In this episode, Robert Mixon interviews Bill Higgs of Mustang Engineering. Bill shares his experiences in growing a business, and the “growing pains” that can come with that. Robert and Bill discuss how having a strong organizational culture, where “doing the right thing” is the norm, can get you through those tough times. Bill’s stories are both entertaining and very insightful — have a listen!
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Podcast Episode 6: A Culture of “Right” — An Interview with Bill Higgs of Mustang Engineering
Robert Mixon:
Welcome everyone to our Level 5 podcast series, “The Journey with No Summit,” and today we are privileged to have as our guest Mr. Bill Higgs, the founder of a company, Mustang Engineering, that went from zero to one billion dollars in revenue based on a market-differentiated culture. Bill’s also a classmate from West Point, class of 1974. He is a Forbes author, picked as a Forbes authority on culture going into 2020, but he didn’t get here in a linear progression.
He faced some challenges, both physically, emotionally, economically, in rising to the level of excellence that he’s achieved in his career, and I’ve been privileged to know Bill now for over four decades, and Bill, I just want to thank you for being here today and joining us with our Level 5 listeners on the “Journey With No Summit.”
Bill Higgs:
Thanks a lot, Robert. I really look forward to talking with you today because we’re talking about my favorite subject, culture.
Robert Mixon:
Yeah, culture, yeah, cool, cool, as a ‘culture code champion.’ So today, Bill, I’d like to focus on a couple of key questions and start out first by asking you, you know, what’s the most important aspect of doing the right thing that you have observed throughout your leadership journey and your cultural journey associated with it?
Bill Higgs:
That’s an interesting question. When we started Mustang Engineering, we were in the middle of a huge downturn in Houston, Texas. We’d had a boom time in the late 70s.
In ‘82, the oil price went from $35 down to $5, and oil companies started laying everybody off, and that just trickled down the food chain, and it got to the point where if you finished a job, you were laid off.
So you can imagine there’s now no loyalty between people and companies, between engineering companies and oil companies, or between suppliers. Everything was pretty well destroyed.
So when we started Mustang, our goal was to be 35 people, the best 35-person engineering firm in Houston, and we lost control of it somewhere in there when it took off to 6,500. But getting people to ‘do the right thing when nobody’s looking’ was a big challenge when you’re in an environment where if you finished a job, you were laid off, because people were having a tendency to milk projects and keep them going, instead of doing the right thing. So it was a big challenge for us.
And I think one of the key things that we did on that, Robert, was to win the hearts and the minds of our people to where they wanted to take the chance, they wanted to get it right.
And I give an example. Okay, so I was in engineering of offshore oil platforms.
And when we were 50 people, so we exceeded our goal of 35, we were 50 people, we won the largest deck design in the world. So it’s going to be a huge offshore deck fabrication. And we were designing on PCs for the first time.
PCs had gotten powerful enough to do complicated structural design. Well, the design came out and the engineers believed it was a good design and our drafters drafted it and it went to the fab yard and the fab yard was building it.
And at the engineering part of that fab yard, they did a test lift for offshore, you lift it up with a big crane to install it.
And when they did the test lift, all of the girders cratered, on the computer. And it turned out, since this was the newest, biggest deck in the world, that the engineers, the drafters, the construction people, all thought that the girders didn’t look right.
But they figured, well, it’s a, it’s the biggest thing ever, maybe you just design it differently.
And so nobody spoke up and said, “hey, this doesn’t look right, we need to double check this or figure it out.”
Think of the egg on our face at a 50 person company, where now this deck that’s in construction, isn’t going to work. So we had to quickly come up with a fix for it, which we did, but it showed me that you need to get people to where if they look and they see something doesn’t seem right, they need to feel confident enough to challenge like the powers that be.
So that’s one aspect.
The other aspect I think of getting people to do what’s right when nobody’s looking is that you got to have what I call a sense of bonding, and a sense of team… to where they’re going to excel, not as individuals, but excel as a team, and that they’ve built that trust within it.
I use projects as examples, because we lived them and died by them.
Well, we were doing our first ever project for Exxon. And it was going to be the largest floating production facility in the world.
It’s going to be at 7,000 foot of water, like a floating city out there. And we had to design this thing in downtown Houston, so we can only put a cadre of people down there and we had to hire the rest.
And we got to the point where we were going to have to issue our first set of drawings to go into construction.
They’re going to be issued on a Friday. So I’m down there two weeks prior, one week prior, talking to everybody. “Yeah, those drawings are coming out.”
On that Friday, no drawings came out.
Robert Mixon:
Oh, boy.
