Masonry Magazine April 1994 Page. 13
Contracting in the 90s:
10 Strategies for Survival
By I. J. (JERRY) JACKSON
President and Chief Operating Officer
FMI Corporation
Change is taking place so rapidly that the only companies that will be assured of survival will be those flexible enough to adapt to increasing unpredictability.
Three common comments echoed by contractors today are: "We used to make money," "We used to do business on a handshake," and "We used to get a solid day's work out for an honest wage." These statements reflect problems that are surfacing everywhere, as the construction industry struggles to maintain the pace and remain profitable in a changing world. These comments along with a changing "American worth ethic" can be traced to the fact that today there are more competition, lawsuits, regulations, and paperwork which adversely affect our ability to do business while at the same time increase the complexity of managing people.
The New Playing Field
We bear the legacy of the '80s and have learned much from the mistakes and changes made during that decade. Construction is not the only industry experiencing change. We are entering a world in which change is taking place so rapidly that the only companies that will be guaranteed of survival will be those flexible enough to adapt to increasing unpredictability. The attitude that will help you the most in the '90s is to remember that change brings opportunity. In order to take advantage of opportunity, you must begin to manage your company strategically. Strategic management means that in the course of managing your company, there is a consistency among the decisions made. This consistency adds up to lead the firm to its supreme goal-its mission.
Many contractors say that their mission is "to make money." Obviously, profitability is required for the organization to survive, just as eating is required for people to survive. All contractors are in business to accomplish something. Define what it is you want to accomplish. This is your mission, this is what guides your employees in their everyday decision-making, and it is what you and your company should represent to them. To survive the '90s, contractors must have every person in their organization working toward a common goal. Exhibit 1 shows a sample mission statement.
Current forces in the marketplace will aid those companies that are strategically managed and destroy those that are not. Larger contractors in the '90s will have to concentrate financial and bonding resources on strong regional markets as well as develop and use advanced technology to "fast track" projects in an increased funding and risk-restrictive environment. These resources will have to be combined with efforts that exploit economies of scale with specialized expertise. An increased focus on core construction activities will be necessary as will decentralized decision making within centralized corporate objectives. Decentralized operations will require updated management information systems to improve these firms' ability to monitor project risk and better respond to market opportunities.
Developing Niche Markets
The small contractor has the best opportunity to develop niche markets which the large firms ignore due to the disadvantage of having to meet volume requirements. A stable, highly skilled, motivated work force is essential to success and a prerequisite to being a low-cost producer with above average profits. Training will be the foundation for inspiring productivity and motivation, and will be the small firm's competitive advantage. Small specialty firms have a much better opportunity to train, control, and retain skilled people than larger firms. The smaller firm, because of its size, will retain the edge in reacting quickly to market changes.