181: Fred Kramer, Former President @ ADD Inc. (now Stantec)

Fred Kramer joined ADD Inc. when it was a 15-person operation focused entirely on suburban Boston office buildings. Over the next three decades, he rose to President, blending his business discipline with design ambition. 

Under Fred's leadership, the firm diversified into multifamily housing, higher education, and interior design - scaling into a 250-person multi-sector powerhouse before its acquisition by Stantec in 2014.

Following the acquisition, Fred spent five years at Stantec, ultimately serving as Vice President and East Regional Business Leader for Buildings. Today, through Kramer Consulting (launched in 2020), he helps founders and next-generation leaders navigate succession, transitions, and leadership development. Fred brings the rare perspective of an executive who has expanded a firm from 15 to 250, steered an organization through a major recession, and managed a massive corporate acquisition from the inside.

Inside this week's episode: 

• Transitioning a team into specialized experts and uniting them as a cohesive team
• Unpacking the critical distinction between a business-led practice and a practice-led business
• How building post-occupancy evaluations into fees transforms client relationships
• Structuring ADD Inc. into sector-based business lines
• Fred’s advice for design firm leaders and the unique value he delivers through Kramer Consulting

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Transcript

Rens Hayes IV 0:08

Hi everyone, welcome to design development. You're home to learn directly to the performance of real estate design and construction. I'm your host, Ren Hayes, co-founder of H+O Structural Engineering, a lifelong learner, and I'm personally obsessed with high-powered organizations and the leaders that can do it. Let's go. Today on Design Development, we have Fred Kramer, former president of ADD Inc., who sold to Stantec. Fred, thanks so much for joining us today.

Fred Kramer 0:34

My pleasure, Rens always nice to see you. Happy to be here.

Rens Hayes IV 0:36

It's so cool that we've been able to build uh really a relationship over the last six to 12 months or so. So I appreciate you taking the time and certainly enjoy our conversations. And it's a pleasure to share those with the audience here today. So you were rugby and a crew athlete at Dartmouth. And for those that don't know, you went on to lead adding to about a 250-person firm. And when you look at your career and your business journey, did that fill that competitive itch from your athletic days?

Fred Kramer 1:03

I would say it definitely did. So I was one of those came from a farm town in central Massachusetts, played every sport that we had. And I think as I look back on my life and my career, the lessons learned through athletics and teamwork and all of those things were paramount in my career. So I always actually ended up feeling more like a coach at the end of the day than I did a CEO or a president. And we'll talk more about that later. But I but when I went to when I went on to college, I was one of two kids in my high school who found a way to get accepted to a good school like Dartmouth. And when I went to Dartmouth, I was much too slow, much too uncoordinated, and much less capable of playing collegiate sports. So I decided my goal in life was to be mediocre at as many sports as I could possibly take on. So that's where rugby and crew came from. And they were a blast. And all of the team-related things that we will discuss were were great. And I still feel that way, the lessons learned, and I used them in business every minute of every day when I became the lead in the firm.

Rens Hayes IV 2:21

Even that mentality of saying, I'm going to be mediocre at as many things as possible. Like you really took that frame and kind of made it your own and led it into such a great, honestly, athletic career. And then when I compare my sports background, the thing I feel like it teaches you the most is one teamwork. You're not just working hard for yourself, but you're working hard for your teammates. And you have to deal with adversity and failure. And those building those skills through sports in my childhood, and when I look fast forward into my career, like those are things you're facing all of the time. And it teaches you what hard work looks like. And that that's something I always look back on.

Fred Kramer 3:00

Yeah, I think it's it's if everybody's winning, you're good. If not everybody's doing their job and not everybody's playing their role, or it's unclear, you're not. Winning was important, but more importantly, was engaging a team of teammates. A number two ore is different from a number three or and a wing forward is different from the scrum guys. So everybody has to do their job, and you can't be afraid to make changes, right? If somebody's not quite doing their job, change the part and the piece. So I think all so many things, long story short, Renz, so many things in my life grew out of competitive athletics and great coaches along the way.

Rens Hayes IV 3:45

Architecture, engineering, and honestly, most business, like one of the keys to building a great team is your ability to attract, develop, and retain A-level players. So if you look back on your career, what is the single most effective thing you did to attract or keep a great architect? Attract.

