Strategic Thinking in Construction

Strategic Thinking & Planning
For Contractors
By: Ted Garrison
New Construction Strategies
800-861-0874
[e-mail] www.TedGarrison.com www.StrategicPlanningforContractors.info
Follow on twitter: www.twitter.com/tedgarrison
(c) 2012- New Construction Strategies

1

Part I

What Is Strategic Thinking &
Planning

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2

Module 1: Where Are We?
3

(c) 2012- New Construction Strategies

It’s Not the Economy
4

• 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
(c) 2012- New Construction Strategies

Self-Inflicted Wound
5

“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

(c) 2012- New Construction Strategies

No Excuses!
6

“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
(c) 2012- New Construction Strategies

A Whole New Mind
7

 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
(c) 2012- New Construction Strategies

Why Is This Important?
8

 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
(c) 2012- New Construction Strategies

Competing for the Future
9

“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!
10

• 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 There
11

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
12

China’s proposed new 220 story building – construction schedule 7 months
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Too Many People In the Construction Business
Are Insane!
13

● Albert Einstein

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

industry must change

(c) 2012- New Construction Strategies

How Many People Wake Up & Can’t Wait to
Buy a New Air Conditioner?
14

(c) 2012- New Construction Strategies

Self-Evaluation

Approach to Your Job
#

Option A

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 longrange 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

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Check
A

Option B

15

Check B

The Right Things
16

“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 Needed
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17

Module 2: Ten Construction 3.0™ Strategies
18

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
(c) 2012- New Construction Strategies

#1 - It Starts with Leadership
Event - Project Final
Initial

conditions

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
(c) 2012- New Construction Strategies

19

“Types” of Individuals
20

100%
Information

Apply

Process

Change

Perceive

Perception of Information

100%

0%

A
B

C

Time

Reality: The more “perceptive” individual perceives faster---- changes faster ---makes more accurate predictions----requires less data ---- makes less subjective decisions! (c) 2012- New Construction Strategies

Exercise on Individuals
Type A or Type C
21
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

(c) 2012- New Construction Strategies

Effective Leadership
22

• 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
(c) 2012- New Construction Strategies

#2 - Strategic Thinking
23

 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
(c) 2012- New Construction Strategies

What is Strategic Thinking?
24

 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

#3 – Value Based Construction
25

• 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

(c) 2012- New Construction Strategies

#4 - Increased Innovation
26

• “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
(c) 2012- New Construction Strategies

#5 - Increased Collaboration
27

• 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!
(c) 2012- New Construction Strategies

#6 – Systems Based
28

 Companies with systems are more efficient

 It’s easier to train people when systems are used
 Necessary for sustainable innovation

(c) 2012- New Construction Strategies

#7 – Effective Risk Management
29

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
(c) 2012- New Construction Strategies

#8 – More Efficient Operations
30

 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!

(c) 2012- New Construction Strategies

#9 - Better Use of Technology
31

• 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
(c) 2012- New Construction Strategies

Customer

Financial

Satisfaction

# 10 - What to Measure
Operational

Innovation
&

Performance

Learning

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32

Company Success
33

 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!
(c) 2012- New Construction Strategies

Module 3: Strategic Planning & Thinking
34

What’s the difference between strategic planning and strategic thinking?
(c) 2012- New Construction Strategies

Strategic Planning
35

• 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
(c) 2012- New Construction Strategies

Strategic Planning
36

 Purpose

 Vision Statement
 Mission Statement
 Objectives
 Strategies
 Action Plan
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Why Strategic Thinking
37

• “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
(c) 2012- New Construction Strategies

Where Is Strategic Thinking Needed
38

 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
(c) 2012 New Construction Strategies

Strategic Thinking
39

● 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
(c) 2012- New Construction Strategies

Strategic Thinking
40

• 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

(c) 2012- New Construction Strategies

Why Do You Need Strategic Thinking
41

 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
(c) 2012 New Construction Strategies

Why Do You Need Strategic Thinking
42

 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
(c) 2012 New Construction Strategies

Barriers to Effective Solutions
 De Bono’s Intelligence Trap

43

• 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 ideas

 Focus on beating the competition
 Instead – what’s needed is Integrative Thinking
• Roger Martin, Dean of Rotman School of Management @ Univ. of Toronto
(c) 2012- New Construction Strategies

Do You have a Superior Strategy?
44

• Without a superior strategy you will be forced to compete on price

• You must understand your SWOT (strengths, weaknesses, opportunities, & threats)

• Your strategy must consider services provided, customers clients, markets, and geography

• Need to adjust to the new priorities
• Surveys indicate 80-90% of CEO’s feel organizationally competent, but strategically deficient
(c) 2012- New Construction Strategies

Superior Strategy
45

Sun Tzu
“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!

(c) 2012- New Construction Strategies

The Art of War

Why You Should Get Out of the
Mechanical Contracting Business?
46

 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

Module 4: Blue Ocean Strategy for Contractors
47

 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
(c) 2012- New Construction Strategies

Blue Ocean Strategy for Contractors
48

 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!
(c) 2012- New Construction Strategies

Avoid Red Oceans
49

 Red Oceans represent

existing industries & markets  Boundaries are defined &

accepted
 The rules are established
• Set by competition
• Competition understands better
 Services are a commodity
W. Chan Kim & Renée Mauborgne
– Blue Ocean Strategy
(c) 2012- New Construction Strategies

 Need to out-muscle the

competition (price wars)
49

Marketing Strategies for Construction
50
SERVICES
Less than
Specs

Lower

COST

Same

Higher

Plans &
Specs

Limited
Must be LCP Must be LCP
Opportunity
Loser

Big Loser

Plans &
Specs

Added Value

Loser

Added Value that clients want LCP = Low Cost Provider

(c) 2012- New Construction Strategies

More than
Specs

Four Questions to Ask to Add Value
51

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?

