As part of my series about the “How Businesses Pivot and Stay Relevant In The Face of Disruptive Technologies,” I had the pleasure of interviewing Ken Smerz.
Ken Smerz is the CEO of ZELUS, a digital as-built service provider. The company delivers Virtual Design Construction (Building Information Modeling) services as well as 2d/3d digital documentation using the most advanced, latest technology.
Thank you so much for joining us in this interview series. Our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?
Early in my career, I was a general contractor in California where I managed a construction company of about 600 full-time employees. Having worked in industrial and commercial construction, I understood the value of having accurate dimensions of the existing conditions of the buildings we renovated because the existing as-built information was always inaccurate.
About 10 years ago, an acquaintance of mine said he had this technology that “measures” things from a great distance about 100 times faster than traditional methods. I thought, “There’s an incredible opportunity to use this technology to measure existing conditions. Who wouldn’t want that!?”
I wrote a 64-page business plan to create a start-up that I couldn’t have been more proud of. And I couldn’t have been more off the mark. The business plan was horrific. I’d made the assumption that everyone would want to adopt this new technology, but in reality, that wasn’t the case. Contractors — and the construction industry as a whole — don’t like change and are traditionally very slow to adopt new technology.
Regardless, we moved forward working some very long days and testing new markets, approaches, and ideas. It was truly a ‘do or die’ situation. We finally convinced some contractors and architects to believe in our proposed new approaches and began to build traction. That was about a decade ago.
To compound the challenges of a start-up, I had a different vision of the future that our ownership didn’t share. So I made the decision to offer the core talent of our team a new future that meant creating a completely new startup all over again and we left the company we’d built.
We barely had any capital, but we had a passionate belief in each other and the technology disruption we could create in the industry. Since we were low on funds, we couldn’t afford rent, so we actually started the company from the park bench where we’d meet three days each week and pull out our laptops to work together. About three months later we finally moved into a small office. Today we’re a team of about 150 employees with multiple offices, and serve clients throughout North America.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons or ‘take aways’ you learned from that?
There are so many to choose from! One mistake that comes to mind is a story about the importance of listening to your team. We have a very collaborative and open environment, and encourage the team to contribute ideas. One of the services we now offer — the ZELUS Real View virtual reality tour — was an idea from one of our project managers. I thought it was going to fail and our clients wouldn’t like it. But we gave it a shot, and it’s become a really valuable revenue stream for our company, not to mention a tremendous value to our customers.
The lesson there is to hire smart people and have enough humility to listen to them even when you think they are wrong.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?
There was a guy I used to work for named Ron Howard. He taught me the value of “we” over “I”. It was a big lesson because I was fairly cocky. He helped me reframe my communication style and approach to management. When it’s about “us” and the collective journey, your chances for success improve exponentially.
Ron also impressed upon me the value of having fun at work and a sense of humor. Work should be enjoyable and with people you like. Those lessons have never left me.
Extensive research suggests that “purpose driven businesses” are more successful in many areas. When your company started, what was its vision, what was its purpose?
ZELUS and our founding team were driven by a passion for adopting new technologies and processes into the building renovation world.
We want to digitize the physical world, which is what led us to the digital twin concept (a virtual representation that serves as the real-time digital counterpart of a physical building). Our mission has evolved further over the last three years. Now it’s about our desire to bring efficiency to the construction process. That means saving costs in a construction process, accelerating timelines, and a number of different value propositions.
Initially, our purpose was to always do the right thing. As trite as that sounds, it’s pretty important. It’s how we built a really strong culture because we truly want to take care of our customers and help them succeed.
Thank you for all that. Let’s now turn to the main focus of our discussion. Can you tell our readers a bit about what your business does? How do you help people?
At our core, we use technology to improve the construction or build process. Construction is inherently a 3d industry — the aim is to create three-dimensional spaces for people to inhabit — but until recently we had to rely on 2d drawings and to plan and execute projects.
