Guy Lethbridge – Strata Group – CEO Business Marketing Interview 34

Guy talks about the unprecedented confidence in the current commercial environment, hiring for cultural fit when hiring as the company expands and why their team lives by the saying “I don’t need to know the answer, but I need to know the question”.

Guy also shares his perspective on the seismic strengthening changes coming in next year, the implications for New Zealand’s old building stock, their engineering approach to try and return the asset to it’s original value in challenging situations and protecting iconic buildings through city modernisation.

PLUS Guy shares Strata Groups’s engineering contribution to help New Zealand artists bring their public sculptures ideas to life.

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Interview with Guy Lethbridge of Strata Group

This is the Ryan Marketing Show and you’re listening to episode 34 of 100. Today on show I have Guy Lethbridge from Strata Group, an engineering services company. You’re nationwide, but based in the epicenters of Hawks Bay and ChristChurch. Now, Strata Group’s a relatively new organization founded in 2008, yet it’s a merger of two longstanding engineering practices, one yours and one Russell Nettlingham’s, which go back to the early 90s, then Duncan Briss joined as a director. What was the catalyst there, Guy, for the merger initially?

Guy: Well we, Russell and I, worked together when we first came to Hawks Bay for a company called Michael Newby and Associates and we split out as we became more ambitious and went our own separate ways for several years, and went off and did our own things. I set up Professional Pursuits and [inaudible 1:23] and Russell went off and set up Designworks, and then through us morphing into different forms we eventually worked out that it was pointless for us to be competing against each other, and we knew each other pretty well, so I came back to Hastings-he was in Hastings-and we decided to merge and formed Strata Group and combine our teams. So we basically doubled the size of our company back then up to about 12, and then went onwards and upwards from there. And then Duncan joined us a bit later on. He was part of our secession plan. He was senior member of the team and we recognized Duncan as the future of the company and developed a strategy to get him locked down effectively, and now he’s equal partner and we’re looking for him to take the company on after we decide to go and play golf or something.

RMS: So you both took a bit of time off and did that kind of give you the time and space to realize that there was some strength in merging your two capabilities together initially?

Guy: Well, we were, when we left Michael Newby’s company we were relatively naive and went off and hit a time as sole operators and where we did have other people with us, but basically learning the ropes around running a business, the wins and the losses, and it was through that running a company on your own effectively gave you all the skills that and all the growing pains getting up to a larger scale that it was fantastic experience because we hit-I definitely hit wins and losses and it’s possibly the losses that you learn more from. The poor outcomes that you learn from as opposed to the successes. So by the time we came back together again we were pretty robust, we’d been through a couple of downturns in the economy and survived, so when we came together in 2008 we were pretty strong diverse team and we had diverse skills. I was around commercial and fire and Russell was industrial and civil. So the dovetailing was fantastic in terms of-and we brought together our clients and it worked pretty well.

RMS: Now, back in 2008 you weren’t to know of what was going to happen in 2010 and in Christ Church. You would have had a couple years trading under your belt together, then when that happened, how did that change the game in engineering?

Guy: A lot of people forget that there was an earthquake in Gisborne in 2007. So we were already up there starting that process. The Gisborne earthquake was the precursor to Christ Church. It was a smaller scale but the issues around the damage to the buildings in Gisborne were there were mortar cracks and strengthening works as opposed to full demolition, so, and the east coast region engineers had actually had a bit of experience in that, but looking at what we did back then it was so different, the learnings from Christ Church. But we still had reinforcement, nice new buildings to repair of very low quality up in Gisborne so we’d had a little bit of a head start on that, we’d gone through all the issues with all the state coders in the building, the owners, the tenants, the insurance companies, the finance, the territorial authorities, so we’d had a few runs on the board before Christ Church even came along and then that just took it to another level again, in terms of learning how to do it. I mean the design side sometimes is the easiest but it’s facilitating around all the stakeholders that becomes the problem.

RMS: Right, you actually already had internal processes set up to deal with stakeholders, albeit at a relatively small scale in comparison to Christ Church, so you were able then to roll out those internal processes relatively quickly? What did it take to then open a Canterbury presence?

