Every Employee An Entrepreneur

Advanced Technology Inc. grew from start-up to $42 million in sales by encouraging everyone in the company to build and manage a part of the business.

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Going from an entry-level engineer to the head of the company's largest division in five years makes me feel almost like Alice in Wonderland," says W. Scott Thompson. As a vice-president and division general manager at Advanced Technology Inc., a professional services firm based in McLean, Va., he saw the company soar from start-up to $42 million a year in six years. It ranked No. 34 on the 1982 INC. 500.

Thompson built the company's $17 million-a-year logistics engineering division from scratch, and his experience has been paralleled by other Advanced Technology entrepreneur-employees. Three of the company's division vice-presidents, including Thompson, all "came into the company as ordinary workers after answering ads in the newspaper," Thompson notes. Each then built a business within it. None had much previous managerial experience.

Advanced Technology's ability to rely on home-grown managers is evidence that careful planning for growth is key. When they launched the company in 1976, Advanced Technology's founders agreed to encourage every employee to be an entrepreneur, responsible for setting clear objectives at the start of each year and for fulfilling each contract he or she brought to the company.

Although Advanced Technology managers admit the company's decentralized approach has disenchanted many employees -- mainly by outgrowing informal channels used to communicate with employees -- the company has been able to continue growing while struggling with the new problems.

After building an $8 million-a-year division of Systems Consultants Inc. (now known as Syscon Corp.), Robert E. LaRose, Ronald H. Hobbs, and Girish K. Jindia concluded that they could be even more successful running a company of their own. So, with two other employees of local professional firms, they founded Advanced Technology. "We said from the beginning," says Hobbs, now executive vice-president for human resources, policy and planning, "that we wanted to be one of the largest professional services firms in the country and that major milestones would be the achievement of $100 million a year in revenues and 1,000 employees." With 1,100 employees and sales expected to reach $60 million this year, Advanced Technology has achieved one mark and is close to the other.

LaRose, the company president, acknowledges that much of the success comes from the company's choice of markets: The largest part of its business consists of providing plans and reports to assist the Navy in its acquisition programs. But market niche is only one factor of tlne growth. Others are the well-thought-out policies the founders developed before launching the company. Besides giving every employee the chance to be an entrepreneur:

* The company would reward top performers before they ask for salary reviews. The company is cautious about revealing how much its people earn, but Carol A. Wolfe, director of compensation and benefits, says that, according to its own surveys, Advanced Technology's pay runs 10% to 15% above industry averages. And each year 60% to 70% of the company's professionals have received bonuses for their achievements.

* It would be market-oriented. "Many companies in professional services are driven by a specific technology," says LaRose. "We decided we would be driven by where we saw a market opening up." Managers are urged to expand and sell their employees' services in fields related to their expertise. For example, Thompson, whose staff specializes in the prevention of military equipment breakdowns, found a new market in utilities and troubled waste-water treatment programs.

* The company would reorganize as it grew, often more than once a year. It would create managerial jobs to increase the number of employees directly responsible for the profitability of their work. It would create new positions as well as adding layers to its organization chart so thnt no executive would supervise more than six entrepreneur-managers. The company now has five divisions, 18 operating centers reporting to division vice-presidents, and 46 program directors reporting to operating center managers.

* The company would clearly state principles in five crucial areas: staffing, management development, marketing, contracts to be sought and fulfilled, and finance. To ensure measurable organization and performance, each manager would set clearly defined annual goals.

Thompson says that although the principles themselves are unexceptional -- in finance, for instance, they call for detailed financial planning and control, timely cost reporting, zero-based budgeting, a strong cash position, and no highrisk ventures -- the discipline of management-by-objectives employing those principles is the largest single reason for Advanced Technology's success.

Thompson's career illustrates how well Advanced Technology's management strategy can work. An engineering graduate of the University of Mississippi, he was hired by the company in 1977 soon after his discharge from the Navy, when there were about 100 employees. He was assigned to a $100,000 contract to help implement a new approach to ship maintenance: The Navy planned to install critical ship parts in modules that could be removed for servicing on shore.

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