Using our technology, we can create 3d models to bring projects to life before anyone breaks ground on a new construction site.
We can create real-time 3d models of existing structures to help folks understand how to restore or renovate existing spaces more efficiently and safely. These 3d models and technologies also enable greater collaboration across all involved in the design/build process. An architecture team in California, for example, can update plans in real time for a construction team in New York and everyone can rest assured they’re always working from the most up-to-date plans.
All of these various technologies we leverage streamline the entire construction process, from planning to build to completion. It reduces waste in cost, materials and time. It increases on-site safety and helps keep teams safe. It allows for more prefabrication off-site to boost efficiency and improve safety.
This technology has so many exciting benefits for everyone involved in building new structures, from the developers and architects, up to the end users of the building who get to live and work in safer spaces.
Which technological innovation has encroached or disrupted your industry? Can you explain why this has been disruptive?
The most pervasive technological innovation transforming the construction industry is BIM (building information modeling) — and the technology and processes that come with it. Luckily, we’re on the leading edge of this. The disruptive technology in our industry is about digitizing the construction process, whether that’s modeling a building, scheduling, resource management, or costing a job.
We have six full-time people that are dedicated to our research and development program. We are continually testing software, hardware, applications, workflows with two end goals in mind. One is to keep us relevant, so we don’t get hijacked by some new technology that is so disruptive we didn’t see it coming. The second is a relentless pursuit of finding greater efficiencies in our processes that benefit our clients.
The challenge is, within our specific domain, there is a lot of irrelevant noise. We have to make sure we’re screening to separate out the noise from the more legitimate, imminent threats from disruptive technologies. We’re not fearful in any way, but we like to be aware of what’s out there so we can adjust accordingly.
What did you do to pivot as a result of this disruption?
Our pivots are more about the markets we’re going after based on need. That has shifted pretty significantly over the last year. For example, we serve a lot of architects but there has been a real push towards getting the owners involved directly so they can use the 3d model for the actual operation/maintenance of their buildings.
Another pivot is the way we approach and engage new prospective customers. Rather than trying to “sell” our services or the benefit, we’re now focused on delivering value. We aim to serve more as a trusted consultant vs. a salesperson. Forget the sales pitch. How can we learn about you and add efficiency to your current process?
Was there a specific “Aha moment” that gave you the idea to start this new path? If yes, we’d love to hear the story.
We knew that if we were going to survive we had to be highly tactical and make decisions quickly. There wasn’t any clear single moment, rather a series of ongoing decisions on whether to pivot off a tactical plan or pursue the plan in spite of early struggles. I think business is most successfully run through a series of micro-decisions that if they come under the overall strategy of the company can help ensure success.
Our ability to make quick tactical decisions came when the pandemic first hit. We had to reduce our team from 128 full-time employees to 62 in a period of three weeks. These were not easy decisions. Within three or four days, we took our workforce 100% remote. As things have rebounded, we’ve now been able to quickly scale back up, and now have more employees than we did pre-pandemic.
So, how are things going with this new direction?
I believe the pandemic has forever imprinted a change on how we interact internally within the company, and externally how we interact with our clients. Communication channels have changed and not all for the better. To have success, businesses are going to have to really focus on remote employee and client interaction.
Internally at ZELUS, it’s the culture we’ve been able to create built around “love”. It’s a love for one another, for our clients, and for what we get to do every day. It’s felt immediately and we’ve been able to attract some of the most amazing people because of it. That is the real driver of our growth.
Can you share the most interesting story that happened to you since you started this pivot?
When we doubled down on our culture and building the type of environment that made people excited about the work we get to do every day, it created a flywheel of collective contribution that has driven performance. And that performance feeds the flywheel too. Our team sees the direct impact of their contributions to one another and to our clients and it inspires them to deepen their commitment. It’s a virtuous circle and one we’re all proud to be a part of.
What would you say is the most critical role of a leader during a disruptive period?
Listen to a variety of different opinions, have contingency plans, and don’t be afraid to make a decision.
