Out Running the
                           Tsunami of Change
                                 Rex Miller
                                Thought Leader
                                TAG Consulting




Thursday, April 29, 2010
Outrunning The Tsunami of Change




Thursday, April 29, 2010
Different Seas   Different Ships




Thursday, April 29, 2010
The 4 Tsunamis of History

                               Oral        Print


                            Broadcast      Digital

Thursday, April 29, 2010
Thursday, April 29, 2010
Thursday, April 29, 2010
Thursday, April 29, 2010
Thursday, April 29, 2010
Thursday, April 29, 2010
Character
                           Content




                            Image      Facebook Vote


                           Network
Thursday, April 29, 2010
Oral
                Holistic, Circular, Symbolic,
                 Interdependent
           Print
                 Linear, Sequential, Rational,
                 Autonomous
           Broadcast
                 Fluid, Fragmented, Emotional,
                 Isolated
           Digital/Interactive
                 Holistic, Non-linear, Whole-Brain
                 Systems Thinkers, Interconnected
Thursday, April 29, 2010
Thursday, April 29, 2010
Thursday, April 29, 2010
Resilient

                           Adaptable
Thursday, April 29, 2010
Thursday, April 29, 2010
Thursday, April 29, 2010
Digital Immigrants   Digital Natives




Thursday, April 29, 2010
Boomer
                                                 50%

                            Over 65


                                                2008
                                6%
                           Millennials
                               6%



                                         GenX
                                          38%




Thursday, April 29, 2010
Millennials
                                43%




                                   2018
                           GenX            Boomers
                            33%              24%




Thursday, April 29, 2010
2 Camps
                Finding the New Normal
                             or
         Hoping for the Old Normal



Thursday, April 29, 2010
Common Phrases

         80 Websites                  Industry Leader
                                      Strive for Excellence
                                      A Bunch of Marquis Clients
         • 6 Mention Sustainability   World Leading
         • 3 Use Social Networking    Highest Quality
                                      Leading Provider
         • 2 Made me Smarter          We have Values
         • 1 Provided a Blog          We started in a garage in 19...

         • 1 Mentioned the iPad       PS: Get Rid of Flash!




Thursday, April 29, 2010
AV Trends

             • Scope Blur
             • Commoditization
             • Prefabrication
             • Telepresence and
               new competitors
             • Margin Erosion

Thursday, April 29, 2010
Thursday, April 29, 2010
Productivity Gap




Thursday, April 29, 2010
The Bid Game vs. Project Success Factors
      • The bid ≠ the business case
      • Negative correlation between low bid
        and final cost
      • Dilution of commitment
      • Winner’s curse
      • Bidding is not apples-to-apples
      • Cost of bidding gets recouped
      • Fallacy of value engineering
      • What does the bidder actually win?
      • Campaign vs. Govern
      • Romance vs. Marriage
Thursday, April 29, 2010
How Do We Force Projects to Behave?

             •Fragmented
             •Silo’d
             •Linear/Sequential
             •Hierarchical             Owner

             •Adversarial
             •Scope Based
             •Anticipates Litigation
             •Low Price / Bid


Thursday, April 29, 2010
Thursday, April 29, 2010
Thursday, April 29, 2010
Sutter Health Past Experience




Thursday, April 29, 2010
Traditional vs. Integrated Target Pricing




Thursday, April 29, 2010
How do Real Project Behave?
              •Complex
              •Relational
              •Require trust
              •Need tight coordination
              •Fluid
              •Interactive
              •A system
              •A discovery process



Thursday, April 29, 2010
Results of a Broken System

          • $300-$500 billion annual WASTE
                (buildingSmartAlliance)


          • 50%+ Waste in the System
                (buildingSmartAlliance and Lean Construction Institute)


          • 70% Over Budget and Late
                (Egan report)


          • 48% of Green House Gases
                (Energy Info Admin Statistics and Pew Climate report)




Thursday, April 29, 2010
Uncovering the Hidden Waste
         • Labor = 50% @ 30% efficiency = 35% waste

         • Materials = 40% @ 70% efficiency = 12% waste

         • QTO = up to10% of the cost

         • Bidding = 5%+ of the cost of a project

         • Change orders between 2-10% of the cost

         • Contingencies up to 7%

         • Team Learning Curve = 5%

         • 3-7% is lost in project cost reduction by not
           maximizing Construction Tax Planning

Thursday, April 29, 2010
New Operating Principles (imperatives)

