A shoutout to those on the leading edge

The 1995 classic All I Really Need to Know I Learned from Watching Star Trek provides great advice on how to craft a mission statement for any business. Referencing the five-year mission of the Enterprise, it encourages leadership to craft a plan that inspires employees “to explore”, “to seek out”, “to boldly go.” It’s with this pioneering spirit that a small band of A/E firm leadership teams have continually embraced new technologies far in advance of their peers over the years and have always found a way to lead the industry to the new frontier.

  • “Leading edge not bleeding edge”: It’s a phrase heard in almost every A/E strategic planning meeting. It’s generally followed by nods of agreement from the boomers in the room and mutterings of “ain’t that the truth.” And it’s indicative of the position that most A/E leadership teams take with respect to technology. In an industry that’s conservative by nature (we have famously low debt to equity ratios), we generally rather follow than lead.     
  • It’s not just an aversion to being out in front: Most A/E leadership teams – by virtue of their demographics – are challenged in terms of embracing new technologies. All things being equal, older, more tenured leaders/owners — who often carry the most weight in decision-making around strategic investments – tend to be further behind the technology curve. Additionally, even among the top design firms the focus of most leaders and managers is optimizing annual performance rather than preparing for the future. To this day it amazes me how many firms look for new technologies to be exclusively funded on the client’s nickel rather than an enterprise-level investment.
  • There have always been A/E industry pioneers: They were the ones who invested in Lidar back in the early 2000s when it was considered cost prohibitive. More recently they were the early users of drones when most of the industry remained stuck in the past. They moved their businesses to Revit while their peers remained skeptical or felt they “couldn’t afford it.” This relatively small group of firms tend to be led by a motley crew of dreamers/entrepreneurs – who are often viewed (both by their employees and their peers) as a little crazy. They tend not to thrive in larger firms as they eschew bureaucracy and received wisdom. This is ironic because it’s larger industry firms that are seeking to capture this type of talent (witness the recent crop of Chief Digital Officer or Digital Transformation Leader announcements among the ENR 500.)
  • Who needs proof of concept? These fearless firms have already experimented with 3-D printing, remote visualization, remote sensing, robotics, and digitization. The results of their investments in these technologies range from “Disappointing, we’re out” to “Still think there might be something there” to “It’s proprietary, we’ve got the investors and will be coming to market this year.” For these dreamers, proof of concept is less important than potential of concept. So, what are they exploring now?  
  • Blockchain and NFTs: While most A/E firm leaders are still trying to figure out Bitcoin (whether to invest in it and what it takes to mine for it), A/E tech pioneers are focused on the business potential of the blockchain for their own firms and their clients in governmentutilities and infrastructure. The technology stands where the internet was 30 years ago – remember those days when you used a fax to send anything urgent (but you never knew if all the pages made it through?) Blockchain will slash the inefficiencies of the intermediary steps inherent with the internet, drive down enterprise and supply chain costs while increasing quality and reliability. It’s getting a lot of attention – including from many industry leaders. And A/E tech pioneers are intrigued by the potential of NFTs to fractionalize ownership and distribute income at a much more granular level.
  • Artificial Intelligence (AI) – Opportunities: Last week Microsoft announced its acquisition of AI speech tech firm Nuance for $19.7 billion. Soon this speech recognition technology will be fully integrated into your Microsoft Teams subscription dramatically improving firmwide productivity and efficiency. Firms on the cutting edge will use speech AI to enhance communications and strengthen relationships with clients. AI and Machine Learning are already being used by designers in their work. In the future you will be using AI for your business to recognize patterns and trends and make better predictions about how to engage with your employees, improve operations and engage clients.
  • AI – The Threat: Just as AI will help you make better predictions based on data, the tech is already helping your clients make choices and decisions about you and your business. And you may not like what they find. Predictive keystroke search already exists, and next generation AI will read your client’s thoughts. So, what’s the threat? If your client is thinking “I need a data center designer” her AI enabled systems will connect her with the “best” data center A/E firms that have already synched their brands to her decision-making systems, so she connects with them first. A/E firms that “get” AI will get to the front of the line, those that don’t will get left in the dust.
  • VR/AR – mixed reality: Many cutting-edge designers and engineers are already using mixed reality on client engagements. Beyond that, a growing number of A/E tech pioneers are now integrating mixed reality into their core business management functions. They are learning from consumer brandsindustry, and government to enhance internal collaboration, foster learning, engage younger employees in business decisions, and amplify their brands. 
  • The leading edge isn’t for everyone: However, for the small group of firms that match vision, with hope with investments of capital, brainpower, and time – it’s a heady and rewarding part of their professional journey.

