1 impact 2020 the future and how it will affect design firms worldwide american insurance and design...
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IMPACT 2020The Future and How It Will Affect Design Firms Worldwide
AMERICAN INSURANCE
AND DESIGN
CONFERENCE 2015
March 25, 2015
Salt Lake City, Utah
Frank A. Stasiowski, FAIA
Copyright 2015 by PSMJ Resources, Inc. All rights reserved
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3 Monumental Turning Points for ALL Design Professionals……...
1. The Onslaught of Liability Fear and Insurance……..
2. From “Value” to “Time” Compensation….The FTC Decision……..
3. The great “AUTOCAD” giveaway………
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Some Headlines This Morning…
DOW Leaps to Record Highs…..…but Can it Last ???
February New Home starts biggest # in 7 years….
Crippling Blackouts paralyze South Africa…..
New Home Building gets Big Lift in February…..
Retirement WORRY is highest in 23 Years…..
Two Americans aboard downed Alpine jet……..
Today’s Teens want No Part of Huge School Loan Debt…..
Ukraine to STOP buying Russian gas next month…….
Heinz-Kraft deal announced….
March Madness will Waste Millions of Employee Hours….
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Our Society in 2015…… No more privacy……period… Birth Explosion (Worldwide Demographic
predictions)…… Exhausted World Resources (Water gone)…. Dominance of Government (a Move to the left) Global everything (Not ‘international’)….. WAR as a permanent state……ISIS Death of the Dollar as King……. Information TRIPLING every 2 years…… Expectation of INSTANT delivery for everything….
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World Economic Growth Will Slow……..
1. Recent growth was based on unsustainable debt levels----witness Europe…….Frank Giustra Interview.. http://www.youtube.com/watch?v=9o30gNfPq_k
2. Huge Government deficits must somehow be repaid for recession pressure to end worldwide…
3. China’s slowing economy will impact the WORLD
4. Aging Western Baby Boomers will:
Take money out of the stock market to live on
Suck up an increasing share of tax revenues
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But Today Our Industry is Actually Well-Positioned for This Shift
1. As a result of recent downsizing:
We require less revenue to support our staff
Average employee quality has improved
Productivity is at all time highs…..NRPP…
2. Design Project management has improved dramatically
3. Pricing has begun to increase…..
4. Our clients LONG FOR ----DESIGN VALUE
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Successful Firms in the Future Will Adopt a New Business Model
The Old Model
Sell more work
Hire more people
Bill more hours
The New Model
Find out what your clients really want
Add more value
Leverage your KNOWLEDGE
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What You Should Do NOW….1. Change your Business Model thinking now….
2. Benchmark your pricing to VALUE not COST Eliminate Time Card Culture…..kill time accounting… Daily “consulting” Billing rates…and retainers… % of construction cost…or Lump Sum ONLY….
3. Benchmark your chargeability Principals are your MOST VALUABLE Consultants… Increase Principal Consulting if you’re below average….
4. Benchmark your Project Management Adapt a culture of SCHEDULE DRIVEN great work… Client exhilaration GETS NEW WORK….
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Things Looked Pretty Scary in Our Design Industry
1989 20140
500
1000
1500
2000AIA Members in California
# Dead or Retiring # New Licenses
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…But That Wave of Retirees May Not Be So Big After All
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2008 2010 2012 2014 2016
Millions of Retirees
Historical Trend
March 2008 Trend
Source: The Coyne Partnership, March 2008
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Especially When Considering the FEAR about Retirement Accounts
401(k) 201(k)
Retirement Account Balances
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What You Should Do NOW…
1. Team retirees with college students…..
2. More Independent Contractors…….
3. Look at “partial retirees” as a way to balance your workload……..
4. Start signing up retirees as “casual” employees………
5. Locate offices in areas with lots of retirees……..
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Mass Exodus of Senior Principals May Be Delayed…
1. Leading edge of baby-boomers now hitting a YOUNG age 65…………..
2. Many are founders or senior principals with lots of stock that has lost value since 2005……….
3. Few have developed long-term ownership transition plans and really want to stay…….
4. Even fewer have developed the next generation of leaders…………..
5. Result will be many failed ownership transitions…...
6. There will also be many more acquisitions…….
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What Should You Do?
1. Formalize and document your firm’s thought leadership and institutional knowledge ASAP.
2. Create a Financial Capitalization model for a 10-year ownership transition plan tied to Growth expectations.
3. Start a formal leadership development program that captures 25 year olds now. If you already have one, put it into higher gear.
