Industry legend Ernst Volgenau, founder of SRA International, shares his insights on building his company and how markets and technologies may change, but values and principles do not.
If Ernst Volgenau were founding SRA International today, the information technology solutions and services he’d offer would certainly look different than they did when he started the company 35 years ago, but that’s about it.
“The market itself has changed so the terms we use, the type of information technology we provide today is a lot different from 35 years ago,” Volgenau said.
He was named this month to the Greater Washington Government Contractor Hall of Fame by the Professional Services Council and the Fairfax County Chamber of Commerce.
“The values and culture would be the very same. One of my very highest priorities was hiring good people, and that would be the same, and helping them to be fulfilled. And the emphasis on customer satisfaction. Those factors would not change,” he said.
And why should they when they’ve earned Fairfax, Va.-based SRA fiscal 2013 revenue of $1.5 billion, down from $1.6 billion in 2012; a backlog of about $3.3 billion; and 1,200 active contracts? Not too shabby for an IT firm that started out conducting a fair amount of research work with pens and paper in the basement of Volgenau’s former Reston, Va., home.
But Volgenau doesn’t use statistics in discussing SRA’s success. He points to its people – 5,500 of them today. More specifically, he credits their dedication to the company’s ethic of honesty and service, which is so important, it’s a registered trademark.
“We don’t cheat people. When we tell them we’re going to do something, we do it and we don’t lie. That’s honesty,” Volgenau said. “On the service side, there are three components. One is quality work and customer satisfaction. Another is taking care of our people. And the third was and is serving our country and society as a whole. So, honesty and service were our watchwords. They led to a culture that I think was very constructive.”
Volgenau grew up on a small farm in New York, which is where his interest in engineering began. He attended the U.S. Naval Academy and on graduation had two options: Accept a restricted commission with the Navy because of bad eyesight or join a combat unit of the Air Force. He chose the Air Force and stayed with it for 20 years, rising to the rank of colonel. He also was director of data automation for the Air Force Logistics Command and director of inspection and enforcement at the U.S. Nuclear Regulatory Commission.
“My last assignment was in the Pentagon,” Volgenau said. “I liked Washington, D.C., and I wanted to start a business, so it was the logical place to be.”
He wrote a business plan based on his monitoring of the market, which was just starting to see the emergence of personal computers. Most IT firms were consulting businesses at the time.
“I wanted a firm that combined computer system design and consulting,” Volgnau said. “The more I thought about it, the more I thought I could create a firm that had those specialties and, equally important, had principle. I wanted to be able to show that a company could be a business success and also stand for something.”
Many would agree that that’s just what he did.
“I often thought and felt that Ernst thought about the kind of company he wanted to have before he thought about the kind of business he wanted to have,” said Renny DiPentima, who replaced Volgenau as president and chief executive officer of the company in 2005. “SRA became known around its customers and peers that this was a company of smart people who act in the customers’ best interest even if it’s not in the company’s best interest at the time.”
As a boss, Volgenau avoided micromanaging, DiPentima said. “His style was to be in control as the CEO, know what’s going on at all times, but to let people below him manage.”
When he took over, DiPentima said he wanted to emulate Volgenau’s rule that the best idea wins, no matter who comes up with it. That, he said, “encouraged people at all levels, from the newest people at the company up through the senior management, to express their ideas.”
Paul Lombardi, president and CEO of DynCorp from 1997 to 2003, said he and Volgenau turned to each other for professional advice.
“He has a unique quality of hiring people who are tad bit smarter than the norm,” Lombardi said. “In any successful company, that’s paramount. You have to hire people who you consider to be smarter than you are.”
“SRA was always the high end,” he added. “It wasn’t putting butts in the seat, if I can use that term. It was high-end engineering, science-related, IT-related, technology-related work activities that he provided.”
Calling a Mulligan
As president and CEO from 1978 to 2005, Volgenau made many decisions, not all of them easy. First, he said he had to define SRA in the marketplace and then adapt his growing company to changing technologies and demands. Things changed again when the company went public in 2002 and then back to private in 2011 when Providence Equity Partners SRA for almost $2 billion.
“I’ve made a lot of unwise decisions in my time,” Volgenau said. “I just happen to have made more right decisions than wrong. The mistakes that I’ve made, hopefully I wouldn’t make those kind of mistakes again if I were to start over, but I’d probably make a whole set of new mistakes.”
Those mistakes include moving the services-focused company into products and losing customers when the wrong program manager was in charge.
Asked to pat himself on the back for an overall job well done, Volgenau defers again to his team. “My proudest moments were not in what I did personally but rather in the people whom I helped to hire and what they accomplished, and the fact that throughout some difficult periods, we were able to maintain our principles,” he said.
Today he is chairman of the board and goes to the office three days a week. There is, he said, a lot more for SRA to do.
“The federal information technology services market was and is a great market. It’s grown nearly every year,” he said. “We want to become bigger and more diversified. We want to develop systems that will make us more competitive and more efficient in the work that we do for customers.”
Leaving His Mark
SRA is not Volgenau’s only legacy. His belief in education – and the lack of a what he called a quality engineering school in the Washington, D.C., area – led him and his wife, Sara, to donate $10 million in 2005 to George Mason University’s School of IT and Engineering, the largest personal grant in the university's history. It’s now known as the Volgenau School of Engineering.
“I’d like to be remembered as somebody who cared about his family, his country and did his best to serve both,” he said.
That he was a successful leader of a profitable company is a happy byproduct of Volgenau’s principled efforts. There’s little surprise, then, about his formula for success: “The fundamental secret is people. It’s not technology,” he said.