1 By: Ted Garrison New Construction Strategies 800-861-0874 [email protected] Follow on

1

By: Ted GarrisonNew Construction Strategies

[email protected]

www.StrategicPlanningforContractors.info

Follow on twitter: www.twitter.com/tedgarrison

Strategic Thinking & PlanningStrategic Thinking & PlanningFor ContractorsFor Contractors

(c) 2012- New Construction Strategies

(c) 2012- New Construction Strategies 2

Part IPart I

What Is Strategic Thinking & What Is Strategic Thinking & PlanningPlanning

Module 1: Where Are We?Module 1: Where Are We?


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It’s Not the EconomyIt’s Not the Economy

• AIA - construction industry only significant U.S. industry that hasn’t experienced an increase in productivity the last several decades.

• Difficulty attracting enough qualified workers and managers• Peter Drucker: “The first sign of decline of an industry is loss of

appeal to qualified, able, and ambitious people”

• Profit margins have declined for years• Industry ROI in 2005 - 9.7%, average of U.S. industries 16.9% -

in the middle of a construction boom

• Highest turnover except for restaurant industry

• Half of U.S. contractors don’t make a profit

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Self-Inflicted WoundSelf-Inflicted Wound

“In many industries, what some call hyper competition is a self-inflicted wound. The root of the problem is failure to distinguish between operational effectiveness and strategy. Operational effectiveness is necessary but not sufficient. A company can outperform rivals only if it can establish a difference that it can preserve.”

Michael Porter


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No Excuses!No Excuses!

“Clear-eyed and stoic, 10Xers accept, without complaint, that they face forces beyond their control, that they

cannot accurately predict events, and that nothing is certain; yet they utterly reject the idea that luck, chaos, or any other external factor will determine whether they

succeed or fail.”

Jim Collins & Morten Hansen

Great by Choice


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A Whole New MindA Whole New Mind

Historically, the greatest capabilities of a technical business were its:

Logical, analytical, fact-based and quantitative abilities that defined the Information Age• Yet, despite this approximately 70% of projects fail

According to Daniel Pink left-brained capabilities “are necessary, but no longer sufficient.”

He adds, “the ‘right-brain’ qualities of inventiveness, empathy, joyfulness, and meaning —increasingly will determine who flourishes and who flounders.”

Daniel Pink – A Whole New Mind


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Why Is This Important?Why Is This Important?

Last century machines replaced human backs – this century technology is replacing left-brain analysis

Engineers will have to rely more on different attitudes, more on creativity than competence, more on implied knowledge than technical manuals, and more on the fashioning the big picture than sweating the details. Daniel Pink

“Investigations revealed that even in such technical lines as engineering, about 15% of one’s financial success is due to one’s technical knowledge and about 85% is due to skill in human engineering – to personality and the ability to lead people.” Brent Danner

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Competing for the FutureCompeting for the Future

“If a top management team cannot clearly articulate the five or six fundamental industry trends that most threaten its firm’s continued success, it is not in control of the firm’s

destiny.” Gary Hamel and C. K. Prahalad

Competing for the Future

• Jim Collins, Good to Great - most successful companies are realistic about conditions

• The biggest challenge in making a leap into a new direction is creating a sense of urgency reports Prof. John Kotter

• The good news is the current economic situation has created a sense of urgency

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The New Reality: Industry Must Change!The New Reality: Industry Must Change!

• How many of you want a satisfied customer?• 86% of satisfied customers will go to your competitor on the next project• Need to convert them to clients

• “For business, it’s no longer enough to create a product that’s reasonably priced and adequately functional.”

Daniel Pink

• The industry must reduce construction costs by 20% - 30%!

• Why?• Because client’s can’t afford to pay more• How many think I’m crazy?• It can be done• Toll Brothers• P3’s• UK example• NREL project• China examples


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It’s a New World Out ThereIt’s a New World Out There

China builds a 30 story office building in 15 days!

http://www.youtube.com/watch?v=Hdpf-MQM9vY


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It’s a New World


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China’s proposed new 220 story building – construction schedule 7 months

Too Many People In the Construction Business Too Many People In the Construction Business Are Insane!Are Insane!

● Albert Einstein defines insanity as: “Doing the same thing over and over and expecting to get different results.”

● The construction industry must change

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How Many People Wake Up & Can’t Wait to How Many People Wake Up & Can’t Wait to Buy a New Air Conditioner?Buy a New Air Conditioner?


