Promise and peril in mentor programs

Keys to success: Set expectations early, align goals, communicate

Advice & insights: Executives and analysts share their tips on mentor-protégé relationships

Gwen Tillman:

Q: Why be a protégé?

A: To learn from the large company how to structure for growth and diversify your customer base. "It's also a way to access technology that will benefit your company in the long run," said Gwen Tillman, corporate manager of social-economic business programs for Northrop Grumman Corp.

Q:What are the signs of a bad relationship?

A: "If it seems that communication has closed up somewhat, [the mentor company isn't] being as open with you as before, you see response times deteriorate ? those are the immediate red flags," said Guy Timberlake, CEO of the American Small Business Coalition.

"If you're not able to get to them and say, 'Here's our value, here's where we see ourselves playing,' and they don't listen to you, then you've got a problem," said Rocky Cintron, CEO of Force3 Inc.

The protégé should see its internal processes and procedures improve because of the relationship. "If you don't ? that's a telltale sign that something's not going right," said Deborah Jackson-Hamilton, EDS Corp.'s mentor-protégé program manager.

Q: What should a protégé expect?

A:"Don't go into the program thinking you're going to get rich quickly; that is the wrong idea. This is a long-term investment," said Tizoc Loza, corporate mentor-protégé program manager for Northrop Grumman.

"It is a very big commitment, the protégé has to understand that, and we do expect them to be totally committed to the program, just as we are totally committed to it," says Deborah Jackson-Hamilton, EDS' mentor-protégé program manager

Rick Steele

As the new millennium dawned, Force3 Inc. was on the verge of graduating from the Small Business Administration's 8(a) program. Company officials knew major internal improvements and upgrades to its strategy were needed to compete on the open market.

It was then that Force3 CEO Rocky Cintron connected with EDS Corp.

EDS was looking for small companies for its mentor-protégé program, and Crofton, Md.-based Force 3 had risen to the highest levels that a small, disadvantaged business could.

"They were looking for well-established 8(a)s that had maybe a couple of years left in the program," Cintron said. "So they came looking for us."

The relationship's payoff has been a spike in Force3's revenue from the contracts that the two companies won together.

For Bay State Computers Inc., another EDS protégé, the mentor relationship has helped shift its business from selling products to providing services, although it has not seen an increase in revenue.

Many government contractors establish mentor-protégé relationships under programs set up by individual agencies and the Small Business Administration.

The relationships may last for three years, while the small companies leverage the mentor's past performances and learn best practices in project management, accounting, customer relations and business development.

Mentors benefit by gaining access to small-business opportunities as a subcontractor and by using their protégés' technical expertise to fill niche roles on large contracts.

Designed to benefit both companies, mentor-protégé programs can be fraught with challenges, which, unmet, can leave both companies disappointed.

As mentor-protégé programs grow in popularity, company executives and other industry officials advise that healthy relationships are built on setting clear expectations from the start, aligning goals and keeping lines of communications open.

"You have to develop a measurement tool, and you have to make sure you're meeting on a regular basis, not at the end of the year and not at the end of the program," said Patricia Hill, CEO of Bay State Computers. "Otherwise you can go all the way through the program and then realize, 'Gee, I'm not really where I wanted to be.' "

Not a contract

The mentor-protégé pairing with EDS helped Force3 reach three goals: ISO 9001:2000 certification, a gold-level partnership with Cisco Systems Inc. and creation of its own 24-hour help desk, Cintron said.

Fueling Force3's growth from May 2002 through April 2005, during which time Force3 was in EDS' program, were the contracts the two companies won together. On some Force3 was a subcontractor to EDS, while on others Force3 was the prime and EDS the sub, Cintron said.

Neither company would divulge the number of contracts or their values. Force3 also declined to provide its revenue growth data.

But Force3's results are not typical, Cintron and other industry officials said.

Instead of measuring success solely on the basis of contract wins, protégés also should look at the three-year program as an opportunity to use the mentor's subject-matter experts and financial resources to build out and develop their infrastructures, experts said.

"This is not a contract vehicle for them," said Tizoc Loza, corporate mentor-protégé program manager for Northrop Grumman Corp.

Bay State Computers chose to remake itself with EDS' help, shifting from selling hardware to providing services, Hill said. Through the relationship, Bay State got its top-secret facilities clearance and ISO 9001:2000 certification, as well as improved internal company processes and systems.

The company's services revenue has increased by 40 percent since establishing the relationship with EDS, Hill said.

But its hardware business has declined, and the company's total revenue has dipped from $14 million to $10 million, she said.

Business tradeoffs

The challenge to make revenue grow through mentor-protégé relationships is that the protégé must make key employees available for training and consulting with the mentor, Northrop Grumman's Loza said.

Because the protégé typically has just a few of these crucial employees, pulling them off contracts and business development work can make earning revenue more difficult, he said.

"Their return on investment is not short term, it's in the long term," Loza said. "We're teaching them how to fish. We're giving them a technology. We're giving them a tool."

But not all small companies know that going in.

Bay State of Lanham, Md., began its relationship with EDS in 2001, thinking contracts were just around the corner, and that EDS would hold its hand throughout. That was not the case, Bay State's Hill said.

Part of the problem was that Bay State misunderstood the nature of the relationship; company officials thought it would be more like a parent-child relationship, she said.

Also, "we lacked the dedicated resources to be effective at the beginning of the program," she said. "From the parent-child perspective, you think everything is going to be handholding, and that's not how the program works."

The relationship is closer to a marriage with shared responsibilities, said Deborah Jackson-Hamilton, EDS' mentor-protégé program manager.

"It is a very big commitment," she said. "The protégé has to understand that, and we do expect them to be totally committed to the program, just as we are totally committed to it."

Both Force3 and Bay State Computers are part of EDS' after-care program, which seeks to continue the mentor-protégé relationship after the three-year period. EDS has 16 active protégé relationships.

Hill said that Bay State does have three or four subcontracts through EDS, and hopes that her company starts winning larger prime contracts.

"It's a little frustrating," she said. "The potential is there, and hopefully over the next 12 months, in terms of what we've received out of the program, we'll start to see the benefit."

Staff Writer Ethan Butterfield can be reached at ebutterfield@postnewsweektech.com.

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