Dr. Raphael Katzen founded our company in 1955, and his vision has been instrumental not only in pioneering the future of the ethanol industry, but also in the way our company is organized and in many ways continues to conduct business today. Below are excerpts from an article entitled "The Advantages of Staying Small", written by Dr. Katzen, himself, and reprinted from CONSULTING ENGINEER, June 1967.
While KATZEN International has grown slightly beyond Dr. Katzen's definition of "small", many of the concepts highlighted in the article are seen in our daily business life at KATZEN, from the direct interest and involvement of our highly experienced engineers and their unique personal investment in each project, to the decisive, specialized, proven, seamless execution of projects both small and large.
"The Advantages of Staying Small"
Excerpts reprinted from CONSULTING ENGINEER, June 1967
In setting the basis for a discussion of the advantages and disadvantages of the small firm in the consulting engineering field, it is essential that we have some definition of the term "small". To some this may mean one man, but many firms having 30 to 50 people on their staffs consider themselves small when compared to the multihundred personnel firms. Perhaps the best way to define the term here is that an engineering organization is small when a few principals can maintain close control of the technical and economic aspects of the business and participate in the actual engineering design to a substantial degree. In this context, it is my belief that the ideal size range for the small firm is from 10 to 20 people, although even fewer personnel certainly can constitute a viable small consulting engineering operation.
Since the small firm is limited in depth and cannot maintain staff specialists in all areas complementary to its work, the engineers and designers it does retain must be well above average in ability and training. They must have developed a high degree of self-reliance and independence along with the ability to deal effectively with people, especially clients. Thus, they must be able to take individual responsibility, making realistic and sound decisions quickly while carrying substantial work loads. This means that these men must be in the upper quarter of their profession. This requires, at the designer level, a minimum of five years' experience and at the engineer's level not less than 10 years.
The small firm should be staffed primarily with experienced engineers and designers, a minimum of draftsman, and facilities should be commensurate with the caliber of the staff.
Since the work is usually of an advanced type, quiet work areas are a prime requisite. The "bull-pen" type of office does not suit the small firm. Preferably no more than three men should be assigned to a room and senior men should have private offices. We find that the small firm gives just as much consideration to optimum working space as does the large firm. Actually in our area of specialized services, we pay particular attention to this matter, so that investigative work can be carried our directly on the premises, and meetings can be held with clients in a proper professional and confidential atmosphere...
Type of Work Preferred
In chemical and process engineering, which is the field of our domestic firm and our international company, our primary role in bringing a plant to the construction stage usually is the detailed process design work and training of the client's personnel for operation of the new facility. The process design phase includes detailed heat and material balance calculations, specialized equipment and instrument control system design, and the preparation of equipment and instrument specifications in sufficient detail to permit procurement by the client. The operator training function actually begins with the preparation, by the firm, of a detailed startup and shutdown instruction manual. This manual then forms the basis for the operator training program itself, which begins several weeks prior to operation and extends through the initial operating period.
How the Small Firm Seeks Work
The consulting engineer is somewhat limited in the solicitation of new work because of ethical considerations preventing self-laudatory advertising. Consequently, work is sought mainly through personal contact with officers and top engineering personnel of potential client companies to sound out prospects for new developments. Contacts are best maintained by a continuing program of visits. The representative of the competent small consulting engineering firm has entree to quite large and substantial companies who recognize the abilities of small firms as a result of their experience with them or because of referrals by satisfied clients. He even has an advantage in that he is recognized personally through his direct contacts at high levels with large companies, whereas representatives of the larger firms often may be relatively unknown as individuals.
As the small firm develops it experience, it frequently is recommended by clients to other interested parties. Further, new leads may be obtained by attendance at engineering society meetings. An additional source, although not as successful to date as the others, are leads obtained through consulting engineering organizations. Generally, public announcement by a potential client of his plan to proceed with a new facility is of little value to the small firm. By the time such announcements are made the preliminary work, for which the small firm is best fitted, already has been carried out.
How the Small Firm Assigns Personnel
In assigning personnel to new projects, the small firm has to look primarily at the specific expertise required, and then determine which man or combination of men on the staff can best fit the situation. In the chemical process industry, this requires not so much a knowledge of specific reaction or unit operation as a determination of whether the assignment requires direction that is development, process, or project-management oriented. A key requirement in operation of a small firm is that the organization be extremely flexible so it can handle assignments through a considerable range of sizes. To this end, a flexible teamwork pattern is set up so that a man who is working as project manager on one assignment and using the assistance of other staff members may, in turn, assist another man who is project engineer or project manager on another assignment.
Actually, this flexibility has a side benefit in that all members of the staff of the small firm become acquainted to some degree with all assignments and have a direct and personal interest in them. Furthermore, it enables staff members to develop a generalized engineering concept which is most beneficial in working out unusual designs and in carrying engineering knowledge from one field to another.
Dealing With a Client
It is likely that a small firm deals with a client in much the same manner as the large firm. Consulting engineering business relations are on a very personal basis. The consulting engineer must have respect for the client; the client in turn must have considerable confidence in the ability and reliability of the consulting engineer. In the small firm, one or two key men carry out the major business contacts with the clients, but each man assigned as a project manager or project engineer must be given full responsibility for dealing with the client in the technical aspects of the project. Also, the client must be able to refer all questions and information to one key man, and have the opportunity to develop confidence in that person.
Advantages for the Client
The client can obtain an unusual type and quality of service from the small firm, particularly with respect to use of consulting engineering advice at various stages of corporate planning, research and development, and feasibility evaluations. It is not only the quality but the unique approach that is beneficial to the client. The small firm can exercise a greater degree of freedom in presenting novel ideas concerning engineering approaches to the client's project. Also, the small firm can take a more independent attitude in presenting objective analyses.
The small firm lends itself to more direct and personal contact with client's representatives at all levels, ranging from top officers to engineering heads to individual engineers. A more direct person-to-person relationship can be developed, which helps to cut the red tape that almost invariably develops when two large organizations work together.
In the small firm there is also the opportunity for a single engineer who is assigned to this client's work to be so familiar with not only the client's facilities and processes but also with policy concepts that he can quickly enter into work for the client, cooperating with the client's engineering staff.
With respect to cost to the client, the small firm, because it has a higher proportion of experienced and specialized personnel, may appear at first glance to be more expensive. However because of its ability to move more quickly in setting up a project, in executing the work, and in its ability to exercise ingenuity in developing improved design approaches, over-all costs of engineering can be less for the smaller than for the larger firms. Construction costs also can be reduced by employing the small firm as the project manager, as here again the direct contact between the consulting engineer's staff members, the client's engineers, and the contractor's representative leads to quick decisions, and an ability to check and control costs as the job progresses.
In the final analysis, however, the measure of relative value of a firm is not primarily one of size. It lies in special expertise, ability, and organization.