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Self-EvaluationSelf-Evaluation

Approach to Your JobApproach to Your Job# Option A Check

AOption B Check B

1 Do you administer? Or do you innovate?

2 Do you copy? Or do you originate?

3 Do you maintain? Or do you develop?

4 Do you focus on systems and structures?

Or do you focus on the long-range perspective and people?

5 Do you worry about “how and when”?

Or do you worry about “what and why?

6 Do you always worry about the bottom line?

Or do you look for the horizon?

7 Do you maintain the status quo?

Or do you challenge the status quo?

8 Do you do things right? Or do you do the right things?

Total # of A checks Total # of B checks

15(c) 2012- New Construction Strategies

The Right ThingsThe Right Things

“Management is doing things right; leadership is doing the right thing!”

Peter Drucker

Strategic thinking is about determining what’s the right thing!

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A New Perspective Is NeededA New Perspective Is Needed

Module 2: Ten Construction 3.0™ StrategiesModule 2: Ten Construction 3.0™ Strategies

1. Effective leadership

2. Strategic thinking

3. Value-based construction

4. Increased innovation

5. Increased collaboration

6. Systems based

7. Effective risk management

8. More efficient operations (lean)

9. Better use of technology

10. Measurement

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#1 - It Starts with Leadership#1 - It Starts with LeadershipEvent - ProjectInitial

conditionsFinal

conditions

Time• The more info we have before the event,

the easier it is to predict the final outcome

• The less info we have before the event, the harder it is to predict the final outcome

• However, the lack of info will never change the final outcome

• Probability occurs when people don’t understand

• Must think proactively – not reactively

““Types” of IndividualsTypes” of Individuals

Perceive

Process

Apply

Change

100%100%InformationInformation

Perc

epti

on o

f In

form

ati

on

Time

A

C

0%

100%

B

Reality: The more “perceptive” individual perceives faster---- changes faster ---- makes more accurate predictions----requires less data ---- makes less subjective

decisions!

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Exercise on IndividualsExercise on IndividualsType A or Type C

Type A

Type A

Type A

Type C

Type C

Type C

Type A

Type C

Type C

Type A

Type C

Type C

Type C

Type C

Type A

Perceives more information

Knows their constraints

Measures performance

Tries to controls others

Manager

Emotional

Long term planning

Works harder

Gets surprised

Prepared

Makes decision

Has expectations of others

Tries to change others

Tries to influence others

Aligns personnel in optimally

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Effective LeadershipEffective Leadership

• Leadership is not about control

• Leadership is about the ability to perceive, in essence to look ahead, then allocate the resources (human & capital) in the best possible way

• Jim Collins referred to this as “Getting the right people on the bus, in the right seats.”

• Who needs to demonstrate leadership?

• Notice – neither of the above two statements mention anything about this being restricted to staff• The right people can be outsourced team members

• It’s not about finding the cheapest person, but the best

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#2 - Strategic Thinking#2 - Strategic Thinking

Strategic thinking leverages knowledge, skills and resources

Strategic thinking examines things from a different perspective

Strategic thinking challenges the status quo & conventional wisdom• Forces people to think

• Not just during crisis

Strategic thinking is applied to business strategic planning, pre-planning projects, and solving problems


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What is Strategic Thinking?What is Strategic Thinking?

Strategic thinking is an intensified exploration or discovery process from a new perspective

Strategic thinking masters information, skills, and ideas

Strategic thinking is about the right ideas (higher purpose)

Strategic thinking is about the right questions – not the right answers

Strategic thinking is a journey, not an event

Many companies focus on the inside of the company, but must also consider the outside

(c) 2012 New Construction Strategies

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#3 – Value Based Construction#3 – Value Based Construction

• Focus on the process of adding value • How can you help the client?

• Redesign (value engineer is the obvious)

• New thought: add value or reduce operating costs?

