Beyond Strategy is an ACG National Capital Region podcast focused on the leaders that are driving innovation, enhancing understanding, and achieving market clearing outcomes in and around the DC area. The podcast will interview senior level executives, private equity partners, and industry leaders to discuss topics including, but not limited to, mergers and acquisition, organic growth pursuits, leadership and management strategies.
Episode 1 includes a sit-down interview with Carey Smith, CEO & President of Parsons Corporation (NYSE: PSN), a nearly $4 billion market cap public company focused on providing technology-based solutions for the defense, intelligence, and critical infrastructure markets. Carey shares her thoughts on leadership, career progression, as well as what makes a successful organic and M&A driven growth strategy.
Listen to the podcast and read a transcript of the interview below:
Transcript: Beyond Strategy Podcast (Episode 1) with Carey Smith
Andy McEnroe: Hi, hello, and welcome to Beyond Strategy an ACG National Capitol region podcast focused on the leaders that are driving innovative change for their firms in and around the DC area. I am Andy McEnroe, one of the leaders of Raymond James Defense and Government Investment Banking team.
Jenn Wappaus: And I’m Jenn Wappaus Infinity Wealth Management Group at RBC.
Andy McEnroe: Over the next several months, we are going to take you on a journey beyond the outline strategy.
What we mean by that is that we are going to speak with leaders from across various industries in the national capital region who will help illuminate how strategies are formulated, decisions are made, and results are achieved. Our first episode features Carey Smith, CEO and President of Parsons Corporation, a $3 billion plus market cap public company focused on providing technology-based solutions for the defense, intelligence, and critical infrastructure markets.
Jenn Wappaus: You’ll get to see what drives Carey as a successful CEO. She is passionate about her people and customers, especially given the war on talent that everyone’s currently dealing with.
She will highlight the M&A activity and cultural fit that are “musts” for companies that they are looking at acquiring, as well as some pretty hefty organic growth goals for Parsons.
Andy McEnroe: We are thrilled to be joined today by Carey Smith, CEO and President of Parsons Corporation, a $3 billion plus market cap, public company, focused on providing technology-based solutions for the defense, intelligence and critical infrastructure markets. Carey, thanks for being here. And before we dive into your time at Parsons, let’s let our audience learn a little bit about your background.
You joined Parsons in 2016, but – prior to doing so – held a series of progressive leadership roles across the aerospace and defense industry. What was it that drew your attention to the aerospace and defense market early in your career?
Carey Smith: Well, first I want to say thanks for hosting me here today. Andy and Jenn it’s pleasure to be with you.
I would say what attracted me to aerospace and defense market early in my career was a flight that I had as a very young engineer with the special operations forces, and just getting to see the importance and criticality of their mission. It was a search and rescue mission. At that point, I was kind of hooked for the rest of my career.
Andy McEnroe: When in your career progression did you decide that – going beyond just leading a contract or leading a business unit – that you wanted to lead a large business like Parsons?
Carey Smith: I started as a systems engineer and an integration test engineer. Though I loved that, I really aspired to go into management. I started in engineering management at a very young age and progressed up the ranks from there.
Once I had the opportunity to kind of develop a vision, lead teams toward achieving that vision, and being able to develop talent, those were all areas that I really enjoyed. And so moving up the management chain was a logical step for me at a very young age.
Jenn Wappaus: Carey, as you grew in the industry, were there any leadership lessons or firm building skills that you leaned heavily on? And where did you acquire the skills or knowledge?
Carey Smith: The most important thing to build skills is to be willing to try new things and to take very diverse learning assignments. I’ve been fortunate to work in multiple industries, both defense and commercial. I accepted assignments that allowed me to work in countries all over the world. And I’ve had the opportunity to perform very different types of roles.
My breadth of experience had assignments in engineering, research and development, business development, strategic planning, operations, manufacturing, and both profit and loss roles. It’s probably sounding like I couldn’t hold a job, but it was a diverse experience
From a soft skills perspective, my biggest leadership lesson is the most important attribute that you have as a leader is to be a good listener. You never have to be the smartest person in the room, but you do have to ask very good questions, listen to diverse opinions, and you have to be very decisive that after you’ve heard everybody’s opinions, you come up with the right course of action and proceed.