Guy: Well, the major learning was we’d actually done projects. We’d actually completed them. We’d actually realized the challenges involved with all of our stakeholders. Everyone has their own needs. Some tenants want to stay, some want to leave immediately. Landlords that’s always reluctant, we called the Grim Reapers. We were dealing with tears. These were pretty bad outcomes for most people. They hadn’t actually forecast it or budgeted for it so we were generally delivering pretty negative news. It wasn’t fun projects at all. They were messy trying to make a silk purse out of a sow’s ear sometimes. So we tried to introduce the positives of saying “While we’re doing these upgrades can we enhance your building to make it more marketable? To return the asset to its original value?” And sometimes the decision was “We can’t. It’s demo and run.” And that’s pretty tragic news for some people. So we took those experiences and when Christ Church turned up we’d already trialed a few of our own techniques, and then it was interesting to see what actually turned up from Christ Church where a lot more research and development went into the strengthening techniques down there by a much larger group of engineers. So we had a better head start.

RMS: And you acquired a business down there to get your team running?

Guy: No, it’s an old university friend that kind of worked as the director down there and he was Project Manager, watching all these amazing projects go past his door, saying “If only I had resource,” so the aim was to establish a branch down there and say “We’ll provide you with the grunt and you get us the work-or take us into the Christ Church market.

RMS: So for your Christ Church area is it more the marketing and sales side and he is the work of the engine or is it really-

Guy: They’re starting to sustain down there so they started off with a team of five and now we’re up to seven, so another engineer has come aboard, another project manager, so it’s just growing as we can. We’re about-if we get the right people, we’ll get the work. And that’s just making sure we get the right people. So it’s-at the moment-in the engineering world there’s-we’re confident to employ because we know that the work’s out there. We’re almost keeping ahead of the load because there’s too much work out there so we have to pick and choose. Which is an amazing business environment to be in, and we’re very lucky. The alternative would be pretty dour if we were having to go seriously hunting for work, but at the moment through good outcomes and referrals we’re getting really good full workload. So therefore we can expand with confidence.

RMS: So I guess one of the challenges you mentioned around getting the right people. You’re one of only a few companies that I’ve interviewed so far that actually publicly states your values for Str around excellence, quality, value, integrity and teamwork.

Guy: MMhmm.

RMS: How do you go about identifying the right cultural fit for someone joining the team? And without having them on board for a few months?

Guy: It’s funny, the first interview is where many of those decisions are made because we can teach people to engineer but we can’t change their personality, and if you get a bad egg in your crew it’s very disruptive. So often at first impression I base a lot of my decision about employing someone on how they interview. I mean we’re looking at their CV’s, looking at their skills, so we’ve got to have the right skill set but for example if they’re a bit light in some areas, if they’ve got the right attitude, the right socializing skills, the right communication skills, we can make that happen. They’ve got to have a reasonable amount of intelligence, obviously, but if the attitude’s there then they will learn. The trick with expanding your company is you can’t have too many people learning and not enough people teaching, so it’s getting the balance of junior and senior and trying to keep it going. Balance of draftspeople versus engineers, because drafting’s a key component of our business as well. It’s a fundamental tool, and our decision was to have that tool in-house so we’ve got as big a drafting team as engineering team. But the recruitment side of things is gut feel around personality-the good people with the right attitude, we can train them to do what we need them to do.

RMS: I see recently you were doing a briefing for youth engineers or youth students who wanted to get into this profession. Is there any lower limit to age of when they can start knocking on your door?

Guy: We have a prodigal son or daughter philosophy, so we can’t compete with the internationals or the major centers in terms of salaries, so we are always looking for the locals who want to return. We believe that they will value
what Hawks Bay has to offer, which isn’t necessarily the hugest project or the largest salary, it’s the other qualities in life. You know we live in paradise as far as I’m concerned, so getting people to appreciate those other things as opposed to, say, dollars or projects-we do do very good projects here but they’re not, you know, multi-story office blocks. We have typically provincial projects so all the challenges are there, just at a smaller scale. But it’s people having the right sort of values about what they think is important. Good skills, a good place to bring up family, so by meeting and establishing a relationship with those students coming through, it might be just the one trigger that brings them back to us when they return home, how Strata Group gave us that great talk which lead me on the pathway, that’ll be the first phone call I’ll make, and not go to the recruiting agency where we have to pay a commission. They’ll come directly to us. So there’s definite strategy there. We’re looking for-it’s interesting-the smart cookies, the really clever people, don’t often come back here. They’re just snared by other companies. We’re looking for the right attitudes. It’d be great to have absolute whiz kids here but our experience is they tend to get taken by the bigger companies first so we’re just looking for the grafters, and trying to see them and just keep in contact with them, put them on data base and see where they end up. So we’ve got student employment. We’re just going through CV’s now for some students coming through for holiday employment, and looking at bonding scenarios so we can actually say “we’ll help you with your studies if you come back and work for us”, so all that sort of trying to get that long term…it’s a long term strategy, it won’t happen tomorrow. They’ve got-wanting them to go overseas…