                 Thought Leadership
                 By-Products to Products
                 Integrated Teams
                 Trust
                 No Waste
                 Owner Value Language
                 Brand Promise


Thursday, April 29, 2010
Thought Leadership

Thursday, April 29, 2010
By-Products to Products

Thursday, April 29, 2010
Select Teams not Players




                           2004        2008
Thursday, April 29, 2010
Evidenced Based Team Formation




Thursday, April 29, 2010
Playing To Your Strengths


                                 17%
                                 engaged 29%
                                         disengaged


                                   54%
                                   unengaged



Thursday, April 29, 2010
Thursday, April 29, 2010
Thursday, April 29, 2010
The ROI of Trust
            • Warren Buffet: Handshake deal for McLean

            • LogicaCMG study of 1200 contracts: 20% to
                 40% difference on service, quality & cost

            • Profitable Partnering for Lean Construction:
                 strategic partnering delivers up to 30% in
                 cost savings of construction

            • Speed of Trust: distrust creates a 50% tax
                 on work

            • Edelman Trust Barometer: 20% higher ROI
                 over a 10 year period

Thursday, April 29, 2010
Trust: Deficit to Dividend
                           Trust Balance      -40%           -20%          Neutral          20%              40%

                           Environment      Stressful        Worry       No worries       Positive         Uplifting


                           Focus           Pre-emption       Process       Scope         Outcome        Mutual success
                           Relationships    Disrespect     Indifferent      Cordial      Cooperative     Collaborative


                           Process          Hidden          Chain of     Task at hand    Keeping        Making it easier
                                            agendas        command                       promises         for others
                           Behavior            CYA         Do my job       Respect      Partnering       Transparency

                           Outcomes          Politics        Slow          Efficient      Learn from         Improve
                                                                                         mistakes
                           Systems         Distracting       Hassle     Does not get in Supportive         Adaptive
                                                                           the way
                           Ethics          Self-interest   Compliance      What is      What is right    What is good
                                                                          expected

Thursday, April 29, 2010
NO Waste - Sutter Health & DPR




                                                   10% under budget
                           $1 million a bed
                                                   6 months early
                           $1000 per square foot
                                                   6 RFIs MEP

Thursday, April 29, 2010
The Value of
                            a Promise


                           Guaranteed Price
                           Guaranteed Move-in Date
                           No Change Orders
                           2-Year Warranty
                           1 Page Contract

Thursday, April 29, 2010
Thursday, April 29, 2010
Call To Action
        •Develop a Digital Mindset and Tools
        •Design Resilient and Adaptable Organizations
        •Make Way and Leverage This Next Generation
        •Use Upstream Thinking to Get In Earlier and Higher
        •What By-Products of Your Work Can Become Products?
        •Don’t Miss the IPD, BIM and Reliable Results Wave
        •Begin Building Teams that Integrate the Supply Chain
        •Learn to Speak to Owners in Terms They Care About
        •There is an ROI for Trust. Can you Measure Yours?
        •Is Your Brand Promise Clear, Reliable and Truly Valuable?
        •Begin to Develop Strategic Foresight to Navigate Change
Thursday, April 29, 2010
rmiller@tagconsulting.org
            214-498-3055
                           •Speaking
                           •Strengths Based Leadership and Coaching
                           •Building Resilient and Adaptable Organizations
                           •IPD Strategies and Implementation
                           •Market Repositioning
                           •Creating Integrated Alliances
                           •Business Development
                           •Change Management
Thursday, April 29, 2010

