fast future (02/2012)

FAST FUTURE!

And What AEC Firms Must Do to Survive and Thrive on the Road Ahead

Fifteen Uber-Trends that Will Rock the World

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Roadmap

1. Economy and Industry

2. Fifteen Future Fast Trends

3. Organization Response

4. Personal Action Planning

PART I.

OK, it is the Economy.

U.S. Economic Growth

Source: http://www.bea.gov/newsreleases/national/gdp/gdp_glance.htm

U.S. Unemployment Rate

Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-120

Source: US Bureau of Labor Statistics- http://www.bls.gov/news.release/empsit.nr0.htm

Monthly unemployment rate, domestic U.S.

U.S. Unemployment Rate

Source: US Bureau of Labor Statistics- http://www.bls.gov/web/laus/mstrtcr1.gif

U.S. Economic Forecast

2011 Forecast – USA Today & IHS Global Insight

Source: http://www.usatoday.com/money/economy/story/Economic-Outlook/35290148/1

Eleven Leading Indicators

+ Real federal funds rate+ Interest rate yield curve+ Corporate bond spread+ Hours worked+ Building permits+ Non-defense capital goods orders+ Money supply+ Stock prices+ ISM export orders index+ Crude oil prices+ Light vehicle sales

U.S. State PopulationsGrowth Forecast (2000-2030)

9Source: U.S. Census Bureau at www.census.gov

% Change

-10 0 10 20 30 40 50 60 70 80 90

USAFLTXNCCASCNJMAMINYND

USAFlorida

North Carolina

California

South Carolina

New Jersey

U.S. State Populations

1 4 7 10

40000Population Distribution (k)

Average State Size

All States and DC 6.14 MSub Top 4 (100 M, 33%) 4.50 MSub Top 10 (166 M, 54%) 3.52 M

CA, TX, NY, FL

IL, PA, OH, MI, GA, NC

Megaregions (Megapolitans)

11Source: http://www.america2050.org/megaregions.html

Architectural Billing Index

BaselineABI

Source: www.aia.org

AEC Industry Forecast

“We saw nearly identical conditions in November and December of 2010 only to see momentum sputter and billings fall into negative territory as we moved through

2011, so it’s too early to be sure that we are in a full recovery mode. Nevertheless, this is very good news for the

design and construction industry and it’s entirely possible conditions will slowly continue to improve as the year

progresses.”

AIA Chief Economist, Kermit Baker, PhD, Hon. AIA.

Source: http://www.aia.org/press/AIAB092722

AIA Consensus Construction Forecast2012 (% Change)

2012 Consensus

McGraw Hill

HIS Global Insight

Moody’s Economic .com

FMI Reed Construction Data

Associated Builders & Contractors

Non Residential Total

2.1 -2.5 0.2 3.9 2.0 5.3 3.8

Commercial Total

5.6 5.6 3.9 8.8 2.4 5.9 6.9

Office 4.3 3.0 -3.1 9.1 2.2 7.8 6.8

Retail/Other 5.0 4.1 4.7 6.8 2.5 4.7 7.2

Hotel 10.2 23.3 7.1 18.1 2.4 4.4 6.0

Industrial Total

6.0 1.1 8.8 10.3 -2.3 12.3 5.7

Institutional Total

-0.1 -7.9 -0.8 2.3 2.3 3.3 0.0

Health 4.5 2.4 4.6 5.1 2.5 4.7 8.0

Education -1.7 -10.7 -3.1 3.2 1.4 3.1 -4.0

Religious 5.1 -1.3 25.3 - -2.0 -0.2 4.0

Public Safety -3.8 -15.9 - -0.3 3.4 -2.2 -4.0

Amusement/Rec.

