In my experience, the vast majority of small to mid-sized A/E firms (those with less than 200 employees) are not effectively positioned. Most firms don’t overstretch their capabilities per se, but rather they’re simply operating in too many markets. As a result, they’re not applying the rigor necessary to attract the types of clients and project opportunities they’d really like with the consistency they want.
This lack of focus and rigor manifests itself in a lot of ways that are detrimental to both the firm’s top-line and bottom-line performance:
- Pursuing too many opportunities the firm is not effectively qualified to win.
- Allocating too many resources towards proposal preparation and development.
- Inefficient use of talented business development personnel and firm leaders.
- Increased commoditization of the firm and its expertise.
- And, of course, this all adds up to lower than ideal profit margins.
Positioning Drives Differentiation
I generally consider positioning to be the most critical aspect of differentiation for a small- to mid-sized A/E firm (a firm with less than 200 people). If you think about the 4 P’s of differentiation, as we’ve defined them, I think of each element as a lever towards building a highly differentiated firm.
A highly differentiated firm is one that has the ability to attract the types of clients it really wants. To perform the work it finds most rewarding. On its preferred terms. Sometimes, even making more money doing it.
Some Quick Thoughts on Positioning
In the 4 P’s model, positioning is the most important lever of the equation. Identifying the right place in the market to compete is the first and most important decision. In a way, getting positioning right is probably akin to solving 60% of the differentiation challenge.
Done correctly, positioning simultaneously narrows the firm’s field of vision while reducing the readily available number of substitutes to the firm’s expertise.
A well positioned firm says to the prospective client — we do exactly what you’re looking for all day every day and every dollar you invest with us makes us an even better partner to you. Well positioned firms:
- Struggle more to find the right talent than to find the right clients.
- Sometimes find themselves “afraid” to market for fear they’ll outstrip their capacity.
- Are selective about the opportunities they pursue and can be quite dogmatic about applying their own “go/no-go” process to potential new client opportunities.
- Recognize that the risk of pursuing work outside their area of focus manifests itself as opportunity lost to deepen their expertise where they’re most valued.
- Seek to identify a space in the market that shifts their firm from one of hundreds or thousands of choices to one of a small collection of choices.
Five Examples of Well-Positioned Firms
When I talk to firm leaders of small- to mid-sized A/E firms about the importance of focus and positioning, often I hear them say that narrowing the markets in which they work is too risky. That a narrower market provides less upside. Yet, increasingly buyers are seeking more specialized partners to solve their facility challenges. And, most of the well positioned firms I speak with offer just the opposite perspective. A narrowness in focus often yields more opportunities.
Within this set of examples, I’ve included firms of all sizes (firms with less than 30 employees to those with over 3,000) to demonstrate that effective positioning can be applied to differentiate firms of almost any size.
#1 – WEBBER/SMITH
A multi-discipline design and engineering firm that specializes in the food industry. With ~25 employees, the firm has worked with some of the world’s most notable food brands on process engineering, food safety and instrumentation and controls programs at facilities all around the world.
#2 – Gibbs & Cox
This engineering and design firm has 6 offices and ~150 employees specializing primarily in naval architecture and marine engineering.
#3 – Array Architects
“We are not architects who do healthcare. We are healthcare architects.” Enough said. 100 people focused exclusively on designing more effective healthcare facilities for the betterment of the companies who run them, the people who work in them, and the patients who heal in them.
#4 – Moffat & Nichol
This ~500 person firm focuses exclusively on infrastructure. More specifically, it primarily specializes on planning and design of facilities that shape coastlines, harbors and rivers.
#5 – SYSTRA
The 2nd largest international design firm in mass transit and rail as rated by ENR, SYSTRA has 3,400 employees focused exclusively on planning, engineering, designing and building transportation systems and their related facilities. Many of the firm’s employees have direct operational experience in railroads — a characteristic that most generalist firms are almost certainly unable to match.
Wrapping It Up
Positioning is the first, and most important, aspect of differentiating an A/E firm. These 5 firms are all good examples of firms who’ve gotten positioning right. For more on this topic check out:
