Management consulting firm FMI Corp. recently surveyed 230 U.S. construction industry executives to get a perspective on how the industry's leaders are reacting to the current economic climate. The result was “Strategy in the Eye of the Storm,” a report published in May 2009. Following is the report's Executive Summary.
Stocks have fallen, banks have failed, and projects are being delayed and cancelled at an unprecedented rate. Bail-outs have come, but are they enough?
The headlines continue to report bad news, raising the alarm of declining confidence and reminding us of the need to think strategically. But once it sinks in that this global crisis is unavoidable, it is often a good idea to shut off the alarms, find a quiet corner, and contemplate how to adapt the business.
In crisis, there is opportunity. Now is not the time to panic. It is time to take advantage of a rare chance to refine your business model and develop a winning strategy for the future.
Much of the construction industry is facing the most severe downturn in more than 25 years. Having enjoyed an extended period of economic prosperity, many executives have been closely monitoring the bellweather indicators to better understand what a deep recession will mean to their companies.
FMI launched its 2009 Construction Industry Strategy Survey in February to gauge how executives of the industry's leading firms were preparing for today's rapidly changing landscape. Another critical objective of the survey was to provide insight into the depth of strategic thinking among industry participants and how they were positioning their businesses for both the short- and long-term. The feedback provided a comprehensive look at how construction firms are approaching strategy and preparing for a world that will look much different in the future than it did in 2007 and 2008.
The field of survey participants was comprised of some of the most influential executives in the U.S. construction industry. We benefited from great participation from firms with annual revenue of more than $250 million. General contractors, construction managers, large specialty trade, and heavy civil contractors are all represented.
What were some of our more interesting findings?
The world is changing, and participants in this year's survey were asked to rate how much the competitive environment had intensified over the last 12 months. The questions were structured using Michael Porter's seminal work on the competitive dynamics that shape an industry.1 The changing dynamic between contractors, competitors and customers is the most stark indicator, signaling the waning of the previous market expansion and suggesting that a new modus operandi will be required to remain viable going forward.
Drastic change in the competitive environment breeds uncertainty for every company. This year's survey attempted to determine the degree of uncertainty firms were anticipating and how deep were their levels of preparation.