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
| Jan 13, 2014
Custom exterior fabricator A. Zahner unveils free façade design software for architects
The web-based tool uses the company's factory floor like "a massive rapid prototype machine,” allowing designers to manipulate designs on the fly based on cost and other factors, according to CEO/President Bill Zahner.
| Jan 13, 2014
AEC professionals weigh in on school security
An exclusive survey reveals that Building Teams are doing their part to make the nation’s schools safer in the aftermath of the Sandy Hook tragedy.
| Jan 13, 2014
6 legislative actions to ignite the construction economy
The American Institute of Architects announced its “punch list” for Congress that, if completed, will ignite the construction economy by spurring much needed improvements in energy efficiency, infrastructure, and resiliency, and create jobs for small business.
| Jan 12, 2014
CES showcases innovations: Can any of these help you do your job better?
The Consumer Electronics Show took place this past week in Las Vegas. Known for launching new products and technologies, many of the products showcased there set the bar for future innovators. The show also signals trends to watch in technology applicable to the design and building industry.
| Jan 12, 2014
The ‘fuzz factor’ in engineering: when continuous improvement is neither
The biggest threat to human life in a building isn’t the potential of natural disasters, but the threat of human error. I believe it’s a reality that increases in probability every time a code or standard change is proposed.
| Jan 12, 2014
5 ways virtual modeling can improve facilities management
Improved space management, streamlined maintenance, and economical retrofits are among the ways building owners and facility managers can benefit from building information modeling.
| Jan 11, 2014
Getting to net-zero energy with brick masonry construction [AIA course]
When targeting net-zero energy performance, AEC professionals are advised to tackle energy demand first. This AIA course covers brick masonry's role in reducing energy consumption in buildings.
| Jan 10, 2014
What the states should do to prevent more school shootings
To tell the truth, I didn’t want to write about the terrible events of December 14, 2012, when 20 children and six adults were gunned down at Sandy Hook Elementary School in Newtown, Conn. I figured other media would provide ample coverage, and anything we did would look cheap or inappropriate. But two things turned me around.
| Jan 10, 2014
Special Report: K-12 school security in the wake of Sandy Hook
BD+C's exclusive five-part report on K-12 school security offers proven design advice, technology recommendations, and thoughtful commentary on how Building Teams can help school districts prevent, or at least mitigate, a Sandy Hook on their turf.
| Jan 10, 2014
Resiliency, material health among top AEC focuses for 2014: Perkins+Will survey
Architectural giant Perkins+Will recently surveyed its staff of 1,500 design pros to forcast hot trends in the AEC field for 2014. The resulting Design + Insights Survey reflects a global perspective.
