Second root problem #2: We don’t know how to sell (our) services
Read more about the connection between selling your services, innovation and profitability.
The mentioned conflict between the client and the architect in the last post probably could have been avoided if the conversation had been about coordination and how the team plans to coordinate the project. So, instead of asking for a method (BIM), ask the team how they plan to do the work and reduce risks.
Very likely, the team would have proposed coordination based on BIM - because it is so much easier to find mistakes early on in 3D instead of 2D plans and on-site. So BIM is a method that helps the team do a better job for the client, but the client doesn't need to order separately!
I invite you for a thought experiment:
Imagine the architect going to the client and saying: "Look, we need a bigger budget to coordinate the building design and the specialist's work because now we use BIM." The client will hopefully say: “What? Did you not coordinate before? Now that you use software that makes coordination easier, you want more money? Did you screw your clients earlier?” It's like a construction company asking for more money because they bought a new excavator that work faster…
So, it’s important for the client NOT to order a method but results. A good order could look like that:
One of the main identified risks in this project are cost overruns and delays due to the high complexity of installation and the low ceiling height. Please show us in your offer how you plan to manage this risk.
The problem of not knowing how to sell our service is even bigger, as many people don’t see it as a problem! In every presentation about BIM you will see this or a similar graph.
The interpretation is:
Other industries perform much better than the AEC industry.
AEC is the only industry that did not show any productivity gains.
The reason why other industries perform better is that they embrace technology.
It might be true that other industries embrace digitalization more. Still, the reasoning is faulty and based on not understanding the economic definition of productivity. Productivity is measured by the output rate per input. Or in simpler terms the relationship between how much money you earn per hour spent. So even if we worked faster (more efficiently), we would not earn more money as long as we didn’t manage to sell either for a higher price or win more contracts. So our productivity problem is a sales problem and not solvable with technology!
Visualize, visualize, visualize
I saw this very well when supporting a production company to improve its sales process. The analysis of the numbers showed that they won huge contracts that looked great on paper and were great for plant utilization, but they never managed to finish these deals with profits. Other smaller, more local, and more custom-made projects were successful.
The sales team complained about the high workload in calculating these huge projects, which hindered them from spending time on the smaller ones that needed more thought; they blamed the production team for not executing well. The production team blamed the sales team for selling for a price that was not economically feasible… The atmosphere was not great!
Just by introducing a Kanban Meeting in the morning with a prequalification process on all the potential leads and NOT calculating the huge ones’, profitability and success rate did go up.
Another example of why technology is only a short-term efficiency gain comes from one of my students - a construction manager. He said: “You just have to look at the local construction companies in two villages. One buys a bigger crane. The other does the same. One buys some controllers for their excavators, and the second will follow a few months later.” The same is true for any investment in digitalization. These efficiency gains are necessary for the company to stay in the market, but they won’t allow it to become more profitable unless the company manages to combine it with some kind of business model innovation.
You will read more about this in Step 5: Empowering the Business Model. Bear with me and think about how to provide a better service or tell your customers why they should work with you.
Next week we start looking into procurement as the flip side of the same coin - the yin and yang of economics.