By Michael Melcher
Partner, Next Step Partners
What happens when a company with a poor reputation and low morale aligns around five core values? Spoiler: it becomes an industry leading company and grows from $1.5 million to $60 million in 10 years.
In a wide-ranging discussion, the two friends and former Stanford Graduate School of Business classmates share insights about:
Pierre Trapanese | CEO, Northland Controls
Michael Melcher | Pierre, can you tell us a little bit about Northland Control Systems and its place within the physical security industry?
Pierre Trapanese | Northland is in a subset of both the construction industry and the security operations industry. During new building construction, we come on as subcontractors to create and install physical security systems. Once construction is complete, we also work directly with clients, providing professional services to help integrate and manage their security systems.
Michael Melcher | We live in a world where we tend to think of security as being very technological and related to the integrity of computers and mobile devices and such, but this is more the old-school style. Yet all companies still have to do this physical security as well as all the cyber stuff, correct?
Pierre Trapanese | Yes, it’s actually both. Traditionally, physical security for companies is just locking the door and having a video camera. A large proportion of the industry stops there, but this approach doesn’t work very well.
Physical security is migrating into being highly technical, where you tie all sorts of devices together through networks, servers and software for added benefits. That’s where Northland comes in. We bridge that gap.
Physical security has predominantly been a blue-collar industry. Northland is unique in that we can play with the construction people and the architects, but also with the end users and the IT people. We’re fluent in both “blue-collar” construction and “white-collar” high tech.
It’s rare to find people who do both. We’ve hired IT people with strong backgrounds in software and networks, and trained them backwards into “old school” locks and card readers. We’ve also invested in training people who have more of a blue-collar, construction background to grow into the professional services side.
Pierre Trapanese | When I acquired the company in 2005, we had revenues of about $1.5 million and 10 employees. In ten years, we’ve grown to $60 million in revenues and more than 200 employees.
We have expanded our geographic reach, too. In addition to the Silicon Valley (where we started), we’ve opened offices in Washington, D.C., London, Singapore, Shanghai and Bangalore.
Our growth has been fueled entirely by word of mouth without financial backing or any marketing to speak of.
Michael Melcher | So how did you do it?
Pierre Trapanese | We’ve had to have really good operations and really good people. And these in turn came from building a culture based on meaningful, shared values. You can’t grow this way in a top-down manner. It has to come out of the capabilities and will of the people who actually do the work.
Michael Melcher | From the beginning you focused on culture and values. What type of culture were you interested in trying to create at Northland?
Pierre Trapanese | I wanted a culture where I actually wanted to go to work every day and where we got to solve problems! I was born to Italian parents working for the US government in Turkey. Growing up, I went to school in the Middle East, Europe and the States. By the time I was 17, my parents had dragged me through 40 countries. Wherever we went, one of the things that always impressed me was America’s “can-do” reputation. I wanted to build a culture where we always said, “Yes,” and figured out how to do it, as opposed to, “No,” and didn’t even try. I had worked in “No” environments before and I wanted something better.
That said, I think positive work cultures are rare. I’ve seen micro-cultures in departments or among small groups of people, but it’s rare to find this type of culture across an entire company. It typically breaks down once you try crossing departments or branches in different parts of the world.
Michael Melcher | When you started at Northland, where was the culture at that starting point?
Pierre Trapanese | Ten years ago, Northland would have been considered a typical, small company in the security industry, that is to say “mediocre” at best or more likely “crappy.” It had a pretty bad reputation and employees were very demoralized. The techs were poorly trained and very poorly paid. So if they did get any experience and became good at what they did, they would go somewhere else and get better pay and better training. The culture was one where people were punching a clock and just working for a paycheck. It wasn’t a place where people wanted to go to work.
Michael Melcher | When did you first come up with the idea of trying to create this positive culture? Was it always there or did it gel over time?
Pierre Trapanese | The idea was there at the very beginning. I couldn’t see how these technicians were making a living from what they were being paid. And I couldn’t imagine them being happy. At the very least, I wanted to work with people who are happy. So I started making changes to make the people who were there happy as well as to attract other good people.
Everything started with the technicians. They are the entry-level people in the organizational structure, but they’re also the most important. They’re the people who do the actual work in the field, and they are the face of the company to the client. From a pure business perspective, having happy techs creates better client experiences.
Michael Melcher | How do you actually go about creating a better culture?