0.2 -16.3 1.3 - 7.9 5.4 2.8

AIA Consensus Construction Forecast2013 (% Change)

2013 Consensus

McGraw Hill

HIS Global Insight

Moody’s Economic .com

FMI Reed Construction Data

Associated Builders & Contractors

Non Residential Total

6.4 8.7 4.2 6.5 4.5 8.1 6.1

Commercial Total

11.4 17.9 17.7 12.1 5.4 9.0 6.2

Office 9.6 12.8 11.7 11.8 5.1 10.3 6.0

Retail/Other 9.9 22.1 9.6 8.6 5.3 7.7 6.0

Hotel 19.7 16.8 47.3 29.2 7.1 9.9 8.0

Industrial Total

10.2 8.7 10.9 16.1 4.1 13.3 8.2

Institutional Total

3.6 2.8 0.6 4.8 3.6 6.3 3.5

Health 5.3 3.2 1.0 6.7 4.1 8.9 8.0

Education 3.1 1.5 0.8 5.5 3.3 5.4 2.0

Religious 6.3 2.4 13.9 - 4.1 72 4.0

Public Safety 0.3 -4.1 - 3.1 3.3 2.0 -3.0

Amusement/Rec

6.5 13.6 4.5 - 4.7 6.9 3.0

AEC Industry Forecast - AGC

February 3, 2012

CONSTRUCTION EMPLOYMENT HITS TWO-YEAR HIGH IN JANUARY BUT INDUSTRY'S 17.7 PERCENT UNEMPLOYMENT

RATE REMAINS DOUBLE OVERALL RATE"Although it's great news that the industry has added 52,000 jobs in the past two months, the unemployment rate in construction is still double that of the overall

economy, and construction employment remains at 1996 levels," said. "It will take another month or two to see if the recent job growth reflects a sustained pickup or merely acceleration of homebuilding and highway projects that normally halt when

the ground freezes in December and January."

Ken Simonson, AGC Chief Economist

"Without adequate long-term funding for infrastructure, competitive tax rates and fewer costly regulatory hurdles, the construction industry may lose

many of the jobs it has gained in the past year.”

Stephen E. Sandherr, AGC Chief Executive Officer

Source: http://www.agc.org/cs/news_media/press_room/press_release?pressrelease.id=1020

Industry Recovery Factors

Economic uncertainty

Tight credit and lending

Overbuilt markets

Weak municipal bond market

Federal budget deficit

Energy (oil) prices

AEC Firm Key Issue Areas

Vision/ Mission

Enterprise Business Strategy

Leadership Alignment

Leadership Development

Strategic Marketing Framework

Business Development

Leverage

Operational Excellence

Ownership Transition

Questions

PART II.

No, it’s the World.

Fifteen Fast Future Trends

Globalization

Technology

Volatility and Change

Meritocracy

DiversityLife and Living

Knowledge and Know How

Consumer Power

Urbanization

Infrastructure

Small FirmFluid Supply Chain

Energy and Environment

Community

The Big Five

Technology

Information

Globalization

Meritocracy

Change

TechnologyRapid technological development and innovation will change everything.

And the pace of the change is accelerating.

Computing Power

AEC Industry Technology

Accelerating Convergence

Computers. Information. Nanotech. Biotech. Communication.

The Singularity IS Coming

Information

The geometric explosion of information will fundamentally transform all human endeavor.

Knowledge

Communication

Wealth

Society

Family

Globalization

The world will experience increasing global connectivity – on virtually every dimension possible.

Meritocracy

What one does will supplant who one is – in a more democratic, merit-based world of broadening economic opportunity.

Change

The era of stability and predictability is over. Near constant volatility, uncertainty, and change in the global economy will become the norm.

The Business Five

Consumer

Supply ChainSmall Firm

Infrastructure

Energy & Environment

Consumer

The age of the consumer is here - buyers (not sellers) will control the market.

Supply Chain

The global supply chain will include a continuously churning, mutating, and evolving mix of providers, suppliers, partners, and competitors.

Supply Chain Phase Changes

Millions of (very) small firms will compete successfully on the global stage.