(c) 2009 Garrison Associates

What’s the Definition of a Client?
52

“Someone under the protection of”
(c) 2012- New Construction Strategies

What’s the Purpose of a Business
53

 “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?
(c) 2012- New Construction Strategies

It’s About Competing on Value
54

• 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

1st of Three Critical Questions
55

• 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

2nd of Three Critical Questions
• Who are you selling it to?

56

• 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?
(c) 2012- New Construction Strategies

3rd of Three Critical Questions
57

• 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?

(c) 2012- New Construction Strategies

What’s Needed to Compete on Value
58

 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
(c) 2012- New Construction Strategies

How Can You Add Value?
59

 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
(c) 2012- New Construction Strategies

What’s First Step in Competing on Value?
60

 “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
(c) 2012- New Construction Strategies

5 Strategies to Winning the Differentiation Wars
61

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?
(c) 2009 Garrison Associates

Part II

The Strategic Thinking Process

(c) 2012- New Construction Strategies

62

Module 5: Strategic Thinking Process
63

• 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

Special Strategic Comments
64

• 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

(c) 2009 Garrison Associates

Challenges
65

 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
(c) 2012- New Construction Strategies

Strategic Thinking Process
66

 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

Strategic IQ
67

“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

(c) 2012- New Construction Strategies

The Strategic Planning Process
Strategic

Operational

Purpose
Vision

Mission
Objectives
Strategies
Action Steps

(c) 2009 Garrison Associates

68

Seven Critical Questions
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

(c) 2009 Garrison Associates

69

The “Right People”
70

Who should be involved in strategic thinking?
“The who?”
Everyone!

Continuous Improvement is the key!
(c) 2012- New Construction Strategies

Questions That Must Be Answered!
71

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?)
(c) 2012- New Construction Strategies

Getting the Right People Involved
 Who are the right people?

72

• 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

How to Get People to Participate
73

 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 them

 Engage 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
(c) 2012 New Construction Strategies

Develop Your People
74

 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
(c) 2012- New Construction Strategies

Defining the Problem or Desired Outcome
75

 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

The Key to the Process is Questions
76

 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

(c) 2012- New Construction Strategies

Look at the Industry
77

 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?
(c) 2012- New Construction Strategies

What’s the Force Behind Your Company
78

 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?
(c) 2012- New Construction Strategies

Questions That Must Be Answered!
79

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?

(c) 2009 Garrison Associates

Questions That Must Be Answered!
80

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?

(c) 2012- New Construction Strategies

The Key to the Process Is Purpose
81

 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?”

(c) 2012- New Construction Strategies

Identifying Your Purpose
82

 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

(c) 2012- New Construction Strategies

3 Keys to a Powerful Purpose
83

 Greater effectiveness

 Improves quality of life for all stakeholders &

community
 Individual betterment

(c) 2012- New Construction Strategies

What Makes a Powerful Purpose
84

 It recognizes every company & situation is unique

 It considers the future
 It’s a living solution that’s constantly being improved

or better defined

(c) 2012- New Construction Strategies

Creating the Right Solution
85

 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?
(c) 2012 New Construction Strategies

Need to Control Competition
86

 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
(c) 2012- New Construction Strategies

Don’t Attack Competitor’s Weaknesses
87

 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
(c) 2012- New Construction Strategies

Strategy Is About Growing Your Business
88

• 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 (c) 2009 Garrison Associates

Selecting the Right Strategy
89

• 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
(c) 2009 Garrison Associates

Executing the Strategy
90

 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?
(c) 2012 New Construction Strategies

Executing the Strategy
91

 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
(c) 2012- New Construction Strategies

Executing the Strategy
92

 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
(c) 2012 New Construction Strategies

How to Get Started
93

 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
(c) 2012 New Construction Strategies

What Should Objectives Cover?
94

• 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

(c) 2009 Garrison Associates

Some Rules for Effective Objectives
95

• 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.

(c) 2009 Garrison Associates

How Many Objectives?
96

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 (c) 2009 Garrison Associates

Additional Ideas to Consider
97

• 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?

(c) 2009 Garrison Associates

How Do You Add Value For The Client?
98

• “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 (c) 2009 Garrison Associates

Total Client Solutions
99

• Focuses on relationships through customized services
• Services are unique

• Services provide high value to the client
• Probably the best approach for contractors

(c) 2009 Garrison Associates

Don’t Cast Your Strategy in Concrete
100

 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)

(c) 2012- New Construction Strategies

Don’t Cast Your Strategy in Concrete
101

 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
(c) 2012- New Construction Strategies

Final Thoughts
102

 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
(c) 2012 New Construction Strategies

Final Thoughts
103

 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 Business
It might make you uncomfortable – but it’s worth it!
Will it require work? Absolutely, but you have no choice!

(c) 2012- New Construction Strategies

Strategic Thinking & Planning
For Contractors
By: Ted Garrison
New Construction Strategies
800-861-0874
[e-mail] www.TedGarrison.com www.StrategicPlanningforContractors.info
Follow on twitter: www.twitter.com/tedgarrison
(c) 2012- New Construction Strategies

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