Bill Higgs:
It was horrible. On Monday, the head of Exxon called my partner and I into a meeting with his project manager.
They had taken a risk to go with a Mustang instead of like a large name, like a Bechtel or a Brown and Root.
And so the head of Exxon essentially stiff-armed us a little bit and said, they got to fix this.
And then he walked out of the room. And so we knew that we were in big trouble.
The project manager then said, “hey, how do we solve this?”
You know, what’s your process for issuing drawings? We went through the process with him.
He says, well, “can you skip some of the steps in your process? We’re willing to accept drawings that aren’t 100% correct in order to get construction going.”
Which to us, that’s the kiss of death if you do that.
My partner and I did is we went back to 20 other projects that we had. And we went in and pulled one or two top people out of every project. And we just overloaded that Exxon project in three weeks, yanked it out and got it on course.
But the problem that I saw is, that we had a bunch of people who hadn’t been in our culture and we’re just sort of going along. And they didn’t understand that sense of team, that bonding and that, hey, we trust each other to do what they’re going to, what they say they’re going to do.
And so I think that’s another aspect of having those people get it right, is that they’ve got to feel that they win as a team.
Robert Mixon:
Okay. That’s great, Bill. Great story.
Powerful.
You know, I think you’re talking about creating and nurturing a culture of doing right is the way people act, even when no one’s looking.
How do your seven ‘Culture Code’ steps enable that culture to come to life?
Bill Higgs:
I think a big part of it is what I call “opening up the communication.”
So one of the things we tried to do was bust silos.
So in a normal offshore engineering firm, all of the structural design people are in one hallway, and all of the equipment people are in another hallway.
The purchasing people are on a different floor.
And I like to say, the electrical engineers… are out in the parking lot because nobody can talk to electrical engineers!
But essentially, you have silos — where the structural people are trying to deliver that structural design and the equipment people are trying to deliver that.
But there wasn’t a good cross fertilization.
So structural would optimize their design. And to save steel, it would have a lot of diagonals in it.
Well, the diagonals made it to where you couldn’t put the equipment in. So when they would give the design to the equipment engineers, they would come back and say, “hey, redesign these parts.” So it created a lot of ‘rework.’
The equipment engineers would send things out for bid that didn’t exist in the world. And the purchasing people would come back and say, “hey, you need to rework this.” What I found was happening with that silo type engineering organization, which we came from, is it between concept to startup, we would design that production facility seven times.
So one of the first things we did when we started is we busted those silos. We put everything, everybody together that was on a project. So the structural, the equipment, the purchasing, the construction people all in one place to get that communication.
And what I felt was if I could lower it from redoing things seven times to two and a half, I would be ‘the better mousetrap’ in the industry. And that’s what happened by busting those silos and open up that communication.
But one of the key ways to do that is we did a lot of outside parties and activities and charity things.
And that’s what I call “free space.” So that’s where people could just bounce off of other people. They could meet the HR people or meet a manager they didn’t know.
And we get that cross fertilization, that cross connection. But that’s where you start building that team and that bonding, I think.
Robert Mixon:
Okay. You also talked about establishing a repeatable process, right?
Bill Higgs:
Yeah.
Robert Mixon:
In the organization, which gives people a foundation to work from, right?
Bill Higgs:
The key thing there is, we started every project off and everything people do in business or organization, it’s a project, it has a beginning, a middle and an evaluation. So everything you do is a project.
We had a kickoff meeting for every project religiously.
And what we would do before the kickoff meeting, we would try to figure out what “go-bys” do we have to use. And a “go-by” is prior work. Here’s prior work we have that’s applicable to this new project or whatever initiative that we’re working on.
So what I wanted to do in a kickoff meeting, I wanted to be at the 30% point in the kickoff meeting. And if you think about that, you can’t do that. You can’t do that.
But we did it all the time. And the clients, it didn’t bother them. They might be an ARCO client, and I’m pulling a Texaco thing and a Conoco thing and a Oxy thing to get that kickoff meeting going.
They didn’t care as long as I was going to be able to produce that final product.
And so that was creating a repeatable process. But then what we had to do, and I use the term, I don’t know if you have a term for it, I call it “boxing in the artsy part of a company.”
So our artsy part was our engineers. So they didn’t want to use a “go-by.” They want to start with a blank sheet of paper and do the latest, greatest thing they could conceive of.
We had to “box them in” and say…
“no, you’re not going to touch this stuff. You’re just going to reuse it. Here’s the thing that’s new here. You can do your talented thing on this part right here.”
But the rest of it’s blocking and tackling. So it’s very repeatable.
And what we were able to do was start doing our engineering for 30 percent less than our competitors.
