Rethinking Strategy at the Top of the Business Cycle
Memorable Quotes from the Video:
Welcome to the fourth edition of the 2019 FMI Quarterly with our latest theme: Rethinking strategy at the top of the business cycle. It’s no secret that we’re experiencing one of the longest economic expansions since World War II, and the Built Environment has been a clear beneficiary of this prosperous time for eight consecutive years. Exactly when an economic recession will rear its ugly head is anyone’s guess, but few would argue the fact that we’re at the top of the business cycle right now.
Here at FMI, one thing we’ve noticed, both with our own clients and within the broader Built Environment, is that, at the top of the cycle, strategy tends to take a backseat while companies scramble to keep up with the projects at hand. Let’s face it, everyone is busy, and backlogs are full. And while we’d love to see this trend continue, there is no better time than now to take a step back and reflect on the bigger strategic picture.
A useful metaphor for understanding the risks that leaders in the Built Environment face during this phase of the market cycle is what mountain climbers experience when attempting to summit Mount Everest. Many climbers who perish while attempting to summit this mountain do so as a result of poor decisions made long before they ever reach the summit.
Similar to the way climbers get into trouble during the planning stages, engineering and construction (E&C) firms often get into trouble due to poor decision-making long before the market ever reaches its peak. E&C companies don’t go broke due to lack of work; they struggle in down markets as a result of the (poor) decisions made months or even years earlier.
Several of the themes in this edition of the Quarterly will challenge you to start rethinking your strategies during today’s economic phase and highlight the importance of staying true to your vision in both good and bad economic times. Authors also provide a close examination of past market cycles and compare companies that did well both at the top of the last cycle and right through the correction. You’ll learn that firms that had tremendous clarity of vision and purpose—and that stayed true to those business fundamentals—performed significantly better than those that didn’t.
Another article deals with the subject of compensation—a hot topic in today’s market where limited qualified labor is an issue for all companies. You’ll learn the value of structuring compensation plans based on incentives and better aligning these plans with company and individual goals.
As we move into 2020, we do understand that everyone is still busy, and that we’re all making hay while the sun still shines. However, there are clouds gathering on the near horizon. Rather than be caught off guard, be prepared. We wish all of you the best of luck in 2020…and beyond.