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Going Glocal: Making Money

John Mathew
JohnMathew
Product Director
BST Global
Ultimately, going glocal for a design consultancy isn’t just about expanding reach and impact – it’s about delivering positive results to the bottom line. Achieving profitability in a foreign market can be quite a challenge for firms who don’t have prior experience doing business abroad. Entering a new market often requires a different operating paradigm, but inexperienced firms can overlook this and end up impeding their return on investment. Let’s examine one last common afterthought as part of our Going Glocal blog series: making money. Common Afterthought: Making Money When consultancies are expanding internationally for the first time, it can be tempting to count on an effective collections process as the key to making money. But in reality, financial success in a new market requires a more holistic approach that considers the entire project lifecycle, beginning with how projects are initiated. Below are some tips to help you get started: Review Contractual Terms: Review how contracts are written for projects in a new market, and consider terms that can help mitigate risk. For example, look at leveraging fee types that share risk with clients and seek to bill the project in a stable currency. In scenarios where volatile currencies can’t be avoided, you may want to look into a foreign exchange hedge to protect against exchange risk. Also, payment terms should be realistic and reflect the payment culture of the market you’re entering. Assess Project Setup: Look at how you internally resource and setup your projects for execution. When delivering a project in a new market, you may bring together multiple operating units to deliver the work, including organizations that you’ve just added in your new market and more experienced organizations that live elsewhere in the firm. Some firms hit a limitation with their internal business system, in that they can’t setup up a single project that spans multiple internal organizations. They then have to setup multiple internal projects to represent the single project they’ve contracted to deliver for their client. This adds administrative burden to project management, impedes visibility into overall project status, and can lead to otherwise avoidable schedule delays and budget overruns. If this is something you’re dealing with, consider switching to an industry-focused business system that accommodates multi-organization, and even multi-company projects. Distribute Budget Accountability: As you setup projects for a new market involving multiple internal organizations, give consideration to how these working organizations have responsibility for the overall budget on a project. Some firms will hold the lead organization on the project responsible for budget performance, while other firms look to distribute budget accountability to each organization performing work. By doing the latter, you are in a position to get better insight into where project variances might arise during delivery. This often occurs in specific working organizations that spend more than budgeted and need more attention to keep the project on track and profitable. Digitize Vendor Invoices: Projects in new markets can also bring about new cash cycle challenges. For example, as you engage subconsultants and other vendors to assist with a project, it can be difficult to keep track of their invoices – particularly when the project is happening in a location that may have a new office or no office at all. Look for ways to digitize your vendor invoice routing process, whereby invoices are scanned and electronically routed around for review, approval, and ultimately vendor payments. This way you can rest assured that vendor invoices don’t go unaccounted for and lead to surprise downstream costs on the project. Anticipate a Different Payment Culture: As I mentioned earlier, entering a new market can entail getting acclimated to a new payment culture – a culture that unfortunately may be longer and have more steps than your existing markets. For example, you may now have to send out a pro forma invoice to a client and get approval before sending out a final invoice. And, you may be expected to personally visit a client in order to receive payment. Understanding the payment culture of your new market is essential to managing expectations internally and externally, as well as sharpening the business case for cash cycle improvements. Automate, Automate, Automate: If you are facing lengthier payment cycles in a new market, one way to offset them is to further automate your internal billing and collections processes. Look at streamlining the process for generating internal pre-bills that go to project managers for their review before sending an invoice to a client. This can be supported by a business system that supports electronic pre-bills that can be edited and annotated online by project managers. Also look to implement a collections system that drives and captures collections activities in support of getting paid, so that there’s better transparency and accountability, and ultimately lower accounts receivable. Making money in new markets can be challenging, not only because of longer payment cycles in some geographies, but also because of internal inefficiencies and bottlenecks that are only exacerbated by more far-reaching projects and more distributed project teams. To successfully go glocal, you must take the time to look at how you structure your contracts and projects, and manage your cash cycle, and then make the necessary improvements. Do you have any financial lessons learned from an international expansion? Let us know in a comment below! Author’s Note: This is the sixth article in a series on glocalization as it relates to the architecture, engineering, and environmental consulting industry.  

