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From
Today's Engineer
Autumn, 1999    Volume 2    Number 3   
G. Berton Latamore
NO RISK NO REWARD

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"When EEs (electrical engineers) talk about career development, they often talk in terms of risk avoidance," says Fort Worth-based consultant and former EE Bob Krause. "But risk is always there. That's why businesses talk about risk management rather than risk avoidance."

Engineering is not about doing the same thing over and over all your life. While that may be the least risky path in the short run, it is often a ticket to obsolescence in this era of fast technological change. Often that change forces EEs into new paths, and when that happens, those who have prepared fare best.

Analog EE David Hall, now a senior database consultant with A.T. Kearney in Alexandria, Virginia, started his career in the Washington, D.C., area in 1986. "Back then, an EE with some military experience could get a job anywhere with no problem. That changed rapidly when the Cold War ended and the Berlin Wall came down," he says.

Hall read the writing on the wall (and in IEEE Spectrum, which was reporting on the rapidly shifting job market for EEs) and decided to move into the commercial economic sector. He moved from doing hardware and test specifications for the military to doing basic research on loss tangent and dielectric constraints in microwave ceramics, the qualities that make today's pocket-sized cellular phones possible. However, he was surprised by the extent of the office politics involved.

"Engineers tend to concentrate on technical superiority and ignore office politics and business issues until they suddenly find themselves in trouble," he says. That's what happened to Hall. He had the misfortune of turning two senior vice presidents into enemies – in one case because he refused to work on a device for bass fishing that one vice president wanted to sell on his own. When a long-term medical condition forced the company president who had hired Hall into semi-retirement, Hall was "laid off" on the most flimsy of excuses.

Over the years, he had learned Fortran and C++ and had mastered the FoxPro database and XBASE language, not to become a programmer but to use as part of his analog EE work. His career began to change when he developed a database in FoxPro for Georgetown University Medical Center to track patients' blood samples for genetic research. He started going to FoxPro user group meetings and attended its annual Mid-Atlantic user conference in southern Virginia. An A.T. Kearney representative spoke at one of the user group meetings. The company was looking for FoxPro experts who could travel to its Fortune 500 clients' sites, analyze large amounts of data, and identify opportunities for those companies to save large amounts of money by changing their purchasing methods for supplies and services. Hall, who was working for Gallaudet University at the time, decided to take the risk.

Today he enjoys a six-figure income. He works about 3,000 hours a year but is paid for all of them – the days of required unpaid overtime are behind him. Although he travels much of the time, if he spends six hours on a plane going to Brazil, he's paid for that time. He has "the best technical manager I have had in my career" and no office politics to fight. Not only is he happy in his job, he is constantly learning – he has mastered Microsoft Access and SQL Server.

"Engineers don't realize that those opportunities for consulting are out there," Hall says. "Consulting can offer challenging, interesting careers with excellent pay and growth potential, if you're willing to constantly learn throughout your lifetime."

Got Three Months' Salary Saved?
You Can Start a Business.

Launching a successful business requires two things, says Milton Chang Ph.D., who has launched or helped other engineers start more than a dozen successful businesses with no failures. Those two things are a good idea for a needed product and a good business plan.

"The business side of running a business really is not that hard," says Chang, who holds a doctorate in electrical engineering. "Business is a succession of logical decisions. It does not require a genius."

Chang, president of New Focus Inc. in Santa Clara, California, a manufacturer of laser research telecommunications photomic equipment that he founded in 1990, became a consultant in launching new businesses after a 15-year career as a senior research engineer at Northrop Aircraft. Although he was successful, he was not happy with his job or his career, and when a friend asked him to help launch a new company in the laser communications industry, he decided to take the risk.

"Getting a higher salary is not a good reason to change jobs," Chang says. "Taking a job that you enjoy or putting your career onto a track that you want is."

Once his start-up became successful, Chang started helping other engineers start their own companies. For him, a strong prospect for a business starts with a product idea based on good technology. Technology is necessary but by itself is an insufficient condition for success. To succeed, a business also needs a strong business plan. That, however, is not hard to create.

Chang outlines two basic business plans, which depend on the size of the market for the idea. The vast majority of ideas have a small niche market, which requires a low-risk, low-investment model – basically the company-in-a-garage approach. Perhaps the most famous company to literally start in a garage was Hewlett-Packard. Its two founders started the company to make a superior oscillator. They created a small, niche market that gave them a steady income and growth for a decade. When the big opportunity came for them in minicomputers, they had the experience they needed to handle the huge expansion of their business in the next decade.