Fred Kramer 4:04

Paint a picture. Paint a picture of where we're going and paint a picture of how that particular individual was going to help us get there. So I would say engagement. If the parts and the pieces don't quite understand the mission or the goal or what the horizon looks like, then they really can't be fully engaged and they can't achieve at a level that might scare the heck out of them initially, but which they come to comprehend and embrace. So I I I guess I use the term engagement. And I think that was the key to success for us was when we decided that we should take this two things. Take take turn generalists. Small firm, everybody has to be a generalist. And as we grew, and as I continued to help us grow when the founder departed, it was really interesting to see how you could take generalists and find the right spots for them where their true expertise was. So turning generalists into experts was mission critical. And then the hard part that I didn't fully comprehend, and I probably should have, was turning a bunch of experts into an expert team. Okay. And how many people, Renz, you notice how many people touch clients and touch design and touch drawings and touch construction and touch the myriad of players in the business for a project to go beautifully, right? How many people have to do a great job and leverage their expertise in order to be successful? So I had a lot of fun with that and changed parts and people got excited about the fact that, oh, yeah, I'm that guy on this particular project because this is what I do best. So you can take that bunch of experts, loosely held, not always experts, and put them together and say, this is how the team is going to be successful, they began to understand and they felt that they made a significant contribution to the success of a project or an initiative or whatever it might be. So without full and complete engagement, you don't have a prayer.

Rens Hayes IV 6:21

That's a great takeaway, Fred. To your point, you go back to a sports analogy. It's like you're not going to build a football team with all linemen. You need a running back, you need people that play, you need CPs, you need receivers. So it's like finding those experts and building a team of experts that complement each other is a true differentiator.

Fred Kramer 6:39

Yeah, and and recognizing and rewarding it when you do it, because some people realize, no, I love touching all parts of the project. Here, here's here's the scoop. Right? You're in our view, and I hope you'll come to agree, Mr. and Mrs. Employee, that this is the best use of your skills, and you can get pumped up and do that and help person next to you do the other stuff and the other stuff and the other stuff. And then you come together. Of course, people can cross over and have multiple exceptional capabilities and you use those where you can. But it was getting people to feel comfortable in their own skin and recognize that, man, it's a team sport at the end of the day. And anybody that's not pulling or rowing or blocking isn't going to help us win.

Rens Hayes IV 7:30

For the individual that's maybe in that position, because like you said, we want to put our team in their position to do their highest and best work to contribute to the t the betterment of the team. How do you balance that with getting, say, pigeonholed?

Fred Kramer 7:43

Constant challenge. I'll give you one example. It's difficult putting together a set of documents, right? Takes months. You move from design development into construction documents. And the person would come to me and say, I just feel like I'm a rabbit. And I'm just, that's all I do all day long. I'm a rabbit. And I'd say, you know what? Here's the scoop. We've got a construction documents group that we're putting together to work on best practices. So you can be part of that group and you can work with other people in a team environment that leverages your skills, but next to folks that are focused on improvement, right? So we did try to keep people within their expertise, but we did give them an opportunity to take what I would say was non-billable time and engage with their fellow employees on improving the firm, improving aspects of the company. And we measured it and we tracked it and we changed people in and we changed people out. So there were other things that folks could get engaged in, even if they were 95% billable on projects, those moments where they got to play with other fellow employees towards an objective that would make the fur better were important moments for them. Shook it up. We could see them in a different environment. Jeez, wow, she's spectacular, man. She's really pushing this team. He or she. So I think changing the scenery in the office was important, especially from those people that are project-based and might roll from one project to another. How do they get involved in the bigger issues and the bigger matters in the firm? What's where's their voice? So you got a project voice, you got a firm voice, you got a community voice. I sent people, I said, every single one of you should be looking at board opportunities, nonprofit opportunities. That's where our clients are. So get out of the office. I don't want to see you in your seat all the time. So I think it was just trying to let them know that the world is much bigger and they have access to that world. And then they begin to believe in the firm and that they can grow. They can grow in this company. I say so, those were some of the things we really tried to do. Everybody had non-billable project-related responsibilities and activities in the firm, down to the younger, youngest, least experienced members in the firm had ways to again participate and make a difference.

Rens Hayes IV 10:11

I like how you frame that, Fred. Advice I'm constantly giving, or I and I do it through a question is what types of conversations are you having with your peers or your customers or your colleagues at an adjacent firm? Because if all you talk to them about is a wall detail or a column detail, that's all everybody's ever going to think about you. But if you talk to them about the economic environment, getting a deal together, the capital, building a business, building training, operations, hey, where are you going in your career? Do you hope to be a principal one day? What type of things are you doing to get there, to prepare yourself for that opportunity? I'm doing this. Now all of a sudden people are thinking a lot different about you, and they might bring those conversations to you, not just you to them. So it's a lot about what you talk about in the industry.

