BUSINESS: One of a kind

In 1973 Bob Tamblyn started Engineering Interface in Toronto to focus only on the conceptual design of mechanical and electrical systems for new commercial buildings. The intent was to develop better value and reduce energy use.

For more than 25 years, BA Group of Toronto have nurtured a transportation planning consultancy that specializes in urban traffic solutions for facilities like shopping centres and sports venues that attract large numbers of people.

Both firms sought to distinguish themselves from other consultants by carving out a definable niche. This gave them a unique identity in the eyes of their clients.

Therein lies the “art” of business strategy — recognizing customer needs, real or anticipated, and crafting challenging strategic visions to guide your firm. It may not demand restricting yourselves to a narrowly focused niche like the two examples above. But it does require that you make yourselves distinctive and easily identifiable with what you do. It demands instinct, intuition and guts.

The “science” is the methodical approach you follow to execute your business strategy. Alone, good art or science can make a viable firm. Together they can create a formidable competitive advantage.

Art: defining your strategic vision

Consulting engineers, like any service company, find it more difficult than product-based businesses to differentiate themselves. The problem arises from the intangible nature of services (few measurable differences) and low barriers to entry (easy to replicate).

But it is easier to defend yourself from competition and substitution if your vision is based on a clearly defined category or attribute. Al Ries and Jack Trout, in their classic book, The 22 Immutable Laws of Marketing (HarperBusiness, 1994) capture the concept succinctly with their Law of Focus. It claims that “The most powerful concept in marketing is to own a word in the prospect’s mind.” There are numerous examples of the Law of Focus in consumer products, but fewer examples in business-to-business, which is the world in which consulting engineers operate.

It is not that the Law of Focus doesn’t apply to service companies, but rather that it is more suitable to specific markets or industries. Robert McBride, P.Eng., president of BA Group, offers this example “We focus on a specialized element of transportation planning and we do it very well. Everyone in our industry, especially our customers, knows exactly what we are and what we stand for.”

How your firm finds its focus can be both accidental and deliberate. Take Engineering Interface as an example. They started in the conceptual design business but increasing demand for their services in existing buildings led them to develop expertise in energy efficiency retrofits. Tom Tamblyn, P.Eng. (Bob’s son) took over leadership of the company in the early 1980s. According to Tom, “We deliberately nurtured this new energy retrofit focus. We flattened our structure, added direct customer marketing and introduced innovative new services like operator training and energy accounting.” Their efforts were so successful that Engineering Interface became synonymous with energy retrofits in Canada.

It took TRAK Canada almost a decade to discover their strategic focus. TRAK started doing industrial mechanical system design but evolved to provide energy-related audit, design and project management services for institutional and commercial buildings throughout Northern Ontario.

With many successful and award-winning ground source heat pump (geoexchange) designs under their belt, TRAK had found a new focus. According to Jeffrey Maxwell, P.Eng., president and founder of TRAK, “We kept getting consistently superior performance from the geoexchange technology, but there were very few firms who had any expertise in the field. It’s a ground floor opportunity for a mature technology.” By 2001, Maxwell had moved TRAK to Burlington in southern Ontario to be closer to the large markets.

Your company’s strategic vision is not the same as its value proposition. The value proposition is a tactical outcome of the firm’s strategic vision. The value proposition can change or evolve without any changes in the company’s strategic focus. As an example, Engineering Interface changed their value proposition from being fee-for-service consultants to turnkey, design-build, performance contractors. All this was consistent with the strategic focus on energy efficiency.

Science: executing your strategic vision

Take two firms. Both have discovered their unique strategic vision through accidental evolution and some deliberate decisions. Both are lucky enough to be first to market with their vision (never underestimate the power of being first to market — The Law of Leadership). But only one of the firms goes on to major success. The other survives but is surpassed by firms who became market leaders in the eyes of the clients. What happened?

The successful firm used a methodical and deliberate process — a scientific method — to execute their unique strategic focus and value proposition.

Strategic planning is a well documented process and many excellent references are available in any business library or bookstore. With strategic planning for business-to-business firms, you should keep in mind the following insights.

First, narrow your markets. There is a temptation to cast your net wide across many markets in search of customers. But you will probably achieve more long-term success if you target key markets and “drill” down to achieve leadership.

In-depth understanding of the issues facing clients can be achieved only by immersing yourselves in their environment. Your understanding then becomes a barrier to new entrants into the market who cannot provide the same degree of insight. If you dabble in multiple markets, you have only a superficial appreciation of your customers’ circumstances and cannot become a trusted partner.

You can use formal market research, anecdotal experiences or a combination of the two to develop a profile for potential markets. Regardless of the approach, you should identify each of the following:

Gross revenue potential

Industry trends

Perceived urgency of need

Geography

Competitors or substitutes

The one truly quantitative item in the list above is gross revenue potential. Often you cannot research this directly, but must estimate it using benchmark and proxy data. Don’t be concerned about absolute accuracy. If you apply the approach consistently with conservative assumptions across all segments, it offers important insights into the relative opportunity between each sector.

With this information, you can now prioritize the potential markets for both near and long-term opportunities.

Define Target Accounts. Start by digging deeper into your target market to pick the top prospective accounts. These may be firms where there is an existing relationship or a progressive firm that might adopt an innovative offering. Just as with markets, you don’t want to spend a lot of effort on marginal accounts. Doing your homework first will save a lot of time down the road.

Develop an organizational structure. Establishing the unique value of your firm may require that you develop a new organizational structure or create special new skills to meet the needs of your clients.

Robert McBride explains how BA Group developed a special approach. “We intentionally avoided having a typical departmental structure that is geared toward internal efficiencies. Rather, we dynamically create unique teams of specialists specifically suited to the needs of the customer and the project.” At any one time, BA’s 25 staff is managing over 100 projects simultaneously. The team members are not static — each project team is customized and specially assembled. TRAK developed a unique financing structure for commercial building owners to help them overcome the perception that geothermal exchange systems have a higher capital cost. Both companies made structural innovations that set them apart from typical consulting operations.

Involve staff. Unlike a prod
uct, your client’s perception of the company is influenced every time they interact with one of your staff — for better or worse. Engage your staff in the vision of the company. If all your people are “singing from the same song sheet'” it will reinforce the customer’s belief in your value proposition.

Target communications. It’s the message not the medium. Often firms are tempted, or directed, to spend lots of money on advertising and marketing communications. Be careful. You are well advised to spend more time and money on developing the right message and less on printing.

Your customer markets are probably small, relative to consumer markets, and the number of impressions you want to make is limited. Use very targeted communications that support face-to-face dialogue with clients and reinforce your firm’s unique attributes.

Learn early. The early successes are critical. You must learn fast from early adopters to refine quality, value and delivery for new prospects as you drill down into the marketplace.

Ask your clients. Make a point of asking your clients what you are doing right and what you could do better. Assuming that you already know is very dangerous. To ensure you get honest feedback, get an independent third party firm to do your customer surveys.

Don’t just listen to what your customers say about your firm. Instead, hear their views on the industry and where their own company is going. This is where you find ideas for new services that they may not yet know they want.

In summary, the most successful companies are those that can carve a distinctive identity for themselves and use it as their strategic vision. Good planning and execution turn the vision into reality.

But don’t let your business strategy gather dust. Changes in industry, economy, legislation and competition can render your strategic vision an “also ran.” Review your strategic plan annually and don’t be afraid to start again if you must.

Dan MacDougall, MBA, P.Eng is president of Naveris Enterprises, a marketing consultancy in Toronto, e-mail dan@naveris.com