Culture Drives Convergint’s Conquests
In a year in which industry M&A activity has soared, no security integrator has made more moves than Convergint Technologies. Yet inquisitive minds may be surprised to learn what makes this acquisitive company tick.
THE HOLY GRAIL for any service-based business – none more so than those in the security systems integration field – is maintaining the personalized customer care of a local provider while growing the company nationally. Consider Convergint Technologies’ leadership the modern-day answer to the legendary Knights of the Roundtable. The firm’s unwavering quest to balance premium service and scale is a hallmark of its success. Built upon an uncommonly altruistic culture, Convergint has become the industry’s largest independent security integrator, with operations and clientele across North America and abroad. And just as a gallant knight woos a fair damsel, the integrator has top talent, technology partners and acquisition targets swooning.
“Before we started the company we wrote down on a piece of paper 10 what we call ‘non-negotiables.’ Here are the things we believe in if we’re going to start this organization. Today, they are known as our values and beliefs,” says Convergint Technologies Executive Chairman Dan Moceri. “They’re not just words on a piece of paper. Our leadership has to buy into it. It’s the values and beliefs that really drive the organization. For 15 years they’ve been going strong. You must never stop reinforcing that culture.”
That culture now comprises more than 2,300 employees (“colleagues” in Convergint vernacular) spanning 72 locations worldwide. Co-founded in 2001 by former Siemens Building Technologies executives Moceri and Board Member Greg Lernihan in 2001, Convergint Technologies has grown prodigiously organically and acquisitively – with six buys in the first six months of 2016 alone, including well-known and highly regarded providers such as Dakota Security Systems, Total Recall and TACanada.
Having earned $471M in revenues and taken on more than 11,000 commercial/ industrial projects in 2015, the Schaumburg, Ill.-headquartered Convergint anticipates 10%-14% core business growth this year and finishing it up in the neighborhood of $600 million.
“We had a goal, called ‘Vision 360,’ of wanting to be a $360 million organization by end of 2014,” says Moceri. “We have blown past that number, so we put a new vision in place. We decided on ‘Vision x 2,’ taking that 360 and saying by the end of 2018 we wanted to double the company to $720 million. We are well beyond on our way to hitting that number.”
SSI had the privilege and pleasure of being able to probe the minds of Moceri and two other esteemed members of Convergint Technologies’ executive leadership team, President/CEO Ken Lochiatto and Vice President, Electronic Security Division, Tony Varco. Although they may not be as famous as King Arthur, Sir Lancelot and Sir Galahad, the trio’s business ideals are just as noble. They hold court on the company’s beginnings, its goals and strategies, top technologies, key opportunities and, naturally, corporate culture.
On the Convergint Technologies website, there’s a photo from 2001 taken in the snow captioned, “The dream begins.” Where did that dream come from and where are you in the process of realizing that dream?
DAN MOCERI: Our initial vision, and I think we still embrace it today, was to create a North American services-based integrator. There was a key focus on the word “services.” We were going to do this, and we were going to create a strong culture. The culture revolved around what we call our values and beliefs. That’s really the driving force behind the company. The whole goal was to encourage accountability within people, integrity, and most important to have fun. Our goal was to always be our customers’ best service provider.
We’re about 15 years into the journey. I don’t know that we ever get there, but it’s fun trying to improve year after year. Our vision has expanded. When we look at our original business plan we talked about being North America’s best service integrator. That’s expanded to more of a global basis, where we can serve some of our key global customers in various regions throughout the world. Today we have over 70 locations. We’re across 13 countries, and we have about 2,300 colleagues. We’ve recently done a cyber joint venture. We’ve developed this large professional services group throughout the globe as well. In many aspects, we’ve probably exceeded the initial vision.
Is there anything in particular that stands out as a trial or tribulation at the beginning that you encountered and had to overcome, or maybe something that in hindsight you kind of laugh about?
MOCERI: There’s probably a lot of those things. If you’re going to grow you have to take some risks, and we took some risks upfront and invested some significant dollars in a number of different initiatives. Some of them turned out extremely well but some of them cost us a lot of money and went absolutely nowhere.
Like any other startup, in the beginning, my partner and I would sit there and put a plus or minus on the calendar for every day that went by. It was either a good day or bad day, and there were as many tough and challenging days as positive days. This was in the 2001 timeframe, when we went through the dot-com bust and sources of money dried up. There were a bunch of ups and downs, never knowing if we were really going to be able to get this company off the ground.
We just kept our heads down and fortunately through happenstance we were able to meet some of the right people that got us in touch with other people. We finally got hooked up with a company that had a similar vision of what we were trying to do, and we were able to finance our startup. Plenty of ups and downs in the beginning, but all in all it’s been more fun than a challenge.
