Sean Berry

Business

Steve Demetriou Is Making Radical Changes at Jacobs

His culture-first philosophy, M&A drive, and streamlined focus has had a multibillion-dollar impact on the company's revenue.

Hannah Waters met Steve Demetriou just once before following him to the other side of the globe.

She had been a health, safety, and environmental manager for Jacobs since 2013, when the global technical and professional services firm merged with the Australian company where she was employed. But it wasn’t until last year that she had the chance to meet Demetriou, Jacobs’ chair and CEO.

That’s when both had reason to be in Singapore. Waters was attending a company meeting while Demetriou was in the island city-state to present at an international water industry event. He briefly addressed the Jacobs executives, too, and afterward, Waters asked if she could have a few minutes of his time. He agreed.

She proceeded to tell him that she had taken notice of the changes he had instituted at the company and that she thought he was doing a great job. She then launched into areas where she believed there were still opportunities for improvement, and how Demetriou could help accelerate what could be positive changes for the business.

“And he said, ‘That’s all great,’” Waters recalls. “He said, ‘I’ve actually got something to talk to you about,’ and I thought, ‘Oh my gosh, this is either going to be great or career-ending.’”

Demetriou explained that he was looking to create a new role, an executive adviser, to assist him and his direct reports in ensuring that the company’s business strategies remain aligned with its goals, as well as the needs of its more than 50,000-person strong worldwide team. Would she be interested in leaving her home in Perth, on Australia’s west coast, to work with him?

Nasa's Orion Spacecraft
Jacobs, NASA’s largest service provider, recently completed a flight test of the Orion spacecraft’s Launch Abort System.

Waters jumped at the opportunity. She called her husband and asked if he would mind a move to Texas. Within four weeks, she was working at the company headquarters in Dallas. “That’s the thing with Steve: Things move at such a rapid pace, but it’s always great,” Waters says. “I was like, ‘This guy is amazing.’”

Jacobs shareholders have had plenty of reasons to be similarly bullish about Demetriou’s management. As of early October this year, the company’s stock price was up roughly 120 percent since the day he took the reins in 2015. And, thanks largely to a series of mergers and acquisitions that opened new avenues of businesses for the company and expanded its presence into new markets—including a $3.27 billion cash-and-stock deal to acquire rival CH2M Hill in 2017—total revenue has risen from just under $11 billion in 2016 to nearly $15 billion last year.

At the same time, Demetriou has led a relocation of the corporate headquarters from Pasadena, California, where Jacobs had been based since the company’s founding as one-man engineering firm in 1947. He has also overseen a major overhaul of Jacobs’ long-term strategy, selling off its energy, chemicals, and resources unit, which had accounted for some 30 percent of its business, for $3.3 billion earlier this year. The company shifted focus onto its other two major lines of business: buildings and infrastructure, and aerospace and technology.

Yet, if you speak to others in the company about where Demetriou has had the most significant impact on Jacobs, they don’t point to the financial statements. They all mention the same thing. All the good he’s done, they’ll tell you, began with his transformation of the company’s culture.

Search for a Turnaround Pro

Linda Fayne Levinson is the longest serving member of the Jacobs board of directors, having held a seat since 1996. She remembers that when the group launched a search for a new chief executive in 2015, the company was in need of big changes; its financials were stagnating.

“The company hadn’t been growing the way it should,” she says. “The organization and the actual organizational structure, which had worked for a very long time, absolutely needed to transform. And I think the energy had gotten a little stale.”

The search committee, of which Levinson was a member, considered both internal and external candidates, some with experience in Jacobs’ core engineering and construction expertise and some without. When they interviewed Demetriou, he had been CEO of Cleveland-based Aleris, a producer of aluminum rolled products, for 11 years. But it was his prior 16 years working in various roles for ExxonMobil, early in his career, that assured the committee that he was familiar with an important subset of Jacobs’ customers (which is ironic, given the subsequent decision to get out of the oil and gas business).

“When we checked references, one of the most telling things that we learned about Steve is people followed him from company to company,” Levinson says. “You can’t be a leader if you don’t have followers, and he really had followers.”

Since Demetriou joined Jacobs, Levinson has watched as he has reorganized the company so that accountability and responsibility are present in a way they weren’t before. “Previously, in a sense, everything rolled up to the CEO, and it was hard to see at the next few levels down. You knew the team was accountable, but you couldn’t see individual accountability. He fixed that,” she says. “He was very disciplined and courageous.”