Fred Kramer 10:57

Well, I think it's a great comment. And it reminds me that we turned even that and we turned that into a team sport too. Every advisee had an advisor. The advisor had a responsibility in the firm for ensuring the continued growth and development of our intellectual capital. Then those were sometimes tough relationships and sometimes they were great. People perform at different levels at different times, or you know what? Maybe they're not performing at all. And it's time to make a change. Slow to hire, quick to fire kind of thing. If somebody's not getting it, you have to have a way to measure it and you have to feel like you've given folks a chance. So I think the ability for that engagement, I remember when I had an advisor in the firm, and that's where the advisor came from. The advisor was the president, but we were 15 people. I had principals and others who were much more experienced than I was to help. But as we grew, definitely people needed to settle into positions because you had to, you really needed to be an expert for in something for us to go where we wanted to go. The merry band of generalists wasn't quite going to get us there as we grew. So it seems kind of natural when you think about it that people would find their water level, if you will, but then continue to push for a better than average detail. Think about the things that are important, all the things that go on and push them to engage, use that term again.

Rens Hayes IV 12:26

I'll expand on this the conversation at pigeonhole, because I think this is really important for the audience to kind of grasp. And you're articulating this from the business perspective, is you're hired to do a job and you're compensated because of the value you bring. And if all of a sudden you don't want to do that task anymore, you want to learn something else that you're not capable to do at a high level, you're now asking to do something while being compensated for another. So I think from the employee perspective is to understand the thing that you're asking for of the company. And then really the move is to be very disciplined in your time management and your execution of the thing you're great at. And you're putting in your own time or a little bit extra time to build the skill to get to where you want to be. Jim Rohn, he has this thing like the better jobs looking for a better you. You start becoming that person today, and then the opportunity presents itself. It's like that's really how you got to understand the relationship and what it takes to run a business because the business needs to be economically viable. It can't just lose money for you to choose chase a new path. So you have to find a way to do both.

Fred Kramer 13:32

We were incredibly transparent about all of those performance metrics, collectively in the office runs, month, monthly meetings, updates, status, individual performance, the same kinds of things. And I remember when the when it clicked for me a little bit, I was at a meeting with the American Institute of Architects large firm roundtable when I became the president of Ad Inc. We were part of a larger national group of large firms, even at our what maybe we're 150 at that time. And I remember somebody distinguishing between business-led practices and practice-led businesses. Those were the two types of two types of firms in the AIA. So ad Inc. grew up as a business-led practice. We got numbers and profit and management in our DNA. And I like that. As we grew, and in order to grew, I felt, as did my partners, who were part of all of the decisions in the firm. Again, talk about a team sport. And we I felt that in order we were really good at the business side, where we needed to grow in order to become a better class of design firm and bring greater value to our clients, was we needed to get better in the practice. And once you peel back the layers of onions in the layers in of the onion in the practice, everybody has the ability to play, but you can't get away with just being mediocre at it. You gotta be the best. So it gave people access to opportunities and different roles that they could play on projects where they said, Well, we are now a design practice-led design firm. And we never we didn't can business because that was in our DNA, and people learned really quickly, right? I don't really care about the design unless we made a strategic decision to invest. If you do a great design and we lose a bunch of money, that's failure. So we never lost our genetic DNA related to business, but we did work really hard on the practice, and that's what allowed us to be more competitive, not only locally, but nationally with clients and to bring greater value, which gives you access to greater clients because it's a service business.

Rens Hayes IV 15:51

I love that you took the initiative to build that business-minded DNA because I think it's easy, especially most business owners step into leading an architecture firm, leading an engineering firm, uh a dental practice, a mechanic. They're the practice expert first. And then they don't realize there's so much to learn in business to build a viable company that is both healthy and valuable to the employees and customers. And I kind of use this example. It's like profit is obviously fundamental to a business's health. But if you solely focus on business profit without an awareness to all of these other things going on, you can actually negatively impact both the future earning potential of your employees and you're negatively impacting the future value of your customers. So it's like profit can be a very healthy metric to focus on, but you first have to have these business fundamentals and like DNA to be able to do that healthily.

Fred Kramer 16:48

You know what's so funny, Renz? When we it's not funny, it's obvious. When we got better clients, we made more money. Gee, why is that? Because they were better clients. A bad client can bankrupt your office. We had them, we had all at all different levels. I just wanted to tip it so that more of our clients were up here and less of our clients were down there. We still had clients that were service clients and we worked hard for them, and they took good care of us and came back to us with repeat business, etc. But I wanted, I want we wanted access to a stronger client who would frankly value our exceptional services at a higher level than the mediocre client or the penny pinching clients or the ones that treat you like you're a commodity instead of a valuable asset. So that whole access allowed us to actually be more profitable and we could choose when we were going to invest in a project instead of having it happen to us, right? Which was totally unacceptable. Cannot happen. Need to know where we are every step of the way on a project in terms of profitability, etc.

