February 1998 Marketer Articles

Marketing Futures: The Dynamic World Ahead

By Jerry Yudelson

I would like to make a dramatic prediction about the future of external marketing for the A/E/C industry. Are you ready? Nothing will change much! Except that everything will change a great deal! Are these contradictory statements? Not really. Marketing will still be a skill set and a mental activity that focuses on effective, persuasive communication with those people and entities with whom we want to do business, but the context in which we market will change radically.

So where will the changes occur? Here are a few safe predictions.

1. The Internet/World Wide Web will dominate most of what we do. We need to keep abreast of changes, plunge in, and get our feet wet. This means

More than 50 years ago, French Jesuit philosopher Pierre Teilhard de Chardin coined the term "noösphere" to designate what separates humans from the "biosphere," namely our ability to be in touch with people around the world simultaneously. He was an early visionary of instantaneous worldwide communication. What he envisioned is now our everyday reality, yet most of us do not have a game plan for taking advantage of the Internet's marketing potential.

2. Collaboration will be the overwhelming reality for most firms, yet most of us do not know how to create, maintain, and build on effective collaborations. We talk a lot about teams, but mostly we work as individuals, doing separate professional tasks and not really collaborating. A/E/C firms must learn how to collaborate and supervise collaborations.

In my firm, we're beginning to talk about how we can secure a competitive advantage by posting our drawings online (security protected with a project password, of course) for collaborative and instantaneous review by our clients. As computer screens get larger and more fine-grained, it will be possible to review on screen-from anywhere in the world-entire engineering drawings and make corrections or suggestions during the design process.

3. Time will be more compressed. We will be forced to find ways to produce our work over 16- or even 24-hour periods. To produce drawings under deadline pressure, our firm frequently puts on a night shift of moonlighters and independent consultants with flexible working hours.

Recently, we took the first steps in collaborating with an engineering firm across the Pacific by exchanging personnel for six months; such transborder collaborations already dominate the U.S. construction industry on many Asian projects. By having their engineers become knowledgeable about our equipment and methods, as well as our building codes, we will be able to go to 24-hour production of many drawings, effectively communicating changes over the Internet, secured by advanced encryption technology.

4. We'll have a bigger pool of people to tap for projects. Changes in the workforce and workplace are occurring rapidly, particularly with technical temporary and contract workers. While most firms try to maintain a stable or growing workforce, the advent of successful collaborations will cause workforces to grow or shrink significantly. Our firms will maintain a "core" workforce augmented by temporary or contract workers as needed. In case you haven't followed the temporary industry, it's probably going to do more than $60 billion of business this year in the United States.

5. Privatization will affect most public-sector work. Increasingly, we will see privatization of public works agencies in water and wastewater work, and possibly road maintenance, as witnessed in solid waste management with the growth of multi-billion-dollar companies such as Waste Management, Browning-Ferris Industries, and USA Waste Systems. Next will be jails, schools (particularly school construction and maintenance), parks and recreation, and so on. Just about every public-sector activity will come under scrutiny.

We will see the beginnings of "managed care" in public-sector privatization. Companies will operate agencies under fixed budgets and strict performance/quality guidelines following the lessons learned in health care.

For marketers, many of the old contacts and selling methods will change. National companies engaged in public works management or public-sector work will no longer be forced to advertise for consultants, and they will want consultants who can service them with a wide range of skills and geographic areas for long periods of time.

6. Design/build is here to stay, and it will grow. Much A/E firm marketing will be redirected to general contractors who will act, in essence, as owners' agents. Design revenues will fall as more buildings are designed while construction progresses, and pressure to speed up design will intensify. Large general contractors will look for A/E firms willing to work with even greater time pressure and who will be effective partners in the design/build environment. More and more technical/engineering skilled people will work for design/build contractors, changing the nature of contracting companies forever. A/E firms will lose business to the larger general and specialty contractors. Already, most of the design revenues in the telecommunications (voice, video, data) field are going to large electrical contractors and specialty telecommunications (cabling) firms who do all of their design in house. They are building experience and skill sets that, in five years, will be almost impossible for engineering firms to match.

7. Many of these trends will eliminate our companies! Don't depend on locally based XYZ Engineers to stay in business forever. The business skill sets occasioned by the Internet, collaborations, time compression, technical temporary workforces, privatization, and design/build will also demand higher quality firms with a superb command of information technology and the financial resources to stay current. This will lead to the consolidation of many local and regional firms into much larger entities, paralleling the consolidation of client businesses.

One real estate magnate I talked with estimates that 30 percent of all U.S. real estate ($1 trillion of property value) will be controlled by the Real Estate Investment Trusts which have sprung up in the past few years. In turn, these large property owners will have large property management divisions that will not want to contract with hundreds of firms for tenant improvement and equipment upgrade work. They will want regionally strong players who will be in business long enough to recover the costs of educating new consultants!

What can we do as marketers? We need to keep up with these trends and make sure that company managers and owners do the same. Cultivate a wider network of acquaintances. Go to meetings of the local or state software association, talk to accountants in the Big Six firms (who tend to get most information technology early in each cycle), get Wired or other Internet-oriented magazines on the reception room table, along with ENR and Architectural Digest, and read them.

Remember that basic marketing lessons don't go out of style. A small, general service A/E firm is a dinosaur, but a well-niched firm might last a long time. In my town, one (purposely) small architectural firm specializes in college libraries and museums; they work all over the country and are well known in this arena. The company's message and focus is clear, and its biggest challenge is to remember this core competency when considering which projects to pursue.

We can be sure of nothing about our marketing futures, except that the pace of technical and business change will accelerate. Just as it is true that the fundamental marketing concepts of "price, product, place, and promotion" will remain, it's just as certain that the contexts in which we apply them will change radically.

As marketers, the most valuable skill we can bring to our companies is to keep one eye on the horizon at all times, so that the tidal waves of "future shock" don't come as an unpleasant and even disastrous surprise. For those willing to learn the new contexts and embrace them, the rewards will be plentiful.