Kevin Berryman, who joined Jacobs as CFO shortly before Demetriou was hired, says much the same thing about the effects the CEO has had. “He encourages a discussion about the opportunities and challenges of our company, of our people, our teams, and he wants that dialogue to occur,” Berryman says. “Then it’s, OK, we’re in this together, and we’re going to hold each one of us—him, me, everyone in the company—accountable to ultimately drive to whatever that finish line looks like.”

Indeed, Berryman has seen the weight of such accountability fall squarely on him when it comes to helping achieve another major goal for Jacobs—increasing its diversity of thought by diversifying its workforce. Demetriou had already brought more women and more significant representation for people of color onto the board and into the leadership ranks, and he expects his direct reports to follow suit.

Along with the CH2M merger, Berryman inherited a finance team that was significantly less diverse than the one he’d already had at Jacobs. About a year after the deal, Berryman was running a department that still lagged behind on this inclusiveness goal. During a one-on-one meeting with Demetriou, the CEO pointed out that Berryman still had a lot of work to do on that front.

“And I said, ‘Steve, look, I mean, come on, we just bought the company a year ago,” Berryman says. “He kind of looked at me and said, ‘Yeah, your point is?’ He was basically saying, ‘Yeah, OK, so what are you doing about it?’ … So he’s challenging in a way that you walk away from the discussion saying, ‘He’s right. He’s absolutely right.’”

One of Demetriou’s closest friends is a FOX Sports executive named Steve Tello, whom he met eight years ago when both were attending the Masters at Augusta National Golf Club. Tello speculates that the power to inspire the Jacobs team grows out of Demetriou’s genuine enthusiasm for the work.

“The same qualities that he demonstrates with his friendship, and perhaps with his family—I think he employs those same qualities,” Tello says. “He really enjoys meeting the employees around the world. He tells me on every trip, ‘I met this most interesting fellow’ or ‘this interesting woman.’ … His whole energy is driven off the excitement of meeting the people who run the businesses.”

Early Lessons in Inclusivity

Demetriou says he doesn’t understand why more companies don’t make diversity and inclusion a top priority. “Proven research shows that the companies that are the most diverse have the best quality, the best retention, the best innovation, best shareholder value,” he says. “So, it’s not only the right thing to do. It’s good business.”

We’re sitting in a largely empty dining room, each table already set up for lunch service, one Friday morning in September at the Hotel Crescent Court in Dallas. Jacobs has assembled about 50 company managers from around the globe for two days of training sessions. It’s another of the initiatives that Demetriou has led, intended both to institute a consistent leadership culture throughout the company and to allow voices to be heard from across its worldwide operations, which include hundreds of offices with clients in more than 50 countries. Begun last year, the intention is to conduct similar sessions three to four times annually so that thousands of Jacobs employees will have cycled through the program over the course of the next several years.

Demetriou with his father; Demetriou, No. 20, was team captain at Winthrop High School in 1976 and later inducted into its basketball hall of fame. (left to right)

“What I’ve learned over time is that you can work on strategy, you can put accountability in, you can set plans and make acquisitions, but if you don’t have a great leadership culture, it’s going to fail because dysfunction sets in,” he says.

Demetriou’s earliest lessons in business came from watching his Greek-immigrant father and uncle run a restaurant in his hometown of Winthrop, Massachusetts, near Logan International Airport outside of Boston. Young Steve peeled potatoes and washed dishes in the kitchen before later busing and eventually waiting on tables. “My father and my uncle were two different leaders,” he says. “My uncle was sort of that heads-down, holding people accountable, but no personality, mumbling behind the client’s back sort. Whereas my father always exuded leadership. People walked in, they were happy to see my father. I was proud of him. He was inspirational. He had that positive leadership.”

Although he graduated from Tufts University in nearby Medford, Massachusetts, with a degree in chemical engineering, Demetriou never planned to pursue a career as an engineer. “My passion was business and marketing. Even when I was in college, I had three jobs,” he says. “I probably worked more than I studied. I always had a passion for business and really getting involved in it.” His first job out of school was a position with Texas Instruments in Lubbock. The move brought culture shock for a guy who had grown up in New England. “That’s what was exciting, because Texas in 1980 was just booming,” he says. “I had this dynamic marketing job. It was fun.”

But he only stayed at TI for a year before a headhunter lured him to ExxonMobil in Houston. His decade-and-a-half of working at the oil giant took him all over the world, including six years managing a Baton Rouge chemical plant and three years in Brussels, Belgium, running a European chemical business. “I saw a lot of expats while I was in Europe—Americans at Exxon—and they all were all trying to find the Burger King or an American club, and all that,” he says. “Whereas, growing up in a Greek family, for me it was, How do I find the local restaurant? How do I try to learn a little language? How do I identify? Again, I think that inclusive style maybe helped me.”