Jenn Wappaus: Carey, it’s no secret that the GovCon market is predominantly male dominated. How did being a woman in leadership roles change or impact how you deployed personal growth or business strategies?
Carey Smith: Yeah, it’s definitely been predominantly male, as was my initial career as a systems engineer and a flight test engineer with the special operations.
I remember putting on a flight suit and they didn’t make flight suits for women at the time. So I was rolling up the arms and the legs just to make it fit. I think for me though, I grew up with a father who always taught me you can do whatever you want in life. And that’s kind of how I’ve always approached my career.
My focus has always been on working hard, delivering results for customers and stakeholders, and having a strong network across customers and industry
Andy McEnroe: This podcast is titled Beyond Strategy. And you’ve already given us some great nuggets focused on that, but now turning our attention to your time at Parsons.
When you joined the company in 2016, it was as the president of the firm’s federal solutions business. This was after serving as the president of Honeywell’s Space and Defense Business. What was your vision for the federal solutions business at the time you joined? Also in comparison to the critical infrastructure sibling that Parsons has, which certainly dwarfed the federal solutions business at that time.
Carey Smith: Yeah as you point out Andy at the time I joined Parson’s, federal business was a quarter of the company and critical infrastructure was three quarters of the company. My objective was to grow the federal business into a solutions integrator that differentiated with technology and make it at least equal in size to the critical infrastructure business.
So to do this, we had to make several changes. First, we had to add a research and development investment. When I got here, we weren’t investing anything in research and development. In the last four years, that’s increased by 20 times. We also reinvigorated the M&A process with a focus on companies that had cyber and space capabilities, and we’ve acquired six companies in the past three and a half years.
And then by doing both the organic and the inorganic investments, we moved up the value chain. We were able to bid prime and win more strategic solutions jobs. As CEO, now my objective is to have top positions in our high growth market areas and to continue to be a global, critical infrastructure leader by capitalizing on both the United States infrastructure bill, as well as the growth of global infrastructure that we’re seeing.
Andy McEnroe: Turning the clock back… Because part of this strategy is helping entrepreneurs, public company CEOs, management level individuals, figuring out how they drive their own strategy… What were some of those key Day One initiatives that you put in place that helped transform Parsons? How did you track your progress against those initiatives?
Carey Smith: Day One was about five years ago, arriving here at Parsons. But I’ll give you a kind of a highlight of some of the things that I did early on when I got here. The first thing was to run the business like a public company. I came with over three decades of experience in public companies.
So to do that and be able to run like a public company, I immediately needed to hire and promote the right talent. I already mentioned that we initiated research and development, and that was critically important to be able to drive technology differentiation.
We also focused on personnel. I’m a firm believer in what I call “people first.” It’s all about the people. It’s all about your team that enables a company to accomplish results. We formed a technical fellows program. We’ve put in place a chief technology office, and we also formed a diversity, equity, and inclusion council.
We developed a mentoring program. We created a dual technical career path. So people didn’t have to jump over to the management chain. And we also had to transform our business development because we didn’t have things such as a capture manager or solutions architects at the time. We built facilities such as skiffs and high bays.
We developed a secure DevOps environment to perform systems engineering and software development work. And then, as I mentioned on the acquisition front, we acquired companies that have very strong financial performance coupled with differentiated technology. And then probably most important was customer engagement, really having strong customer account management and also engaging more with industry associations.
Andy McEnroe: Outstanding. And you’ve already talked about your career progression once inside the doors here at Parsons. As we mentioned, you became the COO in 2018, the president title was added in 2019, you became the CEO in April of 2021. Soon to be the chairwoman as well of the board. Since becoming CEO, what’s one thing that you didn’t expect? And how did you overcome that obstacle?
Carey Smith: Well, I’d say first, there were no major surprises in becoming CEO, since I was the president and Chief Operating Officer before. But I would say my time with investors and analysts has increased. I also spend more time on reviewing and approving SEC public documentation, like the 10 K, the 10 Q, the annual report, things like that.
But I also have responsibility for managing the board of directors, where I’ve tried to shape the board agendas to be able to focus more on strategy, growth, and talent.
Andy McEnroe: Your role adds the chairwoman title – as I noted – in April of this year. Does it change at all – for a business owner or for someone aspiring to follow in your footsteps – how would you frame the CEO versus the chairwoman type role?
