Artificial ingredients

The first industries to adopt a new technology are the ones that succeed. Is your firm prepared for the age of artificial intelligence?

According to Zweig Group’s 2016 Financial Performance Survey, net service revenue per employee has steadily risen from about $127,000 in 2014 to $137,000 in 2016 due to efficiencies gained through utilization of technology. Still, that doesn’t change what we know – the AEC industry is notoriously slow to adopt new technology.

A survey published in The 3rd Annual Construction Technology Report by JBKnowledge shows that the AEC industry’s information technology budget is lower than other industries and only 4.1 percent of construction professionals used two-way cloud and server-based data transfers in project phases such as bidding and estimating. Architect and designer Lee Poechmann cites historical examples in his blog as well. Adoption of Six Sigma took nearly 20 years to become a mainstream manufacturing process and LEAN principles, developed by Toyota for automotive production, are still struggling to be introduced into the construction industry despite the massive benefits seen by firms that adopt these processes.

According to CB Insights, merger and acquisition activity for artificial intelligence startups has seen a more than 650 percent increase between 2011 and 2016. There were 38 such transactions in 2015 alone. Most of these businesses were acquired within their first four years. The usual suspects such as Google, Apple, and Twitter were some of the most active, but also at the top of the list are firms such as Salesforce, IBM, and Intel.

You may think artificial intelligence is over-hyped, a buzzword, or the stuff of science fiction, but the reality is that you need to start planning for how it will affect your business. My background in chemical engineering and physics has spurred my interest in this area for the last few years. In addition to using the normal CAD programs TK solver and Maple, I’ve dabbled in machine learning and building neural networks in MATLAB.

Just in the last few years, AI has had monumental impacts in our daily lives ranging from medicine to education and hopefully now to how we interact with the space in which we live. The Zweig Letter has even highlighted some of the trailblazing firms utilizing drone technology and virtual reality to add a competitive advantage to their business. If you fall past the early adopters on the bell curve of “diffusion of innovation,” developed by Everett Rogers back in 1962, you may already be positioning yourself to be behind the competition. We are approaching Ray Kurzweil’s “singularity” and the pace of technological change may leave you at risk. Let’s take a look at some of the longer-term, more transformational impacts of AI on our industry and how we might integrate them into the strategic plan.

How much time do you spend responding to RFPs, drafting, and messages? These are all things that AI can already handle. Right now, it appears that if you have a job that is done in a regular and consistent way, then that is a good job for AI. Artificial intelligence, however, will soon expand beyond this. A great example of using AI to solve problems that would take days for an architect, is the space syntax software depthmapX developed by the Bartlett Space Syntax Laboratory at UCL. It uses AI to perform spatial network analysis on many levels without the need of going on-site. Soon, with the amount of data that is analyzed from our personal devices, AI will be the one designing, planning, and organizing complex structures, with architects and engineers only adding finishing touches.

They will already know the client’s desires, what they buy, where they go, and how they utilize the space from data collected instantly. It will prioritize projects, respond to email, and analyze our growth plans. AI is something to be embraced as it has tremendous potential to change the world. How will this impact your staffing needs? Recruitment? Will you become a leaner, more efficient organization, or will your employees’ roles simply shift? How does this affect the way you interact with clients? It is important to your bottom line to embrace this change while managing the risk that implementation of new technology can present.

There will be a lot of uncertainty with new companies and technologies vying for dominant design in the next 10 to 30 years. It is important to have some criteria in place to intelligently embrace and implement emerging technology into your enterprise. Here are a few questions to assist in determining which technology to integrate into your strategic plan:

  • How does the solution fit into your existing environment?
  • How does the business benefit (even if I cannot show ROI yet)?
  • Who in my organization will use it?
  • Does my staff have the expertise to manage the change?
  • How will the technology affect my clients?
  • What are the risks?
  • Can I test the solution as a pilot program without significant business disruption or cost?
  • Will the solution scale to the entire enterprise?

Now that you’ve determined the technology is important to accomplish the long-term vision for your organization, there are always risks in the implementation process. Books have been written on the subject, but I’ve added a few tips below:

  • Give the leaders of your firm a layman’s tutorial on the role of any emerging technology.
  • Make sure your firm understands the risk of any new technology and the steps you are taking to mitigate those risks.
  • Invite members of your IT team that are more conservative to weigh in on emerging trends. It may prevent costly mistakes during implementation.
  • Test unproven technologies in small pilot programs before firm-wide implementation.
  • Blast the success stories from the early adopters out to the rest of the organization as a good example of what works.
  • Create a concrete process or application for accepting, analyzing, and implementing new technologies in order to weed out ideas that are not far enough along to make good business sense.

These are just a few suggestions to get you thinking about how to continually analyze and implement new technologies. What tips do you have for implementing technological change in your organization? We would like to know.

You will see many iterations at varying levels of AI in the coming years. Change can be hard, but it should be embraced. Allow your firm to evolve for the future and make sure it has the tools to create the value your clients need. In the end, that’s why your firm exists. If you want to continue, AI will have to be part of the plan.

Phil Keil is a consultant with Zweig Group’s M&A and strategic planning services. Contact him at pkeil@zweiggroup.com.