Engineering Construction Transformation Challenges & Change Hurdles - How to Build Sustainable Competitive Advantage - Part 3: Support Value Creation
Fadi Bayoud
Geomatics | Real Estate - Engineering - Construction | Strategy & Foresight | Operations & PMO | Transformative Leader (Governance-People-Processes-Technology) | Write & Speak on Strategy & Project Management & AI
This is the 3rd and final part of an article entitle: Engineering Construction Transformation Challenges & Change Hurdles - How to Build Sustainable Competitive Advantage
Strategic Management in Engineering Construction
During my work and advisory engagement, I came across many CxO’s and directors who had some difficulty in defining and understanding the term “Strategy”. This is fine and normal because strategy is one of the least understood words and one of the most abused words. My answer is usually on the line of: “defining strategy depends on what you want to do!”
In its extensive definition, strategy is agreeing with your team on
... and doing the above while operating your business-as-usual and sustainably succeeding in a vulnerable, uncertain, complex, and ambiguous world, that has an abundance of political, social, economic, and technological disruptions. (In simpler terms, Strategy is agreeing on where to play and how to play and with who to play to achieve a sustainable competitive advantage.)
Since engineering construction is mainly operations, strategy must moreover connect and align with operations (and its resources, project management in this case), while actively integrating with change and transformation management to cater for the technologies and business innovations that your firm requires for it to play its role in the future.
No, it is not easy! But it is imperative that firms do it if they want to play a role in the future.
A Guide on strategic management in engineering construction
The above definition of “strategy” stressed on the phrase “agreeing with your team on …”; this is extremely important to set effectively and efficiently the:
To arrive at this agreement, Strategic thinking is a resource like no other when we perform strategic management. CxO’s and directors must learn and develop this skill that allows them to look holistically at their business, market, industry, stakeholders, processes, tools, people, technology, environment, and social and regulatory changes.
A firm that seeks excellence and sustainable competitive advantage must have a team of strategic thinkers to deliver the sought-after value; otherwise, it will have little chance to grow, let alone to survive in this competitive world.
To quote Alice in Wonderland: “My dear, here we must run as fast as we can, just to stay in place. And if you wish to go anywhere you must run twice as fast as that.”
We all are aware of the importance of having the right team onboard; but Jim Collins explained it very clearly in his book ‘Good to Great’: “The executives who ignited the transformations from good to great did not first figure out where to drive the bus and then get people to take it there. No, they?first?got the right people on the bus (and the wrong people off the bus) and?then?figured out where to drive it. They said, in essence, “Look, I don’t really know where we should take this bus. But I know this much: 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.”
Imagine what future you can reach if you have a collection of strategic thinkers on your bus – your company!
Strategic Management Framework
There have been several research activities that suggested different ways to frame the strategic management methods in engineering construction. However, they form variations of a general framework with the following elements.
One: Vision, Mission, and values must not be taken lightly, and must not turn into the Vision, Mission, and values of the wall where they hang in posters and nice presentations. To effectively transfer them from “the Walls” to the hearts and minds of the employees, and to give them the chance to know and apply them efficiently, the following simple rules can be a key success:
Two: objectives setting and agreement can be a challenging task as mentioned above. However, the following guide that categorises objectives can be helpful.
Three: Analysing the business environment gives the firm an understanding of market in which it wants to play. This is done by studying the political, economic, social, technological, environmental, and legal opportunities and threats, and put forward risk-based response mechanisms.
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Four: Analysing the firm’s resources is important to understand its fit to the current landscape and future objectives. This analysis is done by answering a set of resource-based questions that are grouped as per the following categories:
After gaining insight from this analysis and through risk management mechanisms, Management can iterate on its objectives to further strengthen and fine-tune.
Five: Risk-based plans must then be put forward with the required core capabilities, in terms of resources (physical, financial, knowledge, cultural, marketing, organisational) and individual abilities (motivations and skills), to solve current issues and to achieve the set of objectives. In most cases, engineering construction firms are faced with a problem when it comes to utilising and mobilising capabilities for strategic change; usually, the existing capabilities are too static to adapt to change, or they simply do not exist within the firm. Hence, firms must decide on ways to acquire, build, and/or merge resources and abilities to produce a dynamic set of useful competencies that fit the requirements to carry out the change and materialise the strategy.
An important aspect of any strategic management is its ability to keep building dynamic capabilities that can adapt to the continuous changes in the market, industry, economy, technology, laws/regulations, and society. Unless a firm has the strategic objective to building this dynamic capability, it will keep going through the same spiral of tension and refusal whenever a new change hits the market, especially the technological innovation.
Take CAD for example; back in 1980’s when 2D CAD was introduced, there was a huge confusion as to how to change from the drawing board to digital screens. The same confusion happened when we moved to 3D in the 1990’s, which was followed again by the current shift to BIM in the 2000’s and recently digital twins. This confusion was always present because firms haven’t built dynamic capabilities that allow its modus-operandi, systems, and procedures to adapt quickly to any technological innovation that demands change and transformation. (We still find construction engineering firms struggling in adopting the 30-years old 3D CAD and the 15-years old BIM; this is a strategic failure on an industrial level.)
To conclude on Strategic Management
To transform the strategic management ecosystem into a true value-support entity, a shift in management thinking is required towards establishing a fit-for-purpose strategic management framework.
Strategy?in an?engineering?construction?firm is not an easy task, because it must connect and align the strategic long-term objectives with the?short-term operations and?projects’ specific objectives.
Also, for strategic management to be effective, it must have elements of change and transformation management; otherwise, you cannot mobilise people and change processes to materialise the strategy.
This is an extremely challenging undertaking when those who strategically lead the firm are still mentality anchored to specific objectives of projects (that have short-term nature). Changing the mentalities requires efforts, energy, and emotions, and in many cases money.
However, if?strategic management?is done properly (agreed-upon, holistic, dynamic, and risk-based), it is one of the best investments that allows the firm to outperform the industry’s norms, in growth and profit.
A note on Change Management
As per the Dr. John Paul Kotter, the Professor at Harvard Business School on leadership and Change, these are the eight steps for successful implementation of a change initiative:
To Conclude
Through my project work, research I conducted on successful and failed initiatives, advisory work (my successful and failed ones), and discussions with many CxO’s and Directors, it was apparent that most of the firms likes and wants to change; however, only few could. Those who could (and I know many of them) were those who combined strong strategic and operational thinking, dared to navigate through the ocean of obstacles and hurdles, and succeeded in negotiating needs and wants of their people with the interests of the firm’s future.
Easily said that done? Yes! And the first steps are always hard. Is there a chance of failure? Yes, of course; but we learn from our failures to succeed later.
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