July 2009

NSPE TODAY OUTLOOK
On Rethinking the Equation

BY EXECUTIVE DIRECTOR LARRY JACOBSON

I suppose many of you have read Thomas Friedman's popular business book The World is Flat. He makes the case for globalization being the result of the invention of the silicon chip that enabled world computerization. The net result is fundamental change in the way the world operates, with an impact not unlike the advent of the printing press, the sextant, and interchangeable parts. Each of these changes opened huge opportunities for mankind in general and individuals in particular.

People who detect and understand change gain the opportunity to exploit it to their advantage. They often become rich at the expense of others who fail to acknowledge the change or ignore the change or, worse yet, eschew the change. Some of our members still exist in the analog world, but most have made the leap over the digital divide and are getting comfortable in an increasingly pure digital world.

Highly traditional institutions like the learned professions tend to be slow to embrace change because it is risky to perform at accepted professional standards using new methods, not unlike the biblical reference to the new wine in the old wineskins. The engineering profession has a special challenge because, unlike the other professions, the engineers' stock-in-trade is working with pure physical sciences, and they remain constant no matter what else happens. No amount of computerization will affect the gravitational constant.

Most engineers have adapted their practice to computerized design and communications. The big challenge for engineers in private practice and engineering firms is to adapt the business of engineering to a digital world. Let me explain what I mean.

Up until the invention of the chip, everything in life required mankind to consider the impact of both time and space. Life was organized assuming time marched along at a constant pace and all things are physical requiring both place and space. Time was the constant and space the variable. With the advent of the digital world, time remains the constant and space is altered or is totally removed from the equation. A person communicating via the digital medium is functionally no further away from a person in China or in Canada or in the adjacent cubicle three feet away.

Even though we all understand space has become irrelevant to business communications, in general we haven't reconfigured all the formulas that undergird our sales and marketing assumptions. If space is removed from business traditions, huge efficiencies emerge—efficiencies that simply don't exist in the pre-digital world. Pricing a big job is radically different when the redundant analog costs are extracted from the built up costs.

For example, consider the cost of office space. With the industrial revolution came a need for people to work together in teams. The only practical way to do that was to create buildings in which they could work and communicate together under one roof. Prior to that time, there was no such thing as an office building. So while the industrial revolution created production efficiencies, much of the efficiencies gained were diluted by the cost of special built space. Since the early 1900s, business has assumed the cost of office space is a necessary price of doing business. But with the digital revolution, business communication no longer requires people to be brought together, and therefore it is now an elective cost. Team members located all over the world can work together without any regard to actual space, and that is so even though we may still require them to sit next to each other in traditional office space. The net result is we invest a lot of money in sophisticated digital equipment that effectively eliminates the need for the office space yet we keep the space and suffer the double expense of maintaining two complete systems of communication: the high tech digital and the office space. Think how much profit would fall to the bottom line if a majority of the office space was removed from the business equation. Think how competitive the organization could become if the redundancy was eliminated.

That's but one example. Think about how much more efficient, profitable, and competitive your business will become by eliminating the "space factor." If you extend that line of thinking, you can get ahead of the curve by anticipating the future. City, state, and national boundaries become vestiges of the pre-digital world. State licensing laws become ever more uniform, melding first into regional laws, and ultimately international licensing. Building codes become increasingly more uniform. Tax law becomes uniform and perhaps even somewhat predictable. The elimination of distance melts away one institution after another.

The opportunity and the challenge for each NSPE member is to recognize that paychecks built on an assumption of space need to be rethought. Business niches that are built on the distinctiveness of one jurisdiction over another may lose their raison d'etre. On the other hand, businesses that can gain efficiencies by eliminating duplication by removing space and distance from their business models will do very well in the long run.

So, I ask you: How can your practice benefit by rethinking your business equation?