Going Glocal: Becoming One Studio

John Mathew
JohnMathew
Product Director
BST Global
In a design consultancy, you’re constantly focusing on who’s staffed, and who has availability – it’s core to life in professional services. And when you look to expand your operations, effectively managing resources becomes even more important. Are you prepared? All professional services firms manage their resources in some form or fashion. It may be done in a thoughtful, disciplined manner, or completely ad hoc and perhaps even as an afterthought. As you think about expanding your operations, know that this will cause you to lean further on your current resource management practices. And for many firms, going glocal also sparks a recognition that becoming a more integrated global practice – or, becoming “one studio” as some firms coin it – is a key strategy for better sharing work and resources across geographic boundaries and ultimately better serving clients in all markets. Let’s examine this concept as part of our continued series on global expansion. Common Afterthought: Becoming One Studio A building block for an integrated practice is a resource management discipline that goes beyond a loose, ad hoc process. To get there, there’s a three step process that I’ve seen successful firms follow: Target One Operating Unit: Choose an office, department, or studio in your firm that has an appetite for change and is looking to make resource management improvements. Focus on its active projects—those currently underway—plan them through completion, and implement an integrated project staffing and utilization management process and system in that unit. Also consider including the scheduling of leave or vacation time, so that this unit achieves basic visibility into staff assignments and availability. Extend to Additional Units: Once you’ve achieved success within one operating unit, bring in additional operating units that work on projects with your first unit, so that you can begin to extend your resource management practices to better facilitate sharing of staff across units. You may also consider including additional projects, such as potential projects and non-chargeable endeavors. This will provide full visibility into staff availability spanning both active and proposed projects, as well as vacation and other types of non-chargeable time. Integrate Earned Value Management: Now, you will have a collection of operating units that are benefitting from your new resource management framework, forming an impetus to get the rest of the firm onboard.  Consider integrating earned value management into your resource management process. This will build on the project planning discipline established in Steps 1 and 2.  Also consider leveraging your resource management system to provide resource and revenue forecasts across the firm, as you now have quality staffing plans to leverage for much better operational visibility. This three step approach can be significantly aided by an industry-focused business system, and it’s also a process that can be adjusted to align with your firm’s specific needs and appetite for change.  If you’ve struggled in the past with establishing a resource management discipline, know there’s a proven way to get traction and move towards the goal of becoming one studio. Has your firm successfully evolved resource management efforts and made progress towards a more integrated practice? Tell us more in a comment below! Author’s Note: This is the fifth article in a series on glocalization as it relates to the architecture, engineering, and environmental consulting industry.  

Going Glocal: Managing Human Capital

John Mathew
JohnMathew
Product Director
BST Global
“Companies have long had difficulty maximizing the visibility and mobility of their best people.  Managers can struggle to find the right person for a specific project, and talented workers can’t always see opportunities that might help them grow professionally and develop their expertise.” --McKinsey This task can be especially challenging for firms that are expanding operations and market reach. For the next step of our Going Glocal blog series, I’d like to explore another common afterthought post international expansion—managing human capital—and offer some tips for planning ahead. Common Afterthought: Managing Human Capital As professional services firms, one of your most important assets is the knowledge and expertise of your staff.  But keeping tabs on this knowledge and expertise, and effectively leveraging it to pursue and deliver work, is a challenge for many firms.  An already difficult challenge is made even tougher when existing staff become more dispersed and new staff is added. How can you better prepare for this challenge? Go Digital: One key to addressing this challenge is to find ways to digitize your talent pool.  How can you capture and store your employees’ qualifications in an electronic manner, so that their education, registrations, skills and project experience are readily accessible when you’re looking for the right expertise to position in a new market? Human capital management can greatly assist here, particularly when integrated with the marketing, project, and resource management functions of your core business systems.  Having employee qualifications available to the folks in your firm who are pursuing, scheduling and delivering work can greatly improve their ability to leverage talent even as the firm expands. Develop Cultural Skills: Beyond technology, it’s also important to think about other ways to develop staff as the firm looks to enter new markets.  If a new market means a new culture for the firm to understand, look for ways to grow cultural awareness amongst your staff, as well as build skills related to working with different cultures and being on diverse and dispersed project teams.  There also may be a need to grow your staff’s language skills, and perhaps add or develop multi-lingual staff. Uncover Leaders: As you develop your staff and better understand their qualifications, be on the lookout for leaders that you might tap to seed an office in your new market.  While an essential part of going glocal is leveraging talent local to a market, you will certainly want to ensure that there are experienced staff in your new market that are well-connected throughout your firm and well-versed in your firm’s operating practices and methodologies. Find Balance: Going into a new market often causes firms to think about adding staff.  For most firms this becomes a discussion of build vs. buy – that is, should we grow our staff organically via recruiting, hiring and development, or should we grow via acquisition of another firm who is already operating in the new market?  A growth-oriented firm might consider a balanced approach, leveraging recruiting, hiring and development to nurture long-term retention, while using acquisition to strategically open up new markets in an accelerated manner. Effectively managing human capital is essential to going glocal. But whether or not you are thinking about expanding your firm’s footprint, it’s always a good idea to look for ways to better leverage your talent.  After all, as a consultancy, your human capital drives your expertise and your brand, which in turn help you grow your staff and your reach. Have you had success with any of these techniques? Tell us more in a comment below! Author’s Note: This is the fourth article in a series on glocalization as it relates to the architecture, engineering, and environmental consulting industry.  

