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
| Jul 1, 2014
China's wild circular skyscraper opens in Guangzhou [slideshow]
The 33-story Guanghzou Circle takes the shape of a giant ribbon spool, with the floor space housed in a series of boxes suspended between two massive "wheels."
| Jul 1, 2014
Hyper-speed rendering: How Gensler turns BIM models into beauty shots in seconds
In search of a fast rendering solution, Gensler looked to the gaming and moviemaking industries for the next breakthrough tool: Octane Render.
| Jul 1, 2014
Sochi's 'kinetic façade' may steal the show at the Winter Olympics
The temporary pavilion for Russian telecom operator MegaFon will be wrapped with a massive digital "pin screen" that will morph into the shape of any face.
| Jul 1, 2014
7 ways to cut waste in BIM implementation
Process mapping, split models, and streamlined coordination meetings are among the timesaving techniques AEC firms are employing to improve BIM/VDC workflows.
| Jul 1, 2014
Winning design by 3XN converts modernist bathhouse to university library
Danish firm 3XN's design wins competition for a new educational facility for Mälardalen University in Sweden, which will house a library, communal spaces, and offices for 4,500 students and staff.
| Jul 1, 2014
Zaha Hadid's flowing Heydar Aliyev Center named Design of the Year for 2014
The Design Museum's Design of the Year award has been awarded to Zaha Hadid's Heydar Aliyev Center. Hadid is not only the first woman to win the top prize, but the center is the first architectural project to win the overall competition.
| Jun 30, 2014
Autodesk acquires design studio The Living, will create Autodesk Studio
The Living, David Benjamin's design studio, has been acquired by Autodesk. Combined, the two will create the Autodesk Studio, which will "create new types of buildings, public installations, prototypes and architectural environments."
| Jun 30, 2014
San Antonio green lights multimodal transit center
The new 90,000-sf development will principally service San Antonio’s growing network of city bus and VIA PRIMO bus rapid transit service, including real-time arrival updates, as well as become an iconic public plaza for the city.
| Jun 30, 2014
Philip Johnson’s iconic World's Fair 'Tent of Tomorrow' to receive much needed restoration funding
A neglected Queens landmark that once reflected the "excitement and hopefulness" at the beginning of the Space Age may soon be restored.
| Jun 30, 2014
Research finds continued growth of design-build throughout United States
New research findings indicate that for the first time more than half of projects above $10 million are being completed through design-build project delivery.