Rens Hayes IV 18:00

Did you review your book of work with customers every year in strategic planning? Like how did you go about evaluating and making those decisions here?

Fred Kramer 18:09

Did you so good question? I think we reviewed our relationships periodically with our customers. Lots of how we're doing, lots of back and forths, lots of visits by me in particular to check in on teams, sometimes known by the team, sometimes not known by the team, sometimes not even known by the client. So I think in the inner service business, you can get a little too focused on the job at hand and a little less focused on how the client is feeling about the services that were provided before providing. So we checked on that a lot. I wouldn't say it was hyper rigorous. We did post-occupancy evaluations. We actually made money on post-office, post-occupancy evaluations so that we could learn from our clients about how the buildings are actually performing that we created for them. That was interesting.

Rens Hayes IV 18:55

Is that a common practice amongst firms, or is that something unique to add in? Because that sounds like such an incredible thing to do.

Fred Kramer 19:02

It feels like a no-brainer, though, doesn't it? Wouldn't you want to know how this incredibly complex thing that you and others have created is performing for the people that are using it? And it was actually a bit of what a bit of a sales tool. Our clients loved it because it immediately said something about who we were. We didn't provide post-occupancy evaluations as a extra service and additional services. We tried to include it as part of our fees because it pays back to us in the relationship and the learnings. Oh boy, that particular flooring that not you guys, you guys gotta see it. Let me show you these pictures, right? So something went wrong in the field or something went wrong with a product. We can't have that happen in our our buildings are there for a long time. So I think that gave people another outlet to go out and see the work, even if they weren't involved in construction. They could go back during post-occupancy evaluation. And nothing hurts more than seeing something that you drew and something that you thought would be just fine fail.

Rens Hayes IV 20:07

I honestly look at that dichotomy for an architect to be extremely difficult. And if I share just even from my own experience, we designed a house a few years ago and built a house. And the amount of tweaks and changes and things that I did over the course of years on my own house. And then even during construction, you're like tweaking these. And then I think from architect as a business versus architect as the design, like it must be so hard to put pencils down because there's no doubt. If you let's say you walk in at design development, you're in permit, you're in construction, you're in CA, you're like, I would love to change this today, but I can't. Or like they have a really hard conversation if we're going to change this. Like, how do you how does that go internally for an architect or how do you manage that in a company?

Fred Kramer 20:53

It's it's gut-wrenching stuff. It's gut-wrenching stuff. But you if we're in a learning environment, right? The technologies we use are changing all the time, Ren. The products available to us are changing all the time, as you know. So we're always trying to to be on the cutting edge, but not the bleeding edge. And there were times where we were excited about something and we did it and it didn't work out. And I think that the that exp when that happens in an experience with a client that's otherwise a beautiful thing, it's a black mark on the relationship. So the idea is don't do that. How are we managing quality control in the firm? Who is actually in the field, right? Is our least experienced person in the field? Is our most experienced person in the field? How often are they there? Because that person's got 15, 20 years of lessons learned that they probably won't make that mistake again. They can see things that no one else can see, and they can see them before it happens. So I don't know. I don't know that there's a book on that. There probably are lots of books on the subject, Renz, but I think. You learn it by doing. Yeah. And you you hope that nobody gets hurt.

Rens Hayes IV 22:04

It's not something you can get rid of. It's almost just like this tension that you have to constantly manage. And you gotta own it. You gotta own it.

Fred Kramer 22:11

You gotta want, you gotta wanna know, right? You have to know, you gotta want to know about what's the best practice and how do we get there. So you learn from others. Uh, but you're on your own a lot in the design profession. Your engineers are, our architects and interior designers were. So um, yeah, lots to learn. We just which we tried to make sure that we exposed people to those learnings in our practice groups that we had, which helped us become a better practice, and that they could look at our handrail details periodically, make sure that we were learning from what wasn't going right, standard details when appropriate, brand new details when opportunities arose. So there's plenty of risk in the business, but I think um with enough foresight on the right structure, you can manage your way through those risks, client relationship risks, as well as practical project safety, life safety-related risks.

Rens Hayes IV 23:05

I went further in this conversation because I know you and I could talk on these topics all day, but I always like to give the audience that are just learning about Fred Kramer for the first time in Ad Inc a little bit of a snapshot on why we're worth why we're worth listening to, right? So could you tell us about the work that ad inc was doing during your tenure?