• Need to focus on life-cycle costs – not just construction costs

• Innovation – the key to value

• Go beyond building process – how can you help the client reduce costs or increase revenue?• Lean factory

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#4 - Increased Innovation#4 - Increased Innovation

• “Tomorrow’s victories will go to the masters of innovation! Period!” Tom Peters

• What’s the purpose of outsourcing?• Innovation

• Occurs by focusing on desired outcome instead of fixing problem

• The keys to innovation• Continuous learning

• Continuous improvement

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#5 - Increased Collaboration#5 - Increased Collaboration

• Involve the people who must do it• PM’s & Supt’s should be active in estimating process

• Pre-planning should start as early as possible

• No one knows where the good ideas will come from

• The more complex a system the greater the need for collaboration

• Integrated project delivery works

• As a PM/Superintendent – what’s your most important task?• Rainmaker!

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#6 – Systems Based#6 – Systems Based

Companies with systems are more efficient

It’s easier to train people when systems are used

Necessary for sustainable innovation


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#7 – Effective Risk Management#7 – Effective Risk Management

How to Reduce Risk• Transfer control and risk to the best qualified entity along with accountability• Make responsible entity “center of universe• Don’t look the other way

• Pre-planning (Risk Assessment)

• Use a matrix – 80/20 rule

• Minimize subjective decision making

• Risk management starts with value based selection process of team members

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#8 – More Efficient Operations#8 – More Efficient Operations

The lean process fosters collaboration, better communication, and mutual respect

Lean is all about adding value by eliminating waste

Lean manufacturing/construction focuses on creating a better delivery method

Lean implements 10 principles of Construction 3.0

It works!

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#9 - Better Use of Technology#9 - Better Use of Technology

• Technology is never the answer to problems, but it can help implement the solutions

Jim Collins in Good to Great

• Identify the solution first, then ask how technology can help implement it

• Better use of technology• It can help transform the industry

• BIM (3D-Modeling)

• Project software

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# 10 - What to Measure# 10 - What to Measure# 10 - What to Measure# 10 - What to Measure

Operational

Performance

Operational

Performance

Innovation &

Learning

Innovation &

Learning

Customer

Satisfaction

Customer

Satisfaction


Financial Financial

Company SuccessCompany Success

No silver bullets for company success – each one is unique

However, strategic thinking is the key – without it you can’t out-think the competition• Looking ahead is where you can create better value

The opportunities are there – you just need to find them, but not with last year’s thinking

Reframe your business as a problem solver – not as a contractor or you will compete based on price

Measure your performance to create dominant proof

Accept that change is coming to the contracting industry – like it or not – or lose the battle!

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Module 3: Strategic Planning & ThinkingModule 3: Strategic Planning & Thinking


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What’s the difference between strategic planning and strategic thinking?

Strategic PlanningStrategic Planning

• Most people accept that strategic planning is important – but many still don’t do it!• 25% of contractors surveyed doing over $50 million/yr didn’t have one

• My recent survey on strategic thinking – 50% of contractors reported they didn’t have a strategic plan

• Those that pre-plan projects (a project’s strategic plan) are more profitable

• Contractors without a strategic plan are 35% less profitable

• Effective strategic planning requires strategic thinking• A facilitator can be a big help to the process

• Company can’t outsource strategic thinking

• Strategic planning expertise is more available than strategic thinking• Strategic Planning is about process

• Strategic Thinking is about looking over the horizon

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Strategic PlanningStrategic Planning

Purpose

Vision Statement

Mission Statement

Objectives

Strategies

Action Plan


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Why Strategic Thinking

• “The purpose of strategic thinking is to help a company’s CEO and management team to make conscious decisions whose rational and underlying logic are clearly understood.”

Michael Robert

• It’s critical to understand what a company does best (areas of excellence)• No company has resources for all areas

• Critical areas should get resources

• Critical areas last to be cut in tough times

• Strategy is the company plan to deal with environment

• The stronger the strategy the greater the competitive advantage


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Where Is Strategic Thinking NeededWhere Is Strategic Thinking Needed

Developing a company’s strategic plan• Don’t let the company’s strategic plan impede strategic thinking

Planning projects • When selecting projects – does the project support the company’s

strategic plan or direction?

• Planning a project – what’s the project’s purpose – how can we add maximum value for client?