“Even when I was in college, I had three jobs. I probably worked more than I studied. I always had a passion for business.”

In 2001, Demetriou took his first CEO job with Noveon, a chemicals producer based in Cleveland that was formed from the sell-off of tire company BFGoodrich’s chemical unit. A few years later, he joined Aleris, which he ran for 11 years before Jacobs came calling. Demetriou viewed Jacobs as a tremendous opportunity. “This great company that had been an industry leader for decades had run into an issue around four or five years of stagnant growth,” he says. “They wanted to bring in somebody to radically change the whole dynamic, really around the culture, to rebuild this great company.”

His early diagnosis for why Jacobs had seemed to hit a wall financially was that it had made a series of acquisitions—in an effort to reignite its growth—without taking care to properly integrate the firms culturally or strategically. “A lot of the culture hadn’t adjusted as it became a world-class Fortune 500 company,” he says. “Some of the modern business practices had just sort of been implemented as some of the homegrown leadership hadn’t adjusted.”

Prior to Demetriou’s arrival, the entirety of the company’s top leadership was living and working in Pasadena, and all of them were white American men. Today, more than 60 percent of the executive team are women, and the CEO says he’s continuing to “cascade that diversity down through the company.”

Reinventing and Rebranding

It has been more than three years since Jacobs announced the relocation of its corporate headquarters to Dallas. The city was already home base for the company’s building and infrastructure unit, housed in the Harwood Center tower downtown. That presence was one of many factors—including Texas’ business friendly environment, the low cost of living, geographically central location, talent pool, and a relatively easy-to-access airport—that led Jacobs to choose Dallas after considering cities on the East Coast, as well as London, for its new HQ.

There are now about 8,000 Jacobs employees in Texas and about 800 in Dallas, including Demetriou. The CEO walks to the office many days (aside from when he’s traveling, which is about 75 percent of the time) from the Uptown Dallas brownstone he shares with Dana, his wife of 11 years.

One of his six grown children—five sons and a daughter—also followed him to Dallas and is launching a business venture of his own. Long-term, Demetriou says, he’d love someday to run a business side by side with his kids.

For now, though, there is much left to accomplish at Jacobs. The divestiture of the company’s energy portfolio came about after a strategic review determined the cyclical nature of the oil and gas industry and its relatively low margins made it expendable. Jacobs’ stock price often moved up and down along with the price of oil, despite the fact that two-thirds of its business came from outside the energy industry.

“We developed a strategy coming out of where we’re making money and where we were not,” Demetriou says. “What came out of that was a clear understanding that we needed to focus on the trends of what was going on globally—urbanization, aging infrastructure, national defense, data analytics, the whole digital tech movement, resiliency, and the issue of climate change.”

So the decision to shed its oil and gas interest came in tandem with the push to acquire CH2M, which made Jacobs a player in the fields of water treatment and desalinization, increasingly important as the developing world modernizes and the entire globe faces a climate crisis. The same mode of thinking—gaining additional expertise to consult on issues of likely future importance—inspired Jacobs this year to also acquire KeyW, a provider of technology for cybersecurity and cyberintelligence needs.

Demetriou at Jacobs’ headquarters
Demetriou at Jacobs’ headquarters in downtown Dallas.

“It has driven performance, and it has driven shareholder value. Our shareholders now look at us as an area that they feel has profitable growth and is less cyclical,” Demetriou says. “A lot of shareholders don’t want to be investing in areas that are up and down. It’s been a very positive change.”

To underline the significance of this reinvented Jacobs, the company is rebranding. It had already eschewed using its full, formal Jacobs Engineering Group moniker (since it has long since moved beyond being merely an engineering and construction outfit). It’s now shifting its legal name to Jacobs Solutions Inc. and will begin trading on the New York Stock Exchange (with the new symbol “J”) as of early December. In addition, downtown Dallas’ Harwood Center will be rechristened Jacobs Center.

During our interview, Demetriou showed me a piece of paper featuring the new Jacobs logo. The letter “J” is now divided in two distinct parts, top and bottom.

“When you look at our new “J” mark, really what it symbolizes is the bottom part of the J is making the shift from the company where we were before to being agile to shift to where the market’s going, where the culture’s going,” he says. “Then the upper part of the J is an arrow moving to the top right—moving upward to where we want to challenge today and reinvent tomorrow. That’s our new logo. It’s ‘challenging today, reinventing tomorrow.’ Our purpose is to create a more connected, sustainable world.”

For Demetriou, that means a more inclusive world, embracing the strength of humanity’s diversity to achieve financial success, too. 

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