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
BIM and Information Technology | Jul 14, 2015
Nation’s first 'drone park' breaks ground in North Dakota
This is one of six testing sites around the country that are developing flight standards and evaluating the utility of drones for different tasks.
Sponsored | Building Team | Jul 10, 2015
Are you the wrong type of ‘engaged’ leader?
Much of what’s written about employee engagement focuses on how leaders can help their employees become more involved at work. But what about the leaders themselves?
Architects | Jul 9, 2015
NCARB: Record number of aspiring architects on path toward licensure
More than 37,170 design professionals either reported hours through the Intern Development Program or tested for the Architect Registration Examination last year, according to a new NCARB report.
Architects | Jul 7, 2015
Why AEC firms should be cultivating 'visible experts'
A new study pinpoints the true dollar value of having knowledge leaders and market shapers on your team.
Green | Jul 7, 2015
Philips sheds new light on growing fresh food indoors
A research center in The Netherlands is testing the latest techniques in urban farming.
BIM and Information Technology | Jul 6, 2015
BIM/VDC training is more than learning the features
Training can be a taxing experience for both the class and the instructor. CASE's Nathan Miller offers four ways to make training more relevant to practitioners.
Healthcare Facilities | Jul 6, 2015
The main noisemakers in healthcare facilities: behavior and technology
Over the past few decades, numerous research studies have concluded that noise in hospitals can have a deleterious effect on patient care and recovery.
BIM and Information Technology | Jul 6, 2015
New documentary shows Legos as touchstones of creativity
The film's narrator, actor Jason Bateman, says it’s a story “about a simple toy and how its unique properties ushered in a new era of creativity for a whole generation.”
Contractors | Jul 1, 2015
ABC: Nonresidential construction spending continues growth with stellar May
Through the first five months of 2015, nonresidential construction spending is having its second best year since the Census Bureau began tracking the metric in 2002, according to ABC.
Architects | Jun 29, 2015
Getty Foundation announces second series of ‘Keeping It Modern’ grants to conserve 20th century architecture
Frank Lloyd Wright’s Unity Temple and Erich Mendelsohn’s Einstein Tower are among the 14 projects added to the Keeping It Modern grant program.