Solving problems• Large problems require a more systematic strategic thinking approach

• Smaller problems rely on continuous improvement

Without a strategy it’s impossible to have day-to-day alignment• Allows consistent & intelligent decisions


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Strategic ThinkingStrategic Thinking

● Business requires two skills for true success ● A good strategy – the what of a company● Quality operations – the how of a company

● Strategic thinking is about the right ideas (higher purpose)

● Without knowledge & experience it’s impossible to think strategically – need to leverage knowledge

● 1st step is strategic thinking to determine what needs to be done – define the problem

● The second step is to learn how to do it right

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Strategic ThinkingStrategic Thinking

• Strategic thinking is about looking ahead – which is why it’s the leader’s responsibility

• It’s about being proactive• Covey’s #1 Habit – Be proactive

• It’s more about preventing problems then implementing solutions (managing risk)

• Solutions after next principle (end in mind)

• Covey’s #2 Habit – Begin with the end in mind

• Use strategic planning (pre-planning) to identify & develop future leaders• Contractors that pre-plan projects are more profitable

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Why Do You Need Strategic ThinkingWhy Do You Need Strategic Thinking

Sorry - but if you aren’t making sufficient profits – you have a poor strategy – time for strategic thinking

Strategic thinking is the basis of a company’s vision

Strategic thinking enables contractors to out-think their competition

Strategic thinking enables contractors to maximize the value they deliver to their clients

Strategic thinking enables contractors to maximize their performance and profitability


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Why Do You Need Strategic ThinkingWhy Do You Need Strategic Thinking

Strategic thinking allows you to grow & stay ahead of the competition

Strategic thinking allows you to identify & seize profitable new opportunities

Strategic thinking allows you to make smarter decisions

Strategic thinking allows you to minimize potential project problems

Strategic thinking allows you to solve problems


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Barriers to Effective SolutionsBarriers to Effective Solutions

De Bono’s Intelligence Trap• Only one answer – people stop looking for better answers

• Too quick to classify problem & jumping to conclusions – not questioning purpose & assumptions

Critical Thinking/Reductionism• Emphasis is on data collection – analysis – judgment

• Accepting the problem as stated – solving the wrong problem

• Need ideas to evaluate

• Need to get beyond what doesn’t work – proving the other way doesn’t work doesn’t make your way work

Focusing on Conventional Wisdom – resisting new ideasFocus on beating the competitionInstead – what’s needed is Integrative Thinking

• Roger Martin, Dean of Rotman School of Management @ Univ. of Toronto


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Do You have a Superior Strategy?Do You have a Superior Strategy?44


Sun TzuSun Tzu The Art of WarThe Art of War

“Those skilled in war subdue the enemy’s army without fighting. Their aim must be to take all under heaven intact through strategic superiority.”

Must out-think the competition

Best advice – get out of the mechanical contracting business!

Superior StrategySuperior Strategy45


Why You Should Get Out of the Why You Should Get Out of the Mechanical Contracting Business?Mechanical Contracting Business?

Not suggesting you stop installing mechanical systems because that’s what you do – but it’s not your business

Your business is how you add value for the client

Must compete based on value – not on mechanical equipment

Need to outthink the competition• Do what they don’t do

• Or do what they do significantly better

• Companies that benchmark current practices slowly fall behind their competitors

• Must differentiate – “me-too” is deadly(c) 2012- New Construction Strategies

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Module 4: Blue Ocean Strategy for ContractorsModule 4: Blue Ocean Strategy for Contractors

Blue Oceans create new or redefine existing industries

In construction the most common approach is to redefine the market

Blue Oceans are based on out-thinking the competition

Blue Oceans create demand instead of fighting over existing demand

High opportunity due to lack of competition

To create a Blue Ocean Strategy requires Strategic Thinking


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Blue Ocean Strategy for ContractorsBlue Ocean Strategy for Contractors

The ultimate strategy makes the competition irrelevant

Incremental improvement produces incremental revenue increases – need new ideas to increase revenue

Strategy must be distinct enough to control or at least influence the contest

Idea is to lock in desired clients and lock out undesired competition

Mistaken belief: rules are the same for everyone – so who masters them the best will win!


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Avoid Red Oceans

Red Oceans represent existing industries & markets

Boundaries are defined & accepted

The rules are established• Set by competition

• Competition understands better

Services are a commodity

Need to out-muscle the competition (price wars)

49(c) 2012- New Construction Strategies

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W. Chan Kim & Renée Mauborgne – Blue Ocean Strategy

Marketing Strategies for ConstructionMarketing Strategies for Construction

SERVICESLess than Plans & More than

Specs Specs Specs

LowerLimited

OpportunityMust be LCP Must be LCP

COST Same LoserPlans & Specs

Added Value

Higher Big Loser LoserAdded Value that clients

want

LCP = Low Cost Provider


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Four Questions to Ask to Add ValueFour Questions to Ask to Add Value

1. What services your company provides could be eliminated?

2. What services your company provides could be reduced?

3. What services could your company increase?

4. What services could your company provide that haven’t been offered before?

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(c) 2009 Garrison Associates

What’s the Definition of a Client?What’s the Definition of a Client?


