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Axiom Design Charts New Territory with Design-Only Business Model - ResidentialSystems.com

Axiom Design Charts New Territory with Design-Only Business Model

In 1991, while working for QHP, a Lafayette, California-based installation firm, Robert Kranson went to interview for a potential home automation project in Napa Valley. As the interview process began, he realized that not only would he be last out of seven applicants to vie for the bid, but also that the other candidates were more experienced.
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In 1991, while working for QHP, a Lafayette, California-based installation firm, Robert Kranson went to interview for a potential home automation project in Napa Valley. As the interview process began, he realized that not only would he be last out of seven applicants to vie for the bid, but also that the other candidates were more experienced.

Unshaken and unwavering, Kranson interviewed with the client, and despite his relative lack of experience, Kranson was selected. He was elated, and also, a little confused. So after the project began, he returned to the client and asked him to explain why, exactly, he was selected as systems integrator amidst such a talented pool.

"The client realized that I probably wasn't as experienced as the rest of the applicants," Kranson stated, "but he also said that I made up for it because I listened so well, asked exactly the right questions and then applied what I had learned objectively."

That exchange was a learning curve for Kranson, as it gave him the validation he needed to make his next big career move.

The Birth of A New Axiom

The client on that special Napa Valley project, whom Kranson would come to consider a mentor, rewarded QHP his project rights. Kranson, too, was excited to see his objective, upfront approach paying off professionally. So he decided to pose another question.

As Kranson recalled: "I had been contemplating a business idea for a while, so I decided to ask my client his opinion. I asked, 'What do you think about establishing an organization dedicated only to providing consulting services for the lighting and architectural electronics industries? A company that asked the right questions, listened to the answers and then came up with a project plan that was able to reflect the clients needs and be completed un-vested from the suggestions and products.'

"And the client replied, 'Bob, I think that is brilliant.'" And that was just the affirmation Kranson needed.

In 1991, following his instincts, Kranson exited QHP, and joined forces with lighting design expert Dana Dornsife, with whom he had prior consultation exposure. Together, Dornsife and Kranson co-founded Axiom Design.

Breaking ground as the first design-only firm servicing the residential marketplace, Axiom created its proprietary blend of systems design, consultation and documentation for custom electronics installations.

Kevin Mikelonis was another figure integral to Axiom's growth. His role in the company initially was that of project manager and technical liaison. Mikelonis was also a critical figure in the pioneering effort of producing Axiom's first design documents. In the past decade, Axiom has gained prominence and prestige in the industry, forming symbiotic relationships with manufacturers, architects, and dealers/installers alike. It also values its educational contribution, making itself a presence in annual CEDIA EXPO workshops and training sessions, teaching industry members the virtues and values of design and documentation.

The Axiom Anatomy

Axiom Design has three distinct design departments, none of which sell anything other than its expert advice.

The first unit is the systems design department, which focuses on designing local and distributed audio systems, local and distributed video systems and dedicated home theaters. The systems design department also creates strategies for communication systems, inclusive for voice and data, heating and air conditioner control systems and design for Premise Systems security, site surveillance and access control.

Axiom's second department is its lighting design department, who gets involved in the design of lighting specifications and lighting controls. The lighting designers configure everything from fixture specs to lamp types, even a bulb's lamp's spread of light. Basically, every detail necessary in specifying the necessary architectural details to create a lighting effect.

Finally, Axiom has an integration department it utilizes to program all of the AMX- and Crestron-type integrated control systems and develop innovative interfaces.

Axiom's services are hired by end users and architects, as well as design/build contractors. Its business is split between new home construction and significant remodels.

Design, Only

Axiom currently staffs 20 employees in its Pleasanton, California headquarters, and project manages jobs nationally and internationally, including recent work in Hong Kong and Hawaii. Additionally, it performs contract administration for dealer/installer hiring. But it never involves itself in on-site systems installation or pulling wires.

"As a consultant on a project, Axiom's role is as the specialist. A client specifically hires us because he or she knows that Axiom is a specialist and that we are excellent at what we do," Kranson remarked. "It is no different from how a person suffering from back pain may start off by seeing a general practitioner, but will ultimately see an osteo-specialist or someone who will assist their specific problem."

Kranson believes that if someone could ask clients the right questions from the very beginning, a true vision of the client's needs would emerge. "If the client doesn't think that I am asking the questions because I am trying to drive the price of the project up, we can get a clear and true picture of what their needs and expectations are," Kranson stated.

More importantly, if Axiom recommends a product or solution that's seemingly very expensive, clients realize there is a pragmatic reason why. Because everyone knows that consultants don't make money from product sales.

Virtues of Design and Documentation

"A client hires us because of our objectivity. They notice our general approach, and they respect that," Kranson stated. Axiom's methods set a tone about the level of professionalism that needs to be followed through on a project. Clients realize that they are going to be educated and perhaps, even gain something from the experience.

