Terry Gerton: ERT works on, I guess, some of the most complex space and earth science missions. Tell us about maybe one breakthrough that’s really changed the game for how you support your defense clients.
Mark Lee: It’s actually a variety of defense and civilian clients. But a lot of what we have been focused on is this pivot to more focused on solutions. And a lot of the business that we work in, services has been sort of the name of the game. And that’s sort of, at this point, has connotations of just people in seats, just sort of staff augmentation. And there’s been a shift that’s happening in the industry, really shifting to more of a solution focus. And that’s really driven how we’re thinking about driving innovation, even reworking a lot of the processes in the company to be around a solution orientation, so making sure that when we’re thinking about what tools make sense to bring to a problem, everybody’s talking about AI and machine learning and all these things, those are extremely valuable tools and still sort of maturing and coming into their own. We’re really starting with the customer’s needs first because I think there’s a risk of so the tail wagging the dog, you see this set of tools and you want to apply it everywhere you can and we really want to come out the other way, like what are our clients’ problems? What tools are the most appropriate to those problems? And that’s really led us into addition to thinking about artificial intelligence, a lot around digital engineering, because in the areas that we work in, there’s all these applications, and by applying some of those principles, you can accelerate how quickly things can be done. You don’t have to wait. In the old days, they would build like two copies of a satellite so they could use one to test and one to launch. But you can now do that within a computer and that extends to the whole IT system to support the satellites and all that. So that’s really a place that we’ve been leaning in a much bigger way. And I think it really flowed directly from this focus on really our client’s problems and focus on what solutions to those problems will be most appropriate.
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Terry Gerton: As you think about and build out that solutions approach, is there a particular move that’s helped you achieve scale without losing your technical edge or your mission focus?
Mark Lee: Coming into a company, when I joined ERT, they had been around for around 30 years, founder-owned, founder-led, and we had investment from Macquarie Capital, and that was when they brought me in. And we had a great team already at ERT, but I also had the opportunity to bring in a few leaders and, to me, building for scale is all about having the right people in the right seats and making sure that the new people understood the role. The existing people sort of knew where we were wanting to head and then building out processes. I’ve been in a much larger company and have kind of seen how they operate. Well, all right, well, what can I do to get ERT ready for that kind of scale? So it’s building in new business development processes, new operational processes, those types of things. That’s really been what we’ve been doing to sort of build so that you kind of want to build the infrastructure for where you want to be because if you get there and you don’t have it, then that’s when delivery can suffer and you put a lot of pressure on your staff to sort of make the impossible happen and there’s so many times you can go back to that well.
Terry Gerton: You talked about having the right people in the right seats. Your work requires some seriously specialized talent and often those folks need security clearances. What’s your strategy for finding and keeping those right people?
Mark Lee: I think some of it is my leadership style is a certain type of person that I want to have and it’s really finding the right people for the organization. I am not a command and control leader, which it sounds great, all that. But there’s actually different implications of that where if there are folks that are expecting to be told, ‘All right, here are the next five things exactly as you need to do,’ that’s not the way it’s going to happen. I will more lay out, ‘OK, what’s the output? What’s the result that we need?’ And you’re a professional, you sort of figure out how we’ll get that done. So making sure that’s clearly communicated and you’re hiring the people that are going to want to do that. Now, the people that like that kind of management style are really drawn to that and I really try to be super approachable. And I think when that all that drives the culture. And I, for example, we have these town halls that we do once a quarter. And I want staff to ask anything. I said, ‘No, don’t give me any questions ahead of time. No prepared remarks.’ And the harder the question, the better. And I’ve learned over time that type of approach, when you’re willing to be vulnerable and actually sometimes be, ‘Well, I’m not really sure,’ and being able to say that you might not have the answer or it may be a question that is a little bit sensitive. Watching me navigate that, I have found the staff trust you more and you build a culture that really, they’re telling their friends, ‘Hey, look, you should look at this opening.’ And certainly, where we always want to start is referrals. But you also have to be doing really cool work. And if you’re seen as a commoditized player, then the top-down are a little less excited. So I think some of it also is about the work that we pursue. You want to pursue the type of work that will attract the staff that you really want to have.