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“Someone under the protection of”

What’s the Purpose of a BusinessWhat’s the Purpose of a Business

“The purpose of a business is to create a customer.”

Peter Drucker

Profit is not a purpose – it’s the measurement of how well you defined and executed the purpose

However, the specific purpose for any individual company is unique, because each company and situation is unique

So the question is how do you determine your purpose?


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It’s About Competing on ValueIt’s About Competing on Value

• Identify what makes you unique

• Help clients understand your value & what it does for them• New ideas

• Influence the market!• Best service is often what they don’t know they need

• What you need to do• Discover every benefit

• Dollarize every benefit

• Include all benefits in your proposal

• Seek added services(c) 2012- New Construction Strategies

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11stst of Three Critical Questions of Three Critical Questions

• What are you selling?• For heavens sake don’t tell me mechanical equipment

• What’s the purpose for selling it?

• What makes it unique?

• What special expertise do you bring to the purpose?

• Where do you excel?• Can’t excel if you try to be everything to everyone

• What problems do you solve?

• What problems might you solve that are unsolved?(c) 2012- New Construction Strategies

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22ndnd of Three Critical Questions of Three Critical Questions

• Who are you selling it to?• For heavens sake don’t tell me people that buy it!

• Who could benefit the most from buying it?

• Who has problems that could be solved by using it?

• What are the value propositions for those using a/c?

• Who could benefit from using a/c if we created a new product or application?

• Who is not using a/c that could benefit if we addressed the obstacles to them using it?


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3rd of Three Critical Questions3rd of Three Critical Questions

• How do you differentiate your company from your competitors?

• You are fired if you said because we are cheaper! • It’s okay to offer better value – but don’t sell price!

• Why is our purpose a better value for all stakeholders & especially clients?

• In what areas do we have special expertise and knowledge?

• In what areas do we have a better vision (perception) than our competition?

• Who can we collaborate with to improve our value package or purpose?


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What’s Needed to Compete on ValueWhat’s Needed to Compete on Value

Peter Drucker wrote that every business needs two skills:

• Marketing

• Innovation • Don’t let the industry

dictate strategy

• Don’t let the competition dictate strategy

• Focus on what client’s value

• Throw away the box


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How Can You Add Value?How Can You Add Value?

Add value at less cost than the added value• Need to learn what’s of value to prospect

Reduce the cost • It’s not about cutting your price

• It’s about where you can add value through greater efficiency

• If you are going to compete on price (low bids) you must compete on projects where you have a competitive advantage

You need to do both!

Need to understand the long-term value of clients• Costs 5 times as much to obtain a new client

• Repeat business, referrals, etc


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What’s First Step in Competing on Value?What’s First Step in Competing on Value?

“Find the right clients”Prof. Dean Kashiwagi

● “Marketing is the art of finding, developing, and profiting from opportunities.”

Prof. Philip Kotler

Three types of clients• Standard customers – 27% - price driven

• Custom clients – 17% - total value driven

• Vacillating clients – 56% - will take price or value

Your job is to identify the 73% that’s value-driven


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5 Strategies to Winning the Differentiation Wars5 Strategies to Winning the Differentiation Wars

1. How can you make the client’s life easier?

2. How can you provide greater responsiveness to client’s needs?

3. What special client problems can you handle for them? (help define their needs)

4. What special knowledge could give you an advantage?

5. What special client complexities can you handle?

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Part IIPart II

The Strategic Thinking ProcessThe Strategic Thinking Process

Module 5: Strategic Thinking ProcessModule 5: Strategic Thinking Process

• Two approaches to developing strategy

• Empirical evidence• Study of other companies

• What most books and professor do

• However helpful from 30,000 feet

• Experimental method• Every company situation is unique

• Must be built around flexibility so can adapt to changes

• Aligns with continuous improvement (refinement)

• Difficult to be perfect when sailing unchartered waters(c) 2012- New Construction Strategies

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Special Strategic CommentsSpecial Strategic Comments

