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Carey Smith
Episode 129th March 2022 • Beyond Strategy • Andy McEnroe and Jenn Wappaus
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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.

Transcripts

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Hi.

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Hello and welcome to beyond strategy an ACG national Capitol region podcast

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focused on the leaders that are driving innovative change for their

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firms in and around the DC area.

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I am Andy McEnroe, one of the leaders of Raymond James as defense

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and government investment banking.

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And I'm Jenn Wappaus infinity wealth management group at RBC

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over the next several months, we are going to take you on a journey

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beyond the outline strategy.

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What we mean by that is that we are going to speak with leaders from across

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various industries in the national capital region who will help aluminate

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how strategies are formulated decisions are made and results are achieved.

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Our first episode features Carrie Smith, CEO, and president of Parsons

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corporation, a $3 billion plus.

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Market cap public company focused on providing technology-based solutions

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for the defense, intelligence and critical infrastructure market.

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You'll get to see what drives Carrie as a successful CEO.

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She is passionate about her people and customers, especially

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given the war on talent that everyone's currently dealing with.

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She will highlight the M&A activity and cultural fit.

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That is a must for companies that they are looking at acquiring

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as well as some pretty hefty organic growth goals for Parsons

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we are thrilled to be joint today by Carrie Smith, CEO and president of

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Parsons corporation, a $3 billion plus market cap, public company, focused on

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providing technology based solutions for the defense, intelligence and

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critical infrastructure markets.

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Carey, Thanks.

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for being here.

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And before we dive into your time at Parsons, let's let our audience learn

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a little bit about your background.

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You joined Parsons in 2016, but prior to doing so held a series of progressive

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leadership roles across the aerospace and defense industry, what was it that

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drew your attention to the aerospace and defense market early in your

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career . Well, first I want to say, thanks for hosting me here today.

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Andy and Jenn it's pleasure to be with you.

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Um, I would say what attracted me to aerospace and defense market early

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in my career was a flight that I had as a very young engineer with

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the special operations forces and just getting to see the importance

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and creditbility of their mission.

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It was a search and rescue mission.

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At that point, I was kind of hooked for the rest of my career.

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When in your career progression, did you decide that.

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Going beyond just leading a contract or leading a business unit that you

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wanted to lead a large business like

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Parsons.

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Well, I started as a systems engineer and an integration test engineer.

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Um, wow.

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I love that.

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I really aspire to go into management.

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I started in engineering management at a very young age and

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progressed up the ranks from there.

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Uh, once I had the opportunity to kind of develop a vision lead teams

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toward achieving that vision and being able to develop talent, those

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were all areas that I really enjoyed.

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And so moving up, the management chain was a logical step for me at a very young age.

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Carrie, as you grew in the industry, were there any leadership lessons

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or firm building skills that you leaned heavily on and where did you

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acquire the skills or knowledge?

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Well, the most important thing to build skills is to be willing, to

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try new things and to take very diverse learning assignments.

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I've been fortunate to work in multiple industries, both defense and commercial.

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I accepted assignments that allow me to work in countries all over the world.

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And I've had the opportunity to perform a very different types of roles.

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Um, my breadth of experience had assignments and engineering

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research and development, business development, strategic planning,

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operations, manufacturing, and model, both profit and loss roles.

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It's probably sounding like I couldn't hold a job, but it

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was a diverse experience, um, from a soft skills perspective.

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Um, my biggest leadership lesson is the most important attribute that you have

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as a leader is to be a good listener.

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You never have to be the smartest person in the room, but you do have to

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ask very good questions, listened to diverse opinions, and you have to be

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very decisive that after you've heard everybody's opinions, you come up with

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the right course of action and proceed.

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Um, so

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Carrie, it's no secret that the gov con market is predominantly

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male, male dominated.

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How did being a woman in leadership roles change or impact how you deployed

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personal growth or business strategies?

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Yeah, it's definitely a been predominantly male.

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Oh, it was my initial career as a systems engineer and a flight test

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engineer with the special operations.

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Um, I remember putting on a flight suit and they didn't make flight

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suits for women at the time.

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So I was rolling up the arms and the legs just to make it fit.

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So I think for me though, I grew up with a father who always taught me.

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You can do whatever you want in life.

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And that's kind of how I've always approached my career.

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My focus has always been on working hard, delivering results for customers

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and stakeholders and having a strong network across customers and industry

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podcast is titled beyond strategy.

