CE Pro – October 2007 | by Tom LeBlanc

System 7:
A Floor Plan for Success

Three purpose-driven rooms in System 7's office space help distinguish it as an open-systems, open-minded integrator.

One of the keys to running a successful business, according to Gerard Lynch, "is to look at the big picture from the outside."

By seeking outside perspectives, the president of System 7 says he has found many gems of wisdom that have helped him run his integration company better. "It is a hard thing to do, but it is worth doing."

It's not that hard to do.

To look at System 7 from the outside, just visit the company Web site, http://www.systemseven.com, and click on "Log into our Home." With a user name and password from Lynch, any Web surfer can peek into System 7's Topsfield, Mass. showroom via remote security monitoring.

There's a camera in the lobby and one in the conference room. Lynch says it blows away potential clients who want to learn about security cameras and remote monitoring, and it helps them understand how a similar application would work in their home.

"We don't want to be spied on all day," Lynch jokes, explaining that onlookers don't have access to cameras in the warehouse and other areas where work is primarily done. They do, however, get to control the lights in the lobby and the conference room.

When a potential client logs on, Lynch gets an e-mail alert. "I'll see that Joe logged on. Now I know that this customer is serious," he explains.

Also, Lynch says he can use it as a sales vehicle. If a potential client can't make it to the showroom, Lynch might walk them through the log-in process over the phone and give them a wave through the cameras.

"Then I'll say, 'Let me show you the system,' and give them a walk-through. I do it all the time."

Getting Literal

OK, so maybe the remote Web monitoring access isn't exactly what Lynch means by emphasizing the importance of looking at the company from the outside. From the inside, though, director of operations Eric Hawley says the Web site feature is reflective of System 7's overall philosophy.

"In terms of 'wow factor,' that's about as far as we go," he explains. He says the company isn't about shocking clients with mind-blowing home theaters or staggering control systems. The emphasis is on reliability, usability and, above all, simplicity.

Even the elaborate Web site monitoring sales technique is designed to show clients how simple their systems can be -- not how extravagant they are. Lynch says the company is dedicated to making the complex simple.

"The customers that are right for us are the ones that want simplicity," he says. "They're the people who just want to press a button and have it come on."

If there are customers that are right for System 7, it follows that there must be customers that are wrong. It's true, Lynch says. It's important to take on like-minded clients that the company can satisfy since most of System 7's business is referral based, he explains.

"Our customers are our sales force," Lynch says. In that spirit, he describes a sales presentation process that seems to also serve as interviews for new sales positions. Is this a client whose needs System 7 can meet, exceed and lead to potential referrals?

It goes both ways, of course. Lynch says he wants to make sure that System 7's approach of bringing a home's subsystems together in a simple, user-friendly control system makes sense for the client. He says there's a two-way discovery process that goes on when he meets with potential clients.

"By the time they leave, we have a good sense of whether or not they're a good fit for us," he says. "There are cultural matches and we figure out if somebody is in our wavelength."

Why is it so important that integrator and clients agree philosophically? "When people refer us they're referring us for a reason and it's because of the experience they've had with us," Lynch says.

"You have to build trust. It's not an artificial thing. You're trying to build credibility and help them understand that you're not trying to dupe them. When they trust you is when they realize that this guy isn't trying to sell me something. Then I'm getting to the point where I can design something that I think they'll like."

That, presumably, is when the referrals start rolling in.

Room No. 1

Much of the discovery process that Lynch describes usually takes place in System 7's lobby. It's one of a few rooms in the showroom/office that is extremely purpose-driven.

It was about a year ago when the company opened its first showroom. It wasn't easy for Lynch and Hawley to justify the cost. The result is a layout designed to fuel the company's success.

Each room has a role. Sure, some rooms in the approximately 2,000-square-foot space have less glamorous roles than others. There's the warehouse area. There's an in-progress home theater demo room. There's a nook that looks part office, part storage room, part lunch room.

Then there are three rooms that, almost like key employees, perform functions that help make System 7 unique.

The lobby, for its part, is sort of like that employee at Wal-mart who greets customers as they walk in the door -- only a high-tech integration version. On the surface it's just a rather small lobby with a couch, a coffee table, a chair and a bookcase.

There's also a HomeLogic touchscreen mounted on the wall. "They walk in and I start talking about building blocks and systems," Lynch says.

The best place to start, he explains, is at the HomeLogic screen. There Lynch shows potential clients how they can access security, climate, lighting, media systems, messaging, irrigation and video cameras -- all tabs on the HomeLogic screen.

Some people, he says, dive right in and start navigating the system. Others sit back and just listen.

The discovery process continues, as Lynch looks to determine what's important to the individual -- maybe it's lighting control, maybe security. Usually, he says, they lead him.

"If not, I'll just start chopping through it. If I know they're interested in media, I'll go to media first." The emphasis, as always, is on simplicity. He gently explains that under the hood of the friendly touchscreen are "four or five or six vendor's products and one unified system that they access via the [buttons] along the bottom [of the touchscreen]."

As simple as the system might seem, it still scares some people. So Lynch explains what he calls the "Aunt Mary factor." Aunt Mary is the hypothetical houseguest that "doesn't even know what e-mail is." If she gets cold, she doesn't want to fool around with a touchscreen; she just wants to turn up the thermostat.

As part of the presentation, Lynch adjusts the thermostat on the wall next to the touchscreen. If he changes the temperature to 73 degrees, the touchscreen next to it will automatically adjust to 73. Then he switches the temperature on the touchscreen to show that the thermostat, in turn, also corresponds automatically.

Demonstrating this type of two-way communication goes a long way with many clients, according to Hawley. "People sometimes have a misconception that if they do this [automate their homes], it's the only way they can control their heat and lights," he says.