Small Firm

AEC Industry Statistics

NAICS Type No. of Firms Total Receipts

54131 Architectural Services 24,283 $37,149,909

54132 Landscape Architectural Services 6,088 $4,365,336

54133 Engineering Services 47,714 $187,531,866

54134 Drafting Services 3,146 $1,083,581

54135 Building Inspection Services 5,673 $1,830,059

54136 Geophysical Surveying/Mapping 729 $3,093,348

54137 Surveying and Mapping (Ex Geo) 9,567 $6,760,251

54141 Interior Design Services 13,492 $9,799,480

54162 Environmental Consulting Services 8,274 $10,423,169

Total 118,966 $262,036,999

37Source: U.S. Census Bureau Business Database, 2007

AEC Industry Firm Size

59.418.6

11.5 6.7

2.1 1.6

Employees

Source: U.S. Census Bureau Business Database, 2007

Pressure in the Middle

Largest Firms

Smallest Firms

100 firms over $100M

1800 firms $13-100M

10,000 firms with 20-100 staff

100,000 firms with staff <20

Infrastructure

Those who build today will lead the world tomorrow.

Energy & Environment

Environmental health will become intrinsically important worldwide – though always balanced by

economics.

Alternative energy will gain in importance - but petroleum will be king.

The Social Five

Diversity

Healthy Living

Knowledge

Community

Urbanization

Diversity

The majority will be defined by consensus, alignment,

and collaboration – and nothing else.

Healthy Living

Peoples around the world will live healthier (longer and better) lives.

Knowledge-Know How

Expertise will become both

the language and currency

of the global realm.

Urbanization

Living in cities and city-states will become increasingly attractive - to nearly everyone.

Jinan, China

12th largest city in China, 48th largest in the world;

Largest World Cities

0 2 4 6 8 10 12 14 16 18 20

ChinaUSAIndia

Top One Hundred World Cities

Megaregions

49Source: http://www.america2050.org/megaregions.html

Community

Engaging in new communities will become increasingly important and meaningful.

So - What Does it all Mean?

“The future ain’t what it used to be.” Yogi Berra

Questions

PART III.

Actually, it’s about us.

Impetus for Change?

“Change is not necessary…

Survival is not mandatory.”

W. Edwards Deming

Forget Buggywhips

Control What You Can

Key AEC Firm Issues

Overarching Objective

Enterprise Business Strategy

Leadership Alignment

Leadership Development

Strategic Marketing Framework

Business Development

Leverage

Operational Excellence

Ownership Transition

Your Response?

Choose your road.

The Road Not Taken

TWO roads diverged in a yellow wood,And sorry I could not travel bothAnd be one traveler, long I stoodAnd looked down one as far as I couldTo where it bent in the undergrowth;

Then took the other, as just as fair,And having perhaps the better claim,Because it was grassy and wanted wear;Though as for that the passing thereHad worn them really about the same,

And both that morning equally layIn leaves no step had trodden black.Oh, I kept the first for another day!Yet knowing how way leads on to way,I doubted if I should ever come back.

I shall be telling this with a sighSomewhere ages and ages hence:Two roads diverged in a wood, and I—I took the one less traveled by,And that has made all the difference.

Robert Frost

Getting Things Done

Effort

Zombies Laborers

Pundits ExtraordinaryProfessionals!

Modified after Jim Cathcart

Not Just What You Know

“Execution is the single biggest issue facing business today.”

Larry Bossidy and Ram Charan

Success Magic - Action Plan

Action Outcome

Lead Due Date

An Organization Framework

1. Pay Attention2. Ask Questions3. Advise Others4. Take Action

Parting Thought #1

“Make no small plans; they have no magic to stir men’s blood.”

Daniel Burnham

Parting Thought #2

“Whether you think you can, or

think you can’t …you’re right.”

Henry Ford65

Questions

Thank You!

Helping firms and their leaders to achieve extraordinary outcomes in business and life.

john@jdoehring.com

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