Fred Kramer 23:24

Let me start with kind of a broader, uh, a broader comment that might not be surprising, but we were a one-trip poly. We did office buildings in the cow pastures of Rue 128 in Boston. That's all we did. No, we did them for some decent developers. Did my first project was an office building a 10 Burlington Mall Road with Boston properties. Boston properties is a pretty good client. Pretty good client, yeah. So bad. We'll take they're still around today, right? But as but as we decided that we wanted to be practice-led, and as we decided that we wanted to be multi-location, and we can come back to that, we realized that the world of other sectors of business was really pretty cool. So interior design grew as a business, not just a role on a project for a client, but as a business. And we became a sector-based organization. We had sectors who were responsible for their own strategic plans, their own profit and loss, their own staff growth and development. And we had plenty of people, especially at the lower level, that crossed over between sectors. But the exper the expertise grew in a sector environment. And that was a huge change and investment for us. So college and university work became a sector.

Rens Hayes IV 24:53

I would say the people that aren't sitting in a business leadership might not grasp how big of an organizational, how costly, both in time and money, an organizational change like that is. How large were you when you made that change?

Fred Kramer 25:06

We did developer work, did developer-driven work. I say in the cow pastures, it sounds derogatory, it's not, but in suburban Boston, we didn't do any urban work. 15 miles outside of Boston. We did no urban work, right? And even suburban urban development trend hadn't hit when we were younger. New England development doing all the stuff out in the malls. Oh wow, maybe maybe we should have some housing there. Yeah, that was relatively new for us. So I think it was that was fundamental because you could test leadership. People could work on things that they got really excited about. We ended up having residential work, a residential design sector, an academic college university sector, an interior design sector, a developer-driven sector. We had a branding group that worked on branding only for the firm, but I pushed them to turn it into a business, and they did. And it remains incredibly successful today, long after my departure and in an instantiation. So that sector structure allowed us to see the firm and to be able to offer mixed-use development services to clients where previously we might not have been able to do master planning. Yada yah. So I'll zip it. I'm not sure I if I answered your question specifically, but it was fundamental to our growth and required an investment of time and energy. People are going to take that time. We need to believe that the time is valuable to run those sectors and to look and do the strategic plan and to make sure we're on target and to be accountable and responsible for success, not just financial success, but all but relationship success. And that was fundamental for us too, because relationships have been everything for me and were everything for my partners.

Rens Hayes IV 26:48

Quick break from the show. Thanks for tuning in to design development. We're trying to help as many people as possible. So if you can subscribe and leave a review on today's episode on whatever platform you're listening, it would be a great help. It's the only way we're going to reach more people. Let's get back to the show. How many people were you when you started to break into sector led to the hundred? You were over a hundred. So you were doing developer-led work as one organization up until a hundred. And at that point, you made the investment.

Fred Kramer 27:19

I would qualify it a little bit to say that our interior design group did a lot of the tenant development work for our developer clients. So they grew in that single sector. And we did master planning for corporate office parks, things like that. So things that you can think of that go beyond just a building could now be a building as part of a broader master plan and interior design as part of our building services, master planning, master planning as part of our development services. But for a single client other than a tenant from time to time. A lot of those developer clients did turnkey services, and we were the designer for the tenant. So we'd meet with the tenant, understand their program, figure out how much space they needed, blah, blah, blah, blah, blah. So there was plenty to do in that sector, but it didn't give us a it didn't give us a platform in a market that could say, wow, these guys are a pretty good design firm. And that's where the practice-led business investment came in. If we're going to be the kind of general- This is really rebranding, that's a rebranding effort. Totally, totally. We became, again, with the help of some spectacular partners, some of whom are still working at the Stantec X Add Inc. today, some of our best who really became experts. And I think that's the that was those were the hard learnings. Multifamily housing, when we came out of the recession in 2000 and the eight, nine, ten, if we didn't have multifamily housing as a sector, we would have been, we would have been on our backs and in real trouble because multifamily housing urban is what led us out of the eight, nine, ten recession. So I think it it made us fundamentally more sound to have some diverse markets and diverse clients because they're not always clicking in the same way at the same time. So that was big. That was big for us and contributed to a multi-location structure, which gave us access to different client pools and created opportunity for staff to lead or move or participate on a project in Miami or San Francisco. So we work shared a lot.

Rens Hayes IV 29:32

This comes back to one of your earlier pieces of advice is that you have to paint a picture when you're trying to attract talent. And here you are talking about rebranding, reshaping the firm. You're having sector-led business lines with people that are accountable and responsible for growing those. That's career growth opportunity. That's an exciting like company to join. It's clear to see how you were able to attract such great talent and put them in a position to succeed.

