How to best embrace AEC digital transformation

There is no denying that the Architecture, Engineering and Construction (AEC) sector is in the throes of a significant technological revolution. Many companies are contending with substantial challenges due to this accelerated rate of change, especially when it comes to adopting agile culture and leadership practices.

Business leaders are in a high-stakes game. Many have embarked on programs to reinvent their businesses, where the rewards for success are enormous, while the consequences of failure are drastic, even lethal (McKinsey, 2017).

So, how can AEC businesses best embrace digital transformation?

Be brave.

Given the speed of transformation, companies need to take more risk, not less. Recent McKinsey research reveals that the companies that do best follow bold and disruptive strategies. They make big bets on new technologies and business models, champion a test-and-learn culture where every failure is an opportunity to improve, and launch change programs that transform their whole business.

There is no such thing as 100% certainty when facing significant technological change, so it is helpful to channel fear of the unknown into proactive measures, such as external analysis of opportunities and threats and a thorough internal assessment of the company’s asset and capability gaps.

Leaders can also combat employee uneasiness towards change by clearly explaining what digital transformation means to their company, their hypotheses for what needs to be done and concrete examples of what that might look like.

Be focused and disciplined.

Focusing on the right kind of initiatives to allow for swift digital transformation is crucial.

Too often, businesses pour resources into programs that yield short-term gains but can’t be scaled, aren’t sustainable, and don’t add value. To avoid this wasted energy, any digital transformation should start with understanding customer needs and build out solutions that not only address them but have the potential to generate the most impact (McKinsey, 2017).

Agility and speed are vital to the success of a digital organisation; however, this energy needs to be channelled diligently. The progress of digital initiatives should be tracked transparently, with leaders systematically identifying and capturing business value.

Be resourceful.

Many digital transformations become unstuck, due to a challenging combination of rapidly increasing costs and slower than expected revenue growth or savings.

Leading companies have been able to “bootstrap” this process by targeting quick wins to unlock value so that the effort funds itself.

In fact, this approach can be so effective that the most successful companies generate more savings or revenues than are needed to fund a transformation (McKinsey, 2017).

The same can be said for the often-elongated process of human resourcing for digital transformation.

Any effective talent search should begin with identifying the problems that need to be solved. This helps clarify the skill sets you need. Creating a start-up-like working environment with informal spaces where people can gather, and share ideas can help attract the right talent (McKinsey, 2017).

It is also important to have an open innovation mindset and engage an ecosystem of partners and vendors. This approach can help accelerate access to markets, talent, capabilities, and technologies.

Fail fast. Adapt. Succeed.

“Failure is an option here. If things are not failing, you are not innovating enough” – Elon Musk.

For a digital transformation to be successful, it is imperative that companies reward experimentation, foster creativity and value learning from mistakes on the path to getting it right next time.

Organisations that embrace learning typically develop inexpensive prototypes, test them with customers, and repeatedly refine them until they reach a minimum viable product (MVP). They seek feedback on new features from small groups of customers through simple surveys or by gauging their responses to specific elements such as the wording or layout of a web page (McKinsey, 2017).

Go faster.

“If everything seems under control, you’re not going fast enough” – Mario Andretti (one of the most successful race-car drivers in history).

Even if you feel that you are rapidly embracing change, chances are it isn’t fast enough. Speed is critical when it comes to reacting to market changes and capturing opportunities before competitors do.

The most effective businesses ingrain speed by making agile a way of life. They use short development cycles to address specific needs, try out rough-and-ready fixes repeatedly with customers, and produce “good enough” solutions (McKinsey, 2017).

The era of digital transformation is upon us, and if AEC organisations and leaders want to ensure their ongoing success, they must be bold, focused, disciplined and resourceful, whilst adopting an agile, open, innovative culture that values continuous learning and creativity, and executes this at the fastest possible rate.

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