Help others and you'll help yourself is more than just a slogan at RWD Technologies Inc.
It's the business model and the mantra.
RWD develops technologies and training programs that help employees of its big-name customers do their jobs better -- which, in turn, helps performance and profitability.
But employees and managers say that simple statement doesn't capture the energy and innovation that are fueling RWD's growth.
The Columbia company has racked up average annual sales gains of 40 percent over the past five years. And it wants to add several hundred more employees this year to the 1,050 who work there now.
Recently, RWD was ranked 55th on Forbes magazine's list of the nation's "200 Best Small Companies."
Ford Motor Co. and DaimlerChrysler AG are its customers. Partners include SAP AG, the German software powerhouse; PricewaterhouseCoopers, the accounting and consulting firm, and Siebel Systems Inc., which makes software used by corporate sales forces and customer-service centers. "They have a very good management team and clearly defined markets," said William Loomis, a Legg Mason Wood Walker Inc. analyst who follows the company. "They have strong financial controls and a strong discipline to [boost] the bottom line. I'm very comfortable with the management team they have in place."
Although RWD may be one of Maryland's most-promising emerging companies, Wall Street has yet to reward it with a high stock price.
Analysts' grievances appear minor: a temporary rough patch for one of its divisions; concerns that potential customers are diverting money from needed new office and factory technology to solve Y2K problems; and ignorance about how much Internet technology RWD packs into its products.
Plus, the company has a short track record with Wall Street, having been public only since June 1997.
'Buy' ratings
Nonetheless, the four analysts who follow the company give its stock some form of "buy" rating.
RWD executives are aware of the concerns, downplay none and are making sure that each gets addressed, said Ronald E. Holtz, the company's vice president and chief financial officer who works closest with investors.
But neither are they losing sight of the company's mission: Helping employees be more efficient, thereby boosting a client's bottom line.
About a third of the firm's business comes from the auto firms, but the client list also includes Boston Edison, Microsoft Corp., Northrop Grumman Corp., Disney & Co., Deere & Co. and Whirlpool Corp.
The RWD formula seems to be working: Sales have grown from $29 million in 1994 to $114.7 million last year. Net income has increased from $2.38 million to $13.1 million during the same period.
With emerging growth companies such as RWD, analysts obviously like to see profits. But growing sales may be even more important. The reason: Wall Street understands that new companies reinvest a lot of their income in pursuit of profits down the road.
RWD is making the most of these reinvestments: Its return on capital -- a measure of how effectively a company uses its money -- is an exceptional 20 percent.
Founder Robert W. Deutsch, a 75-year-old dynamo of ideas, has built two successful companies around what would seem to be a common-sense rule: If you want the best solution possible to a business problem, talk to the workers closest to the action.
Deutsch started RWD in 1988 after getting ousted from General Physics Corp., the Columbia nuclear and environmental engineering firm that he founded and ran for 22 years.
Another firm took a majority stake in General Physics and opted for change at the top.
Deutsch was 64 and not ready to retire. But he had grown tired of all the regulations facing the commercial nuclear power industry and didn't want to do any more government work.
Formed RWD
The private sector appeared fertile ground for high-technology solutions, so he sold his General Physics stock and formed RWD -- bringing some top managers from General Physics with him.
"It was the best thing that ever happened to me," Deutsch said.
The son of a New York City grocer whose family moved around a lot, Deutsch did well in math and science as a youth and wanted to study them in college. But tuition was a problem.
After graduating from high school in 1941, he enrolled in Queens College before enlisting in the Army. A short stint at the Massachusetts Institute of Technology as part of his Army training persuaded him that physics was his calling, though because of his credits he returned to MIT after the war to major in electrical engineering.
He went on to earn a doctorate in physics at the University at California at Berkeley, where he worked with such Nobel Laureates as Emilio G. Segre and Luis W. Alvarez.
Today, atop the bookcase behind his desk, are five framed photographs of Nobel physicists, including Segre and Alvarez, as well as E.O. Lawrence, Enrico Fermi and Albert Einstein.
Testimonials from employees, including a plaque commemorating his 75th birthday, also adorn his office. The plaque depicts the doubling of the company's revenues by using a model of a San Francisco cable car climbing up a steep incline.
