Dealing with Maturity

Jul 25, 1994

Environmental consulting firms are starting to come to grips with what A/E and consulting engineering firms have faced for years— a mature marketplace. No longer is the demand for environmental services growing at a 10-20% annual rate. The whole industry is in a crisis. Meanwhile, just because architects and engineers have been dealing with a mature market (or a declining one, in some cases) for 10 or more years, it doesn’t mean they’ve all found the answers yet. Some firms have— firms like Mid-State Associates, Inc (Baraboo, WI), which has grown to over 200 employees with offices in towns of less than 12,000 people, or Carter & Burgess, Inc. (Fort Worth, TX), which more than tripled in size over a four-year period, or ADD, Inc. (Cambridge, MA), a 40-person architectural firm that declined in size but stayed profitable the entire time. Not everyone is doing so well, however. The point is, now we’re all in the same boat. But some firms have figured out how to succeed in spite of the market. Let’s take a look at some of the tactics successful A/E, consulting engineering, and environmental consulting firms are using today to make money in a mature marketplace (much to the chagrin of their competitors): They’re actively recruiting the best possible staff. This includes experienced employees working for competitors, as well as new hires coming from client organizations or regulatory agencies who can bring in work. They’re streamlining their organization and reporting structures. I sound like a broken record on this one, but the matrix is dead. Even the giant Digital Equipment Corporation has thrown out the matrix in an effort to restore profitability. The companies that are able to deal with a mature marketplace are focussing on restoring accountability through single-person reporting. They’re also trying to renew client focus by setting themselves up to address the needs of particular client sectors (sector being defined as a group of buyers with common wants and needs). And they’re saying goodbye to the “old” discipline-based structures or those set up strictly along geographical lines (southwestern region, Pacific region, etc.). They’re positioning themselves as specialists in one or market sectors. The more mature the market, the more critical it is to be perceived as having specialized knowledge of how to serve a specific market sector. Only in new or fast-growing service markets does the technology drive the consultant selection process— as environmental firms are just now figuring out. They’re keeping their eye on the business. In a mature market, you can’t always cure your woes by growing the organization. You have to figure out how to run it profitably based on the work that you can get. Mature markets require a new focus on the operations end of the business, not just the marketing end. Management must pay much closer attention to the numbers— including profits and cash flow. They’re moving closer to their clients. In a mature market, being close to the client may be the determining factor in whether or not you get the job. There seems to be more willingness again to have small satellite offices to accomplish this. What’s different in a mature market versus a growing one is that these small satellite offices are keeping overhead way down in order to make a profit on what may not be a lot of work. They’re advancing technologically, not retreating. The “old” way of dealing with a declining market was to retrench and cut back on expenses, particularly capital investments. The “new” way is to charge ahead and improve technological capabilities so the firm can become more efficient and competitive. That’s the difference between long-range success and short-range success. They’re improving their marketing support capabilities. Just like investments in technology, investments in marketing support capabilities are important, too, and bear fruit in the long haul. This means the secretary who rose to marketing manager during the good times may no longer be adequate to keep the firm on top of its game in a mature market. It means that having a good marketing database and good writing, graphic design, and public relations capabilities are more critical than ever. My best advice to any firm experiencing the trauma of a mature market is to look at the companies that are doing well in spite of it, and consider doing what they’re doing. Or, in other words, model success. Originally published 7/25/1994

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Zweig Group, three times on the Inc. 500/5000 list, is the industry leader and premiere authority in AEC firm management and marketing, the go-to source for data and research, and the leading provider of customized learning and training. Zweig Group exists to help AEC firms succeed in a complicated and challenging marketplace through services that include: Mergers & Acquisitions, Strategic Planning, Valuation, Executive Search, Board of Director Services, Ownership Transition, Marketing & Branding, and Business Development Training. The firm has offices in Dallas and Fayetteville, Arkansas.