal and one-third by acquisition of regional firms offering similar services as Terracon.

The central focus in developing and implementing our strategic plan is to use it to transform our national office structure into a strength and source of competitive advantage. A highly decentralized office structure such as Terracon’s is often looked at as a potential competitive disadvantage, due to each office acting autonomously. We experience the general problem of “herding cats” that is part of all professional service businesses. Aligning nearly 100 offices and 3,000 employees in a common direction is a challenge but a tremendously powerful weapon in a highly competitive industry.

To accomplish this alignment, we use traditional and nontraditional strategic planning methodology. We begin in a traditional fashion with by appointing a strategic planning committee comprising senior managers of the firm. From there, the process is anything but the traditional, high-level approach. Our process can best be visualized as an hourglass shape. We start with broad input and research from many sources, and then narrow down the ideas to a succinct, practical plan. To implement the plan, we return to a broad approach in our communication and engagement of employees.

The specific process for strategic plan development involves multiple steps. First, the strategic planning committee, based on input from many sources, develops a draft plan. Then, a key step is to engage the firm’s 150 “principals” (the most senior contributors in the firm). Our approach is to conduct a hands-on workshop to obtain their specific comments, critique and suggestions on the draft plan. For us, this is a complex, yet critical and beneficial, step in the process. The committee then uses the principals’ input to develop the final plan. During our last planning cycle in 2006, the input from the principals was invaluable and materially improved the plan.

For the plan form and language, we believe in making it short. Our entire plan is printed on a tabloid-size document and consists of four sections; our mission, values, vision and goals (to achieve the vision). Separate from the plan, we also establish a set of financial and non-financial metrics to measure implementation progress.

To communicate the plan to the firm, we again broaden our approach. First, all principals receive a copy of the final plan and attend a web-based presentation to discuss the plan and ask questions. Then employees at all levels receive a summary of the plan, which is developed as a brochure. Office managers are provided with a tool kit, developed to assist them with presenting the plan to their staff.

During implementation, we avoid too much corporate hype and top-down requirements. Rather, we work hard to integrate the plan and the specific plan goals into all aspects of the company. For example, the plan is used at the corporate level to set the annual priorities and implementation initiatives for each corporate function (human resources, information technology, etc.). The strategic plan is introduced to new employees during orientation. We conduct an annual, multi-workshop leadership development program, and the strategic plan is a prominent focus. Fundamentally, we encourage each and every principal to use the plan in a proactive way to set the annual priorities in their area of responsibility.

Ultimately, our goal is for every employee of the firm to understand the plan and their role in its implementation. We have moved well beyond the strategic plan as a board of directors level planning tool. Today, we feel very good about the alignment and engagement of the principals in the plan and its implementation. For the broader employee base, feedback suggests an understanding that the firm has a clear strategic direction and plan, and that we are working effectively to implement the vision and goals set forth in the plan. Full engagement of all employees, that is connecting the plan to their roles, is a work in progress, as there is no such thing as fully accomplishing this goal. We do see principals and offices as well aligned with our company direction and working together to use the resources of a single, national company and a large geographic footprint as a source of competitive advantage.

David R. Gaboury, P.E., is President and CEO of Terracon, a consulting engineering firm providing multiple related service lines to clients at local, regional and national levels. Mr. Gaboury is a licensed Professional Engineer with more than 25 years of experience in environmental, geo-environmental and water resources engineering. He is a graduate of the University of Massachusetts at Amherst with a bachelor’s degree in Civil Engineering. Mr. Gaboury also received a master’s degree in Civil Engineering from the Massachusetts Institute of Technology and is a graduate of the Harvard Business School , Advanced Management Program. Prior to joining Terracon in 1997, he was with Woodward Clyde for 15 years, serving as the Chief Operating Officer and President of Woodward Clyde Consultants for the latter five years.

Headquartered in the Kansas City metropolitan area, the firm has grown from a small Midwest geotechnical engineering firm to a large, multifaceted national firm with more than 100 offices and 3,000 employees nationwide. Terracon’s 2007 revenues were $335 million, and the firm is the 51st largest engineering company in the as ranked by Engineering News Record. Terracon is 100 percent broad-based employee owned and is named by the National Center for Employee Ownership as the 35th largest employee owned company in the United States.