Pardon the disruption
The biggest challenge for firms—and for the industry—is complacency ahead of massive industry disruption.
Profits at an all-time high? Check. M&A multiples in the stratosphere? Yup. Backlogs stretching over the horizon? Sure. IIJA dollars ahead? You betcha. These are heady days for AE and environmental firms. Most CEOs think the biggest challenge for their firms is finding talent to meet demand. It’s not. The biggest challenge for firms—and for the industry—is complacency ahead of massive industry disruption.
“We sell paper maps, lots of them:” Said the smiling paper-map business owner smoking a cigar on the deck of his brand-new 100-foot yacht moored off his private Caribbean island in 2004. The following year NBA star Yao Ming became the spokesperson for Garmin to promote GPS products. What happened next? Paper-map sales tanked. Related, a barely used 100-foot yacht was repossessed the same year. Put another way: Prior to 2013, owning a yellow taxi medallion in New York City was a sure-fire bet to guaranteed, worry-free income. In 2012, lenders foreclosed on just five New York yellow cab medallions. Uber arrived in New York in 2013. Fast forward: In 2019, lenders foreclosed on 510 yellow cab medallions. Uber destroyed demand for taxis and in the process cannibalized the value of yellow cab medallions. Industry disruption is real and painful. But it’s the way of the world, the law of the jungle. Just as it’s better to own the casino than gamble there, it’s better to be the disruptor than to get disrupted.
External industry disruptors: The power of Facebook, Google, Apple, and Twitter is to make its users believe that they are the beneficiaries of the products and services available to them via those platforms. In reality, the product is the data gleaned from the users on the platform, which is used to sell ads to third parties. Our industry—like every other one—is viewed the same way by various vendors, suppliers, and venture-backed brainiacs. Every keystroke, every calculation is being factored into algorithms that end up on whiteboards titled “Target for Disruption—The Design and Environmental Industry.” (Thank you to the CEO I had dinner with in New York City on Wednesday night for this visual.)
“Faster, Better, Stronger:” Leadership teams across the industry are leaning into harnessing the power of disruptive tech—be it AI, ML, AR, Predictive Analytics, Digital or SaaS. The largest firms in the industry are deploying four distinct strategies—sometimes in parallel—to harness the power of disruptive technologies in an effort to be the disruptors, not the disrupted. They are investing time, treasure, and talent at unprecedented levels to remake their firms via technology. Some are selling proprietary SaaS or digital technologies either developed in-house or piggy-backed on third-party apps. Others are partnering with technology firms—from household names like Microsoft to start-ups with no name recognition but big ideas. A smaller set of leading firms has launched disruptive tech subsidiaries, while those that have the vision and the wallet are making acquisitions of disruptive tech firms. These strategies are not limited to the largest firms. Visit with any CEO these days, and they will tell you about their team’s pursuit of the disruptive tech unicorn.
Keep your eye on the ball: In his role as Director of AI & Analytics at BST Global (Tampa, FL), Hank Tran gets to see these innovation and disruptive tech initiatives play out across the industry. According to Tran, “There are three critical success factors for successful innovation or deployment of disruptive technologies. The first is to make sure there is a clear business case for the initiative; the second is to have the right KPIs to measure its progress and success; the third is to become a data-driven organization. Treat data as an asset. Use it to predict and verify machine learning outcomes. Machine learning results provide a margin of safety.” Says Tran, “Act on these results early before it is too late.”
Why digital will win: In January, industry-leader CDM Smith (Boston, MA) (ENR #23) launched Trinnex, a wholly owned SaaS and digital strategy subsidiary. CDM created Trinnex specifically to help utilities and infrastructure owners embark on their digital journeys. The firm is focused on helping clients achieve digital-first resiliency by developing innovative and powerful technology tools and products. Eoin Howlett, Vice President Product Development, explains the challenges for clients on the digital journey: “Our clients are bombarded with discussions of topics such as digital twins and AI. They know they need to go digital and are struggling to do that without distracting operations with significant enterprise tech investments and multi-year change management and implementation strategies. We see lightweight, elegant tech solutions can be transformational in how they deliver value efficiently.”
VHS or Betamax? WordPerfect or Word? Lotus or Excel? Like many firms that have highly developed, successful civil engineering and data collection businesses, the leadership team at 100-person Forte and Tablada, Inc. (Baton Rouge, LA) is focused on connecting both to create something special for clients. As the firm’s CEO Joey Coco succinctly puts it, “We have made a significant investment in advanced data collection. We’re really good on the engineering side, so it’s natural to marry them together.” The firm has been in business over 60 years and has a veritable treasure trove of accumulated infrastructure data from its legacy and recent projects. As the firm connects its GIS capabilities, data collection, and engineering capabilities, Coco says “We are moving into digital infrastructure management, which is more of an ‘ongoing’ business model as distinct to our traditional model of single, discrete one-off design engagements. It’s more of a digital subscription model where clients pay a monthly fee to access critical information.” Coco frames the associated existential challenge: “The big question is what platform do we use to make all of the data accessible to and usable for clients. It’s risky; we need to make sure that the platform will be around for the long term and that clients will trust it.”
The power of collaboration: Jeff Peacock, CEO of the perpetually innovating Parametrix (Seattle, WA) (ENR #140), sees collaboration—in two specific forms—as key to the firm’s continued successful deployment of technologies. According to Peacock, “We run parallel strategies—acquisitions and partnerships.” In the middle of the pandemic, Parametrix acquired Civil FX (Las Vegas, NV), a firm that blends civil engineering with visualization and immersive reality. Says Peacock, “The acquisition adds tremendous value to clients by allowing them to easily see and adjust alternative scenarios. Beyond that, it has really paid dividends for us in marketing and has helped differentiate us in the eyes of our clients.” In a parallel strategy, the firm has recently partnered with other firms, including Derq (Detroit, MI), a cloud-based software platform that uses state-of-the-art connected vehicle and machine learning technologies. “Our partnership brings together the Parametrix core competency of understanding the challenges and needs of transportation agencies with Derq’s AI and predictive analytics competency for the benefit of our clients.” Says Peacock, “Both acquisitions and partnerships require considerable upfront and ongoing consistent investment. When done right, the returns for both clients and the firms involved can be tremendous.”
Morrissey Goodale is a CFE Media content partner.
Original content can be found at Morrissey Goodale.