Fred Kramer 29:57

Yeah, they could see themselves, Rands. Can you imagine your future here? Right? Because we stole people from some other firms. We, in order to be a damn good design firm, what do you need? You need great designers. And we had great generalists, some of whom were pretty good at design. Now, I'm being black and white here, maybe a little bit crude to put it that way. But if we didn't have it, we had to get it. So we took from some competitor firms some of the best designers that we knew, and we brought them to ad inc at a point where maybe they were ready for a career change. And we asked them to help us get where it is we want to go. And that fundamentally changed the firm along with the sector approach. Fellow named BK Bowley, one of one of who literally just retired a couple months ago, came from another firm and came here with a mission that said, BK, we need you, man. And you're gonna be the point of this spear. And through his relationship with other designers, we attracted other designers. And he grew. Who doesn't want to work on a better design project or with a better client and make more money? Which ultimately at the end of the year, you hope some will come back to everybody in the firm. So I think it also energy it energized the firm, Brand. So change change that you ask for is energizing, right? And you know this. You know this. Everybody can get pumped up about change, uh, especially if the benefit endures to them and ultimately to us.

Rens Hayes IV 31:40

Yeah, line of sight. You gotta connect like what's great for the customer, what's great for the employee, and what's great for the company. And you have to connect those lines.

Fred Kramer 31:47

You have to see their future Rends, and they have to believe that they can make a difference. And if you can do those two things in some way, shape, or form, because it ain't linear. It's left backwards, forwards again. It's all of those things.

Rens Hayes IV 32:00

What was the partnership when you became partner? How many partners did you have?

Fred Kramer 32:05

I think we probably had five or six when I became when I became a partner. And then when I became the president, we had 12, 14, maybe. So we kind of stayed at that scale, broadened out underneath a little bit. We had a little top heavy during the recession, tried to hold on to people, but I let partners go. We let partners go during the recession. It was painful. No, it's painful. It was this the hardest thing I've ever had to do in my life because they were friends. They were some of them were my mentors. But we're trying to balance future needs with what wasn't ultimately a very difficult time in the design because we had just purchased our real estate at 311 Summer Street. And the day we occupied our real estate, layman collapsed and banks started getting a little nervous.

Rens Hayes IV 32:53

I think this is a quote from uh billionaires the difference between a good and a great deal is 10 years. So it's like what started out as super stressful, and I'm sure a ton of fear led to be a great asset for you long-term.

Fred Kramer 33:07

Funny you say that. We survived the building. And layman collapses, and there's nothing going on, and the bank is on us like white on rice.

Rens Hayes IV 33:22

Yeah, you don't want to miss one payment because they'll claim covenants.

Fred Kramer 33:26

So, what did we do in 1617? We sold the real estate, so we survived. We survived, but we took a risk.

Rens Hayes IV 33:35

You had advice for maybe an existing firm owner? Like, how do they prepare for transition?

Fred Kramer 33:41

When should they start thinking about it? Oh boy, what a great question. So, my my little consulting practice called Kramer Consulting, which you probably know about, came about by change changing my LinkedIn profile. It wouldn't let me out of my when I retired, it wouldn't let me out of the damn LinkedIn thing without putting down a business. I I put, all right, frick it. Kramer consulting. So just so I could get on with my life. And my phone started ringing. And it started ringing. It so in all seriousness, it's fine. I had no no interest, no advertising. So, but my point is the phone rang first from individuals. There's a lot of generational change going on in our business right now. Lots of folks my age are getting out. Founders, next generation leaders. So I wasn't the founder of Ad Inc., I was a second generation guy. So founders are calling me to understand what lessons I learned in second generation leadership. And the first thing I tell them is second generation leaders are not founders, they're different animals. Founders, well, so so founders basically found the firm because they want to do it their way, right? That's what they want to do. They want their name on the door, they want to do their stuff. Second generation leaders have to be team builders and coaches. So that's a different guy. I I didn't Larry Grossman and I actually almost founded our own firm. We were this close, and the one client we were going to take with us decided not to do the project, so we jumped back inside adding.

Rens Hayes IV 35:11

That's what it was. That's true.