Going Glocal: Scaling the Operation

John Mathew
JohnMathew
Product Director
BST Global
As firms expand globally, one of the things they can overlook is the need to scale their operating structure and practices to accommodate doing business in a new part of the world. Don’t let this happen to you! Earlier, I shared some common considerations firms take into account before expanding internationally. Let’s build on those concepts and dive deeper into some common afterthoughts that many firms recognize after expanding and wish they had contemplated sooner. Today, I’d like to examine scaling the operation. Later in this series, I’ll discuss three other major afterthoughts: managing human capital, becoming one studio, and making money. Common Afterthought: Scaling the Operation Some important aspects of scaling your operations may not be top of mind as you look to grow your global footprint. After the fact, two things in particular can become evident– the need to add a new company and the need to setup a new currency – but with some additional planning, you can be ready in advance. Do you need to add a new company? Doing business in a foreign market can warrant a separate balance sheet.  This may be due to local legal requirements, but even if not required by the law, your firm may still want a separate balance sheet for its new business venture if you want to isolate liability and risk from your main operating company.  In order to have a new, separate balance sheet, you need to add a new company to your internal operating structure.  This company will need its own chart of accounts, which may mirror the chart of accounts of an existing company, or perhaps be an abbreviated chart of accounts if you are creating a holding company. In some cases, you may decide to leverage some accounts across your internal companies, such as tax accounts, and in all cases you’ll want to think about inter-company accounts to monitor the transactions between your internal companies and tie them out.  Beyond a chart of accounts for the new company, you’ll also want to think about how this company will be organized into cost centers, which may be departments or offices or other operating units. As you setup both accounts and cost centers for your new company, consider an overall mapping structure to bring together accounts and cost centers across all of your companies so that you can get firm-wide visibility into financial performance. Furthermore, for some firms, adding a company is a catalyst for evolving and reorganizing their profit and loss statement. Do you need to add a new currency? In addition to assessing whether or not a new company is necessary, doing business in a foreign market requires an assessment of whether a new currency needs to be incorporated into your firm’s operating practices.  The need for an additional currency is primarily driven by one of four things: 1) a project contract that requires billing a client in a new currency, 2) the need to pay vendors in a new currency, 3) the need to pay employees in a new currency or 4) a financial reporting requirement in a new currency.  If none of these drivers are relevant, you’re in luck – you don’t need to add a currency.  But if any are true, then you need to go about making that currency a part of how you do business. As you go about adding a currency, think about how the currency is going to be used – whether it be in financial reports, project status and invoices, and/or individual financial transactions.  This will have a bearing on how you want to maintain exchange rates in relation to this new currency – for example, if you’re using the currency for financial reporting only, then you may just need month-end exchange rates, but if you’re using the currency for posting transactions, then you may want more frequent exchange rates. Additionally, if you are going to use your new currency in association with projects and invoices, you may need to think about establishing new rate schedules in this currency, depending on the associated project contracts. All told, adding a company or a currency to your firm’s operating structure requires careful thought and execution.  For most firms, these are rare endeavors, so I suggest enlisting the help of an expert when you’re thinking about doing either and make sure you get it right. Do you have any real-world examples surrounding this common afterthought? Tell us more in a comment below! Author’s Note: This is the third article in a series on glocalization as it relates to the architecture, engineering, and environmental consulting industry.  