4. If you don’t have enough time for an internal transition, position your firm for a successful external merger. (For an outline of a “Marketability Assessment,” e-mail me at [email protected]
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Demographics Drives our World......
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As a Species we humans are predictable in how we impact the food chain…..
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World 2015
7,008 Million
80+75-7970-7465-6960-6455-5950-5445-4940-4435-3930-3425-2920-2415-1910-1405-0900-04
0%2%4%6%8%10% 2% 4% 6% 8% 10%
FemaleMale
Excess of males over females
Excess of females over males
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80+75-7970-7465-6960-6455-5950-5445-4940-4435-3930-3425-2920-2415-1910-1405-0900-04
0%2%4%6%8%10% 0% 2% 4% 6% 8% 10%
FemaleMale
0 5 10-5-10
India 20151,080 Million
80+75-7970-7465-6960-6455-5950-5445-4940-4435-3930-3425-2920-2415-1910-1405-0900-04
0%2%4%6%8%10% 0% 2% 4% 6% 8% 10%
FemaleMale
0 5 10-5-10
China 20151,306 Million
80+75-7970-7465-6960-6455-5950-5445-4940-4435-3930-3425-2920-2415-1910-1405-0900-04
0%2%4%6%8%10% 0% 2% 4% 6% 8% 10%
FemaleMale
0 5 10-5-10
Italy2015 58 Million
80+75-7970-7465-6960-6455-5950-5445-4940-4435-3930-3425-2920-2415-1910-1405-0900-04
0%2%4%6%8%10% 0% 2% 4% 6% 8% 10%
FemaleMale
0 5 10-5-10
Japan 2015127 Million
80+75-7970-7465-6960-6455-5950-5445-4940-4435-3930-3425-2920-2415-1910-1405-0900-04
0%2%4%6%8%10% 0% 2% 4% 6% 8% 10%
FemaleMale
0 5 10-5-10
Mexico 2015106 Million
Russia 2015143 Million
80+75-7970-7465-6960-6455-5950-5445-4940-4435-3930-3425-2920-2415-1910-1405-0900-04
0%2%4%6%8%10% 0% 2% 4% 6% 8% 10%
FemaleMale
0 5 10-5-10
United States 2015298 Million
80+75-7970-7465-6960-6455-5950-5445-4940-4435-3930-3425-2920-2415-1910-1405-0900-04
0%2%4%6%8%10% 0% 2% 4% 6% 8% 10%
FemaleMale
0 5 10-5-10
Canada 201533 Million
80+75-7970-7465-6960-6455-5950-5445-4940-4435-3930-3425-2920-2415-1910-1405-0900-04
0%2%4%6%8%10% 0% 2% 4% 6% 8% 10%
FemaleMale
0 5 10-5-10
Iran 201568 Million
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80+75-7970-7465-6960-6455-5950-5445-4940-4435-3930-3425-2920-2415-1910-1405-0900-04
0%2%4%6%8%10% 0% 2% 4% 6% 8% 10%
FemaleMale
0 5 10-5-10
World 20157,009 Million
80+75-7970-7465-6960-6455-5950-5445-4940-4435-3930-3425-2920-2415-1910-1405-0900-04
0%2%4%6%8%10% 0% 2% 4% 6% 8% 10%
FemaleMale
0 5 10-5-10
More Developed Countries 20151,210 Million
80+75-7970-7465-6960-6455-5950-5445-4940-4435-3930-3425-2920-2415-1910-1405-0900-04
0%2%4%6%8%10% 0% 2% 4% 6% 8% 10%
FemaleMale
0 5 10-5-10
Less Developed Countries 20155,841 Million
80+75-7970-7465-6960-6455-5950-5445-4940-4435-3930-3425-2920-2415-1910-1405-0900-04
0%2%4%6%8%10% 0% 2% 4% 6% 8% 10%
FemaleMale
0 5 10-5-10
Near East 2015191 Million
80+75-7970-7465-6960-6455-5950-5445-4940-4435-3930-3425-2920-2415-1910-1405-0900-04
0%2%4%6%8%10% 0% 2% 4% 6% 8% 10%
FemaleMale
0 5 10-5-10
Latin America and the Caribbean 2015555 Million
80+75-7970-7465-6960-6455-5950-5445-4940-4435-3930-3425-2920-2415-1910-1405-0900-04
0%2%4%6%8%10% 0% 2% 4% 6% 8% 10%
FemaleMale
0 5 10-5-10
Western Europe 2015396 Million
80+75-7970-7465-6960-6455-5950-5445-4940-4435-3930-3425-2920-2415-1910-1405-0900-04
0%2%4%6%8%10% 0% 2% 4% 6% 8% 10%
FemaleMale
0 5 10-5-10
Central Africa 2015891 Million
80+75-7970-7465-6960-6455-5950-5445-4940-4435-3930-3425-2920-2415-1910-1405-0900-04
0%2%4%6%8%10% 0% 2% 4% 6% 8% 10%
FemaleMale
0 5 10-5-10
South America 2015371 Million
80+75-7970-7465-6960-6455-5950-5445-4940-4435-3930-3425-2920-2415-1910-1405-0900-04
0%2%4%6%8%10% 0% 2% 4% 6% 8% 10%
FemaleMale
0 5 10-5-10
Northern Africa 2015159 Million
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0
1
2
3
4
5
