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Sunday, 01 March 2015 22:00

Passing the Torch: OST transitions leadership while focusing on growth plans

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OST President Meredith Bronk will assume the role of CEO as co-founder Dan Behm retires from the Grand Rapids-based I.T. firm after 18 years, during which he helped grow the company to $108 million in sales. OST President Meredith Bronk will assume the role of CEO as co-founder Dan Behm retires from the Grand Rapids-based I.T. firm after 18 years, during which he helped grow the company to $108 million in sales. COURTESY PHOTO

As Grand Rapids-based Open Systems Technologies Inc. (OST) embarks on ambitious growth plans, the tech firm must also navigate through the process of its first leadership transition.

While succession planning is simply a part of the ethos of multi-generational companies in established industries, it’s a somewhat new concept to firms in the still relatively young I.T. sector. In the case of OST, the process could signal the maturation of West Michigan’s technology industry, sources said. It also marks a move away from the male-dominated corner office.

Dan Behm, co-founder and CEO of OST, officially stepped down from the company, effective March 31. President Meredith Bronk, who has worked with the firm since 1998, will step into the role of CEO on April 1 and retain her existing title.

In completing the process Bronk and Behm started seven years ago, OST established several best practices to ensure the process went as smooth as possible.

“I had decided a long time ago that I wanted to retire at a relatively young age,” Behm told MiBiz. “By the time you’ve been at a place for 18 years, it’s time for it to have some change. I think it’s good for OST and for me.”

Behm helped launch OST in 1997 and has since grown the company to $108 million in sales, employing 180 workers in offices in Grand Rapids, Ann Arbor, Detroit, Minneapolis, Chicago and London. The technology firm contains application development, talent recruitment, data management and other business divisions.

Throughout the transition of leadership, Behm and Bronk made sure they collaborated closely with the rest of the leadership team. The pair was also realistic when it came to setting a timeframe for the hand-off.

Behm originally made the decision to retire seven years ago and had since mentored Bronk as she prepared to lead the firm. In April 2014, Behm announced his retirement plans, but didn’t set a date to fully step away from the company. At the same time, Bronk stepped into the role of president while Behm remained the CEO.

“During that year, I wanted to step back and have Meredith running the company and have people say, ‘What’s Dan doing these days?’” Behm said. “Well, we’ve accomplished that. It wasn’t so easy on the ego always, but we did it.”

Ultimately, the succession went smoothly because of the company’s culture, Bronk said. The leadership team was transparent and over-communicated on the front end with employees during the process.

“We’ve had tremendous growth built on our core belief that if we hire and take care of wildly passionate people, they will succeed,” Bronk said. “Happy employees mean employees that want to serve clients, which will ultimately serve the organization.”

Additionally, an investment from an outside group also provided Behm the opportunity to cash in a portion of his equity in the company.

In May 2012, Anchorage, Alaska-based Koniag Inc., an investment firm owned by the Alaska Natives, made a “significant investment” in OST, which is now a certified minority business enterprise, according to the tech firm’s website. Koniag made the investment after being attracted to OST’s strong growth trajectory.

“The primary reason for me to bring some money into the company was that I knew that I’d eventually be leaving,” Behm said. “(I wanted) to take some money off of the table.”

The relationship has been mutually beneficial. Koniag directly cited OST as a key driver of its improved performance in 2013 after experiencing an operating loss the previous year, according to a statement. The firm declined to comment in detail about the leadership transition at OST.

“In general, Koniag is thrilled to have OST as a part of our portfolio and has great confidence in the company’s leadership,” CEO Elizabeth Perry told MiBiz in an email.

A COMING OF AGE

While leadership transitions are commonplace among the region’s family-owned, multi-generational manufacturers, having that process play out at a local technology company may mark a coming of age moment for the industry in

West Michigan, said Megan Sall, business development manager at The Right Place Inc.

“There is such a startup mentality that people start (a company), turn it over and they’re on to the next thing in two years,” Sall said. “We’re seeing more ownership and pride in companies here in West Michigan.”

In part, OST’s move also showcases the technology industry’s growth in the region, Sall said. Job growth in West Michigan for application and systems software developers is expected to reach 22 percent and 36 percent, respectively, between 2010 and 2020, according to data from Talent 2025 Inc.

The expansion of the technology industry in general has played out in OST’s growth figures. The company plans to reach $200 million in sales by 2020 and $400 million by 2025. However, growth is already tracking ahead of schedule with the company in line to exceed $150 million this year, executives said.

OST’s leadership transition is also occurring against the backdrop of the traditionally male-dominated tech industry opening up to more women leaders, Sall said.

Bronk sees her new role as an opportunity to encourage other women to consider a career in the field.

“I define myself as a committed leader first,” said Bronk, noting that women often must overcome a question of credibility in the I.T. industry. “(A)s a woman, I don’t behave any differently. I have an opportunity to be a face that represents something that might trigger an aspiration of a young lady somewhere.”

GROWTH STRATEGY

Under her leadership, Bronk plans to largely continue OST’s proven conservative growth strategy that includes opening offices in new geographies and expanding the company’s service offerings.

In particular, the company aims to slowly capitalize on the global market as more of its customers move operations overseas, Bronk said. OST opened a London office in December 2014 and plans to ramp up its global presence in the next year and half.

The company will also continue to expand domestically. OST recently opened an office in Chicago in January 2015 and plans to launch its next location sometime in 2016.

“In order to stay familial, you can’t get too big in one geography,” Bronk said. “We’ll continue to grow our core growth geographies but these are in markets outside of Grand Rapids.”

As the technology industry continues its rapid evolution, OST plans to expand its service offerings in areas such as analytics, game development and others, Bronk said. Exploring new business divisions and skill sets allows the company to retain its entrepreneurial spirit even as it continues to grow at a fast clip.

But the trick is managing where its customers are in the industry versus where the technology field is headed, Bronk said. Large publically traded companies often lack to mobility to stay on the edge of the technology industry but to stay competitive, OST needs to manage that against new industry trends, she said.

“If you’re standing still, you’re dying. … We have to keep the train running while we think about what’s ahead,” Bronk said. “You have to do it all — we call it maturity.”

In retirement, Behm plans to spend more time with his family, work with his son in a real estate venture and continue to mentor young entrepreneurs. He also remains in an advisory position with the company’s board of directors.

“When we think about Dan retiring, every moment has been about honoring what he has helped build,” Bronk said. “But at the same time, part of that honoring is figuring out how to do it really well without him.”

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Editor’s note: This story has been changed from its original format to correct the date Dan Behm will retire. He officially steps down March 31.  

Read 4243 times Last modified on Monday, 02 March 2015 11:48

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