Carey Smith: Yeah. The biggest differences as the chairwoman of the board is I’ll be responsible for setting the agendas and running the meetings. That’s the only real change I already, as CEO, had a lot of engagement with the board. So it’s really just that agenda setting.
Jenn Wappaus: Carey, it’s clear that you care about the people here at Parsons and leadership is often only as good as the team that surrounds you. How did you actively recruit, retain, and incentivize executives to join you on this journey?
Carey Smith: Yeah, it’s a great question, Jen. As I shared earlier, I call it people first mentality.
We have to focus on both recruiting and retaining the right people in order to have a successful business. And when you have the right leadership team in place, they drive growth and they model the focus and the behavior that you want to see at all levels of the organization.
So throughout my career, I’ve always had a strong industry network, and I always kept what I call an A list of people that if I’ve ever moved to a different position or a different company, they were people that I would want to have on my team. Those are generally people that share my vision and we’re all passionate about our customer’s mission and are focused on driving results.
When I became CEO in July, I also did engage an external recruiter to hire a few new functional roles. And after sharing our company’s prospects and our two strong end markets, federal and critical infrastructure, our culture of agility, innovation, and collaboration, and our growth strategy, the executives that we interviewed liked our vision and joined the company. So I think we’ve done a good job of bringing in talent from the outside and also promoting from within.
Andy McEnroe: You mentioned this earlier in our discussion about your organic and inorganic components to your business strategy when you assumed the leadership role in the federal business.
Starting with the inorganic side of the equation, can you tell us and our audience, the strategy you put in place? How you identified the targets you were looking to bring into the Parson’s portfolio? You know, of course, some of the greatest hits Polaris Alpha, OG Systems, QRC technologies, Braxton, Echo Ridge, and, of course my favorite, BlackHorse. All great companies, but all with distinct attributes.
Carey Smith: Yeah. So I think the engineer in me will come out because at first, the first thing we do is a gap assessment. What are our technical capabilities? Who are our customers? And where do we want to go? Then we develop a one to end list and starting with company one, that’s the company that we go after in this continuously revised list that we work with. We like to work with companies that we know have a strong cultural fit. So they’ll work well with our folks. And we’d like to close deals on an exclusive basis and not go to auctions if we don’t have to. So that fit and that understanding are foundational.
We know if we have a similar approach and we have a shared commitment to mission, to innovation, and our people, that the rest kind of falls in place and it’ll be a successful acquisition and a successful integration.
So starting with Polaris Alpha, what we were kind of missing there was we wanted to enhance our space capabilities. They brought space situational awareness. They brought additional cybersecurity, data analytics, and cloud capabilities.
OG Systems was next with geospatial intelligence and threat analytics. Then we acquired QRC Technologies to supplement our RF portfolio and specifically situational awareness. Braxton was a significant acquisition in that they really helped us with ground systems as well as resiliency, and had a presence on many, many different platforms.
Echo Ridge was unique because they were a smaller technology play where we did an assessment and we said if we had to develop this capability in-house, what would it cost us for spying it? So they brought assured position, navigation, timing capabilities, and software to find radios.
And your favorite Andy, BlackHorse Solutions, has been outstanding. They brought cyber electromagnetic spectrum and information operations. Most importantly, focused on the near peer threat, which we wanted to acquire. I would also say, just a highlight on integration, even though you didn’t ask it. We do take a different approach to integration of the company. We like to adopt the companies that we acquire as best practices, because they were successful for a reason. And we don’t want to change them.
One example of that would be that we took the recognition program, which was called the Drive Awards program, from Polaris Alpha. But we do that with all of our companies. What made them tick and how do we change Parsons to be better? We also keep the leadership teams of the companies that we buy. And when they join Parsons, often they get increased responsibility.
Great example is our Chief Technology Officer who came from Polaris Alpha. Our Head of Corporate Developments from Polaris Alpha. The CEO of BlackHorse picked up a lot of the business that was at Parsons. We put it under him to run. So his portfolio enhanced. And the head of Braxton also picked up a lot of our space portfolio.
So when we get to see this great leadership talent, it really helps Parsons.
Andy McEnroe: Well, I think the culture, point’s a great one, Carey. I mean, I’ve seen you transform Parsons’ culture, whether it’s as simple as adding games and beer taps to certain offices, or just adopting a more open forward-leaning culture, if you will, into the community, which has just been tremendous to see.