The Axiom team also believes that the presence of a designer adds a whole new dimension to the residential systems installation process. It provides a proven method of capturing information and documenting expectations.

"Many people speak very eloquently but in a very technical manner," Kranson stated. "And what we are trying to do is simplify the explanation process so we can demystify it. There can be a whirlwind of information where the client becomes greatly confused, which leads to the client making rash decisions. And everyone knows that rash decisions may cause a dealer to ultimately install something that doesn't represent what the client wanted. Axiom's documentation ensures that never happens."

Another benefit of design is seen in the potential scope of projects. Kranson noted that when his team first started he realized that some kept getting very large in scale, much larger than when he worked for QHP.

He came to recognize that when design is provided upfront, projects tend to increase in scale. And more critically, that it is due to education.

"It is all about educating a client. When you are the client's advocate, you don't have your hand in their pocket. Your sole focus is on identifying their needs and wants and recognizing their attitudes toward different things. This relationship actually increases the scope of the project because they know you are on their side, and you are finally exposing them to what is available to meet their needs. You are letting them buy in because you are allowing them to be responsible for their own needs. After all, they are the ones that told you what they wanted in the first place."

Axiom prides itself on eliminating the distress of underselling or overselling to avoid sticker shock, as product margins have no impact on a consultant's bottom line.

Another reason Kranson contends he is equipped to fulfil clients' needs effectively is because of the "off site time" and "thinking time" unique to residential installations. This off-site time requires a critical set of skills, specific types of people and different ways to communicate that information in order to do the job correctly. The staffing requirements for that are different from the needs an on site project manager who is managing a group of installers who are pulling wires. For all of these reasons he is confident Axiom's consultation structure is best suited and most conducive to success.

Necessity Breeds Invention

Kranson asserts that his business was developed as, and continues to be, a product of necessity. Dornsife and Kranson recognized a huge void in the residential integration realm in the early '90s, because there was no one to provide their services. But beyond that, because no residential integration consultants existed, it would have required a fair amount of missionary work to educate clients and fellow industry professionals on the virtues of design. The commercial industry has had consultants for decades but in the residential industry there was a total dearth.

Also, Axiom views its specialty focus as an alleviation of the growing pains associated with the residential systems industry's organic expansion. According to Kranson, when this industry shifted paradigms and moved from boxes to systems, it morphed into a segment that needed specialists. Because things have become so comprehensive over the years (which included people wanting to do many different things) its resulting complexity necessitated a real demand for design and consultation to ensure project integrity and follow-through.

Initial Resistance

During its incubation period immediately following conception in 1991, Axiom met with initial resistance, due to what some deemed as its unproven and unprecedented business model. Besides the lack of consultants and designers in the residential arena, manufacturers and dealers alike saw in Axiom a new paradigm, which challenged existing notions of proper procedure.

The initial trepidation hinged on one main point: how could Axiom charge for design when usually firms don't charge any fee for design?

Another element of confusion came from dealers whose main revenue was drawn from margins made on the equipment they installed. If they weren't going to be installing equipment then they can't be guaranteeing revenue...right?

Additionally, with perhaps the most detrimental connotation, some systems integrators thought Axiom was encroaching on their territory and/or getting in their way of a potential bid.

"Dealers initially didn't think we could co-exist with them and not steal their business," Kranson stated.

But immediately after conception, Axiom started becoming successful as it expanded upon great opportunities. After a few years, the reps and dealers who initially didn't think it had a place in the market began to see its name everywhere. Dealers who worked with Axiom on projects also reaped the benefits of having the design and documentation handled for them.

The test of its viability in the marketplace came, simply, as Axiom's success continued and its reputation grew.

"Integrators began to call up and try to get on projects where Axiom had already been hired," Kranson said. "It was a shift. People recognized the reality that not only can we all co-exist, but we can help each other do our jobs better, faster and more cost effectively."

Creating a Win-Win Dynamic

Kranson is quick to enumerate how dealers benefit by collaborating with consultants.

"If you get a situation where you have an integrator and a designer, you will have the best of both worlds," he said, "because you now have an unified team effort."

An analogy he often shares with dealers and integrators is also one that Kranson uses with his Little League kids: "Team stands for: Together Everybody Achieves More."

"The team benefit occurs when you take a consultant who understands his/her trade of design, development, documentation, and then combine that person with an integrator who is being asked to be the best of his class, pull all the wire correctly, source all of the equipment and be able to do so in an efficient manner. It really allows both companies to leverage each other. Plus, it allows the ability to work in tandem."

And Kranson doesn't fear the possibility of redundancy involved in the process. "The client wants a system that at the end of the day just works. With manufacturers coming out with products twice a year, last year's model may not cut it on a project. So what Axiom is able to do is confer with the integrators and test to see what products will work best. We beta-test in house, confirm product viability and when the implementation time comes there is no question of success." Also, Axiom devotes energy to writing programs for reusability and universality for multiple applications, which saves integrators time and resources.