Should We Go Glocal?

John Mathew
JohnMathew
Product Director
BST Global
Entering a new international market is not a decision you make overnight. It requires significant research, planning, and change. Is your firm prepared? To help you succeed in the international marketplace, we’re kicking off a series of blog posts about glocalization best practices and recommendations for effectively doing business internationally. Continue to follow along with us to learn how to strategically leverage your resources and fuel your international growth. Should we go glocal? You may be wondering if it’s time for your firm to go glocal, or perhaps know it’s time but want to gain additional insight before taking your first steps.  Or you might already be part of a firm that’s gone glocal, and are looking to make some course corrections. Where ever you might be on this spectrum, I’d like to share some insights we’ve gained at BST by working with hundreds of consulting firms like yours around the world.  I’ve grouped these insights into two categories – the common considerations that most firms take into account before expanding internationally (that I will address in this post), and then the common afterthoughts that a number of firms only consider after expanding and wish they had contemplated sooner (that I will cover in subsequent posts). common considerations Legal In 1977, the United States passed the Foreign Corrupt Practices Act – or FCPA – which made it illegal for companies to influence anyone with personal payments or rewards.  Further amended in 1988 and then 1998, the FCPA applies to U.S. businesses as well as non-U.S. businesses that trade securities in the U.S.  It also applies to U.S. nationals, as well as foreign nationals that are in the U.S. at the time of a corrupt act. Then, in 2010, the United Kingdom passed the Bribery Act 2010, which raised the bar on the FCPA and is now considered to be one of the toughest pieces of anti-corruption legislation in the world.  In sum, the U.S. FCPA and the U.K. Bribery Act, and other similar laws around the world, have helped drive legal considerations top of mind for design consultancies that are looking to expand their business into new parts of the world.  And beyond these anti-corruption laws, we find that globally-minded firms are focused on understanding and complying with any local legal requirements in a new market, be they statutory or regulatory requirements. Safety Beyond legal considerations, most firms carefully assess the safety of doing business in a target market, taking into account the local socio-political climate and carefully considering whether it will be safe for employees to work there.  And even in stable markets, firms commonly take the time to assess the weather, terrain and other physical conditions that can contribute to a hazardous work environment, and factor that into their market entry decision. Culture Culture is another common consideration of firms looking to go glocal – including an assessment of the business culture in the target market and the compatibility of a firm’s internal culture in that target market.  There are times that a firm will need to adjust its culture in order to better serve a new market, and attract and keep local talent. Brand A fourth common consideration is brand.  As firms look to expand their footprint, they will often look at their brand and assess its fit, differentiation, and reception in their target markets.  Sometimes branding needs to evolve in order to represent a more global practice or connect to a particular market. All told, legal, safety, culture, and brand considerations are 4 vital components of going glocal.   Any globally-minded consultancy should take the time needed to thoughtfully address each of these in their strategy. In my next post, I’ll dig deeper on what we see as common afterthoughts when going glocal – that is, the things that growing firms often wish they had understood and taken on earlier. Do you have any successes or lessons learned while planning an international expansion related to the considerations above? Please share your experiences in a comment below. Author’s Note: This is the second article in a series on glocalization as it relates to the architecture, engineering, and environmental consulting industry.  

