Strategic thinking for AE firms
One of the biggest challenges strategic planning teams have is getting their heads around strategic thinking.
“Take your thinking up a notch,” “Think in terms of the next five years, not the next five weeks,” and “Get your heads out of the weeds,” are words I often find myself saying when running strategic planning sessions for AE firms. One of the biggest challenges strategic planning teams have is getting their heads around strategic thinking. Why? Well, most of the decisions architects and engineers make tend to deal with their particular areas of expertise, so they predominantly think from an operational or tactical perspective. They don’t often have the opportunity or training to practice strategic thinking. But taking care of the concerns of a firm requires more than just tactical thinking. These concerns include:
- Sustainability: The sustainable use of a firm’s resources (be they human or capital)
- Serviceability: Consistently producing significant value and a superb experience for a firm’s clients
- Survivability: Making enough money to pay for today and invest in tomorrow.
Early definitions of strategy were the plans that “matched” the organization to its environment.
Today’s definition describes strategy as a set of decisions and actions that leaders take to achieve organizational goals related to achieving competitive advantages and above-average profitability.
Strategic-level decisions that focus on doing things differently are what provide a sustained competitive advantage where a firm preserves meaningful differences over time with rivals.
Examples of such strategic decisions include:
- How to position a firm in its chosen markets (cost leadership vs. differentiation)
- If and how to grow, whether organically, via acquisition, or both
- Selecting what businesses and geographies to enter and exit
- Selecting a capitalization model (owner model vs. investor model)
Operational decisions, on the other hand, help a business to run effectively and efficiently on a day-to-day basis in the areas of:
- Human resources
- Finance and accounting
- Marketing and business development
- Production/line operations
Nevertheless, even when the conceptual distinction is made between the two, the line separating them is not always obvious—the distinction between the two can be hazy.
For example, what if you decide to reduce your proposal fee to beat out a rival firm? On the face of it, that would be a tactical move. But what if cutting the fee is in support of a larger strategic decision to build market share by wresting away client relationships from the competition? Is reducing the fee on that one proposal now strategic in scope? Or what if you make an aggregated series of purchases of innovative design software? And say these software purchases give the firm additional competencies and thereby alter the strategy of the firm? Would they be strategic purchases? Perhaps.
To help differentiate, ask these questions…
- Will the decision change the firm’s position in the industry?
- Will the decision involve a new business area?
- Does the decision have a significant financial impact on the firm?
- Would it evoke a significant response in the environment– that is from competitors or other stakeholders?
If the answer is yes to any of these questions, the thinking and the accompanying decisions are strategic in nature.
Why is it important?
- It begins a strategic thought process which helps leaders to recommend decisions that affect the firm as a whole and to better understand the importance of competitive advantage.
- Operational decisions can help a firm outperform the competition, but those decisions can be more easily imitated.
- Strategic-level decisions that focus on doing things differently are what provide a sustained competitive advantage where a firm preserves meaningful differences with rivals.
– This originally appeared on Morrissey Goodale’s website. Morrissey Goodale is a CFE Media content partner.
Original content can be found at Morrissesy Goodale.
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