But if you think about the artsy part in companies and people just have to think about if you’re a lawyer, are you starting with a “go-by”? There’s an artsy part in every company.
We not only reduced our cost, but our total installed cost of a facility. So say it’s a two billion dollar facility. Our total installed costs and schedule, were both 30 percent less than industry benchmarks.
So then that repeatable process is bringing in what we call repeat work. That client gets locked in and just keeps coming back.
Robert Mixon:
Mm hmm. That makes a lot of sense. Why do you think, Bill, that that leaders fail to establish the ecosystem of right behavior, of doing the right thing?
Bill Higgs:
Well, I think part of it is that they get thick skinned.
So we saw 50 other engineering firms start in the boom times, and we saw them go out of business in the bad times. And they would all start, all of the companies would start where the people really wanted to take care of their employees and build a good organization.
But then across a year to a year and a half, they’d get thick skinned because somebody they’d invested in left to go somewhere else. And they just start to think that, “man, I just can’t invest myself too much in these people because I’m going to get let down.” And I think what they needed to do instead is, no, invest more in those people, do it authentically and don’t get thick skinned.
Stay open. Know that some people aren’t going to stay. It’s just the way it’s going to be.
But you’re going to end up having those ‘rock’ individuals that will stay long term. So I think it’s a little bit of the leadership just getting tired, getting beat up.
Robert Mixon:
Yeah. And that persistence we talked about in moving the needle in your culture, you know, it’s understandable sometimes to see why people lose their momentum, because they feel like they’re getting beat up or they’ve had people that they’ve invested in who haven’t performed to the level they expected them to or behave the way they expected them to. Right?
Bill Higgs:
Correct.
Robert Mixon:
So who’s your hero, Bill, and why?
Bill Higgs:
I think my hero is Paul Redmond, who was my partner when I started, Paul Redmond and Felix Covington. But I really like Paul Redmond because he really exhibited Judeo-Christian values as his ‘Azimuth’ in how he treated people as a servant leader. And when he started, the three of us, he only wanted to be 35 people.
He wanted to know each person individually, want to know their families, know their kids. And so I just tried to never have more than 35 people in the same room with him so he wouldn’t notice as we grew to 6,500 people.
Robert Mixon:
[Laughs]
Bill Higgs:
But, with that ‘Azimuth’, he had a great capacity to be able to grow and move with the organization.
And I would always go out.
I was like the hunter killer. I’m out there chasing.
And I used to say that Paul Redmond and his leadership team were in the cabin.
I’d go out and poke the bear in the eye. I’d get it chasing me.
I’d run in the front door of the cabin, run out the back door and slam it and hope that they could skin that bear that was following me. But he always figured out a way to do it. So he’s definitely my hero, which is pretty cool considering that we first met in 1980.
I was at an engineering firm as a equipment engineer. He was a ‘water walker’ structural engineer coming back from an overseas assignment. And we ended up in the same conference room sharing an office in a startup company.
And so it turned out we were both really good and ended up starting a company seven years later.
Robert Mixon:
Yeah, I’ll tell you, “Mustang, The Story,” your book… really is a powerful account of your journey and being with people that you admired and respected. He certainly was high on the scale. It was obvious from reading your book.
What advice, Bill, would you give aspiring leaders to avoid the pitfalls of choosing the easier wrong?
As we remember from the cadet prayer at West Point, remember, “help me to choose the harder right instead of the easier wrong.”
So what would you give aspiring leaders some advice there?
Bill Higgs:
I think one of the key things is one of your six leadership principles, and that’s to know your ‘Azimuth,’ which is to know your values and where you want to go.
And I give an example. We had worked for in a lot of cases to work internationally.
We would work as a sub to a construction company that was willing to take the risk of doing an international job. So we were bidding a large project, and we had worked with a French company before, and we worked with a Korean company before. Both of them came to us and asked us to bid with them because they knew that we knew the oil company real well.
So we would give them a leg up to win.
Well, partway into the bid process, the Korean firm came to us and said, “hey, Mustang, we would like to pay for all of your bid costs if you’ll go sole source with us.” And we go, “hey, they’re going to pay my bid cost. I’ll go sole source.”
And there was a good chance that the Korean firm was going to win it because they’re very competitive in construction.
So we sent a letter to two other bidders, one of them the French firm, saying, “hey, we’re going sole source, pull our name out of your bid effort.”
Unbeknownst to us, the French firm and the Korean firm both put in their bids, both put them in with Mustang as their engineer.
And it wasn’t until bid evaluation had gone down quite a ways to boil down from eight bidders down to two… it got down to those two bidders. And at that point, the French company came clean with us and said, “oh, by the way, we put you in as our engineering firm despite that letter that you had sent to us.”