"This shows them that it basically just sits on top of the systems as far as from a control standpoint, as opposed to replacing them. It's pretty compelling."

Room No. 2

After the "discovery process" takes place in the lobby, a logical next stop is the adjacent conference room. Unlike in most conference rooms, the large rectangular table in the middle of the room is far from the focal point.

The eye is more likely drawn to the irrigation system mounted on the wall.

The perimeter of the conference room serves as a walking guide to the subsystems that System 7 pulls together in its clients' homes. There are seven stations: audio, irrigation, security, lighting, climate, video and interfaces.

Each station has a sign and part of the corresponding subsystem mounted below it.

For Lynch, it's an "education room." It's a place for him to take potential clients and explain how different systems work, giving them an idea of what things will look like in their homes.

"We're trying to build systems that work together and have different pieces," he says. "The only way to attack the integration issue is to break it down into understandable bits."

The room allows Lynch to go beyond describing a lighting control system across a conference table. He can get up and show potential clients how the system communicates with the light switches. He can press buttons and change lighting scenes in the ceiling's six recessed lights.

Then he can explain that those six lights could easily be six different rooms in a home, and scenes can be set, he can show, by switching, like this, this, this and this. He has an array of interfaces to show that there are other options besides the in-wall HomeLogic model in the lobby.

Basically, the room allows him to easily add visual, interactive elements to what can sometimes be a stagnant sales consultation.

Lynch says he has always wanted a room like this. "When I first got into this business a lot of this was new to me," Lynch says.

"I'd go into a basement and I'd see all these boxes and I'd feel like my customers probably do. I'd go, 'Is that my phone system? What is that?' So as unglamorous as they may seem, I decided to put those boxes up there and make this stuff understandable for people."

Lynch says he makes it clear to potential companies that System 7 isn't a security or HVAC company. The room serves as a good prop for explaining that it deals with different contractors and also for demonstrating how it ties the different systems together.

For instance, he'll open up the security box on the wall and show where the security company's work ends and System 7's begins.

He says it's been an effective sales tool.

Room No. 3

The lab is one of the rooms that can't be viewed on the remote Web portal. The big, open-design room sits in the center of the office space, and that's probably intentional, since Lynch describes it as the nucleus of the company.

"This is the bullpen," he says.

The room to which he refers looks both organized and chaotic, depending on the perspective. There are large dry-erase boards covering two of the walls with nearly every square inch covered in ink. Every active project is detailed in a unique color.

There is a big table in the middle. It's a high table, designed for standing as opposed to sitting. There are a couple of desks. There's a flat-panel TV on one of the walls. There's an equipment rack on wheels that looks like its components are constantly being replaced.
There's also a thick, rope-like cable that drops from the ceiling down near the table with component, serial, VGA and network inputs.

The wide-open work environment, according to Lynch, is ideal for System 7. Rather than putting employees in separate offices, the lab or bullpen nurtures constant communication and sharing of ideas.

It's a place where projects are discussed, courses of action are debated and products are tested and considered.

It also reflects Lynch's personal philosophy. "I'm a big believer in non-hierarchical organization. If you're in this room, we're just working as a team on a problem. The team is bigger than the individual. I'm not the boss and you're not just the worker. You can speak your mind without getting in trouble."

The all-hands-on-deck approach serves System 7 well in terms of seeing projects from every possible angle. Since System 7 gets most of its business from referrals, Lynch says it's essential that "every job is done as good as it can be done."

To do that, "everybody has to play a role."

The team-first philosophy, however, only works when the right individuals make up the team. Hiring, therefore, becomes extremely important. Lynch says System 7 very rarely hires a person that it hasn't worked with a great deal. Often potential employees arise from a partnership with another contractor.

"Sometimes after working with a guy, [Hawley] and I will say, 'he really gets it,' and we'll keep him in mind for when a position opens. When you find somebody with the intangibles that's more important than somebody who has been hanging TVs for 15 years. The open culture gives them a place to flourish."

What's Next?

The open culture, meanwhile, is also set up to make the company flourish. What that means, though, is a question with which Lynch struggles. When he tries to look at System 7 from the outside, the biggest question he says he has is, "Where is it going?"

"Bigger is better" is a myth, according to Lynch. He says the myth is propagated, in part, by CE Pro and its CE Pro 100 list of highest-revenue integrators. He says the list is riddled with "DirecTV people up on roofs putting in satellite dishes. I think the real CE Pro reader is four- or five-guy companies. That's the meat and potatoes of what this industry is. I think the jury is still out on how big [an integration company] should be."

There is a general attitude, Lynch says, that the custom-electronics industry is going to grow. As an integrator, though, he maintains that it's important to look at the big picture.

"What are the big-box retailers doing (if they're still going to be around)? You have your Geek Squad and your firedog. You have your IT guys who say it's all about IT. You have your security guys. Everybody has a different approach.

Lynch is skeptical when he sees fellow integrators who are quick to franchise or are quick to bulk up their companies during a lucrative period. He wonders if they have the business model in place to support the larger company once business slows.

Growing too quickly is risky, Hawley agrees. "You end up with guys sitting around and you [get away from your comfort zone] and start taking on busy work just to make the van payments," he says.

Lynch says he isn't opposed to growing the company but he doesn't want to get to the point Hawley describes. "You can't objectively say what size is the right size for an integration company," he says.

"I believe right now that to be profitable you have to work on problems that nobody else is working on. By default, that makes your market a little smaller."

Trying to compete directly with larger integration companies and Geek Squad, for instance, isn't in the cards for System 7. Lynch says that his employees wouldn't be passionate about the work that such competition would mean doing.

"I have given up on the myth that bigger is better," he says. "It may be better for you based on your company culture. If we want an open culture, though, maybe this is the size we need to be."


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