The small business plan requires a minimum investment and can usually be managed by the engineer without outside help. The investment can come from family members, friends, or an individual looking for an investment and willing to take a higher risk than that of the stock market.

"If an engineer has experience in successful project management, he has the skills he needs to run his own small business," says Chang.

The other model is for the rare product with a huge market opportunity, a more dangerous approach. Startups have often pioneered major new markets only to see major players enter that market and take it away. However, some startups have been successful. Microsoft Corp. is a perfect example in the computer industry, but Intuit Inc., which makes the Quicken personal financial software and Quickbooks small company software, is another. Microsoft tried to push it out of the market but failed.

Launching this kind of company requires a fairly large infusion of capital, probably from a venture capitalist company. An engineer with that kind of idea may be well advised to find a partner with experience in the business and financial side of starting a large company, says Chang. Success will depend as much on managing the financial side of the business and strong marketing as it will on the technical superiority of the new idea. But a successful major startup will make plenty of money for both partners, and if it fails, the investors assume the major risk.

"People don't take risks because they fear the unknown," Chang says. "The only way they will take the risk is to quantify the worst-case scenario. Today, most of the investment risks are taken by outside investors. So if the business fails, the main financial risk the engineer who founds a company faces is the loss of his job and salary. A good engineer will need no more than three months to find a new job. So if you have three months' salary in your savings account, you have a very low risk-situation."

Doing What You Really Want

"The biggest risk is not doing what you really want to do, and often the largest problem for EEs is discovering what they want," says Krause.

Krause speaks from experience. He started his career as a pure EE but found himself unhappy in his job. "I was keeping everybody happy, getting raises, doing the work, but something was missing. I wouldn't read trade journals for fun, and I realized that if I didn't read those journals, I would become obsolete in five years."

In college, his roommate was in the MBA program and was excited about going to class. As Krause thought about that, he realized that the business side of his company interested him more than the engineering side. So he started working on an MBA. Then he had an opportunity to become an electrical rate engineer, designing electric rates for a major power company. This experience combined his EE and business knowledge and encouraged him to finish his MBA, not as a goal in itself but as a means to a better career.

After several years in that position, Texas-New Mexico Power Co. recruited him. A major power supplier in the Southwest, the company purchases most of the power it distributes rather than generating that power itself. Instead of designing rates, Krause now found himself fighting those rates as he negotiated for lower electric rates.

Texas-New Mexico Power was the first U.S. power company to be privatized for profit, about a decade ago. As that happened, Krause began to see signs that concerned him, and he took the next step in his career, becoming an independent consultant on electric rate negotiations and court cases. His timing was excellent — two years later, a new president took Texas-New Mexico Power through a major downsizing.

"In general, when a company begins to tighten up on its training and travel budgets, it is a sure sign that senior management is becoming more concerned about the bottom line," he says. Another danger sign is a drop in the company stock price, a merger, or an acquisition. Senior management is likely to respond to such pressures by reorganizing the company, merging with or acquiring a competitor.

"When reorganizations, mergers, or acquisitions start happening, I can guarantee there will be company downsizing," Krause says.

When senior management responds to those financial pressures, they think of the short term. As many senior technical staff members of companies have discovered, the senior staff – who command the highest salaries – become the first targets regardless of how well they do their jobs or how important those jobs are to the long-term health of the company.

Since becoming an independent consultant, Krause has helped a coalition of Texas school districts negotiate a favorable rate from their power supplier and represented a power district in a suit against a power company over high rates – a suit that his client won. He did a study for the U.S. Agency for International Development to determine the price Pakistan should ask in the sale of several existing power plants to a private company and also defined the maximum rate Pakistan should expect to have to pay for power after the sale.

Diversity, Focus on Goals

"My advice in taking risks is to follow the first rule of wing walking – never let go of what you have until you have something else," he says. He urges all engineers to think about their futures, and try to define where they would like to be in five years, even if only loosely. Are you happy in your present job? What would you do if that job disappeared? What new skills can you learn now that will make you more attractive in the job market, and get you a position that gives you what you want?

"Too often I see EEs become too specialized," he says. The more specialized they are, the more dependent they are on their present job. If the company is sold, if it closes the project, if it goes through a downsizing, the specialized engineers may find themselves not only out of a job – but out of a career.

"Always seek to diversify," Krause urges. "Look at your options and what you want to do, then work toward those goals. Remember that nothing is more sure in your career than change. The goal is to make the changes work for you."


G. Berton Latamore is a freelance writer in Alexandria, Virginia. 

Today's Engineer  3rd Quarter 1999


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