AE Industry Intelligence: Issue 32

Top 20 Fundamentals Countdown

Welcome back to the Top 20 Fundamentals Countdown.  This week, we present our top five fundamentals

#5:  Recognize “Failure Demand”.

Failure demand is a demand on the labor of a professional services firm during the delivery of projects, or even following them, that is a result of failure in a process.  Think about requests for information, or RFIs.  A full set of plans gets to the trades.  They report back with some problem or another, and want to know what you are going to do about it.  Essentially they have just made a request for information.  Now you have to deal with the question administratively.  In architecture and engineering projects in general, it is a frequent occurrence and industry firms often end up eating into a significant portion of the budget originally set aside for construction administration or other value-add services.  Why do design firms get these questions?  Incomplete design, uncoordinated design, designs with a clash in it— the list goes on and on.  Only once in a while does the real problem lie with the contractor making the request for information despite already having the answer.  Yet many A/E firms don’t see it that way.  They routinely place the blame downstream and therefore don’t take responsibility for the breakdown.  But once you observe and own failure demand, use #’s 4 and 3 below to attack it.

#4:  Give preference to flow efficiency.

In the A/E and environmental industry, utilization is the metric relied on most to determine efficiency.  Yet utilization is, in fact, a poor proxy for actual value production.  Staff are often so preoccupied with hitting utilization goals, they will work on tasks that are not ready to be started and finished without interruption (e.g., the client has not yet provided all of the information to carry out a task, yet the employee starts the task anyway to make sure she appears busy, thus creating re-work).  On the other hand, firms that give preference to flow efficiency (i.e., the ratio of time spent on a task to the time taken to deliver the outcome) over resource efficiency tend to live by the credo, “stop starting and start finishing.”  These firms know that value is only created when something is completed— and task-switching makes people exponentially more inefficient.

#3:  You have enough problem solvers.  Create problem finders.

Architecture and engineering firms are staffed with born problem solvers.  Problem solving isn’t just what they do— it’s who they are.  But our industry needs more problem finders.  Most A/E and environmental firms expect their staff to do the work of the firm.  Precious few expect them to improve the way the work of the firm is done.  People in most design and environmental firms simply cope with processes and tools that are suboptimal.  Improving them is not often something they consider their responsibility unless they are given a corporate directive to do so.  A simple way to begin changing that mindset is by piloting a continuous improvement program.  Request that each person in the pilot group generate one adopted improvement per month (it could be as fundamental as fixing an excel spreadsheet that constantly imports the wrong client information from the firm’s database, for example).  The employee writes down what the problem was, what he did about it, and how it improved the situation.  The entry is initialed and dated, and put in a public place for all to view.  Others who have the same problem now have the solution, and still others might improve on the improvement.  The idea is to get your staff focused on things about their work that bugs them or instances when the processes and tools they use don’t deliver the outcomes they want— then make it clear that you expect them to make improvements.  Don’t’ worry.  They won’t find this new responsibility burdensome— in fact, they will view it as quite the opposite.

#2:  Build and promote your firm’s brand.  And don’t stop.

Develop and execute a process that will position your firm as an expert in its target market sectors through a variety of coordinated ways, including e-marketing, consistent PR, original research, and consistent client perception monitoring.  We have found that an effective way to position professional service firms in their target markets is by routinely providing clients with information they can use in bite-sized chunks (think “Good Food Fast”).  Newsletters, press releases, pod-casts, and other communications should impart some wisdom or provide clients with the benefit of your firm’s experience by giving advice to the audience or informing them of important trends in the industry that will impact their organizations.  More and more of this type of marketing is being conducted on the Internet, and your firm should be building an increasingly strong presence in that arena.  Finally, don’t be shy.  Marketing is a numbers game.  Stealth marketers don’t win market share. If you are providing value, you won’t be bugging anyone, so stomp on the pedal.

#1:  Don’t simply spread it around.

View your firm’s individual businesses as though they are part of your own personal investment portfolio.  Which businesses would you invest your own money in, and why?  Some of your firm’s businesses likely feed others, so that value must be taken into account.  In any event, develop a simple filter that allows you to compare the various growth opportunities that might exist under your company’s umbrella:

• Does the business have the potential to help position the firm as an industry leader?
• Does the business allow the firm to provide superior service?
• Does the business lead to the firm being a great place to work?
• Does the firm have a champion for the business?
• Does the firm have a passion for the business?

If you can’t check off at least four of the five boxes above, apply your resources elsewhere.