Dear Reader;
Some of the most dangerous assumptions in business are the ones that sound perfectly logical: More backlog is always better. Fee pressure means your price is too high. Leadership and management are basically the same thing. AI belongs with IT. And a lower acquisition multiple means a better deal. Look a little closer, though, and conventional wisdom can lead an AEC firm in exactly the wrong direction. Here are five ideas to challenge your thinking about what really drives sustainable growth, profitability, and competitive advantage.
Do you have any questions about any of these tips? Perhaps you wish to share some feedback? Maybe you need some guidance or support on a challenge that your firm is facing? Let me know in the comments.
Growth hides a lot of problems.
When an AEC firm is growing rapidly, it can create the illusion that the firm's underlying operating systems are working. But dig deeper, and you can find things like weak project management (but new projects keep replacing the lost margins), pricing problems (but volume growth produces enough revenue to offset lousy fees), weak business development discipline (but a strong market generates plenty of opportunities anyway), and overhead creep (but growing revenue makes it appear manageable). Don’t confuse growth with health. Conduct a full financial performance benchmarking exercise and start asking hard questions about what happens if revenue growth stalls.
Hire for potential, not just credentials.
In AEC firms, it’s easy to hire based on what’s visible on a résumé (e.g., years of experience, technical credentials, and project history). But the people who create the most value over time often have something harder to measure: the potential to learn, adapt, and lead. In the interview and screening process, assess a candidate’s curiosity, initiative, and willingness to grow. In other words, don’t just solve for whether they can do the job. Solve for what this person could become in the firm. Situational interviews are a great tool for this. Ask about a difficult situation or unique challenge. At PSMJ, we have created Harrison Assessments specifically tailored to key AEC roles to articulate an individual’s trait set as it relates to high-performing AEC professionals.
Accountability starts at the top of the org chart.
People tend to mirror what leaders consistently demonstrate, reinforce, and tolerate. If senior leaders miss commitments, avoid difficult conversations, or excuse poor performance, it becomes difficult to expect accountability throughout the organization. In a healthy AEC firm, accountability isn't about blame. It means setting clear expectations, following through, addressing problems early, and recognizing strong performance. The best place for firm leaders to start is by asking: “Are we consistently demonstrating the accountability we expect from everyone else?"
Stress-test your strategic plan with this simple question.
The strategic planning process is largely designed to define a firm’s desired future state and then build out the specific strategies and tactics to get there. But, once you have completed that, there is one more step. Stress-test the plan by asking your leadership team, “What would have to happen for our plan to fail?” This question forces everyone to identify the assumptions underneath their strategy (e.g., on the economy, hiring, backlog, clients, technology, etc.). Once those assumptions are visible, leaders can stress-test them: What happens if revenue grows only half as fast as expected? What if a key market declines? What if we can't hire the people we need? What if AI changes how clients buy our services? The goal isn't to predict the future, but to ensure that the firm has thought through the future scenarios and is ready to adapt should they come true.
Is your business development model still built for yesterday’s AEC world?
Many firms are still relying on a business development model centered on traditional relationships and a relatively small number of senior people who “own” key clients. The AEC marketplace is changing. Just like we’re seeing a wave of retirements in AEC firms, we’re seeing the same in client organizations. Additionally, clients have more choices, information is easier to access, new competitors are emerging, and digital channels and thought leadership increasingly shape how firms establish credibility. Has your firm institutionalized business development beyond individual relationships? Are you developing the next generation of client leaders to “zipper” client relationships with multiple touchpoints on both sides, or does business development still depend on a handful of people who happen to be good at it? If your three biggest rainmakers left tomorrow, what would be the impact on the firm?