RMS: … and get some experience and come back. You say some of the buildings here aren’t very complex or big yet, for Hawks Bay residents not in the engineering business, these are some pretty significant landmarks you’ve been involved with. Some that I’ve got listed here is the David Trubridge Design Building, [inaudible 12:55], Hexy’s, Crown Hotel in Ahuriri, Farmer’s Hastings, the Air Ambulance, Tumu’s…so you’re significantly changing the built landscape in Hawks Bay. How much is of that is your influence versus the architect and the builders that construct it. How do those three areas interplay?

Guy: When it comes to industrial buildings we are often the lead consultant, so we pull-not the ugly buildings but the simple buildings, so they’re a huge, sort of simple structure with a small architectural component stuck on the front, so we generated the lead consultants, we’ve got the dominant role then. Whereas you take something like the Village Exchange or the Crown Hotel in Rivergate, the architect is generally the lead consultant. So when it’s got an aesthetic-a more significant aesthetic component the architect will lead that and they put the skin on, we do the bones. That’s the simple way to describe it. So they come up with a concept of the shape and we’ve got to put the structure inside it, sometimes exposed, sometimes it’s hidden and there’s a lot of interactions, a lot of dialogue between the architect and engineer on those sort of projects, whereas you take the food grade warehouse, the water bottling, something like that, they’re just a shed with an office block stuck on the front. So there’s definitely different approaches have different structures of the design team around it. But in a bit of a ding dong sort of clashing, the architect wants it to be smaller and we say “No, you can’t have it that way” so we’re trying to work out ways to make it look sleek and aesthetically pleasing but still having to satisfy our obligation to make it safe and compliant.

RMS: That must result in some quite creative outcomes in a good way, because you’ve got that constant kind of debate or discussion between what it should look like and how it should function.

Guy: They’ve got functionality requirements as well, the architects they’ve got to make it energy-efficient, make it dry, all sorts of compliance around there. Probably more than we have, but we’re just fighting against gravity and earth quakes so we’ve got to put that structure inside it. The fun is when they’re trying to create an image and we’ve got to make it fit them, and not be too chunky or too structure-dominant, and that’s where it’s frustrating because we want to create really neat looking structures and structures that people will go wild, but often they come with a budget and it’s finding the clients that respect the value of their aesthetic outcome and prepared to pay the money, versus just saying “I want it done as cheap as we can get it.” It’s always a balancing game.

RMS: Where do you see that on the spectrum at the moment with clients in Hawks Bay for the buildings here, versus what you’re seeing in Christ Church?

Guy: Um, it’s harder in the provinces. We don’t – we’re finding constantly now you’ve made a mistake, you haven’t made budget, which is quite frustrating because the budget’s an important, I mean it’s all about – there’s got to be a viable outcome from to see how much revenue they’re going to generate from all the people that use it. So it’s tough. There’s not as much money to create that aesthetic. What is important is we find key items where we do spend the money, that will have the impact. If you try to do that over the whole building you’ll be spending a fortune. But if you can find – the architects clever to say “we’re going to focus on this area, that’s where we’rte going to spend out money, that’s where we’re going to get the wow effect”, and everything else is neat and tidy but cost effective.

RMS: So for example, for the Napier Conference Center, where would that wow factor be when people walk in when that’s launched?

Guy: That’s in about it’s third version of budget control, it came in over budget so we’ve had to do some serious trimming around that, and the Central Studios and Gram Webb have done a great job to manipulate to get it to a point where it’s still going to look good. It won’t look as good as the original concept but they’d had a dollar sign attached to it and the council just couldn’t meet it. So, we had to do some cutting and trimming. So that’s where the challenge comes is trying to…

RMS: And I guess when you’re dealing with an existing building there’s things that you don’t necessarily know in detail until you start removing things.
Guy: Well that’s existing buildings are always a challenge because we’ve sort of gone to look at, and know…we’ll take a sample and say well we’ll interpolate that sample and say we assume that’s everywhere else and many times we find that that’s not the case. So I have a rule around the office of 4 Surprises in Old Buildings, there’s always an element that we don’t know, things that weren’t built like they were detailed, and we’ve got to come up with clear and cunning plans to deal with those, to keep projects on budget and on time when we – when they arrive. Sometimes they’re positive outcomes, sometimes they’re negative, so…

RMS: Now, not everything you do in the engineering space is super-serious. You also have this area around artistic contribution and sculptures. Tell us a little bit more about that.