Jenn Wappaus: And integrating the best practices with the other companies that you bring in is fantastic.
So tell us a little bit about the organic side of that strategy. Was there a list of must wins that were central to the Parsons federal side of the business?
Carey Smith: Yeah, so we, we pride ourselves first on having a very high, competitive win rate and more importantly, we pride ourselves on having a close to 100 percent recompete win rate.
We feel that once we win jobs and we perform for our customers, we keep those jobs. And I think a testament is 2021. We were close to a 100 percent win rate. To drive growth, as we got bigger, we really said we’ve got to win a bid and win bigger programs, those that are greater than $100 million. In 2021, we went over 12 programs that were greater than $100 million. The most in Parsons history.
And two of those contract awards were greater than $2 billion.
Andy McEnroe: Oh, that’s outstanding. And it seems like Parsons continues to climb, not only the contract size ladder, but the capability ladder in terms of what it’s offering to its customers. You mentioned some of the acquisitions that have probably helped put those puzzle pieces together. But on both the critical infrastructure and federal solutions sides of the business, what’s next for Parsons?
Carey Smith: Well, we’re well positioned and strong in markets. And these are markets that have high growth rates. They’re profitable and they’re enduring markets. Our goal is to have top positions in these markets. If you look on the federal side, that would be cyberspace, missile, defense, and C5 ISR.
And then on the critical infrastructure side, it would be transportation, environmental remediation, and water and wastewater. And the way that we’re going to do that is what we’ve been doing for the past five years, which is continuing to move up the value chain of solutions integrator.
To your point, how do we connect the dots? Investing in internal R&D and then continuing to acquire differentiated companies.
Andy McEnroe: Since this podcast is called Beyond Strategy, we must ask what are the central tenants to Parsons’ strategy and mission moving forward?
Carey Smith: Well, first our vision is to create the future, and that’s whether we’re creating the future of national security or global infrastructure to deliver a better world.
As you look at the world we’re facing today, it is a complex security environment. There’s adversaries challenging on every domain and we’re in an economy that’s driven by digital transformation. So we leverage innovative technologies to deliver integrated solutions at the speed of relevance.
And I’ll highlight at the speed of relevance. One thing that we haven’t lost as we’ve gotten bigger is our agility as a company where we’ve got breadth and depth, like a large business, but we operate at the speed of a small business. More specifically, I’d say we have four priorities.
First is to focus the portfolio, prioritizing those markets that I mentioned. Really focusing on those. We do a lot of things. We’re a diverse company, but those are the seven markets that we’re focused on. We’ll continue to move up that solutions value chain and differentiate through data, technology, and software.
Third will capitalize on the global infrastructure spending. And then finally we’ll outpace organic growth in each of our top markets and we’ll supplement that with a creed of M&A.
We have to continue to achieve these priorities by competing for the war on talent. People first means a lot, and we have to make sure that we recruit and retain the brightest in our industry. And that we keep this culture, which I think is innovative and different at Parsons, where people can truly come in and thrive in their careers.
Jenn Wappaus: Carey, as we segue into the end of this interview. What’s one lesson that you’ve learned from your job that you think everyone should learn at some point in their career?
Carey Smith: So I’ll probably sound repetitive on this, but I’d say the one lesson is people are your most important resource and it’s the customer’s mission and what binds us together towards a higher value purpose.
Andy McEnroe: We end all of our interviews on this podcast with a simple, but maybe most important question. What is the important or salient thing that we and our audience should know about you Carey Smith?
Carey Smith: I’d say for me, work is very important, but family always comes first. I pride myself on the fact that as I moved up the leadership ranks, I never missed a soccer game or a swim meet or a critical school event for my kids. And it’s the one message I try and give all leaders. Remember families.
Andy McEnroe: Family first. I love that. People first. Within the organization as well, Carey Smith, CEO, and president of Parsons Corporation. Thank you for joining us on our inaugural episode of Beyond Strategy an ACG National Capitol region podcast.
Carey Smith: Thank you very much, Andy
Andy McEnroe: Well, once again, a special thank you to Carey Smith for joining us on Beyond Strategy an ACG National Capital region podcast. For Jenn Wappaus, I am Andy McEnroe, reminding you to subscribe to this podcast, wherever you get your podcasts from. We hope that you will join us again next time.