Editorial: 34 years; 10 observations

Sep 05, 2014

Mark Zweig lists some things he has learned about the A/E/P and environmental business over three decades.

The end of August marked 34 full years working in the A/E/P and environmental consulting business. I have been a student of the industry that entire time, but have also been an owner, employee, manager, board member and consultant to firms in this business. Not everyone knows this, but my design/build/development company (Mark Zweig, Inc. – No. 3,720 in the Inc. 500 | 5000 list of fastest-growing, privately held firms for 2014) is also a provider and purchaser of A/E/P and environmental consulting services. I have designed many houses down to the smallest detail, including furniture, colors, and even the art on the walls. So, after all that, I thought I would share some of my observations of this business (and the people in it) with you:
  1. This business gives people working in it a lot of job satisfaction. People like seeing the results of their efforts in a tangible form. There is something about seeing something built – something big you can walk around on or in – that you were a part of planning or designing that you just can’t get from doing anything else. I think it is one of the big draws that keeps people in this business, and coming back to it after they leave.
  2. While architects and engineers are not necessarily all great businesspeople, they are getting better. The average firm in this business makes a 10-percent-plus pre-tax, pre-bonus profit, and a 20-percent-plus return on their equity. Not to mention the typical principal makes close to $200K per year in total compensation.
  3. We are still weak marketers. The number of firms in this business that cannot even refer to themselves by a single company name is appalling. Websites are horrible. Graphic design is terrible. Written copy is verbose. There’s way too much self-laudatory everything. We have uncoordinated business development efforts with zero management. We don’t understand search engine optimization, e-marketing, or social media. We don’t understand what influences people to buy one thing or another. In spite of the best efforts of organizations such as SMPS (and they do a bang-up job), our marketing development lags most other industries.
  4. Clients are (usually) a necessary evil but you cannot think about them in that way. Clients can be a real pain. They want what they want and they don’t always know what that is. They don’t know what you do. They call and expect an immediate response. They may not pay as fast or be as grateful as we think they should be. But the bottom line is: unless you are John Portman or Jonathan Segal, without them you are out of business. You have to make them feel important, serve them well, and keep selling them with a smile on your face, period – unless you want to find a new career doing something else.
  5. Specialization is the easiest path to success. I don’t know why higher education institutions don’t teach this (unless the teachers themselves don’t get it, which I suspect is the case). Clients pay higher prices, are more likely to seek you out in the first place, are more likely to listen to you, and you’ll not be geographically hamstrung when you are specialized. Yes, some people will feel it restricts their creativity. But the best people get creative around the constraints of the industry, organizations or project types they work on… and succeed far beyond local generalists who still believe “good designers can design anything.”
  6. No one ownership structure is universally the best. The ESOP firms are usually zealots about it. The firms with a million owners think that is best and motivates all. Sole proprietors think they need sole control for fast decision-making. Everyone is right – and everyone is wrong. And everyone is entitled to their opinions but no one ownership structure works for all firm types. Where they are in terms of their development, growth rate, needs for capital, etc., all affects what ownership structure makes sense.
  7. Everyone has costs they can cut out of their business. Everyone does. I can go in any company and look at the financials and in one day find hundreds of thousands, if not millions of dollars, of expenses that could be reduced. Do the owners and managers want to go through the pain of doing this? Most of the time, no. But it doesn’t mean a purely rational person couldn’t do it. Insurance needs to be bid. Underemployed principals and managers cut. Excess space carved off. Unneeded assets disposed of. There are costs that can be reduced.
  8. Figuring out how to charge more is almost always more fruitful than figuring out how to reduce costs. It has always disturbed me that project management training seems to focus on over-managing a meager budget when if more time and effort would have been extended on the front-end of the project a higher fee and smaller scope could probably have been negotiated.
  9. The people who work for you and with you are, have been, and always will be your biggest problem, AS WELL AS your best opportunity. That clichéed question every management consultant loves to ask: “What keeps you up at night?” can almost always be answered with: “People problems!” People don’t always behave well. They drag their personal baggage into the workplace. They don’t get along. They don’t always do their jobs. They are unhappy with their jobs or with you as their manager or leader. They have different opinions on a course of action. All of these issues will always be there. How you respond to these problems will determine whether or not you can build an organization of wide ranging talents and skillsets that can sustain itself over time and liberate you to move on to whatever else you would like to do with your life.
  10. This industry WILL adapt and change along with the markets we serve. It’s interesting to me to see firms like AECOM buying a contracting company. Or architecture firms getting into marketing consulting. Or engineering firms getting into the software business. Or environmental firms going into the temp help business. I think it is great to see firms not putting themselves into such narrowly defined boxes as they once may have because it will be the only way we can adapt to rapidly changing client organizations. I have faith firms in this business can and will adapt (at least some of them) based on the evidence I’m seeing in our industry.
So there you have it. I could go on and on and fill up all these pages with my years of observations. Maybe someday I will put it all into a new book. But truth is, if I ever have time to write another book, I’d rather write a novel based on this business so we can glamorize the profession a little! We all need to sell the sizzle if we are going to influence young people to jump in. Mark Zweig is the chairman and CEO of ZweigWhite. Contact him with questions or comments at mzweig@zweigwhite.com. This article first appeared in The Zweig Letter (ISSN 1068-1310), issue #1070, originally published 8/8/2014. Copyright© 2014, ZweigWhite. All rights reserved.

About Zweig Group

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.