Size matters but excellence and culture of innovation drives success, says Uwe Krueger

Interview with Uwe Krueger, Atkins chief executive: UK infrastructure businesses must think bigger and wider about innovations and business models to embrace the trillion dollar global opportunity.

Antony Oliver
22 May 2015

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Uwe Krueger is chief executive of Atkins, one of the largest UK engineering consultancies with around 18,000 staff and a £1.75bn annual turnover.

In an interview with Infrastructure Intelligence editor Antony Oliver at the recent ACE International Conference, Krueger set out his thoughts on the need to think bigger to embrace the digital business opportunity, creating a culture of innovation and value-led business modesl to enable consultancies to be rewarded fairly or their efforts.

Can UK business truly lead in the world of infrastructure when it is faced with increasing global competition?

I would be careful about saying it will be leading but clearly we have the opportunity to shape the future with the experience and knowledge that we have here in the UK, particularly if you think about the opportunity that is out there. I was in Davos this year and for the first time CEOs of major engineering and construction business came together to meet with major pension fund CEOs and it was an eye opening experience for me to realise just how much money is out there looking for an opportunity to be invested in infrastructure – it is mindblowing.  We are talking about a trillion US dollars looking for a place and the fundamental challenge is not the need for infrastructure but how to structure projects in such a way that this money can find a harbour That is an interesting challenge for our industry - to make that happen. That is the prize in front of us .

So are we thinking big enough?

"How we can change the pricing structure away from paying us by engineering hours to think about value pricing schemes"

Thinking big enough has many facets to it. It means being steadfast on being fairly paid for the knowledge and expertise that we provide. And that goes deep into the contractual issues that many are being confronted by every day. But at the other end of the spectrum is to think globally with major clients around how we can change the pricing structure away from paying us by engineering hours to think about value pricing schemes [that enable us to] really get our fair share for what we save investors with the resources that we put on the ground.

Digital technology is critical but do we risk simply finding cheaper versions of business as usual rather than creating genuinely innovative new approaches to infrastructure management?

It is an important question. I think there is a fundamental misunderstanding in our industry that digital engineering will all of a sudden change the way we are doing business. I think that is nonsense. The true value behind it is that we use these means, these innovative technologies to really create new business models for us in this industry. We heard earlier about the value of cooperation but it is not only cooperation between similar companies in the industry (as we are doing with Arup on Crossrail with the application of big data and analytics on settlement sensors under the city of London). But there is other cooperation that has innovation as a focus along the supply chain - with Rockwell Collins for example we have developed a breakthrough in identity detection technology for airports. That is the kind of innovation that we need to embrace much more. There is a whole range of opportunities where we can be innovative not only in technology but in business model invention.

Is Atkins – is the industry - doing enough to make the businesses attractive to the Generation Y talent that will make this happen?

"You need to tap the same talent pool that Google does - and we need to get used to it"

Attracting those kind of [young technically engaged] people is a challenge for our industry but I think we have one fundamental advantage in that we can truly claim that who is working for us is has the opportunity to really shape the environment in which people are living and working tomorrow - something with purpose and that is extremely important for that generation. I think that is how you can attract them more than anything else. But I had an interesting dinner with the HR director of Google recently and he shared with me the way in which Google approaches the challenges of attracting the best and the brightest. Of course they have a built in advantage with the brand they have, but we must understand how data rich their recruitment process is – how each and every spot of data [about candidates] helps them to make an informed recruitment decision - and I can tell you there is lot to be learn in our businesses.

So do we have to consider Google as the competition?

Absolutely. Let’s face it if you want to get people in your company that are versed in big data, predictive analytics and in crowd sourcing then you need to tap the same talent pool that Google does - and we need to get used to it.

Isn’t that a battle that will inevitably be lost?

No – it is a lot of fun. If we try to be a bit smarter – and we can be.

How can UK engineering and consultancy boost its impact on the global stage? Is this simply a question of ambition?

To hear more from speakers at the ACE International Conference click here for video

You need to be ambitious but it is not just about ambition. You need to be sure that you are not only attracting but deploying the right resources. And if you have the ambition to play on an international scale you need to figure out a way that you move work to people and people to work in an intelligent way. You really need to have a seamless organisation that utilises resources almost 24/7 and invest in a GDC (global design centre) wherever it might be – Philippians or India or Eastern Europe. All that needs to come together in order to fill the ambition with reality.