• Any strategy must accommodate the company’s future environment

• The best strategies are distinctive and sustainable over the long-term

• Services that have been custom-tailored gain premium prices – avoid imitation

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ChallengesChallenges

Managers tend to be consumed by operational issues rather than strategic issues• Strategic issues not a priority

The result is a strategy by default – outside influences start shaping your business

There are many forces that will tend to fill the gap the company abdicates its responsibility

This includes your clients – other contractors• Those that you respond to

• Those that you don’t respond to


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Strategic Thinking ProcessStrategic Thinking Process

Effective Strategic Thinking requires a system• Provides structure – especially for less experienced

• Makes it easier to train people

• Provides a baseline for continuous improvement

• Minimizes the number of subjective decisions

• Keeps everyone focused

• CEO’s often strategists but do it intuitively

Four critical steps to Strategic Thinking system• Get the right people involved

• Defining the problem or desired outcomes (purpose)

• Creating the right solution

• Executing the solution(c) 2012 New Construction Strategies

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Strategic IQStrategic IQ

“If you want to increase the strategic IQ of your people and the total organization, you

must have a deliberate, formal process in place so that all decisions made are

decisions whose strategic rationale is documented and can logically be defended.”

Michael Robert

Decision Process International


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(c) 2009 Garrison Associates 68

Strategic Operational

Purpose

Vision

Mission

Objectives

Strategies

Action Steps

The Strategic Planning ProcessThe Strategic Planning Process

(c) 2009 Garrison Associates 69

Question Conveys Concept

1. Which? Choice Niche

Strategically 2. Why? Purpose Values

Effectiveness 3. Where? Position Vision

4. Who? People Culture

Operational 5. What? Results Goals

Efficiency 6. How? Process Method

7. When? Action Timing

Seven Critical QuestionsSeven Critical Questions

The “Right People”The “Right People”

Who should be involved in strategic thinking?

“The who?”

Everyone!

Continuous Improvement is the key!


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Questions That Must Be Answered!Questions That Must Be Answered!

Who?● Who are your clients?● Who are your potential clients?● Who can you partner with?● Who else can help you grow your company?● Who in your company should participate?● Who are the critical people in carrying out the

strategy?(In essence, do we have the right people to go

where we want?)


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Getting the Right People InvolvedGetting the Right People InvolvedWho are the right people?

• Collins: If we get the right people on the bus, the right people in the right seats, and the wrong people off the bus, then we’ll figure out how to take it someplace great.”

• All stakeholders involved in the issue (where practical)

• Can include people outside the company

Why it’s critical to get everyone involved• When companies win awards for innovation, most of the time the

ideas came from the workers – not management

• Innovations that are suggested by workers usually have more impact than management’s suggestions

• No one knows where the good ideas will come from – so best to have everyone participate

• Helps create buy-in – requires understanding of what & why(c) 2012 New Construction Strategies

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How to Get People to ParticipateHow to Get People to Participate

Start with solving problems – continuous improvement• Small changes they can implement or with the help of their team

• Convince them they are part of the solution

Start with what people know the most about Focusing on what’s important to themEngage them by asking questions – creates ownership• “What’s driving you crazy?”

• “What would make your life easier?”

• Let them do it!

• Encourage them

• Create a safe environment for their suggestions including failures


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Develop Your PeopleDevelop Your People

Very few strategists• Get people out of the operational silos – expand their thinking

• Must communicate - can’t execute a secret strategy

• Don’t assume they know the strategy

Start the process with continuous improvement

Advance to projects

This develops experience so that people can effectively participate in the company’s strategic planning

This process will allow you to assess who are your good strategists – participation is a great educational tool


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Defining the Problem or Desired OutcomeDefining the Problem or Desired Outcome

The #1 reason why initiatives fail is the lack of clear definition or goal

Understand the difference between a problem statement and purpose statement

Focus on the outcome – not the problem• What’s the value proposition?

Begin with end in mind – work backwards

Differences between a company strategy, planning a project, or solving a problem

Create a filter that is consistent with strategy

It’s about allocating resources(c) 2012 New Construction Strategies

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The Key to the Process is QuestionsThe Key to the Process is Questions

The key to the process is asking the right questions – not trying to have the right answers

Questions create buy-in for the stakeholders who are participating


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Look at the IndustryLook at the Industry

Is the market changing?

If so, how do you need to change?

