Preparing for the competition
Competition can be a good thing, especially if it stimulates others to make themselves better; survey data shows that now is the time to think about your competitive edge.
I’ve spent most of my career analyzing strategies and developing new ones to counter the anticipated actions of competitors. Working at the Pentagon, I analyzed other countries’ motives, decisions, and actions, and built plans to ensure we were ready to respond to a wide range of events. In the geopolitical world, being caught off-guard can be disastrous for a nation, as we unfortunately learned in 1941 and 2001.
In the architecture, engineering, and environmental consulting world, being caught off-guard most often leads to lost market share, lost revenue, and sometimes, loss of ownership.
The healthiest firms prepare themselves for what could happen. They understand their local and regional markets and can identify their competitors within those markets. They understand the value of their company and how they compare with their hungry competitors. They have a formal process for assessing the market; one that addresses much more than the uninspiring strengths, weaknesses, opportunities, and threats analysis taught in every business school.
Successfully competitive companies have also built plans to infuse their firms with talented people capable of accelerating the firm’s growth. They’ve built plans for ensuring their people are educated in the latest techniques and industry trends to maximize their value to their clients. They’ve built plans for a potential ownership transition and the eventual succession. It’s interesting to note that more than 83 percent of large AEC firms are looking to buy another firm, but only 39 percent of firms are prepared for such a transition.
Successfully competitive companies understand their weaknesses and are actively working to overcome those deficiencies. In many cases, they’re successful because they’ve assembled a proactive strategy team chartered to look for competitive gaps in their business model.
From this strategist’s position, here’s a sampling of what I see ahead:
- According to Zweig Group’s 2015 Mergers & Acquisitions Survey, if yours is a civil engineering firm doing commercial development in the South region with fewer than 25 employees and earning less than $5 million in annual revenue, you might want to have an acquisition plan in place, because that’s the most sought after demographic.
- Alternately, based on the same survey, if yours is an architectural firm, I recommend developing both an expansion plan and a long-term succession plan, because only 21 percent of the companies surveyed are looking to acquire architecture firms. For your architectural firm, acquiring a design/build firm might be just the spark needed to enhance your competiveness.
What if your company isn’t prime to be acquired? According to another Zweig Group survey, more than 82 percent of the companies that attended the 2015 Hot Firm and A/E Industry Awards Conference stated they expect to grow by more than 10 percent next year. Ten percent doesn’t just grow out of thin air: These firms are likely coming after your market share. Are you prepared to compete with them?
Here are some tips for becoming successfully competitive:
- Know the value of your company. You can start by looking at your books. Make sure your financial statements are in order and that you know the status of all of your accounts. Consider having an outside assessment of the total value of your organization. You’ll quickly discover if you’re a target for an acquisition or healthy enough to expand your business.
- Build a strategy team. Designate a strategy team with your best and brightest minds. That’s obviously easier to do when you have a larger organization, but a strategy group of three or four people in a firm of 25 employees is very doable. Task them with becoming experts on the industry and the market. Make them your prognosticators of things to come. This should not be just your principals!
- Leadership is important. Your strategy team must be fully supported by the firm’s senior executives and have constant, direct access to all of your company’s executives. Remind the team its efforts must always be connected to the company’s vision and mission. Most importantly, leaders must be willing to act on the advice of this team of experts.
- Training is vital. Do you know how to develop a strategy – not a strategic plan, but a true strategy? Very few people have the experience and formal education required to do it effectively. To have an effective team, appoint a leader who’s been formally trained or send that person through a training program. Anything less, and you’re just wasting time. There are a few good programs out there, but the best ones are very pricy. Look at the course overview and if it peddles “SWOT Analysis” as the main selling point, keep looking. There’s more to a solid strategic plan than a SWOT analysis.
- Commit. Too often, companies spend precious time at some nice off-site location, discussing in which direction the company should head, only to return to the office to place this shiny new strategy on some shelf, where it gathers dust until next year’s off-site at some even nicer location. If you’re going to spend the time, commit to the results, or it’s all for naught.
“Always prepared” is a great mantra for any company in any industry. The ones that prepare for the competition are healthier and will likely fare well. Those that fail to plan will have plenty of time to reminisce about how great things were before the competition took their market share, or worse, their company.
By understanding your company’s position relative to others, actively scouting the horizon, and having actionable plans in place, your company can be successful in the highly competitive and dynamic AEC marketplace.
BILL MURPHEY is Zweig Group’s director of education. Contact him at email@example.com.