Guy: We’re sort of became the engineers to the artists. It sort of started off with David Trubridge, Justin Kite, Rick’s doing all his sculptures, the New World Tree, the Caramy Tree, the sculpture in front of the Scenic Circle, we’ve done the sculpture at the Mental Health Unit at the hospital, and a few of David’s works locally and internationally, and with the artist there’s no insidious code 999 for artistic structures. They’re always very random and sleek and using materials that we haven’t got a gut feel for, so the design techniques around that are a bit of gut feel followed with a bit of modeling around it and then sometimes it’s going up and pushing them to see whether they wobble, or something like that. It’s very hard to design for the artist, but they’re a front of house item that is high profile and we often do them either non gratis or jus rite so we value the art in Hawks Bay and want to be part of it and we think we’re good at it as well because it’s about bending the rules and just making sure we get a safe structure but there’s working at clever and cunning ways to achieve it through our toolbox of knowledge that we can apply them and sometimes we’re suggesting “what about this, what about that” and they are always challenging.

RMS: Are they projects that your internal team covets or kind of steers away from because they’re always out of the box.

Guy: Engineers like to go through a code and have a formula that tells them the answer, so, um, no they don’t. There’s a lot of gut feel and with that comes risk and you’ve got to have the experience to know that risk and know whether it’s within the parameters of your company.

RMS: Now, in this interview we haven’t really covered a lot on the marketing side, because as you said before, getting a pipeline of work is not an issue for you. This is certainly a growing and expanding area and you are growing and expanding with it. Which brings on the other challenge, which is how do you say “No”. How do you know how to attract the right type of business in an area where you can kind of pick and choose your projects?

Guy: It’s interesting because Russell and I graduated in ’89 at the ___________and I’m turning 50 this year so anyone younger than me hasn’t really experienced a major downturn in work like we experienced then, where there was just no work for engineers. We had to go offshore, which is an amazing environment to be in because I’ve never looked up to say “what am I doing next?” in Hawks Bay, and that’s not unique to me, I think we’re great engineers but a lot of engineers are in the same boat. So for us now we’re going through growing pains as we’re expanding to a bigger company. We’ve got to pick and choose. We have to have a filtering system when projects come in, new clients, clients in a hurry, we’re saying “Look, we’d rather tell you now that we can’t fit this work in or we can’t do it for three months” I mean I hate turning work away. It’s just so against my psyche and Russell as well, so we’re always trying to fit it in, but we’d rather say to someone “Look, I’ll tell you now that we can’t do it rather than saying yes and not delivering”. We think that’s much worse. So filtering out projects to say, existing clients, clients with good programs that “I need them in ten days” and looking at the type of project – is that what we’re good at, is that the project that we’ve made profits in the past, or been catastrophic, so there’s all these filters going on. And I’d have to say we’re not very good at it yet, we’re still committing to too much because Russell and I have come from hard times and when we had to take everything and we still haven’t got that out of our system. I think we’ll always be thinking “Have we got enough work for this hungry based out here for the next six months, to keep them going?” Cause it is a big base to feed.

RMS: It’s a lot of people. It’s a lot of people to keep on the books as well. On the flip side of it, and this is kind of the last question, what should clients be looking for when they’re selecting an engineering firm, or what should architects and construction companies be looking for when they’re choosing their services?

Guy: Obviously you’ve gotta have the engineering firm that has the skills, so there’s lots of disciplines of engineering. We do-our primary ones-are civil and structural, so obviously that’s gotta fit. They’ve got to have the scale, so they’ve gotta be able to have the resources. A one man band if they get a bug from the water, then obviously that’s the entire team wiped out. For us, we’ve got good scale, so if someone tips over then someone else is there to fill the boots so clients are often coming to us because they have confidence in resource. Some experience-I mean, we’re hoping they’re going to the website and looking at the jobs we’ve done and the successful outcomes we’ve had so you’ve already gotta be able to demonstrate their track record. And you need a few gray hairs to show that you’ve got the experience to know what needs to be done on a project. We have a saying here “I don’t need to know the answer but I need to know the question”, so when you’re looking at a project team, if there’s part of the project that noone’s covering in their scope we’ll say “who’s doing contamination, who’s doing planning, who’s doing traffic?” The client doesn’t know that, and sometimes some of the other consultants are just looking at their bit. We’re constantly scanning and saying “Last time we did a project like this, someone forgot to do that.” Now it’s not our responsibility, but you need to go and find someone to fill that out. So having that, as one person drops the ball, the whole team gets blamed. So we’re trying to make sure that every part of the scope is covered, identifying red flags early, and making sure they’re ticked off any veto points, saying “if we don’t get that sorted out we’ve got a problem”, and communicating it to the client. So as I said, it may not be our job, but somebody’s got to do it, and that’s where, I think we add value to the projects, is where scanning the whole project, not just our little bit.

