New Rules of Business
Apr 28, 1997
Let’s face it, readers— the A/E/P and environmental business just isn’t what it used to be. The old assumptions just don’t hold true. The old ways of doing things aren’t working. The people who can’t (or won’t) learn can no longer do their jobs. What’s up is supposed to be down. What’s down is supposed to be up. The entire industry is in flux and I believe it’s a good thing. Here’s some of what I’m referring to: Marketing. The old rule was find good sellers and they will take care of you. The problem is that good sellers also take their clients when they leave; they may have motivation problems and not produce consistent results; and you can’t find enough of them. The new rule is use a process to position the firm, one that can be implemented by what are essentially support people. Acquisitions. The old rule was that acquisitions are only for big firms, that they are fraught with peril, and that chemistry is the most important aspect of a successful deal. The new rule is that small firms are buying companies, sometimes larger than themselves; that firms are more likely to be successful with an acquisition than they are to fail; and that the financial aspects of the deal are more important than chemistry, because you can love each other all you want but if you have money problems, you’re in trouble. Incentives. The old idea about incentives was to take care of your highest performers and penalize the non-performers through the bonus plan. The new idea is that allowing yourself to think that you have done your job by penalizing the non-performers may not be good enough; that having a formularized plan that could actually pay out a share of the firm’s profits to someone who doesn’t deserve it could force you to either reform or cast off the non-performer, either of which is better than paying them less but doing nothing else. Benefits. The old idea was that benefits are a cost to be minimized, that the firm should do about what everyone else does and nothing more. The new idea (actually the oldest idea, but it fell out of fashion in hard times) is that having a better benefits program than your competitors may keep people wedded to the firm, and that the incrementally higher cost for labor is offset by the savings in recruitment fees, relocation, interviewing expenses, and downtime associated with replacing someone who leaves. Accounting. The old idea was that accounting is all about managing your business to maximize personal income and minimize taxes; that your CPA gives both personal and business advice related to your business. The new idea is that accountants probably know less than you do about how to operate a business as a going concern, and that many times, their advice about how to minimize taxes is in conflict with growing your firm. Scheduling. The old idea was that every firm should have a master manpower scheduling system, or at least some person who does all the scheduling. The new idea is that none of the old ideas work, that it’s better to break down the work force into small teams that do their own scheduling. Firm names. The old idea was the firm name has to include all of principals. The new idea is that sometimes that results in absurd, ever changing combinations of names that in some cases even sound funny to outsiders. Therefore, it’s better to pick the name of a principal who is dead, retired, or some other name, such as “Those Fabulous Consultants,” or “ZH5x9,” or anything that is more memorable. Recruiting. The old idea was that it’s unethical to recruit from your competitors, that this is “stealing” people. The new idea is that you can’t steal what you don’t own, that direct recruiting is essential if you want to have a staff, that there’s nothing immoral or wrong about it at all, and that people have their own free will. Management. The old idea was that all owners are managers, and that any job that needs doing should have a principal supervising it. The new idea is that there’s no relationship between ownership and management, that just because you are an owner does not make you a manager. Hot project types. The old idea was that infrastructure is what’s hot, and that building design is doomed. The new idea is that building design is growing at a much faster rate than is public works type projects. Office facilities. The old idea was that all the owners and managers are placed around the perimeter where they have window access, and everyone else suffers quietly in the dark. Another old idea is putting all the principals in one place in the building, a “mahogany row.” The new idea is that the owners and managers should have their offices on the inside of the space and/or use glass interior partitions, and that the principals should be interspersed throughout the office area. Stock ownership. The old idea was that who you made an owner was really a big deal. The new idea is that just because you are an owner it doesn’t mean you have a job for life. Another old idea is that stock should be sold for book value. The new idea is that book value doesn’t recognize the real value of the firm, which is more closely tied to backlog, market position, and revenue growth rate than it is to hard assets. Computers. The old idea was that computers are used for CADD, technical calculations, and accounting. The new idea is that the computer is a communication device, much like a telephone. Meetings. The old idea was the best way to communicate was through meetings. The new idea is that e-mail, telephone, and memos are in many cases more efficient and effective. Training. The old idea was that training is good, and that it’s management’s job to ask the employees what type of training they want. The new idea is that management should decide what type of training the employees need, and give it to them. Growth. The old idea was that it’s O.K. to “stay small successfully.” The new idea is that that’s a bunch of B.S.— a cop-out for people who can’t delegate or manage, or who don’t know how to grow. So the question is, which rules and ideas are you living by? The old ones or the new ones? Originally published 4/28/1997
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