How Will Information Technology Pulverize Our Business Model (maybe yours too)?

Geoff Smith Portrait

BY Geoff Smith


Several years ago, an architect friend of mine had to make a speech about the future of his profession, and asked me if I had any off-the-wall predictions. After a few days, and perhaps a glass of wine, my prediction was that his ‘industry’ is likely to cleave in two. There will be the ‘creative side’ firms, where the conceptual designers will congregate in niche firms, and there will be the ‘production’ houses, who will work on volume, converting those concepts into complete ‘For Construction’ documents expertly, efficiently, at very low cost. My friend’s response, just a tad curt, was that design firms will never give up ‘production’ (and, now that I think about it, I haven’t heard from him in a while). And he was right in this respect: I am not an architect and had no idea what I was talking about.

Until a few days ago, I had an article about Uber sitting prominently on my desk. Just to remind me. Surely it is reasonably alarming to any sane businessperson that a rather simple combination of a GPS app, a billing app and a texting app has upended a global industry, municipal revenue bases, and hundreds of thousands of people’s lives. The more I think about it, the more I need an app to help me get some sleep.

We have all seen IT companies take over industries – from travel to entertainment to taxis – and soon, health, education and beyond. Their ambitions are limitless and relentless.

One answer, perhaps, is to turn yourself into a software operation. There are several industry players out there (GE is one, we are one, Jay Z is definitely one) who believe that they can be better at business software than the software companies can be at ‘business’. As we began to develop our own software applications, our Board suggested that this effort wasn’t our core business, that we should leave it to the tech companies. I say that as soon as you hand the control over your core systems and processes to someone else, you have handed them a big chunk of your core business, and a big source of your competitive advantage. You are now irrevocably compromised and heading in the wrong direction. We may not have the tech resources (yet), but we have the knowledge, we have speed and flexibility and we are much closer to the action. We’ll see what happens.

But regardless of how that turns out, my industry is certainly going to get pulverized. Subcontractor disciplines will merge and compete with General Contractors, who will compete with the Engineering firms that used to oversee both the Generals and the Subs. Our business model is generations old, and on its death bed.

How will it all work out? Obviously at our firm we have some very firm ideas, and obviously we don’t really have a clue. But I’m still stuck on that first thought, that many ‘traditional’ firms (industries) won’t be able to survive on both the production side and the knowledge side. Production is going to get too efficient, too fast and too global and you’ll have to be all in, or out. But production is separate from the creative ideas, the big entrepreneurial ventures, the personal (and emotional) service element. These forces will be completely different, and not in competition with one another. Some corporations will attempt both. As long as they recognize that they have two completely separate businesses under one roof, they may well succeed. For a while, then they’ll they split.

But likely we will all have to decide. IT is going to split your business model, so where and how do you want to work? And as for EllisDon? We’re not precisely sure, but my cell phone message asks “How may I be of service to you?”

Thanks for reading.