The Dark Secret of AEC Industry Commoditization

By Deborah Briers, MBA posted 10-09-2015 13:45


Ssssshhhhhh... this is just between us. The truth is that if you are still struggling to differentiate yourself and keep lowering your fees to win work, then you have fallen into the commodity trap.

This is a trap you set yourself. Think about it. You are a highly skilled technical professional. You survived many challenging years of education and have completed many significant projects. You know that YOU are not a commodity, but if you market like one welcome to widget world. 

True commodities are basic goods that are interchangeable with other commodities of the same type. It is a raw material that has no value added and quality standards are set by the government.

All industries experience commoditization over time as their projects/services evolve through the product cycle from start-up to maturation. The signal of a mature market is me-too products, overcapacity and frequent price cuts. However, even true commodities have discovered opportunities for differentiating their product around availability, delivery, shipments quantities, payment terms and other services that go with the core product.

Consider how the California Milk Advisory Board has used their “Happy Cows” campaign to reposition California’s dairy projects. Ten years ago most people never considered where their milk came from, it was just milk. Then came the activists who showed the world how production farming practices were inhumane and the added hormones were causing our kids to overdevelop. Also in the mix are the soft drink companies that have poured trillions of dollars into advertising. We don’t need to wonder why so many people stopped drinking milk and became soda-holics. Now we have a health crisis in America so the Happy Cows have come to the rescue! Happy Cows are treated humanely. No added hormones in their healthy diet. They love providing pure, wholesome milk and dairy products to families. Kids want milk that has a happy cow on the label. People are drinking milk again.

The commodity crisis became a huge issue for AEC firms as the economy has emerged from the recession. AEC firms are facing tremendous competition.

  • California has the 2nd largest number of firms (52) on ENR’s top 500 list.

  • Of the top 25 AEC design firms, 8 have their headquarters location in California including the top 3 – AECOM, Jacobs and URS.

  • All but two of the Top 24 firms have a signification presence in California despite their headquarters being located elsewhere.

If, as a small to medium-sized firm your reaction to competing with the giants has been to lower prices, reduce overhead and cut compensation benefits, you have positioned yourself as a commodity.  Talented AEC professionals, when being treated as widgets, don’t experience the level of job satisfaction that brought them into the industry. We need more happy architects, contractors and engineers!

Having served in the AEC industry as a marketing and business development professional for 20 years, I recognize the passion, vision and integrity of the people who lead and work for AEC firms. As Larry Webb of The New Home Company frequently says, what we do “is noble work”. The pioneering industry leaders, and those who have (or are) succeeding them, need to be celebrated, not overworked and then sold at cut-rate prices.

Here are three ways to de-commoditize your firm:

  1. Think of a new product (prototype) or service (3D Visualization graphics) that responds directly to changes in the built environment. Upgrading/changing your existing services are also how you can innovate. These changes force your competition to respond through innovation of their own.

  2. Think about ancillary services that will appeal to clients who are willing to pay a premium for quality, convenience or reduced risk. For instance alternative delivery methods like integrated project delivery, PPP and design build.

  3. Clients today value specialization. If you are good at something then focus your effort on being the best firm delivering those services. Clients want to see experience and be able to trust that as an expert in your field, you will deliver the superior project.

The growth and evolution of online content marketing has provided a way to achieve each of these objectives. It is how leaders of large and high growth professional services firms have built their brand image and reputation as visible experts.


HONK Alert! If you are tired of your widget wardrobe and need assistance developing your brand voice and implementing a content marketing plan for yourself and/or your firm, contact me at DB Creative Communications.