Just two months after we started the company and hired our first colleagues, 9/11 happened. While we never really wanted to benefit from a disaster that impacts people, we saw an increasing need for security. So we really upped our investments and focus on building the best service offering in the security market. The rest has pretty much been history.
What industry experiences and lessons learned prior to Convergint have you used to your advantage?
TONY VARCO: Our foundation happened to come from a very large, multinational organization, Siemens Building Technologies. What we wanted to build here is a company that had the bandwidth to really grow. There were good lessons learned coming from a large organization, and understanding what it takes to put a global service platform together. We certainly left a lot of the big company stuff behind, but I’d say one of the things we brought forward was an understanding.
The original 10 who were involved, these are high-level leaders used to working in a larger environment, used to working a larger P&L, which allowed us to gain traction early on. So I’d say one of those things we brought forward was the ability to really help our vision of building this global platform.
MOCERI: Another area in addition to service was training and development, which is one of the things large organizations do a very good job of. Some of our values and beliefs are centered around that as well. If we were going to build this strong service organization and have that be our main competitive advantage or differentiator, then we had to have the best colleagues in the industry. We spent and continue to spend a lot of time and money on developing our skills as an organization.
When you look at our model, it was originally based around leadership and service. We grew up in the HVAC industry, which is much more service focused than what the security industry was in 2000. Our goal was to bring that model to the security industry. One of the ways you got to do that is through a lot of investment in
training, development of colleagues, and tools and all to support that.
KEN LOCHIATTO: Convergint has a culture that’s twofold. It’s based on our 10 values and beliefs, and they’re absolutely critical to what we’re all about. At the end of the day, Convergint makes nothing. We’re pure integrators, the largest independent integrator. So we can bring whatever customers need from a solution standpoint. But we have to have the best people in the industry to do that. We believe we do. They’re attracted to our culture, one of being a service-focused employer of choice augmented by good leadership and good investment from a training standpoint.
The company has been especially acquisitive, with basically six acquisitions during the first six months of 2016. Could you speak to that overall strategy and associated benefits?
MOCERI: We’ve acquired a total of 12 companies, and we look for a number of things. The first is the whole geographic coverage. As mentioned, we differentiate based on service, not just being a lowcost installer in the marketplace. To do that, we have to have the geographic coverage. Hence, we have 70 locations and are continuing to add.
In the past four years, as we’ve built up North America, and our customers pushed us more toward global support, we started to expand internationally. It was really again to support customers. We can go anywhere in the world and do a project, but it’s very difficult to support customers from a service perspective if you’re not there locally.
The second consideration is culture, which we look at very carefully in acquisitions. Incompatible cultures and poor integration are the two top reasons why many acquisitions fail to meet expectations. We seek companies with a similar culture to Convergint. They’re service focused, they’re a caring company that supports and develops their colleagues and gives back to communities, and has fun along the way. Culture becomes very important. A company may not be the best executor in the marketplace, but their culture can override that execution.
The next thing we look for is leadership. We’re hiring somebody every single day now. Our aggressive growth requires us to attract some of the best colleagues in the industry. The acquisitions are another way to bring some talented colleagues into our organization. At the same time, we need future leadership and so we do as much as we can to develop our existing colleagues. But at times it’s nice to bring in some outside leadership as well.
We are also looking for expertise, and consider if a prospective acquisition target brings particular vertical market expertise, a particular service solution or particular engineering skills. We can then take some of the good things these local companies have done and be able to leverage that across our organization. When you boil it all down, our acquisition strategy is based on supporting the customer, building out that local service capability, and then expanding our set of solutions for the customer.
VARCO: I would add technology alignment is important too. We look at these partners to make sure we’re not making a right- or left-hand turn in terms of the technology we support for our clients.
Also, companies often go out and find organizations where they can ferret out costs, and they have all kinds of overlap. They’re taking out administrative costs or other things. We really don’t do that. We find very complementary organizations and leverage what they bring to the table. We’re not looking for all the synergies to drive out cost from the organizations to gain a return on that investment or acquisition.
It’s about bringing them onboard, integrating them properly and indoctrinating them a bit into our culture. One of the ways we do that is through our Convergint Connect Program; in fact, some of the acquisitions we’ve been involved with actually began as part of this program. It gives them a way to be a service provider in an area where we don’t have brick and mortar today. Dakota Security Systems is a great example of that, where they were first a Connect partner. It gives both them and Convergint a chance to kick the proverbial tires a bit on the culture, the fit, and how we feel about each other.
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