Fred Kramer 35:13

That's the only reason. He sold, he said, geez, Larry, we got kids for crying out. We can't do this. So we didn't have enough confidence, and timing wasn't supportive of starting our own business. So we stayed. And I think what I talked to founders about who are looking to do an internal sale. So that's the internal transition versus an external sale, which all founders have the ability to do. They can be part of something bigger, too, if they wanted to, so they could sell the firm, is to help them understand who that next, what the characteristics of that next guy should be, in my opinion. And that has worked successfully in several firms that I have helped. We have found the right guy. The founder learned from those experiences. And some of the things that we at Ad Inc. did as a group were of interest to that founder as well as they transitioned. So, how do they become a better, bigger, more impactful company? You can talk about transitions from business-led practices to practice-led businesses. You can talk about transitions from single sector to multiple sectors and what were the benefits. You can talk about multi-location versus single location. If we I look back at my experiences, Renz, and you probably do too, and someday you will even more, and you realize that your experiences are just your experiences. But to someone else, they can actually qualify as expertise. You've been through it. So the people that are smart enough to pick up the phone and look for advice from someone that's been there are the clients that I enjoy working with the most. They're the most humble. They know they don't have all the answers. That's all it is. I wouldn't say, I would never say it was always right. I know the things that worked and I know the things that didn't work. The difference is that we tried to learn from those things. And we put ourselves in. We had a CEO, a CFO, I should say, Evan Glassberg, who we put through business school so that he could get his MBA and be a better CFO. And he was a dog. He was a dog on everything, which was really important. So that that that was the leader of our business-led practice, because we had to measure all of this stuff and we needed to know where we were in good times and in bad. That's he was a real, I just I should mention him because he's no longer with us, and he passed away shortly after we joined Stantec to with cancer.

Rens Hayes IV 37:41

That's one of those lessons that everyone can shake their head in agreement. Yeah, leadership development's important, but very few understand what that actually looks like in terms of creating a plan and execution. We go back to this founder or transitioning a business and that internal sale. And something I've picked up along the way is you look at a lot of small businesses, they're very much imbalanced organizations in terms of they have a few strengths and then they have organizational gaps that might be in marketing sales, that might be in leadership. They don't have an executive team. The owner wears a ton of hats to get the business to run the way it does. So the problem is anybody that's looking to take over that business has to put on all of those same hats to be as successful. And they're not the same person. So it's if the business is designed for your skill set and the thing you want to do, you have to find your clone to step in. Otherwise, there's some cost to transition the business. For sure. And it's all risky.

Fred Kramer 38:36

It's all the future's not certain. It's all situational awareness is important. Again, all of the sports stuff that we've learned over the years is critical. You can't enable a bad performer. You got to move quickly, either change the role or change the person. If you put everybody in a position where a contribution that's meaningful is required, you have to be willing to make changes where something's not working. I and that might mean just having somebody try them in a different role where they might take off. So it doesn't necessarily mean failure. It just means that this is not quite working out the way we want it to. So let's try something else.

Rens Hayes IV 39:13

Underpaying, overworking, or underpricing. What's a bigger constraint in most architecture firms? In terms of long term, underpricing is it's one of the biggest constraints in business, but I think it's hard to see in a design firm.

Fred Kramer 39:27

When we were a business-led practice, we were profitable because we sacrificed other things that cost money, right? We sacrificed on some talent, so our designers were okay. Not great. We wanted great designers, so to to make that change. But we didn't I I knew we would never lose our business-led practice roots. So Ad Inc always knew how to make money. We didn't have we knew how to make money, and we generally did, or it would have been an unacceptable year. So the Great Recession and when markets are in the tank, obviously you struggle a bit. But the other two are really important too, but underpricing has a greater long-term devastating effect. And and people will look at you as, oh, you're the guys that underprice, and you'll never be a you'll never be a a region class design firm if you're going to continue to underprice your services. And underpricing to get work is doesn't lead to servicing a client well.

Rens Hayes IV 40:22

And if I think about the chain of events, underpricing leads you to underpaying and overworking your staff, which is why it's harder to see.

Fred Kramer 40:30

And at the end of the day, underperforming is very hard to fix because it becomes a part of how you do your work, how you do business.

Rens Hayes IV 40:37

You're in a hamster wheel and it's really hard to get out of, which is why you need Fak to Kramer consulting.

Fred Kramer 40:44

Yeah, um among maybe a couple of other things. But no, I I think the the my retirement store, my retirement recommendation is, and this is my mother's, my mother passed away when she was 98, and I still remember her pointing her bony finger at my nose when I said I was gonna retire. And she says she goes, You can retire anytime you want, but you better have purpose. Said, wow, great advice.

Rens Hayes IV 41:12

What did you love more, Fred? Architecture or building a company?

