Yes, the economic rebound is on the way. Guaranteed. But where, and when? If you’re like most architecture, engineering, and environmental consulting (AEE) professionals, you’ve been asking and analyzing this question for some time.
You’re not sure, and neither am I. The economy is indeed recovering, but it’s slow and fragile. Job losses have stopped, and nearly a million new jobs have been created this year (this week’s May jobs report was disappointing). Consumer confidence is growing and has this month reached a two year high. More business leaders are now planning for hiring and inventory ramp up across a broad base of sectors. The stock market has recently given back some of its run up, but remains about 15% higher than last summer, and most investors are clearly expecting a coming rebound.
I know the bigger economic story doesn’t always match up with the company’s outlook. Last year many AEE firms enjoyed loyal clients and projects, high staff productivity, and (even) record-breaking results, and quietly wondered “what recession?” This year the tables are turned a bit, and today many organizations face unprecedented uncertainty – short backlogs, slack staff, and a more difficult and competitive path to winning new work. Yes, some firms are now building positive momentum, but many others are receiving a mix of up and down signals. And unfortunately, too many AEE organizations have experienced very little improvement, and will probably need to make additional and painful adjustments in the quarter ahead. Overall, the short term AEE outlook remains mixed, and at any rate is unfolding too slowly for most.
Here’s AIA Chief Economist Kermit Baker, PhD, from the May 19th ABI press release: “It appears that the design and construction industry may be nearing an actual recovery phase … the economic landscape is improving, although not across the board, but doing so at a gradual pace. It is quite possible that we will finally see positive business conditions in the foreseeable future.”
Figure 1: Architecture Billings Index (ABI), from THE AIA
Of course, the uncertainty of the market outlook is no excuse for doing nothing. Here are four steps you can take now, to ready yourself and the firm for better times ahead:
1) Take courage. Buck up, there’s plenty to be enthusiastic about. The AEE industry enjoys many long term, structural, and positive economic fundamentals – too many to not be bullish on business prospects. Demand will recover, and supply will again be constrained. The rebound is coming.
2) Prepare the firm. Yes, the short term will be uncertain, anxiety causing, and (even) scary for some. But this is precisely why preparation now – sharpening up the firm’s operations, marketing, leadership, and strategy – will pay off big for forward-focused leaders. (Consider how the successful farmer works long into winter nights – repairing, maintaining, and improving his tools and equipment before spring). Now is the time to position the company for the planting and harvest ahead.
3) Focus on the controllable. AEE firms and their leaders should limit their attention to “the economy.” Even in the worst of business environments there is client work to be done. For most design and technical firms a couple of new projects can change the whole dynamic – and profitability – of the business. Leaders must focus on their business – operations, employees, clients – issues and opportunities that can be managed, manipulated, and controlled. Blaming shortcomings on the economy is for losers.
4) Think and act different. Come on, you know that working harder is not the answer! Reducing staff, cutting costs, doing more with less, yelling louder? Enough already! Take Einstein’s definition of insanity (doing the same things over and over while expecting different results) to heart. Use your head. Think innovation. Do something different.
That’s my take – what’s yours? How do you see things ahead? What’s working (and what isn’t) in your business today – with planning, marketing, project management, or leadership development? What are you doing now to succeed – both in the short term, and for sustainable success tomorrow?
Let me hear from you. Cheers!