Pierre Trapanese | I started by taking down all the “motivational” posters that had pictures of airplanes flying high. I would rather have a blank wall than a mission statement or vision statement that people laughed at.
Instead, I talked about core values: to take on challenges, to be honorable, to have fun, to value our people and to do whatever it takes. The values had to be lived by me and by our employees—there were only ten of us at the time. We were upfront with our clients about sharing our philosophy with them.
Michael Melcher | Where did this idea about leading from core values come from?
Pierre Trapanese | The core values thing came from Jim Collins’ Built to Last. I did not take his class at Stanford, but I had heard a lot about the importance of core values from classmates. Prior to joining Northland, I had put together some business plans with core values as the main concept.Our core values actually lead to another value: Having fun. Click To Tweet
Values function by being a guide to how we make decisions and how we do our work. Values run our company. As long as everybody shares the values, I don’t have to worry about people making good or bad decisions. Even if they make a bad decision, they’ll recover from it provided their work is based on shared, core values.
Michael Melcher | What’s a specific example of how values are applied in your work?
Pierre Trapanese | In our industry, customers typically don’t have a lot of trust for physical security contractors. Contractors will often quote something and actually not be able to do it.
Northland’s value of being honorable says we have to do the right thing regardless of whether it is painful to us or whether or not somebody is watching. We deliver on our commitments.
Our value to take on challenges means we are not allowed to say no. We have to say yes, and explain how we might be able to achieve it, and how much time and money it might take.
These values actually lead to another value: having fun. It’s a lot of fun to take on tough challenges.
Michael Melcher | Fast growth often challenges companies, since the original set of values-holders quickly becomes a small minority. How have you maintained these values as the company started growing rapidly?
Pierre Trapanese | In the hiring process, we talk about our values, about taking on challenges and doing whatever it takes, about creating an environment where people have fun in their jobs every day, not just going out and having events now and then, and so forth. It is part of our presentation.
By sharing those values upfront in the recruiting and hiring process, we find like-minded people who can live our values and who are attracted by them.
We also emphasize our values to our clients, so then the clients have an expectation of us to be honorable and to do whatever it takes. This keeps us accountable. Our clients won’t hesitate to make comments like, “I thought you guys liked taking on challenges.” It creates a self-reinforcing ecosystem.
Michael Melcher | I would imagine that most people, if they really want a job, would purport to follow those values. How do you know if somebody is really being honest in an interview about their alignment with your values?
Pierre Trapanese | It’s hard, especially since we’re in a more technical field where candidates can be more reserved in interviews. They might share our values, but it doesn’t come across. Other folks might be very good at interviewing, yet not actually share our values.
References can be very helpful. For example, we might ask a reference, “Can you think of a specific time when this person did something that stood out as being honorable?”
Michael Melcher | What about the people who were already at the company when you joined? How did they respond to the values?
Pierre Trapanese | People were hungry for them. They wanted to work in an enjoyable environment and they wanted to work with people who shared the values.
Our values are specific to Northland. They certainly aren’t the same as those of other companies. Part of the idea is that you want people to be self-selecting. The other part of the process is to be very vigilant about weeding out people who don’t share our core values.
The hardest thing as a businessperson is to dismiss someone, especially someone who is good. Just because somebody doesn’t share your values doesn’t mean that they aren’t good; they could be great. It’s hard to let somebody go that you personally like but who doesn’t fit.
Michael Melcher | Can you give me an example of when somebody or some group really took the values and ran with them?
Pierre Trapanese | In one instance, we had a fairly large project and a subcontractor working for us did a poor job. This led to an all-hands-on-deck situation for our application engineers, technicians and project managers. Everyone was working out in the field 20 hours a day and through the weekends to catch up. Regardless of level or position, they were on ladders with tool belts.
No one asked them to do that. They just saw that it was needed. They all jumped in and started working really hard together. They were working their butts off for three weeks and were getting very little sleep and very little rest.
What made me so proud is they would just laugh about it at the end of every day or the following morning. They had very little sleep, and they were all just laughing and kidding about who was on the ladder, who was doing what, and they were having a great time doing it.
Michael Melcher | One of Northland’s values is “people” and one expression of this has been the Northland Career Challenge, a program to help each employee develop and achieve longer-range career goals. How did that come about?