How does this impact your future?

It’s a good idea to listen to clients• Be wary of disruptive innovation

What are today’s critical issues facing your company and the construction industry?

What are the future critical issues facing your company and the construction industry?


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What’s the Force Behind Your CompanyWhat’s the Force Behind Your Company

What’s the types of buildings you build - what’s the type of buildings you don’t work on?

What type of customers you work with – what’s the type of customers you don’t work with?

What’s the type of services your provide – what’s the type of services you don’t provide?

What market’s do you work in – what markets do you not work in?


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Which? ● Which business will your company be in?● Which services will you provide?● Which markets will you participate in?● Which brand will you be known for?● Which values will you focus on?● Which critical issues will have the most impact?

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Why?● Why does your company exist? ● Why are you creating this business model?● Why will your clients buy your services?● Why will your client’s value your services?

Where?• Where is your company headed?

• Where is the industry headed?

• Where are your clients located?

• Where is your company located?


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The Key to the Process Is PurposeThe Key to the Process Is Purpose

Once the company agrees on a purpose it can focus on the critical issues

To accelerate growth a company needs to leverage is strategy (purpose) across multiple services, multiple clients, and multiple markets simultaneously.

What is your “Blue Ocean?”


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Identifying Your PurposeIdentifying Your Purpose

Exploring a larger content of purpose lets you think larger and more creatively

The bigger the purpose – the more possibilities

A bigger purpose may eliminate obstacles to your current situation

May find a better idea that benefits all stakeholders


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3 Keys to a Powerful Purpose3 Keys to a Powerful Purpose

Greater effectiveness

Improves quality of life for all stakeholders & community

Individual betterment


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What Makes a Powerful PurposeWhat Makes a Powerful Purpose

It recognizes every company & situation is unique

It considers the future

It’s a living solution that’s constantly being improved or better defined


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Creating the Right SolutionCreating the Right Solution

Need to create as many possible solutions as possible• Have all stakeholders participated so that we have considered all

perspectives?

• Create a long list – you pair it down during the analysis phase

Does the solution move us toward the long-term goal?

Can we execute this strategy?

Does this solution consider all stakeholders?

Is the solution flexible enough to adapt to a changing environment?


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Need to Control CompetitionNeed to Control Competition

Your strategy isn’t working if you don’t control or at least influence the rules

Your strategy isn’t working if you are constantly surprised by your competitors

Successful strategies allow you to choose competitors rather then have them choose you

Need to understand competitors• Their business concept

• Their area of expertise

• If you do this they become predictable


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Don’t Attack Competitor’s WeaknessesDon’t Attack Competitor’s Weaknesses

Conventional wisdom is flawed

They will improve weakness & turn it into a strength• No shift in market share with this approach

Attack strengths and choke it off• This is the proven way to increase market share

Don’t try to do it better – change the rules• Turn strength into a weaknesses

• Home Depot versus hardware stores


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Strategy Is About Growing Your BusinessStrategy Is About Growing Your Business

• Strategies provide direction, philosophy, values, and methodology for building and managing your business

• Strategies create the guidelines and boundaries for evaluating important business decisions

• Strategies answer: “What will make this business successful over time?”

• To develop an effective strategy requires strategic thinking

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Selecting the Right StrategySelecting the Right Strategy

• Look for leaders in your niche of the market• What do they do that makes them the dominate player?

• There are usually several strategies that you can employ to create a competitive advantage

• The idea is to select the one that fits best• Prioritize your company values

• Establish chart

• Usually focus on core strategies that remain constant but are modified to meet current market conditions

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Executing the StrategyExecuting the Strategy

Nothing occurs until the strategy or solution is executed

Many great ideas fail because they aren’t executed• Too often management abdicates this role instead of delegating

• Execution is impossible without ownership

• Effective execution is impossible without commitment

Execution is clearly part of the strategy• Do you have buy-in?

• True buy-in only comes from participation

• Do you have the resources to execute the strategy or solution?

• Have you built in enough flexibility to deal with the unexpected?