Terry Gerton: So let’s follow up on that because you’re in a space where you have a lot of competition. So beyond your culture and your people and the type of work that you do, what really makes ERT stand out to your clients?
Mark Lee: Our competition tends to fall into two big buckets. I kind of see there’s the much larger, multi-billion dollar firms that we go up against and then there’s companies that are more our size or even smaller. I think we try to do the sort of the best of both worlds approach. I think relative to the bigger companies, we offer more customer intimacy, we can offer more flexibility and a little bit more ability to adapt quickly because we don’t have this big, huge infrastructure that has to adapt with the customer. So I think that gives us some advantages. I think relative to companies that are our size or maybe smaller, we’ve got a lot of executives that have been at big places and been successful at big places and we’ve the backing of a really good private equity firm, we got a great banking group led by JPMorgan so that we can be much more able to respond to big challenges, ‘Oh they’ve got this huge project that they want to launch.’ I think we should have a little more faith that we can pull it off, given kind of the leadership we have and the kind of backing that we have. And I think you’re trying to find that balance, like I’ll come back to solutions, that really plays a key role. If you can be flexible and you have the client intimacy, but then you also have the heft behind it, you can really drive some outstanding results. And I think given where we are, that’s really where the team is really aimed at.
Terry Gerton: So those are three really important topics: the relationship, your own team and then the solutions-based approach. So tell us more about how you bring those three threads together to really deliver modernization of technology or the solutions that matter for your clients and you still help them stay compliant and secure.
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Mark Lee: Yeah, I see technology as a key to making those things happen. I think some people think about all this technology modernization, all this great risk. Well, the risk is trying to keep doing things the way you’ve always done it. So part of what we’ve tried to do is to build teams that are encouraged and actually incentivized to constantly push the envelope. We’ve got a innovation team where their whole job is figure out what are the newest tools that out there, how can they be applied to our clients’ problems and then what are the implications of applying them or are there other risks? Does it create cyber concerns? Does it address cyber concerns? How scalable is it? Is it going to lock us in or lock our client into a single vendor? So we’ve really had, and those folks are not sort of bogged down the day-to-day client, so they can sort of be a little bit more creative and focused, but at the same time, and we joke about it all the time, is that we don’t do science fair experiments here. So they know that whatever they’re working on has to be practical, has to be applicable and has to be really client-driven. And we’ve worked really hard to build a really close connection between that solutions team and our business development team so that all the things that they’re doing are being informed by what we’re seeing in the market, what things we’re chasing so that then we’re arming our business development team with really great solutions that just put them in a much more competitive position to win the work.
Terry Gerton: And as you look ahead, say, five years, how do you see your competition space changing, and how are you preparing ERT to meet those challenges?
Mark Lee: Well, I think there’s two different sides. I think on the overall federal landscape, I think you’re already seeing it happen, that this shift from people talking about services to talking about solutions. We’re not the only ones thinking that way. And with the government talking about rewriting the FAR, I think that there will be some incentives in that in terms of less of the cost-based pricing and more of fixed price, things like that, which provide the contractors an incentive to drive innovation. So I think you’ll see that happening. Within the space market, we couldn’t be more excited about all that’s happening there. I think it will be much larger. You’ll continue to have the big folks that have been there a long time. I think they’re sort of almost an extension of the government in a lot of ways. They’re critical to how things happen. But I think there’s going to be some non-traditional players that are going to come in. Within civilian space, you’re seeing a big push to commercialization, using more commercial services. And I think that opens the door to new entrants. We’re looking at those as really good teaming partners. And I think part of what makes ERT special as well is that we’re all about the best solution for our customer. Sometimes we can do that all ourselves, but sometimes there’s somebody that does a part of that better than us. And we’re not going undermine our customer by trying to do the things that we are not great at. We’re going to go bring in the best in breed and being able to bring in some of these non-traditionals puts us in a much more competitive position, but it also is really fun because they’re doing some really interesting stuff. And I think you’ll see more of that over the next five years.
Terry Gerton: Lots of opportunities ahead then.
Mark Lee: Absolutely.
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