Industry Trends — Fall 2021

"The only constant is change" is a common adage that seems even more relevant than ever these days. It seems like we earn a new set of challenges and opportunities as soon as we’ve figured the last ones out. For every pandemic related restriction lifted, a new supply chain issue arises; for every customer willing to move a project forwards, a new price increase requires a refreshed proposal. The good news is we’re seeing macro trends that largely show wind in our sails moving into 2022 for those brave enough to seek the open sea.?

Economy Wide?Trends

The largest economy wide trends that we see persisting into 2022 substantially are a) supply chain disruptions, b) labor shortages, c) remote/hybrid work, d) inflation, and e) climate change.?

Supply Chain Disruptions

We’re all accustomed to supply chain disruptions and all signs point to challenges through 2022. Like many of these trends that are obvious, I’ll focus on strategies to manage this challenge. First and foremost is to ensure estimates and contracts are sent with language that outlines exactly what you’re able to commit to with clear remedies for missed timelines. Manufacturers and distributors alike are fudging their timelines to win orders knowing they can’t make their commitments. Plan for everything to be late until you have a tracking number. Expect pricing increases frequently. Communicate like crazy with your customer and your vendors. Stay flexible and get creative to meet your deadlines. Underpromise even more than normal. And most importantly remember everyone’s in the same situation so keep your cool when things inevitably get delayed.

Labor Shortages

We expect labor shortages to persist through 2022 for most roles with a dire outlook for many roles becoming the new normal due to lack of talent entering the workforce and large portions of the workforce retiring. First and foremost is to rethink your relationship with your team to ensure you’re the type of company and the type of boss you’d want to work for. Great companies with great compensation, upward mobility, and training will hoover up the talent. Remember you’re competing for the talent and if you’re not a boss, remember your role in creating a work environment that welcomes new team members. Next, get serious about your software and technology stack to automate and simplify every part of your business that you can so your workers are only doing the things humans have to do. Finally, get engaged in your trade, professional, and local/state communities to get more on the job training, post high school education recruitment, and policy incentives to help attract and educate/train the new workforce.

Remote/Hybrid Work

This is a trend that appears to be here to stay with the only unknown being what percentage of the workforce will end up remote or hybrid. Generally I think it will depend on the role and location to a large degree since it’s obviously easier to be a remote software developer moving out of San Francisco than a journeyman electrician in Wichita. First and foremost, consider how flexible you can be for every role/person in your organization/team. The more flexible you can be, the more productivity you will generally see and the higher your hiring rate and retention will be. If you aren’t ready to go fully remote or hybrid, think about the systems, processes, and tools you’re lacking that would help you make that transition.?

Inflation

Inflation is both worse than expected and here to stay longer than hoped. With the Fed looking to increase rates and supply chain issues starting to temper in 2022, we can expect inflation to slow mid 2022 at the earliest. That means price increases, sometimes sharp, in all sorts of places. First and foremost, make sure you’re including significant increases in your expenses for 2022 budgeting. Next, look for replacements to larger expense lines to see if you can use this opportunity to find less expensive options or efficiencies.?

Climate Change

Most large organizations, most small organizations, every nation, and most Americans now believe climate change is happening and we should do something about it. This is creating a huge demand for carbon reduction strategies with government mandates and organization goals getting set and updated at a breakneck pace. This means we’re going to see a massive expansion in capital deployed into every sector of the economy, including buildings which I’ll cover in the industry specific trends below. Larry Fink from Blackrock?just announced?he thinks the next 1,000 unicorns (private companies worth over $1B) will come from climate tech and the world’s first trillionaire will be in climate tech. This is the next internet, but bigger. I can’t emphasize enough how big of an opportunity this is for businesses to capitalize on and how the ship has already sailed on it being something that will happen.?

Up Next

Stay tuned for Part II coming soon that focuses on trends in the Energy Efficiency Industry!