Going Glocal: Authentically Melding a Global Brand With Local Resources

John Mathew
JohnMathew
Product Director
BST Global
Nearly 50% of architecture and engineering CEOs plan to increase their international expansion over the next 5 years, according to EFCG. Are you ready? To help you succeed in the international marketplace, we’re kicking off a series of blog posts about glocalization best practices and recommendations for effectively doing business internationally. Follow along with us to learn how to strategically leverage your resources and fuel your international growth. GLOCAL DEFINED So, this word glocal.  It is a decidedly English play on words to describe a much broader, global strategy that spans languages, borders, and markets.  In fact, the roots of this term glocal come from the Japanese word dochakuka, which can be translated as “global localization”.  Multi-national companies like Sony and McDonalds are often cited examples of going glocal, as they have tuned their advertising, branding, and offerings to the local markets they engage around the world. The Harvard Business Review has written about glocalization, stating glocal organizations have “global scale on technology, production and organization…but communication, distribution and selling customized to local consumer tastes.”  McKinsey offers a similar definition, describing glocal organizations as “multinational companies and local businesses developing business models specifically for local conditions.” To put it more succinctly, being glocal means thinking globally while acting locally. Here at BST Global, we get to work with architecture and engineering (A/E) consultancies around the world, and see firsthand how many firms are expanding globally or are getting ready to do so.  From our perspective, the firms that find success are those that figure out how to meld their global brand and expertise with a local touch and approach. Later on in this blog series, I’m going to share more detailed insight on what we see successful firms doing, but first I’d like to start with the more fundamental question: What is driving A/E firms to expand globally and embrace glocal strategies? The answer lies in some trends that are shaping the world and the A/E industry. GLOBAL A/E: GLOCAL A/E Noted New York Times journalist and Harvard lecturer, Thomas Friedman, in his bestselling book The World is Flat, describes today’s world as one that’s becoming a level playing field for commerce.  But according to renowned statistician Hans Rosling, in his study of 200 countries over 200 years, this wasn’t always the case. Looking back about 200 years, we see a world where every corner was facing a short lifespan and low income – that is, being sick and poor was the norm.  Fast forward to almost 70 years ago, and we see that after the Industrial Revolution, the Great Depression, and two world wars, the Americas, Australia and Europe have pulled away from the rest of the world towards a healthier, more prosperous standard of living.  And then coming up to present time, we see Africa and Asia making huge strides in their lifespan and income. Despite the many disparities that exist in the world today, the last 200 years have shown remarkable progress in closing the gap between “the west and the rest”.  We live in a converging world, where average lifespan and average income are increasing in all corners, with particularly rapid growth - and therefore opportunity - in Africa and Asia. Looking ahead, we can expect a continued shift to the east and south.  Global economic power will continue moving to rapid-growth countries like China, India, Sub-Saharan Africa, the Middle East and North Africa.  Indeed, these markets will become increasingly important venues for conducting global business. And to go along with this, the competition for talent will grow increasingly fierce. Studies show that 60% of the new jobs resulting from this shift east and south will require specialized skills.  But only 20% of the population will possess these skills. Furthermore, by 2025, the global South may become the major source of technical talent in the global economy. All the while, companies can take heart that increased worker mobility and technological advances are improving cross-border collaboration, and therefore the ability to leverage in-house talent on a global scale.  Ultimately, though, it’s predicted that greater workforce diversity will provide competitive advantage in the converging global marketplace, so being able to recruit and retain local talent is an important consideration as firms expand internationally. Against this backdrop of macro-trends that are impacting life and business in general, let’s look at some trends that are more specific to the architecture and engineering industry.  From an infrastructure perspective, there are some remarkable things happening. It’s anticipated that the world’s overall gross domestic product (or GDP) is growing to the tune of possibly doubling by 2030, with the highest economic growth expected in the Asia-Pacific region.  One impact of this growth is that the current transport infrastructure capacity will not meet 2030 demand – which means lots of work for firms who can help design and build this infrastructure. Looking at where in the world this work will be, the Asia-Pac region is the largest transport infrastructure market by far, projected to increase from 557 billion dollars a year to nearly 900 billion dollars a year in 2025. Also of note is that sub-Saharan Africa is expected to have the fastest transport infrastructure investment growth rate, at over 11% - representing another area of opportunity for A/E consultancies. An even more industry-specific data point comes from an EFCG 2015 survey of engineering CEO’s.  A portion of this survey focused on evaluating the most opportune markets in the world.  Each CEO respondent was asked to rate each world market in terms of growth and profitability.  Only four markets came out with an overall positive rating, with the US leading the way and Asia and the Middle East coming in second and third respectively as the fastest growing and most profitable markets for engineering firms.  This presence of Asia and the Middle East in the top 4 markets offers an industry-specific corroboration of that shift east and south we looked at earlier.  Indeed, the ongoing shift in global economic power is impacting the A/E industry. Another interesting finding of this same survey speaks to how the A/E industry has already been impacted by the shift of economic power and opportunity.  In the year 2000, there were 41 firms with greater than 100 million dollars in annual revenue that participated in the survey.  In 2015, only 15 of these firms still were in existence – in other words, 67% of the largest firms that participated in the survey 16 years ago are no longer around today.  The main reason for this?  In short, acquisition – most of the firms that are no longer around were acquired by other firms looking to increase their global reach and specialization, and better serve their emerging markets. So the data shows that we live in a converging world, and that there’s a shift in economic power and opportunity towards the global East and South.  We see that the global transport infrastructure market, as one leading indicator for the A/E industry, is pointing towards Asia-Pac and sub-Saharan Africa.  And engineering CEO’s are bullish on Asia and the Middle East, while the engineering industry continues to consolidate as firms look to tap into the growing opportunities around the world. Has your firm started exploring international expansion? Share your experiences in a comment below. Author’s Note: This is the first in a series on glocalization as it relates to the architecture, engineering, and environmental consulting industry.  