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And you've already given us some great nuggets focused on that, but now turning

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our attention to your time at Parsons.

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When you joined the company in 2016, it was as the president the

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firm's federal solutions business.

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This was after serving as the president of Honeywell's space and defense business.

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What was your vision for the federal solutions business at the time you joined?

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Uh, also in comparison to the critical infrastructure sibling that Parsons

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has, which certainly dwarfed the federal solutions business at that time.

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Yeah as you point out Andy.

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Um, at the time I joined Parson's federal business was quarter of the

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company and critical infrastructure was three quarters of the.

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My objective was to grow the federal business into a solutions

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integrator greater that differentiated with technology and make it

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at least equal in size to the critical infrastructure business.

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So to do this, we had to make several changes.

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Uh, first we had to add a research and development investment.

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Uh, when I got here, we weren't investing anything in research and

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development or less four years.

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That's increased by 20 times.

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We also reinvigorated.

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Um, M&A process with a focus on companies that had cyber and space

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capabilities, and we've acquired over six or acquired six companies

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in the past three and a half years.

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And then by doing both the organic and the inorganic investments,

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we moved up the value chain.

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So we were able to bid prime and win more strategic solutions jobs as CEO.

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Now, my objective is to have top positions in our high growth market

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areas and to continue to be a global, critical infrastructure leader by

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capitalizing on both the United States infrastructure bill, as well as the

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growth of global infrastructure that.

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Turning the clock back because part of this strategy is helping entrepreneurs,

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other, uh, public company, CEOs, management, level individuals, figuring

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out how they drive their own strategy.

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What were some of those key day, one initiatives that you put in

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place that helped transform Parsons?

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How did you track your progress against those initatives?

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Yeah.

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So, um, day one was about five years ago, arriving here, persons,

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but I'll give you a kind of a highlight of some of the things

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that I did early on when I got here.

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Uh, the first thing was to run the business, like a public company.

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I came with over three decades of experience in public

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companies, Parsons at the time.

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Private company, ESOP employee stock ownership.

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So to do that and be able to run like a public company, I immediately needed

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to hire and promote the right talent.

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I already mentioned that we initiated research and development, and that

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was critically important to be able to drive technology differentiation

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we also focused on personnel.

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I'm a firm believer what I call people first.

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It's all about the people.

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It's all about your team, um, that enables a company to accomplish results.

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So we formed a technical fellows program.

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We've put in place a chief technology office, and we also formed a diversity

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equity and inclusion council.

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We developed a mentoring program.

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We created a dual technical career path.

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So people didn't have to jump over to the management chain.

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And we also had to transform our business development because we didn't

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have things such as a capture managers or solutions architects at the time.

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We built facilities such as skiffs and high bays.

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Uh, we developed a secure dev ops environment to perform systems

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engineering and software development work.

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And then as I mentioned on the acquisition front, we acquired companies that

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have very strong financial performance coupled with differentiated technology.

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And then probably most important was customer engagement, really having strong

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customer account management and also a engaging more with industry associations

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outstanding.

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And you've already talked about your career progression once inside the

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doors here at Parsons, obviously joined, uh, as we mentioned, became the COO

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in 2018, the president titles added in 2019 become the CEO in April of 2021.

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Soon to be the chair woman, as well as the board, since becoming CEO.

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What's one thing that you didn't expect.

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And how did you overcome that obstacle?

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Uh, that, that you may be.

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Well, I'd say first, there were no major surprises and becoming CEO.

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Um, since I was the president and chief operating officer before,

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but I would say my time with investors and analyst has increased.

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I also spend more time on reviewing and approving a sec public

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documentation, like the 10 K the 10 Q the annual report, things like that.

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That's it's fun.

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And this is even more throwing.

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No, I'm kidding.

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But I also have responsibility for managing the board of directors, um,

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where I've tried to shape the board agendas to be able to focus more

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on strategy, growth, and talent.

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Just a

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follow question.

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Your role adds the chairwoman title.

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As I noted in April of this year, does it change at all for a, for

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a business owner or for someone aspiring to follow in your footsteps?

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How would you frame.

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The CEO versus the chairwoman type

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role.

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Yeah.

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The biggest differences as the chairwoman of the board, I'll

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be responsible for setting the agendas and running the meetings.

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That's the only real change I already, as CEO had a lot

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of engagement with the board.

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So it's really just that agenda.

