2020 has been a peach, hasn’t it? A global pandemic. Raging wild fires. Riots and looting. Facemask battles. Ongoing trade wars. Election-year shenanigans. Recession fears. Increasingly divisive politics. Everything canceled. (Lest we forget zombie deer and murder hornets.)
In a year of jobsite shutdowns, project delays, funding pitfalls, and project postponements—and with no guarantee of a more prosperous 2021—it is understandable for AEC firm leaders to take a guarded, hunker-down stance when planning for next year and beyond. It is natural for firms to focus first on “right sizing” the business by slashing investments, overhead, and operational costs.
But these positions of passivity and cost-cutting run counter to the key lessons from AEC leaders who successfully navigated their firms through past market downturns and economic events, says Scott Winstead, President of FMI Management Consulting, who’s firm last year studied takeaways and strategic lessons from the Great Recession (BDCnetwork.com/DownturnLessons).
A common mistake AEC firms make during down cycles, says Winstead, is running the firm as a collection of projects, versus a business. “It’s a subtle but very distinctive difference that speaks to the long view versus the short view, and to the notion that you can’t save your way to prosperity,” says Winstead.
The firms that came out of the Great Recession in growth mode, according to the FMI research report, focused on investing in their clients, people, and business; they diversified their services and found unique ways to outperform the competition; they streamlined their operations and put their “A” players in a position to succeed and grow the business; and they created a company culture that is nimble, collaborative, and transparent.
Winstead says 2020-21 should be no different. “If I think back to 2008 and the beginning innings of the Great Recession, I heard then what we heard early on in this scenario, which is mistaking backlog as a proxy for health,” he says. “Backlog is a reflection of work that has already been sold and booked, and is in the process of being burned off. Past performance is no guarantee of future results.”
The key finding of the FMI research, which gathered insights from more than 150 engineering and construction executives, was that AEC leaders who increased their financial investment in strategy reported higher effectiveness in operations, strategy, and overall company performance, compared to respondents who either didn’t do anything or decreased spending in that area. “Strategic thinking and planning are among the top leadership skills needed to be an effective leader during a recession,” wrote the authors of the report.
Download the FMI report, “Leading Through Business Cycles: Lessons Learned From E&C Executives,” at: BDCnetwork.com/DownturnLessons.
Related Stories
Urban Planning | Feb 14, 2022
5 steps to remake suburbs into green communities where people want to live, work, and play
Stantec's John Bachmann offers proven tactic for retrofitting communities for success in the post-COVID era.
Urban Planning | Feb 11, 2022
6 ways to breathe life into mixed-use spaces
To activate mixed-use spaces and realize their fullest potential, project teams should aim to create a sense of community and pay homage to the local history.
Senior Living Design | Feb 11, 2022
Design for senior living: A chat with Rocky Berg, AIA
Rob Cassidy, Editor of MULTIFAMILY Design + Construction, chats with Rocky Berg, AIA, Principal with Dallas architecture firm three, about how to design senior living communities to meet the needs of the owner, seniors, their families, and staff.
Architects | Feb 11, 2022
How computer simulations of vision loss create more empathetic buildings for the visually impaired
Here is a look at four challenges identified from our research and how the design responds accordingly.
Healthcare Facilities | Feb 10, 2022
Respite for the weary healthcare worker
The pandemic has shined a light on the severe occupational stress facing healthcare workers. Creating restorative hospital environments can ease their feelings of anxiety and burnout while improving their ability to care for patients.
Architects | Feb 8, 2022
Perkins Eastman and BLT Architects merge
Expanding services in hospitality, education, and mixed-use sectors to better serve clients.
Architects | Feb 3, 2022
SmithGroup elevates Mark Adams to lead workplace practice
In his new role, Adams leads the firm’s practice devoted to the design of corporate and commercial facilities.
Architects | Feb 2, 2022
Steven L. Pliam joins LEO A DALY as Design Technology Leader
Pliam will oversee the deployment and use of technologies such as computational design, parametric design, digital practice, reality capture, visualization, virtual/augmented reality, GIS and AI/Machine Learning.
Architects | Jan 31, 2022
Heatherwick Studio proposes new public waterfront site for Seoul
Heatherwick Studio was recently selected as part of the team by the Seoul Metropolitan Government to create a new sports and cultural district for the city.
Retail Centers | Jan 31, 2022
Amazon Style: Amazon’s latest innovative physical shopping experience
In January, Amazon unveiled plans to build a physical fashion store concept, dubbed Amazon Style, in Los Angeles. The e-commerce giant says the store will offer “together the best of shopping on Amazon–great prices, selection, and convenience–with an all new shopping experience built to inspire.”