The Future of Architecture and Engineering: A Q&A with Consult Australia CEO Megan Motto

Megan Motto
MeganMotto
CEO
Consult Australia
In an industry centered around innovation, the question always remains – what’s next?  To help answer this, we’ve launched a series of blog posts exploring the past, present, and future trends in architecture, engineering, and construction consultancies. Over the next few months, follow along with us as industry leaders share their thoughts. In this post we spoke to Consult Australia CEO Megan Motto based in Sydney, Australia. Megan Megan is also currently a Director of the Australian Construction Industry Forum (ACIF), Councillor of the Australian Chamber of Commerce and Industry (ACCI), Councillor and Treasurer of the Australian Sustainable Built Environment Council (ASBEC) and sits on the NSW State Advisory Council for the Committee for Economic Development of Australia (CEDA). She was named as one of the 2014 AFR/Wespac 100 Australian Women of Influence.  Q: What do you think is the most significant trend that will impact the future of the AEC industry in your region over the next 5 years? A: Globalization will be the biggest trend to affect this sector (and region), as it has already to date. As projects become bigger in scale, value and complexity, the consulting community is responding by pursuing stronger balance sheet growth so as to both spread and manage risk. Whether this risk is due to the imbalance of power between consulting firms and international construction consortiums, the cost of tendering, or sourcing adequate capacity for jobs, rapid growth strategies (usually through acquisition and merger) are fundamentally shifting the structure and culture of our industry. This is forcing change on a number of fronts, whether it be firms embracing technology to drive operational efficiency, or understanding the resulting cultural and behavioral changes that will impact project management and partnering relationships. The industry is never likely to look the same as it did a decade ago. Q: How do you see the current role of AEC firms shifting, what do you think is causing that shift, and how must AEC firms react to survive? A: There is a growing gap between those consulting firms that are attempting to elevate their advisory services to compete with the management consultants in the built environment sector, and those that merely provide downstream services. This is partially driven by the size and capacity of the new global players, and a desire to reclaim the more lucrative and rewarding elements of the services supply chain. It is also driven by a desire by the industry more broadly to both participate more fully in higher order public policy and to remain relevant in an increasingly global, competitive and complex environment. This will mean, however, that firms playing in this space will need to develop new capability with regards to delivering fit for purpose policy advice rather than technical advice. The two might converge on the same information, but the delivery systems will be wildly different.  At the other end, it will be increasingly important for firms to demonstrate best practice technical services and have a clear strategy for talent attraction and retention, so as to remain viable for the future.  Q: Knowing what you know today, are there things you would or could have done differently to prepare for or react to the Global Financial Crisis of 2008? Are there things that you are doing differently now because of the GFC? How have you evolved your processes or policies post-GFC? A: I think for most Australian companies the biggest shock of the GFC was that our organizations didn't have exponential growth paths. In Australia we are now in our third straight decade of economic growth, and this has meant that many middle and even upper level managers had been lulled into a false sense of security that the good times would last forever and that we were innately resilient from external shocks. Thus we did not react fast enough to the changing conditions. We had become bullish in our budgeting, buoyed by past successes, and underestimated the speed with which we could react to income collapses with expenditure controls in professional services companies. In future I think the industry will budget more cautiously, and look more closely at lead indicators in the broader market.  Q: What is the biggest challenge you are currently tackling within your firm or association? A: Maintaining relationships with the senior leaders of the industry is actually a real challenge at present. The turnover and movement of individuals in the Australian AEC sector is astounding - partially from mergers, partly from more immediate financial return demands from shareholders, partly through demographic and intergenerational change. For Consult Australia this means being more connected to the members via social media as well as traditional communication channels.  Q: How has your office environment changed, and how is your firm continuing to evolve your workplace environment, procedures, and technologies, to accommodate the evolving demands of the incoming millennial workforce? What considerations and changes are you making regarding collaboration, efficiencies, work/life balance, technologies, etc.? A: Well although we are certainly not paperless yet, we certainly have LESS paper than a decade ago! I think the biggest change is of course the difference technology is making in terms of the autonomy of how work is packaged and delivered. Mobile connectivity means that work can be done any time, any place, and this is fundamentally changing our entire work culture. It means that we have more fluid boundaries between work and life, and this encourages more diverse workforces and more diverse working styles. This is a challenge for organizations as it necessitates more sophisticated management capability focused on outcomes rather than inputs.   This post is part of a question and answer series with global industry leaders on the future of the architecture, engineering, and environmental consulting industries.

