Examining the Upside of the Upside Down
By Gregg Schoppman, FMI
Sun Tzu, the author of The Art of War, was a military strategist and tactician that lived thousands of years ago. Yet he is arguably one of the most studied individuals by military minds, business leaders, coaches who leverage his countless principles and theories to drive or optimize for success. While there are many barbaric and insidious strategies in Sun Tzu’s mantras, the quote “In the midst of chaos, there is also opportunity,” appears to strike a chord in these challenging times. Most likely referring to a military force striking an enemy during a time when their forces appear in disarray, we can all use this refrain as businesses attempt to craft a new strategy amidst these challenging times.
COVID-19 has taken so much. Whether it is the loss of life and millions of sick individuals, or the deeper economic ramifications of the “Post-COVID-19 Shutdown” that continue to evolve. Given our druthers, I am sure every human would opt for a year where no pandemic required life to alter so greatly. However, Sun Tzu’s quote might have a deeper meaning for the world. English theologian and historian, Thomas Fuller, had a similar quote that has a similar theme – “It is darkest before dawn.” Great leaders recognize the pain and agony of any horrible situation but it is the greatest of them that identify the positive to create opportunity.
The Markets
Jay Bowman, Principal and Leading Researcher at FMI, has used another descriptor that may provide context for future strategy. “Bears and bulls exist in all economies.” Bowman references this quote when examining the last great recession:
Figure 1 – 2006- 2011 Percent Change in Construction Spending Put in Place (US Total) SOURCE – FMI
His thesis is that even during the Great Recession, there were markets that thrived and grew. So much of the first half of 2020 has been focused on playing defense, whether it be against COVID-19 or simply battling the market forces. Strategies are tested all the time and markets are hardly static. In fact, there will be opportunity for nimble and agile businesses to be successful in the new normal. However, the great businesses do not sit still and wait for the market to come to them. There is no crystal ball that will help these businesses prognosticate on what the market foretells in the coming months, but the successful ones will act decisively and with purpose.
Productivity
Two inalienable truths have become evident in 2020 – a deeper appreciation for statistics and hygiene. As the world learned about distribution curves (and flattening them) it also became keenly aware of hygiene principles that we probably should have had before COVID-19. That being said, the construction industry has seen an amazing forced metamorphosis in a short time. Starting a day’s work has been supplanted with a new set of rules related to hygiene and distancing. On the surface, the tedious yet necessary steps could be viewed as productivity killers. However, businesses are refocusing on elements like crew size, proper planning and activity prioritization that are more deliberate. Countless times, the phrase “Activity does not equal productivity” provides a subtle reminder to field teams that ambling around a jobsite without purpose is costly. The rules will require businesses to rethink their cost structure, but it will also help create opportunities for improvement. Not too mention, we probably needed to refocus on the jobsite cleanliness anyway.
Technology
It is a safe assumption that the world is ready for more sociability and less “virtual meeting.” However, as bandwidths were taxed to the hilt as town halls, production meetings, webinars and trainings were leveraged, the construction industry learned a valuable lesson. Technology has a place and done right, teams can be as or more productive than traditional means. Technology is also not limited to these millions of online meetings. In fact, these collaborative tools are just the tipping point for other advancements to enable better productivity, better quality, safer projects and a better experience for all. While the desire is to get back to normal, organizations should also be more focused on making that “normal +.”
Cashflow Focus
The balance sheet is another financial instrument that leaders have consulted with regularity recently. As businesses “hunkered down”, controllers and CFOs poured over the data to explore the firm’s resiliency. How long and how deep could businesses thrive, surviving on the cash in the business. Additionally, collecting outstanding receivables was another area of focus. For some readers, these last two statements appear “ordinary.” Put another way, should we not have been doing this all along? Similar happenings occurred during the last recession. Businesses become hyper-focused on cashflow and cash reserves. It was as businesses “got busy,” that they became distracted. This is an opportunity that should persist long after the pandemic has left our midst. It shouldn’t take something like this for businesses to forget the basic tenets of healthy best practices.
Business Expansion and Growth
Lastly, it is clear that some businesses will thrive while others may languish. Some may languish through no fault of their own, victims of horrible circumstances. When examined in totality – markets, productivity, technology, cash flow – best in class firms will be poised to leverage opportunities either created by businesses exiting a sector, geography, or niche or capitalize through acquisition, assuming there is something marketable in a target. In the end, the market will continue to have opportunities and the firms that maintain their agility and wherewithal will be in the right position. Survival of the fittest or some other Darwinian principle will dictate who succeeds. Those firms who find the upside in the upside down will be victorious.
About the Author
As a principal with FMI, Gregg specializes in the areas of productivity and project management. He also leads FMI’s project management consulting practice. He has completed complex and sophisticated construction projects in the several different niches and geographic markets. He has also worked as a construction manager and managed direct labor. FMI is a unique and fast-growing firm of professionals passionate about creating a better future for engineering and construction, infrastructure and the built environment throughout North America and around the world. For more information on FMI, please visit www.fminet.com or contact Schoppman by email at gschoppman@fminet.com.
