A business model for the 21st century planning, engineering or design firm

The recent demise of one of New Jersey's largest engineering and planning firms,  CMX (formerly Schoor-DePalma), has made us think about what could be a winning model for private sector land use firms in the 21st century.

In the 20th century, such firms could rely largely on the expertise and relationships of influential professionals (such as Olmsted, Bartholomew and Schoor).  As the firms grew, more work would be farmed out to junior and mid-level associates in a central office, who generate the greatest revenue margins in the private sector.  Bigger firms could better afford the hardware and manage the human resources to become sources of expertise for their clients. With the reduction of travel costs and the growth of the Internet, bigger firms could afford to have more branch offices to compete against smaller local firms.

Here's why the 20th century business model won't work as well in the upcoming decades:

• Globalization.  Globalization doesn't just distribute goods around the world -- it distributes brain power.  Within the next decade, if not already, there will be thousands of English-speaking professionals in lower-wage countries like India and China.  Some will have trained in the United States.  Some, like those in the Middle East, will be trained in their home countries by American universities.  And of course, there are plenty of fine universities throughout the world.

• Information technology. As more information gets digitized, and there is more bandwidth to distribute it, there is less need to keep it in any central location -- especially not in high-rent locations like New York City or San Francisco.   Videoconferencing and cloud software (such as Google and Zoho applications) allow professionals to collaborate from anywhere they can get an Internet connection.

• Diversity.  Olmsted, Bartholomew, Schoor and others were almost always building business relationships with other white men like themselves. They could build connections in the Rotary Club meetings and golf courses, then close the deals in the conference rooms.  In the 21st century, more decision-makers are going to be women and people of color.  (And not just in the cities.  American suburbs are becoming more diverse.)  It's easier to work with people who are like yourself, and so large planning, engineering and design firms tend to go from lighter to darker, and from more male to female, as you move down their organization charts.  Decisionmakers who are women or ethnic minorities are going to wonder how well your firm can serve their communities if your staff look like the people who used to live in those communities. 
  
  (By the way, you know that technique of tossing 5% of the work to a women-owned or minority-owned business, then showing up with someone from that firm at the interview to show the diversity of your team?  Yea, decision-makers will catch on to that soon.)

  So what might the successful 21st century American business model be?

• It may be based anywhere in the United States, but its technical and analytical work will be done in India, China or other countries with large numbers of English-speaking professionals and lower wages than in the United States.  Teams will collaborate by videoconference and large files will be sent through the Internet.  Anything you can do from your desktop in the United States can be done by someone else anywhere in the world -- for less money.  

• Branch offices in the United States will be boutique offices.  They will have a small number of staff -- mostly people who are good at getting contracts that can be managed somewhere else -- and be in locations that clients will enjoy visiting.  (Hint: Nobody wants to visit an exurban office park.)  Because information is so cheap to get and hold, more professionals will look the same to clients.  Building personal relationships with a wide variety of people will be more important than ever.

• It will be more diverse and culturally competent.  No, no, no -- it's not that clients want to hire only those people who look like themselves.  Clients will know that everyone who pitches to them has the same basic level of expertise. Contracts will be given not for being smart, but for being able to understand the concerns of the client at a deep level. 

• It may not even be a single firm, but a consortium of boutique businesses sharing resources. Why carry the overhead of full-time staff when you can have friends in the business who are on-call? (By the way, this is happening now, and it is a threat to mid-sized firms.)

If you are a professional in the United States with at least 20 more years left in your career, you should build skills in business development, cultural competency, team building and leadership.  Even if there is more demand for planning, there may not be much more demand for mere technicians in the United States.

--Leonardo Vazquez, AICP/PP

If you want to learn business development skills, try the upcoming BOCEP Deep Learning course Business Development for Planners, from May 26 to July 3, 2010.