Fred Kramer 41:16

There's no question building the company was my passion. I loved architecture. Designing and executing something else with all of the challenges associated with it was more important to me. So the team building experience, take a bunch of experts and turn them into an expert team. I think Bobby Valentine, of all people who used to coach the Red Sox, said that. Hard to believe because he wasn't that good a coach. But I thought it was genius, right? Let's take this team of experts and turn them into an expert team. And that's the way we grew. That's really the way we grew the business. Um, and don't be too afraid of risk, although I'm not sure I'd buy another building tomorrow due to what we went through. So I got a feeling for how developers feel in downmarcus boy when they've got a $16 million loan and business is drying up. Kind of a hard ride. At any rate, yeah, that's it. Uh there's not a ton of things I would change. And you know what? You can't do it anyway.

Rens Hayes IV 42:14

So nose forward, eyes forward. I like that. And I like the conversation around risk. I think it's important for people in the position of making those decisions to really reframe risk because not making a decision has risk and no upside. So you need to find a way to take small risks to continue moving the ball forward.

Fred Kramer 42:36

Manageable risks. I consider myself very lucky to have worked with the incredible talented people that comprised ad ink when I took the wheel, and that still comprise the Boston and the Miami office of Stantech today. And I look back all the time. There's a lot of it that I miss, and then there's a lot that I look forward to.

Rens Hayes IV 42:55

Thank you so much, Fred. I was actually just gonna turn it to looking at our company at HO and our stage of growth. So we're building a national firm. We're trying to do so by providing more value to our customers than we can, mostly private developers, large-scale commercial real estate. As we grow from around 30 to let's say 100 to 200 to 250, like what advice do you have for us in what's to come?

Fred Kramer 43:22

Keep your feet on the ground and your eyes forward. Don't get too full of yourself. Don't get too down when things don't go well. Just you're the leader of that firm. So you have to, even when the shit is hitting the fan, like when the Great Recession hit us, and I'm standing in front of the staff trying to tell them this doesn't change where we're going. This is the setback. We're we're we'll be okay. And I don't go home at night and I'm saying to my wife, Sue, I don't know if we're gonna be okay. I really don't know. But I have to believe that we're gonna be okay. And you have to transition that to others. So I think, yeah, I think for you, yeah, it's you're you're gonna it's gonna take more talent and more fellow leaders as you grow because there's more to do and there's more opportunities. So yeah, so just be careful of the bites you take along the way, right? Because we're a service, we are a service business. Uh your value proposition is absolutely well aligned with what clients want in terms of the best practices for the right amount of money, right? And if you bring value, you got it. So keep bringing value, you do it. The market that I have come to know in Boston loves you guys, so you're clearly doing something right. So as you grow, don't lose it. You need great engineering talent and great delivery talent by your team to be able to do that, right? So that that it feels like a no-brainer. But there are plenty of service firms out there that aren't that interested in doing great stuff. Be proactive, don't let it wash over you, right? There's always you you've always got multiple decisions you can make, which ones and why.

Rens Hayes IV 44:58

I heard this piece of advice recently was the right decision is the one that you make, right? It's like just make a decision and then make it successful.

Fred Kramer 45:06

Make it successful. Yeah, once you've made it, it's awful hard to undo it, right? So you better make it work out somehow, right? But that that's passion, a little bit of luck, and a little bit of capability, and then surrounding yourself with the best people money can buy.

Rens Hayes IV 45:19

Fred, congrats on a successful career. I admire the business you built. I had the fortune uh of working with your team in the bit towards the beginning of my career at Ad Inc, doing a 12-story building in Boston, and it was a project went amazing. So thank you again for everything you've done for the uh the industry. My last question before I let you go what's a favorite book or podcast?

Fred Kramer 45:44

So this one's recent for me, and it's a really good book for people that are moving into a leadership position at any level, might be leading a sector, might be leading a piece of the practice documents or construction. It's your ship now, especially for developing leaders who are in a position of responsibility, and it's by Michael Abrisoff, a military man. So it's your ship now by Michael Abrisoff. Just a great read. I've recommended it to many. Culture of ownership, all of that kind of stuff are great for people that are moving into leadership positions where they haven't been in one before. So those lessons learned are fabulous. I don't have a podcast immediately that comes to mind other than the ones that I've seen from you, where some people I know have done those podcasts, and I get to learn a little bit more about them. Those are fun.

Rens Hayes IV 46:36

I love that. Fred, thanks again for sharing your journey of wealth and knowledge and a great storyteller to go along with it. So thanks again.

Fred Kramer 46:43

It's been a lot of fun, but it's all about the people right now.

Rens Hayes IV 46:48

Everyone, thanks for tuning into design development. Real quick before you leave, our goal is to help as many people as possible. We're a growing community and you're a big part of it. So just click that send button, send this episode to a friend to let them get the same insights that you got today. We appreciate you. See you next time.