But it is about scale as well – being big enough – how big do you have to be?

"Where scale matters most is in your ability to invest"

Let’s be cautious here – it depends. Of course there are areas where scale matters in our business. If you want to deliver a large scale metro project in the Middle East then you need to be capable and be able to bring enough horse power on the ground to deliver a large part of it yourself. But partnering is equally important. Where scale matters most is in your ability to invest - in technology, in resourcing, in recruitment initiatives and in your ability to invest in company infrastructure. At the end of the day our business is one that interacts locally with clients using people on the ground. The days are gone when you could parachute people in and hope for the best – you need to be local and that needs investment and scale. 

Parsons Brinckerhoff was clearly a business that you wanted to buy. Without that addition where does it leave Atkins?

I think we have a critical scale that is absolutely appropriate to compete internationally - and you will understand that I am being diplomatic in answering that. Whenever an interesting opportunity occurs we of course have the balance sheet to address that and at every point in time we are looking at interesting opportunities. 

So what really drive success? 

"What makes you successful is that you have to be really good at what you do."

Consolidation in our industry will continue but I fundamentally I am of the opinion that what makes you successful is that you have to be really good at what you do. Operational excellence is the necessary, but not sufficient, condition for success. The next step is that you need to be differentiated in what you are doing. And when that comes together, size is an interesting ingredient. But it is not the most important part of growing your business - you can do that very successfully organically.

What is Atkins really good at?

Atkins is extremely good when it comes to complex engineering challenges. And that is not about the size of the project. We are an engineer who is not playing the commodity field and where we did that in the past those were the businesses that were have divested – the highway services business for instance.

So what do you want to be really good at in the future?

“Creating space for a culture of innovation”

First we need to be sure that we play in the areas of the developing world where the market grows faster. These are uncomfortable regions of the world and you need to know how to play there. And second, and very importantly, we need to get better at technical and business innovation. Disruptive innovation typically comes leftfield from small and medium sized enterprises and so to avoid suddenly waking up in the morning and finding that part of your business has gone you need to create an atmosphere and space in your company where the same culture of innovation can prevail and flourish – and that is a challenge for a company of 10,000 or 18,000 people.

Which companies to you aspire to be like?

I look at companies that are nothing to do with the engineering world. I had a chat with Sir George Buckley the other day, the former chief executive of 3M. That is a fantastic company with a fundamental principal of organised freedom for innovation and that is something that we can learn from them.

Where do you see the UK consultancy and engineering sector’s future competition coming from?

For the large companies taking on complex projects the most important competition comes from the US and that will continue to be the case. However, we need to watch out for what is happening in China – particular the Chinese construction companies who have developed very sophisticated design institutes, who are very savvy in technology. Clearly they also have an advantage of coming with equity which obviously helps to win contracts.

And no businesses of the size of the global accountancy consultants such as say, EY at 210,000 staff?

No, I don’t think so because in the engineering consultancy world probably the most important part of success is that you keep a homogeneous culture. Clients want to be to be sure that the service they get today is the service that they will buy tomorrow. Once that gets out of hand you cannot guarantee that. But more important you will not be able to keep your most important assets – the staff that go out of the revolving door every night who may not come back in the morning.

What sort of people do you think businesses like Atkins will need to employ in future to take advantage of the global opportunities on offer?

We are actively looking at a much more diverse workforce. I need people that are highly mobile and accept that their career progresses today in the UK and tomorrow in Riyadh. From a technical point of view I need people from much more diverse places. We moved away from just hiring civil engineers out of the Ivy League universities and have cast our net much wider over the last few years and will continue to do so.

Do these people exist in the UK or will you be hiring these people abroad? 

Still because of the brand advantage we have the UK is still a very important place for recruitment – and it’s around 30% for graduates. But it was, perhaps, 90% at one time so you can see how that is moving.

Can UK expertise and creativity still lead the world?

I like to talk about shaping the world with the advantage we have of attracting talent - people that are creative, that are responsible, that have knowledge and want to leave a legacy behind them for what they are doing in life as engineers and consultants. And so as UK plc we have a fantastic opportunity.

Anything that keeps you awake at night?

I sleep very well.