The cable car has another significance, recounted on the plaque's legend: how on a break from a technology conference in San Francisco, Deutsch kept pace with his much-younger executives during a walk up the city's steep Nob Hill a month before he turned 75.
In September, he and his wife Florence will celebrate their 50th wedding anniversary.
Won't slow down
Deutsch says he has no intention of slowing down anytime soon. He's the owner of 62 percent of RWD's stock and has formed a foundation that gives money to local universities.
The business philosophy Deutsch developed at General Physics and now employs at RWD rests on making customers more profitable by removing the obstacles that keep their employees from doing their jobs.
Companies often make huge investments in technology but fail to get a payoff because the technology doesn't quite solve the problem, is too hard to use, or isn't accompanied by training.
It is RWD's aim to make sure that doesn't happen.
"We bring technology and people together," Deutsch said. "We have empathy for the end-user."
While at General Physics, he learned the value of good training and design. The company trained nuclear power plant operators, who faced difficult licensing exams and worked in control rooms that were poorly laid out. Some operators found themselves having to simultaneously monitor gauges that were on opposite sides of the room.
Engineers, it seems, had designed the control rooms without talking to the people who would be using them.
Such oversights are less frequent today, but they still happen.
Deutsch tells how a Big Three automaker recently scoured the globe for a piece of specialized equipment for one of its U.S factories. Project managers found the equipment, bought it and installed it only to find that the instruction manuals the employees needed were in Finnish.
Deutsch, a longtime professor at Catholic University in Washington, and his RWD team aim to give their employees guidance, but also "empower" them with a lot of responsibility and freedom to get the job done.
'Lot of latitude'
"I honestly feel like I'm running my own company," said Jeffrey W. Wendel, the head of RWD's Information Technology group. "They give us a lot of latitude."
RWD has staked a claim in four distinct areas: "enterprise-resource planning," "lean-manufacturing consulting," "technology-performance support" and "information technology."
It is working harder to highlight its Internet know-how and also is getting involved in the now-trendy "knowledge-management," which lets corporations capitalize on the know-how within their organizations.
"Enterprise," or "ERP," software from from SAP, Baan Co. NV, or Oracle Corp., lives up to its name. It ties all the different pieces of the "enterprise," or business, together so that people in marketing, finance, accounting and manufacturing can make better decisions by having access to the most recent data from every other part of their company.
RWD trains workers how to use this complex software, and can even design smaller add-on software to perform very specific tasks.
Lean manufacturing -- pioneered by Japan's Toyota Motor Co. -- requires a company to build only enough products to fill specific orders.
In its technology-performance support business, RWD developes training programs to help workers understand new technology.
The ERP business was a stellar performer last year, but has been a financial disappointment this year, Legg Mason's Loomis notes.
But the other three businesses are surpassing expectations, he said.
White hot business
The information-technology unit is white hot, putting in place productivity-enhancing technology for such outfits as Boston Edison and Deere & Co.
For instance, RWD helped develop a system that helps Deere technicians rapidly diagnose problems on equipment.
When a technician plugs the equipment's on-board sensors into a computer, a database tells him what the most likely problems are.
The technician is given a list of things to check, with each possible problem assigned a percentage of likelihood, said Randal Jaminet, a product support manager at Deere's construction equipment plant in Dubuque, Iowa.
The diagnostic program also estimates the costs of each solution. For instance, the mechanic might be told to check the hydraulic fluid level in a reservoir tank -- a one-minute procedure -- before taking the time-consuming step of tearing into the hydraulic system itself.
Once the right repair is identified, the technician can call up a screen that lists the parts and tools he'll need to do the job. This all serves to keep the technician fully occupied.
RWD's Deere project also included some hardware and software partners, Jaminet said.
And RWD's methods impressed him: Project workers got an overview of what the company wanted and then went straight to the technicians to find out how they did their jobs and what they needed to be more efficient. That's a big reason the technology, called "Service Expert," is being sent to Deere dealers with high expectations.
Said Deere's Jaminet of RWD: "I'm very high on them."
Pub Date: 5/09/99