The Perils of Overlooking Ethos in Expansion [and How to Avoid Them]

Eduardo Niebles
EduardoNiebles
Manager Director
BST Global
There are thousands of books, articles, and excerpts on globalization, international business, and global strategies, each divulging different ways to gain market share and global brand recognition: Should you adapt your products to the marketplace differently? Take advantage of economies of scale? Or look at global growth based on cost and risk reductions given the geographical opportunities? When considering a new global growth model, business leaders usually cover the basics. First, they look at their business model to determine how to adapt the company’s value proposition to the new geographical market participants, and then they determine what infrastructure (enterprise resource planning, outside partnerships, and organizational management – to name a few) is needed to succeed. But one element that is often overlooked – or worse, assumed to be inherently part of the strategic process – is the ethos of the business. The ethos of your business sets the tone for how your organization operates. This core set of values – be it trust, fairness, honesty, or even environmental awareness – is not automatically incorporated into your global strategy; you must make a conscious effort to include it. Just as you discuss how you will create new sales opportunities, you must also consider how your company ethos could affect which strategies you adopt, what trade-offs you might make, and to what degree the ethos of the business itself may need to change. While it is one thing to adapt your business model to gain competitive advantage or to create a “blue ocean” of opportunity, changing your company ethos to quickly gain market share in a new region is a recipe for failure in the long-term. The ethos of a business should not be changed, altered, or adapted to win new business outside of your home geographical boundaries, in my opinion. As simple as incorporating your core operating principles into your international strategy may sound, there are countless case studies on companies that failed when going global because the leaders made trade-offs on mandates of their business ethos that they assumed came naturally, but often did not. To make sure that you continually incorporate your business ethos into your global expansion plans, consider these steps as you go through your global development and execution process:   Align business ethos with key performance measurements. A balanced scorecard (BSC) methodology is a good way for leaders to not only measure performance across key perspectives such as finance, customers, and internal business, but to also integrate external and internal processes. BSC helps leaders see where they have made trade-offs between future success and short-term gains, and ensures that success does not come at the expense of core ethos.   Compare defined activities to core values. Think of this step as a checks and balances system for your plan. Once your organization defines and prioritizes key activities of the global strategy, each action needs to be compared with your business ethos, defining expectations as it relates to what will be executed. A byproduct of this exercise is that you will also see what areas the company needs to excel in to guarantee your core competencies transcend to other regions.   Create a strategy map. Intangible assets like ethos, corporate culture, and employee skills are becoming increasingly vital in today’s world of mobile resources, social networks, and real-time information. However, measuring these assets is often difficult. By developing a strategy map, you can help your employees understand why intangible assets are key to the success of your global plan. The map also helps convert intangible assets into tangible outcomes, as it shows the cause-and-effect links to how your intangible assets can create or change the desired outcome. Creating a successful global organization takes time, patience, commitment, and the flexibility to adapt quickly based on the information you receive on the ground as you begin to execute. By making sure that your business ethos is firmly embedded throughout your global expansion, you can better ensure that you are building a long-lasting organization that fully encompasses your tangible and intangible assets as you leave your home geographical boundaries. How does your organization focus on long-term sustainability without compromising its ethos? Share your ideas in a comment below!