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Must eliminate ambiguity or not there will no effective execution• Doesn’t mean there can’t be flexibility

• But unless someone knows what they are supposed to do – it’s difficult to execute it

Strategy can’t be so lofty that people can’t identify with it

However, need to stretch, challenge and excite people

Must be focused on both long-term and short-term goals (purpose) just like a project


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Need to plan the execution in phases (milestones)• An execution process requires a system

• The work needs to be chunked – planning for 90 days at a time maximum (milestones)

• The management team (whatever group agreed on the strategy or solution) establishes the parameters – but those implementing focus on how the work is actually performed

• Continuous improvement is the worker’s idea –so let them implement it

• Instead of telling those that are doing the work what to do – management should ask questions to insure they understand and are on target to meet the milestones


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How to Get Started

It starts by recognizing all stakeholders have the potential to contribute

Start small - don’t try to start with a huge problem – allow people to learn the strategic thinking process• There is little risk on small continuous improvement efforts

• Huge learning curve

• Creates motivated people (in on things & appreciated)

Focus on what’s important to the stakeholders – not the company

As they gain experience get them to participate on more complex issues


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What Should Objectives Cover?What Should Objectives Cover?

• Should provide a cross section of the business

• Most businesses focus on financial and marketing objectives

• However, should target the entire scope of the business

• Focus on goal most critical to your success

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Some Rules for Effective ObjectivesSome Rules for Effective Objectives

• Keep meaningful by making them specific and important.

• Prioritize to have only the most important goals.

• Past successes and failures are a great source of ideas for creating goals.

• Create objectives that can be measured continuously.

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How Many Objectives?How Many Objectives?

No special number, but 8 –11 seems to work the best.• 1 on revenue

• 1 on profitability

• 2 or 3 on marketing

• 4 to 6 on operations, personnel or any other important issues

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Additional Ideas to ConsiderAdditional Ideas to Consider

• What actions could you take to achieve superior economic performance?

• How can you build loyal clients by adding value through the delivery of unique and differentiated services?

• How can you work with others to add superior services to increase sources of profitability?

• How can you use your core expertise to increase your client’s profitability?

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How Do You Add Value For The Client?How Do You Add Value For The Client?

• “WOW” the client!• Creates client loyalty• Requires client intimacy• Client intimacy comes from managing the client’s special needs• Serving special needs is the heart of adding value

• If you’re not wowing your clients – you’re not going to be remembered

• Research indicates the best of class contractors have a strong main objective of delighting their clients

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Total Client SolutionsTotal Client Solutions

• Focuses on relationships through customized services

• Services are unique

• Services provide high value to the client

• Probably the best approach for contractors

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Don’t Cast Your Strategy in Concrete

When you have finished you strategic plan – it’s time to assign someone to tear it apart• What could improved

• What’s the new threats

• What’s the new opportunities

• In essence – constant evaluation by someone who can step back from the heat of the moment and be objective

Strategy is a long-term proposition, but in needs constant adjustment (90 day maximum action steps)


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Don’t Cast Your Strategy in Concrete

Revisiting strategy on a regular basis is not about changing it• It’s about refining the strategy

• Understanding the situation better

• Developing a list of critical issues

Avoid casual change – don’t abdicate your strategy• Don’t let the environment simply mold your company

• Don’t let consultant dictate your strategy

Slow times can be a good time to change

Time to change one’s strategy• No more growth possible in current area

• There is a potential death threat out there


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Final ThoughtsFinal Thoughts

No contractor can thrive without continuous improvement based on strategic thinking

Contractors need to tap the intellectual resources of all its stakeholders

Company strategies must be well constructed which requires a systematic approach to strategic thinking

Contractors that thrive in the future will be the masters of strategic thinking

Throw away the box! Think big – not small• “BHAG – Big Hairy Audacious Goals” - Jim Collins


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Final ThoughtsFinal Thoughts

It was not my role today to tell you what to do – my role was to challenge the way you think

For each of you, it’s your job to determine your company’s Purpose!

However, don’t be afraid to ask for input from all your stakeholders

Challenge your team! - Challenge conventional wisdom!Remember you are no longer in the Mechanical

Contracting BusinessIt might make you uncomfortable – but it’s worth it!Will it require work? Absolutely, but you have no choice!(c) 2012- New Construction Strategies

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By: Ted GarrisonNew Construction Strategies

[email protected]

www.StrategicPlanningforContractors.info

Follow on twitter: www.twitter.com/tedgarrison

Strategic Thinking & PlanningStrategic Thinking & PlanningFor ContractorsFor Contractors


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1 By: Ted Garrison New Construction Strategies 800-861-0874 [email protected] Follow on