Pierre Trapanese | I was inspired by the One-Page Strategic Plan by Verne Harnish, who has a book called Scaling Up. Harnish’s idea is that you should be able to put your five-year, one-year, quarterly and monthly plan on one page so that you can continuously work towards those goals as a team.
I liked the precision and visibility of this approach. As I started to map out the SWOT analysis, mission statements and milestones for Northland, I had the happy realization that we were going to achieve all of our goals, even the stretch goals.
But I also realized that individuals lacked this process for themselves. Anyone working knows that it’s easy to get on the wheel and run as fast as you possibly can to make a living. And while you might be relatively content in the moment, 20 years down the line, you might realize, “You know what? I actually never really wanted to do this.”
I wanted to help people throughout our company start thinking seriously about what makes them happy and to support them in achieving this.
Michael Melcher | So you took this idea that was first promulgated for business strategy goals, and then you asked a logical question, “Well, if the business does this, why aren’t individuals doing it?” And then you created a kind of similar template that individuals in the company could use for their own career goals.
Pierre Trapanese | The Northland Career Challenge follows the same process as far as the business strategic planning where we set up five-year goals, but instead of the business strategic planning, it’s the individual’s strategic plan —say Michael’s strategic plan. If Michael wants to get somewhere in five years, what does he need to do in the next 12 months in order to lay the groundwork so that next year, he can continue to work towards that 5-year plan?
Once you know what you need to do in the next year and next quarter, you can target experiences or assignments or classes to prepare you. Without specific goals, it’s too easy to put things on the back burner.
Michael Melcher | What kind of resistance did you get to the Northland Career Challenge when you first introduced it?
Pierre Trapanese | One of the hardest questions for the individuals was, “Where do you want to be in five years?”
Working 12-hour days, 6 days a week achieving great things can be much easier than clarifying and working towards something that will give you a sense of progress in your personal life.
There are a lot of unknowns. We don’t necessarily know what else might be out there. It’s possible that a person may want to be doing the same thing. It’s possible that the person may want to be in a different function. It’s possible that they might want to be out of the company entirely. How does anybody know how to explore those types of things?
Michael Melcher | You were open to the possibility that people might want changes or that their future might not be with Northland. Is that correct?
Pierre Trapanese | Yes. We want honest answers, not just what they think we want to hear. And we want to support them in furthering their personal goals.
For example, someone might realize they don’t want to be a project manager, they want to be a firefighter. Normally, they would take EMT classes to lay the groundwork. If we know about their goals, we can adjust their schedule to make it easier for them to take the class.
As a company, we can accommodate what they’re doing and overlay what they want to do personally with what we’re doing. It benefits us to have the right person in the right place on the right thing, and it reduces friction for everyone.
Michael Melcher | We have seen more interest from companies in finding ways to help their people work on their career development, partly because they think that this is necessary to retain people and to get the most out of them. We see this particularly with companies that have large Millennial populations.
But there seems to be a split. Some companies are open to wide-ranging, career-development discussions because they want people to grow and be fulfilled, recognizing that it’s inevitable that some people will leave. These companies view it as part of their compact with employees that they provide opportunities to grow, and they also want to feel some assurance that if people leave they aren’t doing so for the wrong reasons.Where Do You Want to Be In 5 Years? Click To Tweet
There are other companies that are very nervous about even raising these questions, fearing that people might decide they are unsatisfied and want to go somewhere else. And perhaps these companies believe that even the process of providing ways to think through career satisfaction issues will somehow empower employees to take flight. What is your underlying belief about how this works?
Pierre Trapanese | I’m not sure that we have a complete answer. We know that people who fit well with our philosophy and our core values AND who get the opportunity to advance their careers are very likely to stay for the long run. Some others might move on. So far the results are working for us.
Keep in mind that our company’s mission goes beyond our own company. We want to be a leader in improving the quality of our industry overall. This means that if our employees improve themselves and go elsewhere, they are helping grow and professionalize the industry. They might end up competing against us, but the thought is that it will make us all better.
Michael Melcher | We worked with Northland to provide leadership-development sessions, particularly focused on helping more senior leaders and managers be effective in helping others to develop their plans. The objective was to be more of a coach and less of a directive advisor. How did that play out?
Pierre Trapanese | It worked out really well from the perspective of giving people management tools and some empathy with others. The training has had profound effects on their lives and their choices.
Michael Melcher | What’s an example of that?