Well, the Korean firm, now that it’s down to two bidders, found out that they had Mustang as their bidder. So the Korean firm calls us up, all upset.
Our ‘Azimuth’ is to do what we’re going to, what we say we’re going to do.
And in the international bidding process, it’s a very tough thing to do. There’s lots of weird things that happen there. But we said, “no, we have to stay true to our beliefs and what we said we’re going to do.”
So we sent a letter to the French company, a letter to the client and a letter to the Korean outfit saying, “our bid is only good with the Korean outfit.” Well, it went down, it got awarded to the French outfit.
And I’m on a bus to some international airport and I get a call from the project manager at the French outfit.
And they said, “hey, we just won the project.”
It was a huge amount of money for us. It would have moved the needle in our company and we needed the work.
And he says, “I want to offer it to you. We can totally give it to you now. The Korean firm is out of it. So you no longer have a commitment to them. Will you take the project?”
And I knew what my answer was. “Absolutely not.”
But, I also knew that my leadership team had needed the work really bad or we were going to be letting some people go. So I said, “let me check back with the leadership team,” called them, got them all in a room.
I told them what had gone on, where we were. And to a person, they all said, “absolutely turn it down. We’ll go find something else to do.”
And I think that spoke volumes for the type of company we were.
But, to a Korean firm that does some nasty thing in bid and a French firm that does some nasty things in bids, I think going forward, they knew that they could trust our word on whatever we said that we were going to do.
And that’s, I think you have to know that, ‘Azimuth,’ and as a leader, make your decisions within the framework of it, even though it can set you back in the short term.
Robert Mixon:
Yeah, that took a lot of courage, Bill, I think for you and your leadership team to make that decision in the face of the challenges you had, you know, financially at that point in time.
And so, I was going to ask you, Bill, in the terms of the ‘culture code champion’ that you are, and again, I congratulate you as being a Forbes ‘culture code champion.’
What’s the one big idea that you would like the listeners in our Level 5 audience today to take away from today’s discussion and their way ahead?
Bill Higgs:
Well, I think one of the key things to understand is that leaders inspire and motivate people. And they need to know and understand that people want that. That’s something that people in organizations and companies, they’re wanting somebody who’s going to lead and inspire them.
Because they’re going to start to feel that positive energy, and they’re going to feel respect. And I think a lot of people just want to feel trusted and respected. And then they’re going to respond positively as you’re building a culture that’s going to differentiate you within your marketplace, in our case, across the world.
And you’re going to outperform. So, I think as a leader, know that that’s part of your job, is to inspire and motivate, and authentically show people that you trust them and respect them.
Robert Mixon:
And then by modeling the behavior of ‘doing the right thing when no one’s looking,’ others will want to be like you.
Bill Higgs:
Right… they’re going to see that. And we always made sure when those actions happen by somebody in the company or in the leadership team, we made sure that people heard about it.
So, you’ve got to advertise a little bit that you’re living those values.
Robert Mixon:
And seek to recognize the people who are doing right, whether it’s individual recognition in face to face, or a handwritten note… or an announcement to the rest of the team that, hey, Bill just did this and chose the harder right instead of the easier wrong.
Bill Higgs:
And celebrate the small wins as well as the big wins, because that celebration makes the memory, makes people understand, hey, this is what we want.
Robert Mixon:
Well, that’s great stuff, Bill. And I’m really excited about having the chance to talk with you today. It’s been a lot of fun.
And I know that I’ve learned a lot from the stories of your journey and what you’re doing now going forward. Yeah, I just wanted to thank you for your leadership, and your time, and coming on the podcast today to help our Level 5 leaders learn some from your journey.
Bill Higgs:
Well, thanks. I like what you’re doing. You’re getting a little bit deeper into some companies and deeper with some individuals, on how to move them through the Level 5 leadership and understand those, you know, the six leadership principles that you’re working.
Your culture, world class, building a culture. I think building a culture is what you and I are both trying to get people to understand. It doesn’t just happen.
You can’t do it in 30 days. It takes a lot of habits, a lot of gumption. But the benefit is you’re going to change lives positively.
People are going to be happy when they come to work. They’ll be happy when they go home. Their families are going to be better, and the communities are going to benefit from it.
So thank you for what you’re doing. I appreciate it.
Robert Mixon:
OK, Bill. Well, on our next episode, we’ll continue our series of interviews with executive leaders from different industries to identify some of the lessons they have learned in their journeys and how it applies to our ‘journey with no summit’ with the ‘Big Six’ principles. So we look forward to seeing you then.
Thanks very much!
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