President and CEO of Blueline (Kirkland, WA), a firm that’s committed to building relationships, enhancing communities, and improving lives.
By Liisa Andreassen Correspondent
Darrow is one of Blueline’s founding principals. While he’s best known for his urban infill expertise with hundreds of projects in the cities of Seattle and Kirkland alone, he’s recently shifted his focus away from project-related work to company operations as the business launches its latest strategic business plan.
“The trusted advisor is the person clients call first even before an idea turns into a real project; the person clients call first to bounce ideas off even if they know it’s outside of our area of expertise,” Darrow says. “We get there with our clients by always being honest and always doing what we say we are going to do. We get there by forming strong relationships in the jurisdictions where their projects are located. We get there because we know something about their families. And we get there because, for the most part, we genuinely just like hanging out with them.”
A conversation with Brian Darrow.
The Zweig Letter: Under your leadership, Blueline has consistently been named one of the Best Places to Work in several business and industry publications. To what do you most attribute that recognition?
Brian Darrow: Blueline was first named a “Best Place to Work” in 2007 because we’ve always known that our employees are our most valuable asset and have treated them as such. Our mission statement is, “To build people. To build relationships. To build communities,” and when we talk about building people, we’re referring to our employees. In the last few years alone, Blueline added three key leaders to our ownership group, developed professional development plans for each employee, created an extensive internal training program for our employees, reorganized the company organizational chart to help accomplish more of Blueline’s overall goals as well as staff’s individual career goals, and we formed a board of directors to provide outside council to continue steering our efforts in the right direction.
Our owners believe that employee satisfaction and retention is the key to our ongoing success and unique company culture. We’re constantly re-evaluating our company benefits and perks to make sure we’re being creative and staying ahead of our competition. While some of our perks are not possible now due to COVID-19, we have found ways to show our appreciation for our employees in different ways. For example, we recently gave all employees an employee wellness bonus for them to choose an item or activity that would increase their emotional or mental well-being. Hiking boots, spa appointments, exercise equipment, and childcare were just a few of the suggestions.
TZL: How do you anticipate COVID-19 permanently impacting your firm’s policy on telecommuting?
BD: We’ve had a telecommuting policy in place for years and had three telecommuters working in separate states prior to the COVID-19 outbreak. We spent lots of time and effort up front to make sure these telecommuters could work as efficiently outside the office as they could inside the office. This included investments in hardware and software to ensure workflow and communication was seamless.
In early March of 2020, we made the decision to recommend employees work from home before it was mandated in our state. The investments in the telecommuting tools were already available for our entire company to use, so the transition to remote work was relatively painless. But more important than anything else, it was our employees who proved to us beyond a doubt that they could be trusted to balance working independently while communicating and collaborating as necessary to keep projects moving forward.
While not officially stated in our pre-COVID telecommuting policy, the unwritten rule was that employees had to earn our trust through tenure before they were allowed to telecommute. Going forward, I believe we will allow all employees the option to telecommute regardless of tenure. And in addition to making sure employees have a dedicated workspace at home as well as the minimum hardware specs, their supervisors will also be inquiring into what full-time telecommuting employees have planned for what we call the “phantom commute.” The phantom commute is the routine employees have at the beginning and end of their workday. It could be going for a walk, exercising, reading a book, meditating, or just about anything to provide a mental barrier between their home and their work lives. We feel the phantom commute concept is a critical factor for our employees’ mental well-being, especially those who telecommute full-time. This is more important than ever with the additional stress that COVID-19 has put on our lives. It is something that we will continue to encourage long after COVID-19 is in our rearview mirror.
TZL: How much time do you spend working “in the business” rather than “on the business?”
BD: Prior to 2018, I spent too much time working “in the business.” My founding partner and I came from another firm where too many of the principals were detached from billable work and had essentially retired on the job. We told ourselves from the beginning that we would not run our company that way. We were able to grow the business to 24 employees prior to the last recession and then to about 35-40 employees post-recession. But we eventually reached a point where both our growth and revenue stalled out for a few years.
It wasn’t until we changed the partners’ mindset to realize that it was OK for someone to not be involved in billable work as long as that person was focused on working “on the business.” For the past three years, I have had the support of my partners to focus entirely “on the business” and since then we have seen year over year revenue growth in excess of 20 percent, staff has increased approximately 60 percent, we have two branch offices, and we have added two disciplines to our previously single discipline firm. Staff retention is also up because our growth has provided many employees with career opportunities that didn’t exist before. We’re firm believers that it’s critically important to have the CEO focused on working “on the business” rather than in it.
TZL: Trust is essential. How do you earn the trust of your clients?
BD: We preach to our young project managers that the pinnacle of success with our clients is to become their “trusted advisor.” The trusted advisor is the person clients call first even before an idea turns into a real project; the person clients call first to bounce ideas off even if they know it’s outside of our area of expertise. We get there with our clients by always being honest and always doing what we say we are going to do. We get there by forming strong relationships in the jurisdictions where their projects are located. We get there because we know something about their families. And we get there because, for the most part, we genuinely just like hanging out with them.