Pierre Trapanese | We have had several middle management people whose goal was to become senior managers. A big part of this role involves mentoring and coaching others. Operations and technical people often lack this experience set since they succeed by simply doing their job really well. Helping others develop themselves can be a scary thing for someone, because there’s an element of working yourself out of a job.
The Northland Career Challenge has helped people who want to move into leadership positions to see the need to strengthen their soft skills. They commit themselves to getting training and experiences that they normally wouldn’t go looking for on their own, allowing them to be more successful as managers.
Michael Melcher | When you have a technical role and have done well in that role, whether it’s in physical security or banking or pharma or something else, it’s easy to assume that your trajectory forward is to continue learning technical things. But, in fact, we know that most of leadership development relates to soft skills, influencing, emotional intelligence and related topics.
In contrast with many companies’ leadership or career development programs, the Northland Career Challenge is not for a limited group. It is something that all employees participate in.
Pierre Trapanese | We wanted everyone to have a chance, not just people who would naturally self-select. The Northland Career Challenge gives quiet people—who may have or might potentially develop great leadership skills—the opportunity to work things through and to speak up. Or alternately people might think that because they lack formal education, that the opportunity is not open to them.
By saying the program is open to them, it gives them a chance. They may not make it, but the hope is that some of them will.
Michael Melcher | When you make something universal, you uncover more talent.
Pierre Trapanese | We have great people working for us, people with excellent leadership qualities that no one saw 10, 15, 20 years ago. By allowing people to think over the five years that the Northland Career Challenge covers, we’re bringing to the surface hidden qualities.
Michael Melcher | Pierre, you’ve engineered some very rich, almost wacky global experiences for your teams. One group took a tuk-tuk race across India. Another put solar panels on a remote school in East Africa. What was your vision in doing these things?
Pierre Trapanese | These adventures are related to two of our core values: taking on challenges and being global. We started doing work all over the world, and doing it really well.
I grew up overseas, but I realized that other people at the company may not have had cultural experiences with India or Africa where we would have projects. The idea was to create fun opportunities for them to get to know people from other cultures.
I talked to somebody in India who organized tuk-tuk challenges where there’s no GPS and the only way you could get from one side of the country to the other is by talking to people.
Eighteen people from our team hopped into tuk-tuks and crossed about 1,000 miles of Southern India in five days.
Many Americans and Westerners are scared of India. Everybody on this trip had an amazing experience where they started to realize that being able to talk to people becomes much easier if you understand their environment and their culture.
I also wanted to be able to give back. I felt that we were sort of taking advantage of the situation—learning from the Indian people, as opposed to them learning from us. I wanted to find an opportunity for cultural experience and learning that was also tied to social service.
So we did this self-driven challenge which included spending a day installing solar panels at a school in a remote part of Rwanda. We had to drive two hours on some really bad roads and then hike through rough terrain the last hour.
Without the solar panels, the school would never have electricity. It’s just too remote, it’s too expensive to run power lines out there. It was extremely rewarding for our team to be able to give back.Being able to talk to people becomes much easier if you understand their culture. Click To Tweet
Michael Melcher | I’m guessing that some of the members of your team had never left the country before.
Pierre Trapanese | Absolutely. One of the main reasons behind the challenge was to expose people to other cultures. Few people on the trip would have thought of going to Uganda and Rwanda as their first exposure to international travel. Most people were absolutely shocked at how well they did at traveling around.
Michael Melcher | Most graduates of Stanford Business School seem to go into certain industries—banking, consulting, tech, venture capital, etc. It’s the opposite of a brain drain. There has been a kind of brain concentration in certain business segments where a lot of the most highly educated people end up clustered in a handful of very competitive industries.
But on the other hand, there’s a whole swath of American enterprise where graduates of elite business schools tend not to go. I’m curious about any thoughts you have on taking the road less traveled to get to your current spot, which I think is amazing.
Pierre Trapanese | At the start it was very unglamorous. We’re more like a Silicon Valley high-tech company now, but it’s only by being really good at the stuff that seems unexciting that we have that privilege.
The funny thing is that I know many people who’ve taken more glamorous-seeming marketing or operations and finance roles in high-tech companies or with elite brands and they’re relatively unhappy. There’s a lot of pressure to do well in their positions and many are not feeling satisfied.
I’m not sure I was avoiding glamour. The simple answer is that I knew I could bring more value as an individual in this environment than one where there are 15 other Stanford MBAs. And I couldn’t be happier with my choice.