Nordic Highs: Seeing Opportunities in Slow Growth Markets

Henrik Garver
HenrikGarver
Managing Director
FRI
Following the global financial crisis, credit crunch, and other fallacies that have squeezed the global economies since 2008, the Scandinavian economy is slowly recovering. Up until mid-December of 2014, the gross domestic product (GDP) for Denmark was up, with a meager expected growth rate of 1,4%, according to the Ministry of Economic Affairs and the Interior. But, revised figures released on last month indicate an even more moderate growth rate of just 0,7%. However, in spite of slow growth rates in the national economies, the Scandinavian consulting engineering sector has still managed to seize many opportunities that the market has had to offer. Most significantly, the infrastructure and energy sectors have grown in importance across the region, while the building sector – particularly with regards to commercial buildings – have seen a steep decline. In addition to choosing the right positioning in their Scandinavian home markets – that is, a stronger focus on infrastructure and energy with less dependency on buildings, many of the consultancies in the region have seen international growth as the way to create more value for owners and clients, and to provide new exciting projects for their staff. The most recent example of this is the Rambøll acquisition of US-based Environ in December 2014, but also companies such as COWI, SWECO and NIRAS are developing their international businesses at a much faster rate than their domestic business units. Expanding into new international markets, particularly in other parts of Europe, in the Middle East and Africa, and in the North American market, allows consultancies to utilize key experts within the company, as well as build and efficiently use stronger sourcing centers – in order to drive higher profits in declining markets. The tricky bit is that, in order to make international sourcing centres and key expert sharing a viable growth strategy, a growing volume of projects is required. Without multiple projects within a region and a large number of large scale global projects, setting up the resource centres will not be cost efficient. What’s more, this method challenges staff and managers by requiring them to work at an increasing extent with multinational teams on projects inside as well as outside of their home region – something that, in the past, would have been handled by a purely domestic staff. Nevertheless, once implemented, this strategy gives companies the structure and resources to grow in the international markets at an even faster pace. And the results of these international efforts are already visible. By utilizing the domestic markets of Scandinavia as a solid home base, Danish consulting engineering companies have over the past three years surpassed Danish contractors in international revenue, according to the Export Profile 2014. Additionally, profit ratios appear to be back at their pre-crisis levels, according to the 2014 Sector Review. The major players, such as Rambøll, COWI, Grontmij, SWECO, and NIRAS are financially strong, so more growth is to be expected. The success of these business models will likely drive new international strategies by the second-tier of companies with 200-1.000 staff in 2015. What’s more, consulting engineering staff numbers have grown across the Scandinavian countries. In fact, the Danish consulting engineering industry now employs more staff outside of Denmark than in Denmark, a development that has been driven by first-tier companies with more than 1.000 staff, like Rambøll, COWI, and NIRAS. For 2015, we will continue to see high demand for consulting engineering services in the infrastructure, energy, and environmental sectors, both in Scandinavia and internationally. I expect that the Scandinavian commercial building sector will recover, while the public sector will keep a steady demand for consulting engineering services. Thus, it appears that the solid base for growth will continue in the years to come – and the Scandinavian industry will be ready once GDP growth begins to grow significantly.