I also think it’s important to build an outside support group that can act as an advisory board to help you discuss the critical issues and direction of your business. This can be something formal like Vistage, or informal like hanging out with friends at a cigar bar.
When the future seems so uncertain, what is the best way to boost morale? What can a leader do to inspire, motivate and engage their team?
Share and be transparent.
I’ll use the pandemic as an example. At the beginning of the pandemic, I met with my senior leadership team every other day to discuss critical topics, keep each other updated on what was happening specifically within our individual teams and make critical decisions. We’ve continued this, but now it’s on a weekly basis. I also communicated with a weekly email to all employees in the company, and I didn’t sugarcoat anything. Of course, you don’t want to be unnecessarily negative, but don’t create false positive hopes, either. People can handle the truth as long as they feel there’s leadership they can trust.
Finally, it’s important to remain calm. Calm creates control.
Is there a “number one principle” that can help guide a company through the ups and downs of turbulent times?
There is no universal playbook. It depends on the size of your company, your culture, and the composition of your leadership team. Your unique circumstances will necessitate different responses.
I also encourage disagreement as long as there’s buy-in to the overall mission. Varying viewpoints are healthy if done in moderation.
Can you share 3 or 4 of the most common mistakes you have seen other businesses make when faced with a disruptive technology? What should one keep in mind to avoid that?
The biggest mistake is the inability to recognize a change in the market — think Blockbuster or Kodak. There are hundreds, if not thousands, of companies that refuse to believe change is coming. They completely bury their heads in the sand.
I think it’s much harder for a public company to change because they’re so worried about short-term results. They have to make their quarterly earnings report. The rules of the game for a public corporation are completely different than they are for a private business.
Groupthink is another common mistake. I’ve seen it in companies where the management team is too similar. You need to diversify and have somebody from the outside saying, “But what if…?”. That outside opinion can also come from your advisory board, or, if you’re part of a leadership mentoring organization, other executives from outside industries can provide that diversity of viewpoint as well.
This is also why it’s good to have a diverse team. And not just diversity in terms of what we commonly think of, but diversity in perspective and experience.
Ok. Thank you. Here is the primary question of our discussion. Based on your experience and success, what are the five most important things a business leader should do to pivot and stay relevant in the face of disruptive technologies? Please share a story or an example for each.
- Always seek alternative viewpoints or ideas.
- Have a plan and some systems set up within your company that acknowledges change is going to occur. For us, that’s our R&D team. They’re keeping an eye out for change on the horizon and are there to sound the alarm on things we need to be aware of.
- On the flip side, though (and just as important), don’t believe everything you hear. Just because you hear or see a change, learn more about the threat before you act. Take the example from the gaming industry. When gambling opened beyond the Las Vegas borders, riverboat casinos and Native American casinos began opening up left and right. Everybody thought it was going to destroy Las Vegas. In the end, though, it made Las Vegas that much more relevant. Suddenly, even more people knew how to gamble and wanted to go to the mecca of gambling and casinos in America: the Vegas strip. Just because it looks like trouble doesn’t mean it’s a foregone conclusion. You need to test ideas and consider all potential outcomes before you launch a costly counterattack on what you think will be the next big disruptive element in your industry.
- Lean on your team. When you have a diverse team, the collective is capable of amazing things. It elevates the ability to problem solve and potentially introduce the next big disruptor. Don’t try to solve it alone or limit it to just the executive team.
- Join them. If the technology truly does represent a game changer in your industry, is it possible to align with it or utilize it in some way that will make you or your organization stand out as an early adopter? Or is there an ancillary service or offering you could develop that plugs into or works in tandem with the disruptor?
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
It’s more of a belief than an exact quote: There are two things in your control — your attitude and your effort.
Those two things will genuinely determine your success or your failures. I don’t care how smart you are, what money you came from, whatever. If you recognize only you can truly control your attitude and effort in control, you have tremendous power.
How can our readers further follow your work?