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Carrie, it's

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clear that you care about the people here at Parsons and leadership

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is also often only as good as the team that surrounds you.

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How did you actively recruit, retain and incentivize executives to join you on

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this journey?

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Yeah, it's a great question, Jen.

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Um, as I shared earlier, I call it people first mentality.

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Uh, we have to focus on both recruiting and retaining the right people, um, in

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order to have a successful business.

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And when you have the light right leadership team in place, they drive

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growth and they model the focus, the behavior that you want to see

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at all levels of the organization.

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So throughout my career, I've always had a strong industry network, and I

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always kept what I call an, a list of people that if I've ever moved to a

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different position or a different company.

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They were people that I would want to have on my team.

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Um, those are generally people that share my vision.

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And we're all passionate about our customer's mission and are

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focused on driving results.

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When I became CEO in July, um, I also did engage an external recruiter to hire

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a few new functional roles and after sharing our company's prospects and

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our two strong end markets, federal and critical infrastructure, our culture of

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agility, innovation, and collaborative.

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And our growth strategy, the executives that we interviewed liked

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our vision and joined the company.

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So I think we've done a good job of bringing in talent from

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the outside and also promoting.

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You mentioned this earlier in our discussion about your

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organic and inorganic components to your business strategy.

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When you assumed the leadership role in the federal business, starting with

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the inorganic side of the equation, can you tell us in our audience, the

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strategy you put in place, how you identified the targets you were looking

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to bring into the Parson's portfolio?

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Um, you know, of course, some of the greatest hits Polaris, alpha OG systems,

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QRC technologies, Braxton, echo Ridge.

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And of course my favorite black horse, you know, all great companies,

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but all with distinct attributes.

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Yeah.

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So I think the engineer in me will come out because at first, the first

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thing we do is a gap assessment.

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What are our technical capabilities, who are our customers

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and where do we want to go?

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Then we develop a one to end list and starting with company one.

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That's the company that we go after.

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Um, in the sec newly revised list that we work with.

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We like to work with companies that we know have a strong cultural fit.

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So they'll work well with our folks.

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And we'd like to close deals on an exclusive basis and not go

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to auctions if we don't have to.

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Um, so that fit and that understanding or foundational.

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We know if we have a similar approach and we have a shared commitment to

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mission, to innovation and our people that the rest kind of falls in place

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and it'll be a successful acquisition and a successful integration.

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So starting with Polaris alpha, um, what we were kind of missing there, we

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wanted to enhance our space capabilities.

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They brought space, situational awareness.

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They brought additional cyber security, data analytics, cloud capabilities.

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OG systems was next with geospatial intelligence and threat analytics.

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Then we acquired a QRC technologies to supplement our RF portfolio and

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specifically situational awareness Braxton, uh, was a significant

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acquisition in that they really helped us with ground systems as

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well as resiliency and had a presence on many, many different platforms.

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Echo Ridge was.

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Because they were a smaller technology play where we did an assessment.

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And we said, if we had to develop this capability in house, what

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would it cost us for spying it?

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So they brought assured position, navigation, timing, capabilities,

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and software to find radios.

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And your favorite Andy Blackhorse solutions has been outstanding.

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They brought cyber electromagnetic spectrum and information operations.

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Most importantly, focused on the near peer threat, which where we wanted to acquire.

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I would also say, um, just a highlight on integration,

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even though you didn't ask it.

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Uh, we do take a different approach to integration the company.

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We like to adopt the companies that we acquire as best practices, because

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they were successful for a reason.

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And we don't want to change.

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One example of that would be that we took the recognition program,

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which was called the drive awards program from Polaris alpha.

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But we do that with all of our companies.

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What made them tick and how do we change persons to be better?

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We also keep the leadership team.

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So the companies that we buy and when they joined.

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Parsons often they get increased responsibility.

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Great example is our chief technology officer came from Polaris alpha, our head

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of corporate developments from Pluras Elpha the CEO of black horse picked up a

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lot of the business that was at Parsons.

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We put it under him to run.

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So his portfolio enhanced and the head of Braxton also picked

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up a lot of our space portfolio.

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So when we get to see this great leadership talent, it really helps.

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Well, I think

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the culture, point's a great one, Carrie.

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I mean, I've seen you transform Parsons culture, whether it's as simple as adding

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games and beer taps to certain offices, or just adopting a more open forward-leaning

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culture, if you will, into the community, which has just been tremendous to see

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and integrate being the best practices with the other companies

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that you bring in is fantastic.