TZL: Diversity and inclusion are lacking. What steps are you taking to address the issue?
BD: We’ve always known that our industry lacked diversity, but until 2020, we never took big enough steps to address it. I think we believed that because we were a small engineering company and there was little we could do to affect change. The murder of George Floyd and the Black Lives Matter movement has since raised our awareness and has changed this mindset up and down our organization.
Over the past eight months, we started our DEI journey by hiring two outside DEI consultants to help facilitate education and change. The first consultant worked directly with the ownership group and provided us with some useful guidance to outline our first steps. The second consultant provided an overall DEI assessment of our company by conducting individual staff interviews, small group workshops, and an anonymous DEI survey. We also created a DEI committee comprised of organizational leaders and staff that will use our DEI assessment as a roadmap for change inside our organization and within our community. Through our efforts to date, we have come to realize that there is no finish line on this journey and that this important work will probably never be completely done in our lifetimes. But we believe that every step forward is a step in the right direction and no organization can solicit change if they don’t believe (no matter how small they are) that they can affect change.
TZL: Can you tell me more about the strategic business plan?
BD: We embarked on a five-year strategic plan centered around company growth a few years ago and I changed my entire focus toward implementing it. In just three short years, we’ve accomplished everything we set out to do: established marketing and accounting departments (previously we had no marketing and/or accounting personnel on staff), implemented more sophisticated accounting/project management software, created a formal organizational chart from scratch, acquired a complementary business, opened two branch offices, all while increasing net service revenue 15 percent to 20 percent every year.
One of the overarching goals of the plan was to provide more career opportunities for our employees. Our staff has grown from 39 employees at the end of 2017 to 58 employees. During this time, we added three new principals, and have internally promoted more than 15 people in the last three years, compared to just a handful three years prior.
This year, I plan to focus on creating the framework for our next strategic plan and we’re all excited to get started on the next Blueline chapter.
TZL: Are you using the R&D tax credit? If so, how is it working for your firm? If not, why not?
BD: We’ve been taking advantage of the R&D tax credit since 2016. We have found the tax benefits the company has received over the years is well worth the internal effort as well as the cost associated with hiring an outside expert to do the analysis, determine the qualifying credits, and provide all the necessary information for redemption to our tax accountant. We will continue to pursue R&D tax credits as long as this program is available and the type of work we do qualifies for it.
TZL: How often do you valuate your firm and what key metrics do you use in the process? Do you valuate using in-house staff or is it outsourced?
BD: We’ve only done one formal valuation, three years ago, by an outside consultant. At the time of the valuation, we also determined which of Zweig Group’s valuation formulas most closely matched our formal valuation and we’ve been using that formula quarterly to internally value our firm. Key metrics and variables in the valuation formula we use are number of employees; net service revenue; backlog; EBITDA; pre-tax, pre-bonus profit; book value; and interest-bearing debt.
TZL: They say failure is a great teacher. What’s the biggest lesson you’ve had to learn the hard way?
BD: When we started our business in 2003, the founding partners all had expertise in single family residential projects and that market was booming for the first several years of our business. We focused solely on that market and didn’t even attempt to diversify into other markets. While we weathered the housing crash of 2007 longer and better than some of our competitors, it eventually brought our business to the brink of closure and put some of the founding partners in financial conditions worse than before we started the business.
As we began to emerge from the recession, we began planning our strategies to better prepare for the next downturn. During one of our brainstorming planning sessions, our facilitator asked what we would do differently in the next downturn. One answer was that we would try to recognize the next downturn earlier and downsize ourselves earlier than we had done previously. To this the facilitator responded, “Why not build your business differently so you don’t have to downsize at all?” This thinking led us to recognize the value of diversification and the importance of marketing even in the best of times. Now, instead of being a 20-person, single discipline firm focused on the single-family market, we are an almost 60-person, multi-discipline firm with nearly identical revenue streams from the single family, commercial, and public sector markets. And while the last couple years have been the strongest revenue-wise in our 18-year history, we continue to increase our marketing budget year after year. We feel confident that during the next downturn, we will be able to shift resources into the stronger markets rather than simply laying off staff to survive.
TZL: How many years of experience – or large enough book of business – is enough to become a principal in your firm? Are you naming principals in their 20s or 30s?
BD: We have three new principals in our firm. The decision to invite them to join the ownership had more to do with the current owners wanting to run the business with these individuals and less to do with a required amount of experience and/or big enough book of business. That being said, all three were seasoned senior project managers who had several years of experience in many aspects of the business including developing and winning work. The youngest of these new principals was in their early 30s.
We are currently developing new criteria to determine the next tier of principals. While experience will certainly come into play, we will be looking at other leadership qualities to round out the skill sets and the diversity of our current set of principals. I suspect that our next group of principals will likely consist of more people in their 30s than their 40s, but I wouldn’t be completely surprised (or opposed) to naming someone in their 20s if they met our criteria.Click here to read this week's issue of The Zweig Letter!