Changes and innovations impacting the A/E industry

Morrissey Goodale is providing A/E leaders with news and perspective on COVID-19 and its impact on the industry. This week, they discuss changes and innovations impacting the A/E industry.

Never let a crisis go to waste – Why forced innovation is better than none

Regardless of whether it was Winston Churchill or Rahm Emmanuel who coined the phrase, this crisis has created the conditions for change and innovation in all areas of the A/E industry. Here are just some of the changes and innovations that we have seen over the past five months.

• The firm becomes the virtual village. A number of larger firms have transformed their internal knowledge sharing systems into a virtual village where employees and their families proactively help each other navigate the new reality. Need someone to read to your kids while you are on another endless Zoom call in the attic? Schedule it via the virtual village and have the teenage daughter of a colleague in the Columbus office read, sing, and play games virtually with your kids in your Los Angeles living room.
• Wait, what? You WANT me to stop working!?! Folks just are not taking their vacations. There’s nowhere to go. They are too darn busy (industry utilization rates are still WAY up). And it’s taking a toll. Our workforce is slowly approaching a zombie-like state. Quality is beginning to slip; more mistakes are being made. It’s unsustainable and draining – and it’s highly probable that it will continue in some form into the fall should schools not go back. So many firms are requiring (read forcing) employees to break from work this summer to rest and rejuvenate.
• “You Can’t Handle The Truth!” Around the country, the crisis has laid bare the deficiencies in leadership teams. As one CEO told me, one of her top managers became like a “deer in the headlights” in March and April. He couldn’t or wouldn’t sell work or make changes to his team or systems or demonstrate the hustle required to navigate the New Reality. She removed him from the leadership team by the end of April. As Warren Buffett said, “It’s only when the tide goes out that you learn who has been swimming naked.”
• The end of Boomer skepticism (and leadership). What a difference five months makes. All those 60-something presidents, CEOs and managing principals who scoffed at working remotely (largely because they had never bothered to figure out how to use MS Teams themselves even though their firms were spending a boatload on the technology) have finally got religion. It would be funny except that they, as a group, had been made aware of this trend five years ago – but collectively were unable, or unwilling to lead their firms forward. Instead, we had to wait for a pandemic.
• The end of human resources management is nigh. Five months ago, there was no way any firm in this industry would hire management or difference-making talent without a physical face-to-face series of meetings. But thousands of employees have been recruited and on-boarded virtually in the industry since March. In a world where talent moves smoothly from potential via LinkedIn to full-time employee via MS Teams, HR managers and internal recruiters are being challenged to justify their value.
• Using PPP loans to strengthen communities. A number of firms have figured out a higher calling for their PPP loans. They are directing their underutilized employees – in business units that are soft or have slowed down – who cannot be reassigned to billable or non-billable work – to volunteer in their communities. They are working in food banks, driving for Meals on Wheels, shopping for shut-ins, or fixing or maintaining properties. Engineers, architects, and environmental scientists – we make a difference.
• VDI to the rescue. For most A/E professionals, their 10-hour-plus day is a non-stop bouillabaisse of technology brand names like AutoCAD, Civil3D, ArcGIS, FlowMaster, Bluebeam Revu, and a CRM/Accounting package (with the last being the software most likely to induce cries of “what the fork?!”). We’ve heard from countless firms that their pre- or in-pandemic investment in a powerful Virtual Desktop Infrastructure (VDI) has been critical in helping them to continue to serve their clients in this New Reality. It’s similar to the 2008-2010 recession. Firms that didn’t invest in BIM withered on the vine. Lesson to be learned? Don’t be cheap – invest in your future.
• Capitalism is alive and well as buyers and sellers have figured out how to make mergers and acquisitions happen in the New Reality. Consider this – through the first 13 days of July we reported 13 acquisitions in the U.S. – right on pace with the 15 deals we reported for the same period last year. Buyers have figured out how move the buying process to an almost 100% virtual model of meetings, due diligence, deal closing, and integration.

Has M&A bottomed out? The U.S. 12-month rolling average pace of A/E deals is inching back. A/E M&A was down 18% compared with 19% last week. There are plenty of good deals to be had now and buyers are proactively pursuing them.

This article originally appeared on Morrissey Goodale’s website. Morrissey Goodale is a CFE Media content partner.

Original content can be found at www.morrisseygoodale.com.

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