Additionally, documentation and design provides installers with clear roadmaps of what needs to be done. And that understanding speeds project completion, which ultimately leads to more profitability.

The Axiom advantage lets installers focus solely on systems connections, because they don't have to spend that time coordinating services with architects, interior designers and general contractors. "All that work is being done for them," Kranson said. "Integrators are simply being asked to execute."

Influencing Distribution

Over the last decade Axiom Design has molded special relationships with product manufacturers. Manufacturers understand that it isn't going to sell their products directly, but they do realize that it influences buying decisions and augments increases in sales. Therefore, manufacturers such as Lutron, Vantage, Crestron and AMX, among others, continually educate Axiom on their new product developments.

"When manufacturers realized that consultants exist and actually 'get it' they looked at us more closely," Kranson said.

Axiom also created a bit of crisis for some manufacturers who, in the early 90s, were selling only through authorized dealers. "If you have a consultant who is recommending a product on a project and that appointed dealer isn't the dealer in that territory, there is a problem."

So Kranson believes that this reality shook the paradigm of having only one dealer with access to specific products, which Kranson contends influenced the move to distribution at some level.

The Executive Level

As general manager, Patti Brosnan oversees day-to-day operations and the financial picture of Axiom. On both operations and finance, she works second in command to Kranson and closely with him on financial decisions based on the data she prepares. Part of her operations duties involves methods for how things function, while the other part involves ensuring that Axiom designers have the supportive environment they need to successfully manage their projects and provide quality customer service.

During the past five years, Brosnan played an integral part in making a name for Axiom Design's graphic user interface designs. With an undergraduate degree in graphic design and several personal design accolades, Brosnan parlayed her knowledge and experience into innovative touch panel layouts. Her team's hard work continues to pay off, as Axiom's touch panel designs are what the company believes earned them new recognition within the home automation industry.

Additionally, Brosnan has recently implemented new procedures, based on Axiom's identified financial and operational needs. She works closely with various managers refining each department's workflow process. "By examining our processes, we're identifying productive measures and eliminating inefficient efforts," Brosnan stated.

"Addressing the financial picture, operations and customer service all at once, I am heading up company-wide contract administration to ensure the proper documentation is consistently exchanged and properly shared. By increasing communication between accounting and the project managers, our receivable turnover has significantly increased.

Clients seem to appreciate the clarity as well. Designers are very clear on the dollars/time associated with their project and aren't as likely to go over estimated amounts. In turn, designers keep open communications with clients regarding project status and expectations. Everyone seems to benefit from effective contract administration, which includes clients as part of the team," she said.

Another Barometric Reading

Earlier in 2002, original co-founder Dana Dornsife decided to depart Axiom Design to pursue personal endeavors. While her colleagues miss her tremendously, Dornsife's leaving caused no structural rift on the executive level.

"When you spend a whole decade with someone, you grow, mature and learn with them," Kranson stated, "so personally, Dana is really missed. And professionally, she did such an unbelievably phenomenal job at running the company that she did exactly what an executive is supposed to do: create a self-sufficient environment where you can be replaced and have the organization survive. In many ways she is kind of my hero, because she was able to build Axiom up and be integral with its success, and then follow through with an exit strategy. It is very special."

Dornsife's painless departure acts as a barometer for how significantly Axiom has grown. According to Kranson, Dornsife probably couldn't have exited the company five years ago without causing a ripple effect, but leaving this year was painless, adding further evidence of the strength and viability of the company.

Looking Ahead

The Axiom team already feels that it is evolving into a leaner and meaner, team-based machine, which should be a solid company attribute for future growth.

Constant growth continues to allow executives to increase staff and continue refining their work flow process to produce more accurate work in less time.

"I look forward to the onset of our START initiative as it will bring to fruition the numerous concepts we've been practicing all along," Brosnan stated. "I expect Axiom will continue to employ the best talent and continue leading the industry with forward thinking strategies and intuitive solutions."

Recently, Kranson brought a CTO on board. Mark Scovel, an independent programmer who consulted with Axiom on previous occasions, was deemed the perfect person to join the Axiom team. "Mark Scovel shares my passion for being the absolute best of class," Kranson stated. "He loves to ask questions and, actually, he asked me questions about Axiom that I had never been confronted with before. And we both believe in the adage, 'Am I doing the right thing, and am I doing it right?'"

So Axiom created a position for him as the chief technical officer, with a role as a leader and developer in integration procedures and programming preparation.

The Axiom crew, excited by Scovel's addition and bolstered by industry success, refuses to rest on its laurels. It is devoting energy to its START initiative, a proprietary scalable programming platform, scheduled for launch in the near future.

"We have a fun team that is talented and always conscientious of doing things better for the benefit of the client," Brosnan stated. "I believe it is that attitude that keeps us on top."

Margot Douaihy is managing editor of Residential Systems.

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