0 10 20 30 40 50 60 70 80 90 100
United States Population 2015
Depression Babies
(Aging)Baby Boomers
Boomlet Birth Dearth(Generation X)
War Babies
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Mi l
l io n
s
Age
Giving care
2:1Needing careNeeding care
1:1Giving care
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With this DATA How Does the Immediate Future Look for Design Firms Worldwide ???
Results of PSMJ’s Quarterly Market Forecast for Q3 2010( 538 Firms Reporting)
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And Profitability Continues Poor…Compared to Most other Industries …..
19841986
19881990
19921994
19961998
20002002
20042006
20082010
20120%
2%
4%
6%
8%
10%
12%
14%
16%
18%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%Operating Profit
EBBT
(% o
f Net
Rev
enue
)
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PSMJ’s Expectations for 2016+1. The recession in our industry has ended.
2. Our industry is now seeing a gradual recovery, especially in private sector markets.
3. It will be a long while before we see pre-recession revenues again. But most firms have cut their cost structure to match the lower revenues.
4. Clients are forcing a change in the way we do business….Think Beyond BIM-----PPP…Integrated Project Mgmt….DB…
5. Plan now for the coming 2016 boom times: Hire key TOP LEVEL staff…..Principals not Juniors……
Market to high quality clients (especially in markets that are turning around)……Fire bad clients….
Make acquisitions now before prices for firms increase dramatically
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10 Earthquakes coming for Design
Professionals…..1. No more employees……
2. No more drawings……No more TIMECARDS…….
3. Licensing irrelevance…….
4. Geographic irrelevance…….
5. Even Faster Acceleration in Speed of Delivery…….
6. Global Brands……Local Delivery……IPD, P3, DB….
7. TEXT, APPS, PINTEREST as THE business tools…….
8. Death of the medium sized firm…….
9. Death of the ‘old’ business model of professional practice
10. Unbelievable Needed Explosion in training…….
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How Much Tolerance for CHANGE do YOU Possess ??????
RIGHT NOW…???
Where are we now?
What do we want
to become?
What will we do toget there?
How will we assure that it
really happens?
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Can You Really Embrace CHANGE IN every facet of your approach to…..?
Marketing
Growth
Project Delivery
Design for Value
Human Resources
IT
Finance
Leadership Transition
Capitalization
Acquisitions
Global Culture
Business Model
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9 Urgent Actions you must take right now…….
Adapt a CULTURE of permanent change…… Restructure how you are capitalized….. Embrace technological new ideas BEFORE your
competitors….. Share your Intellectual Capital FREELY….. Build a network of knowledge you can tap fast.. Control your clients through speed of delivery…. Price and contract what you do in a brand new way…. Treasure and Build Your Relationships…… Embrace RISK….It is the LIFEBLOOD of CHANGE….
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Remember……
“Change always brings bold new opportunities…..be vigilant !!!! Think GLOBALLY!!! And most
importantly….Do it even faster…..!!!!!”
--Frank A. Stasiowski, FAIA
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Bold Thoughts ?? Questions?? or Mind Blowing Comments Please !!
Call or connect with PSMJ Resources, Inc. at 617-965-0055 or
www.psmj.com
To contact Frank: Phone: 617/965-0055 E-mail: [email protected]
To contact Kate Allen re: PSMJ Survey Data: Phone: 303-549-8782 E-mail: [email protected]
For a copy of this Presentation, please email….. [email protected]
NOW….it’s up to you…..