The first quarter of 2025 is closing, and (depending on where you are) Spring has either already sprung, or it’s teasing its approach. Change, too, is everywhere: advancing, arriving, arrived.
I’ve been out on the road a lot this month – working with clients on the things we do (strategic planning, leadership development, improving operational results). We’ve been in retreat centers and executive conference rooms, had lively discussions with mid-level managers and staff, and conducted a bunch of individual, personal interviews with principals and shareholders.
Concurrently, I’ve also been immersed in research – the background work we do to better understand our current reality in business (and life), looking out for change and disruption on the horizon, and working to make sense of it all. Books, magazines, podcasts, videos…
Adding it all up this month, I see a new disconnect between leaders of professional services, and those in most every other industry. These differences (in engagement, understanding, consideration, and planning) concerning the future are many. Here are a few things, top of mind:
Economic Uncertainty – we are, most certainly, in a moment of uncertainty and potential economic turmoil – but it hasn’t changed the behavior of most AEC professionals.
Construction costs are up, trade and tariff policies are a wild card, global political turmoil is high, consumer confidence has tumbled, and the stock market is off a good deal from its recent highs. Businesses can often adapt to both up and down markets – but uncertainty hurts most all of them.
We have seen some recent anecdotal evidence of a slowing of projects, but the overwhelming sentiment remains business as usual, all hands-on deck. This is expected: a project-based firm remains quite busy, right up to the time that it isn’t. So, perhaps this is a moment for firm leaders to look more critically at bookings, backlog, and project vulnerability. Where we’ll be (politically, socially, and economically) six months from now is a crap shoot – but some ‘what if’ scenario planning might help right now.
A Lack of Selling – professional services leaders invest much of their sales and marketing effort in building long term client relationships. This is the core of the model, and it’s long made sense. Most clients (80% or more) are repeat, and trust, comfort, and satisfaction are important considerations with the buyer. Additionally, most firms are today fully booked, and executing projects they’ve already won. The ‘why’ of acquiring more is not so obvious or instinctual, and the marketing switch might even be fully turned off.
If so, this is wrong. In these uncertain, changing, and disruptive times, many businesses (in most other industries) are way more tuned in to finding new customers, upgrading their offerings, and strengthening client portfolios. These organizations are, it seems, skating towards where the puck is moving, not to where it is right now.
Exacerbating this challenge in professional firms, we’re also in the midst of a much larger, industry-spanning, generational shift in responsibility – to a new cohort of business leaders and owners. Too many in this up-and-coming group haven’t yet developed the business and client skills they’ll need for long-term success. Whether or not existing rainmakers can win is not the issue – it’s whether the firm is any good at creating new rainmakers.
Most firms should, we think, be investing more today to assess and upgrade their clients, focus more on the specific types of clients and projects they’ll pursue, find and build new client relationships, and train and mentor staff to contribute more to the overall business development effort.
Technology Skepticism – I am only now beginning to really appreciate the power of AI (LLM) technology in my work – as a research assistant, draft writer, and strategic business partner. [Just this morning I had, yet again, one of those ‘ah ha’ moments around just how fast and helpful these AI tools can be.] And yet, while many market sectors are today racing ahead with adoption and change (including even a radical rethinking of technology over talent), it’s pretty slow going in the professions. This is partially predictable: professionals (including architects, engineers, scientists, and planners – as well as lawyers, doctors, and management consultants) closely define their personal identity through what they do (and how they do it) at work. Replacing this core professional value with a machine – no matter how smart and how logical – was never going to be easy.
Still, many firms can and should be moving much faster with AI. Some industries are making huge bets here, and the impact on talent, project delivery, operations efficiency, and bottom-line results – will shortly be (we believe) quite astounding. [Recently, we’ve been predicting that median industry revenue per head will double in the next five years]. Law, medicine, accounting, and banking will all be rapidly transformed through intelligence technology. Why not the design, technical, and project delivery fields as well?
Indeed, there are challenges in this: errors and omissions, plagiarism and copyright issues, hallucinations and other inaccuracies – but these models are improving at warp speed (often in a matter of months). And we note too that those industries closest to the action – the technology firms themselves – are the most bullish with adoption in their own businesses (will there be any human coders after this year?)
In 1995, my Big Oil employer decreed that employees could not use the internet on company computers. That same year my graduate marketing-management professor posited in class that no one would ever use the internet to buy or sell anything of value. Predictions with technology are risky – and sometimes don’t age so well. That said, here’s mine: in just the next two or three years, we believe that up to half of what design and technical professionals bill their time on today will be accomplished (or substantially assisted) using AI automation. That means, of course, that someone (either the firm or the customer) stands to capture a windfall of profit or cost. Who will it be?
Our recent experience has us wondering who is right and who is not, and what is missing in understanding these short and long-term changes afoot. In one sense this wonder is not for us that new – our book Fast Future! Ten Uber Trends Changing Everything in Business and Our World focused on these very questions, and it’s now ten years old. That said, this moment, in early 2025 – feels really different. The exponentially accelerating world we predicted in 2015 is now truly here – and it’s gaining more, faster and faster, every day.
Economic volatility and uncertainty, insufficient focus on business development, and the rapid arrival of AI technology are today complicating the baseline challenges of running a professional services firm – developing talent, delivering projects, satisfying clients, and making a buck or two along the way. Nothing here is getting any easier …
A new season is arriving – or it’s already here. Change, my friends, has sprung.