M&A Update: Industry M&A has shaken off last year’s spring slow down. The 12-month pace of M&A is now at all-time highs. We saw eleven deals announced this week – many by the industry’s top designers.

Take your team on a VR expedition! We’ve received a ton of requests to expand participation in our VR events beyond CEOs. So, we’ve opened eligibility for our next Virtual Reality Conference in June to CEOs and C-suite executives (folks who report directly to the CEO). So, beyond CEOs you’ll be networking and learning with CFOs, CMOs, CTOs and CPOs! This first-ever two-day themed VR Conference will focus on Strategy + Execution and M&A/Capitalization. Click here for early-bird registration pricing and for multi-attendee discounts. 

Live and in person October Texas M&A Symposium! Our M&A Symposium series is back live and in person with our 6th Texas M&A Symposium in Houston this October 21 and 22. Join us as we host at the super sleek Post Oak Hotel (the ONLY Five Star Hotel & Spa in Houston). Network with A/E executives and investors from Texas and around the nation. Get the latest M&A trends, stats and best practices from industry experts, buyers, and sellers. We’re proud to once again partner with our friends at ACEC Texas on this premier industry event. Click here for updates and to be notified when registration opens.

Who we’re following on Twitter this week: Christer Ericsson is President & CEO of ENR #64 GPI (Babylon, NY). We like both twitter accounts. We especially like how Christer constantly highlights the GPI team’s proactive support of and engagement in the community.

Questions? Insights? What emerging technologies are you exploring? Email Mick Morrissey @ mmorrissey@morrisseygoodale.com or call him @ 508.380.1868.

Four Factors to Watch

1. Economy   

The U.S. economy could grow by 6.5% this year and the unemployment rate may drop to about 5% by year end, according to the Federal Reserve. Inflation could increase by about 2.5% but it is thought that the surge will be temporary. Price increases are expected to taper off as disruptions to distribution channels are reduced and consumer spending slows after stimulus funds have been spent.

2. COVID-19 Case Numbers  

In the last week, the seven-day average of daily COVID cases increased slightly to 68,400 from 66,100 the previous week, but that number has actually dropped over the last few days. The seven-day average of daily fatalities dropped from 1,000 to 750. Seven-day averages of COVID cases ticked up in California, Texas, and Florida:

  • California: from 2,660 to 2,840
  • Texas: from 3,200 to 3,380
  • Florida: from 5,700 to 6,200

3. Labor Market  

Jobless claims fell to 576,000 last week from 769,000 (adjusted up from 744,000) a week earlier. It is the lowest weekly mark since the pandemic kicked into gear in March 2020. Claims are still more than twice as high as they were before the pandemic (about 220,000), but expectations are that claims will continue to fall as the pandemic’s grip on the world weakens.

4. COVID Vaccine Update   

According to information collected by Bloomberg, 894 million doses in 155 countries have been administered, compared to 726 million doses in 154 countries the week before. The average number of daily doses decreased slightly to 16.6 million from 17 million the week before. The number of doses delivered is enough to vaccinate about 5.9% of the global population, up from 4.7% the previous week.

To date, 209 million doses have been administered in the U.S., up from 175 million last week. An average of 3.19 million doses per day are now being administered, which is up from the daily rate of 3.04 million last week. At this pace, it will take another three months to cover 75% of the population.

Weekly real-time market and industry intelligence from Morrissey Goodale.

Read Newsletter

The AE industry’s weekly go-to source for the latest information on M&A deals and trends.

Read Newsletter

Bringing you snapshots of key market sectors, business management ideas, and must-know information for managing and leading your firm.

Read Newsletter

Brining you new ideas for impacting people performance including the latest on company culture, work-life balance, time management, developing next-generation leaders, and new management ideas being implemented in other industries.

Read Newsletter

An insider’s look at the latest trends in attracting, recruiting, retaining, and hiring people in the competitive AE industry.

Read Newsletter

A guide to help you better understand how AE firms are valued and – perhaps more importantly – what you can do to build value now.

Read Newsletter

Overviews on what industry consolidation means and forecasts for where activity, deals, and pricing is headed.

Read Newsletter

At-a-glance snapshots of key market indicators in various market sectors and geographies.

Read Newsletter

Achieve goals and outcomes and reshape your future!

Purchase Today!

Subscribe to our Newsletters

Stay up-to-date in real-time.