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So tell us a little bit about.

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The organic side of that strategy.

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Was there a list of must wins that were central to the person's

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federal side of the business?

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Yeah, so we, we pride ourselves first on having a very high, competitive

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win rate and more importantly, um, pride ourselves on having a

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close to 100% recompete win rate.

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We feel that we, once we win jobs and we perform for our

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customers, we keep those jobs.

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And I think a testiment is 2021.

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We were close to a hundred percent win rate, um, to drive growth.

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We also, um, as we got bigger, we really said we've got to win

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a bid and win bigger programs.

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Those that are greater than a hundred million in 2021, we went over 12

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programs that were greater than a hundred million the most in Parsons history.

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And two of those contract awards were greater than two.

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Oh, that's, that's outstanding.

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And it seems like Parsons continues to climb, not only the contract size ladder,

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but the capability ladder in terms of what it's offering to its customers.

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You mentioned some of the acquisitions that have probably helped put those

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puzzle pieces together, but on both the critical infrastructure and federal

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solutions sides of the business.

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What's next for Parsons?

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Well, we're well positioned and strong and markets.

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And these are markets that have high growth rates, uh, they're profitable

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and they're enduring markets.

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Our goal is to have top positions in these markets.

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If you look on the federal side, that would be cyberspace,

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missile, defense, and C5 ISR.

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And then on the critical infrastructure side, it would be transportation,

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environmental remediation, and water and wastewater, and the way that we've been

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at work, the way that we're going to do that is what we've been doing for the past

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five years, which is continuing to move up the value chain of solutions integrator

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to your point, how do we connect the dots?

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Drive end to end solutions investing in internal R and D and then continuing

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to acquire differentiated company.

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Since this podcast is called beyond strategy, we must ask what are

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the central tenants to Parson's strategy and mission moving forward?

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Well, first our vision is to create the future and that's whether we're creating

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the future of national security or global infrastructure to deliver a better world.

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As you look at the world we're facing today, it is a

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complex security environment.

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There's adversaries challenging on every domain and we're in an economy

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that's driven by digital transformation.

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So we leverage innovative technologies to deliver integrated

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solutions at the speed of relevance.

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And I'll highlight at the speed of relevance.

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One thing that we haven't lost as we've gotten bigger is our agility as

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a company where we've got breadth and depth, like a large business, but we

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operate at the speed of a small business.

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More specifically, I'd say we have four priorities.

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First is to focus the portfolio, prioritizing those

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markets that I mentioned.

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Um, really focusing on those.

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We do a lot of things.

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We're a diverse company, but those are the seven markets that we're focused on.

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We'll continue to move up that solutions, value chain and differentiate

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through data technology and software.

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Third will capitalize on the global infrastructure spending.

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And then finally, at the market, organic growth in each of our top markets.

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And we'll supplement that with, um, a creed of M&A, we have to continue

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to achieve these priorities by competing for the war on talent.

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People first means a lot, and we have to make sure that we recruit re

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retain the brightest in our industry.

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And that we keep this culture, which I think is innovative and different at

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Parsons, where people can truly come in and thrive in their careers carry as

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we.

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Segment until the end of this interview.

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What's one lesson that you've learned from your job that you think everyone

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should learn at some point in their

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career.

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So I'll probably some repetitive on this, but I'd say the one lesson is people are

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your most important resource and it's the customer's mission and what binds us

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together towards a higher value purpose.

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We end all of our interviews on this podcast with a simple, but

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maybe most important question.

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What is.

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Important or salient thing that we and our audience should know about you.

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Carrie Smith,

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I'd say for me, work is very important, but family always comes first.

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Um, I pride myself on the fact that as I moved up the leadership ranks, I never

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missed a soccer game or a swim meet or a critical school event for my kids.

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Um, and it's the one message I try and give all leaders.

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Remember families, most of them.

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Family first.

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I love that people first, uh, within the organization as well, Carrie Smith, CEO,

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and president of Parsons corporation.

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Thank you for joining us on our inaugural episode of beyond strategy

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and ACG national Capitol region

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podcast.

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Thank you very much, Andy

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and Jenn

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Well, once again, a special thank you to Carey Smith for joining us

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on beyond strategy, an ACG national capital region podcast for Jenn Wappaus.

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I am Andy McEnroe reminding you to subscribe to this podcast, wherever

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you get your podcasts from, we hope that you will join us again.

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