RMS: So you’re almost looking for questions haven’t been asked and whether they’re your area or not, to make sure that they’re asked so that the project continues on.

Guy: Gotta have a successful outcome and it may not be our responsibility but the client looks around the room going Why didn’t you tell me about this, and if you just hold your hands up and say “Not my responsibility” then they’ll look at you and go “Well, it wasn’t mine” and the client’s always right.

RMS: Excellent. Well, I’m looking forward to seeing what new buildings start to pop up, both around Hawks Bay and to really see this Cross Church rebuild get to its completion. Actually, how far through is the rebuild, are we quarter of the way, half the way, almost done?

Guy: Well, I don’t think you have to look at Cross Church. The virtual is quite at Rosbury Museum, and this is all the assessments of all the buildings throughout New Zealand, so that’s the legislation is coming in next year, and once that legislation’s in place then all buildings within this catchment of earthquake-prone all have to be assessed, so I think basically something like 800 buildings have to be assessed. Now, some of them have been done, but Christ Church has its own challenges, but the rest of New Zealand have got this building stock that have to be reviewed and the workload from that is major.

RMS: So you’ve got work for the next decade, plus.

Guy: Once that clock starts ticking it’s going to be a significant part of our workload is to assess buildings, now some of them will be fine, but there’s definitely a that’s sort of the time frames that we’re talking about of upgrading all of New Zealand’s building stock, all building stock-it’s massive.

RMS: I think it’s a really exciting time because regardless of whether the outcome is to demolish and rebuild or to retrofit, there’s going to be a focus on our built environment based on 2016, not 1916, and that’s going to result in some exciting ways to live, work and play and I think for any of the provinces that get this right, and have the right people involved, whether it’s engineering, architectural or construction, things are going to be fantastic places to live. And I think that’s going to regenerate some of the provinces, not only Auckland, but internationally.

Guy: Well, the rebuilds kept Hawks Bay construction industry going. They’re sort of the upgrades and have quite a lean time. Now at the moment we’re in a hugely prosperous time. We have not experienced an environment like this either. We’ve had some busy times but this is pretty major right now. Which is fantastic. It’s demonstrated the confidence to own in Hawks Bay business environment and adding on top of that we’ve got this potential full workload, not great for landlords, they’re going to have to spend some money but what it does do is it releases some locked up money and what we try to do in the upgrades is try to put the silver lining on the cloud so well, “how do you take your building and enhance it and not just end up with the same thing you had before.” How do we take small rooms and spread them out so they’re more attractive asset for sale or use, whatever the future that building holds? Or is it time to look at knocking it over and getting excited about a new product. But it’s a major advantage that we’ve going forward. We’ve also gotta protect our history, so there’s some pretty iconic buildings particularly in Hawks Bay that we need to preserve, the Opera House is going to be a big one coming up. That’s hugely iconic about where that goes. Lots and lots of other art deco Spanish mission buildings. If we knock them all over we’re going to have a pretty boring…

RMS: I think that would be a disappointing outcome and we don’t want to look like necessarily midwest of America when we’ve got this history that’s unique.

Guy: Yeah. That’s not going to happen but we need to preserve that and get that balance right.

RMS: Well, exciting times and I’m looking forward to seeing what the physical transformation looks like in the cities that you’re operating in. And look, it’s been fascinating today, learning more about how Stra operates. And to know that there’s some safe pair of hands leading the ship forward.

Guy: Yeah. Yeah. Now we’re excited about the future. We have a great time out here and always looking for good people, so…

RMS: If you’re listening out there and you want a career in engineering in a fantastic firm in Hawks Bay, also has offices in Christ Church, then have a chat with Guy and I’m sure whether you want the start of the career now or you’re boomeranging back this can be a great place for your future career.

Guy: Absolutely.

RMS: Thanks for your time, Guy.

Guy: Thank you.