Tsunammis of Change

  • 1.
    Out Running the Tsunami of Change Rex Miller Thought Leader TAG Consulting Thursday, April 29, 2010
  • 2.
    Outrunning The Tsunamiof Change Thursday, April 29, 2010
  • 3.
    Different Seas Different Ships Thursday, April 29, 2010
  • 4.
    The 4 Tsunamisof History Oral Print Broadcast Digital Thursday, April 29, 2010
  • 5.
  • 6.
  • 7.
  • 8.
  • 9.
  • 10.
    Character Content Image Facebook Vote Network Thursday, April 29, 2010
  • 11.
    Oral Holistic, Circular, Symbolic, Interdependent Print Linear, Sequential, Rational, Autonomous Broadcast Fluid, Fragmented, Emotional, Isolated Digital/Interactive Holistic, Non-linear, Whole-Brain Systems Thinkers, Interconnected Thursday, April 29, 2010
  • 12.
  • 13.
  • 14.
    Resilient Adaptable Thursday, April 29, 2010
  • 15.
  • 16.
  • 17.
    Digital Immigrants Digital Natives Thursday, April 29, 2010
  • 18.
    Boomer 50% Over 65 2008 6% Millennials 6% GenX 38% Thursday, April 29, 2010
  • 19.
    Millennials 43% 2018 GenX Boomers 33% 24% Thursday, April 29, 2010
  • 20.
    2 Camps Finding the New Normal or Hoping for the Old Normal Thursday, April 29, 2010
  • 21.
    Common Phrases 80 Websites Industry Leader Strive for Excellence A Bunch of Marquis Clients • 6 Mention Sustainability World Leading • 3 Use Social Networking Highest Quality Leading Provider • 2 Made me Smarter We have Values • 1 Provided a Blog We started in a garage in 19... • 1 Mentioned the iPad PS: Get Rid of Flash! Thursday, April 29, 2010
  • 22.
    AV Trends • Scope Blur • Commoditization • Prefabrication • Telepresence and new competitors • Margin Erosion Thursday, April 29, 2010
  • 23.
  • 24.
  • 25.
    The Bid Gamevs. Project Success Factors • The bid ≠ the business case • Negative correlation between low bid and final cost • Dilution of commitment • Winner’s curse • Bidding is not apples-to-apples • Cost of bidding gets recouped • Fallacy of value engineering • What does the bidder actually win? • Campaign vs. Govern • Romance vs. Marriage Thursday, April 29, 2010
  • 26.
    How Do WeForce Projects to Behave? •Fragmented •Silo’d •Linear/Sequential •Hierarchical Owner •Adversarial •Scope Based •Anticipates Litigation •Low Price / Bid Thursday, April 29, 2010
  • 27.
  • 28.
  • 29.
    Sutter Health PastExperience Thursday, April 29, 2010
  • 30.
    Traditional vs. IntegratedTarget Pricing Thursday, April 29, 2010
  • 31.
    How do RealProject Behave? •Complex •Relational •Require trust •Need tight coordination •Fluid •Interactive •A system •A discovery process Thursday, April 29, 2010
  • 32.
    Results of aBroken System • $300-$500 billion annual WASTE (buildingSmartAlliance) • 50%+ Waste in the System (buildingSmartAlliance and Lean Construction Institute) • 70% Over Budget and Late (Egan report) • 48% of Green House Gases (Energy Info Admin Statistics and Pew Climate report) Thursday, April 29, 2010
  • 33.
    Uncovering the HiddenWaste • Labor = 50% @ 30% efficiency = 35% waste • Materials = 40% @ 70% efficiency = 12% waste • QTO = up to10% of the cost • Bidding = 5%+ of the cost of a project • Change orders between 2-10% of the cost • Contingencies up to 7% • Team Learning Curve = 5% • 3-7% is lost in project cost reduction by not maximizing Construction Tax Planning Thursday, April 29, 2010
  • 34.
    New Operating Principles(imperatives) Thought Leadership By-Products to Products Integrated Teams Trust No Waste Owner Value Language Brand Promise Thursday, April 29, 2010
  • 35.
  • 36.
  • 37.
    Select Teams notPlayers 2004 2008 Thursday, April 29, 2010
  • 38.
    Evidenced Based TeamFormation Thursday, April 29, 2010
  • 39.
    Playing To YourStrengths 17% engaged 29% disengaged 54% unengaged Thursday, April 29, 2010
  • 40.
  • 41.
  • 42.
    The ROI ofTrust • Warren Buffet: Handshake deal for McLean • LogicaCMG study of 1200 contracts: 20% to 40% difference on service, quality & cost • Profitable Partnering for Lean Construction: strategic partnering delivers up to 30% in cost savings of construction • Speed of Trust: distrust creates a 50% tax on work • Edelman Trust Barometer: 20% higher ROI over a 10 year period Thursday, April 29, 2010
  • 43.
    Trust: Deficit toDividend Trust Balance -40% -20% Neutral 20% 40% Environment Stressful Worry No worries Positive Uplifting Focus Pre-emption Process Scope Outcome Mutual success Relationships Disrespect Indifferent Cordial Cooperative Collaborative Process Hidden Chain of Task at hand Keeping Making it easier agendas command promises for others Behavior CYA Do my job Respect Partnering Transparency Outcomes Politics Slow Efficient Learn from Improve mistakes Systems Distracting Hassle Does not get in Supportive Adaptive the way Ethics Self-interest Compliance What is What is right What is good expected Thursday, April 29, 2010
  • 44.
    NO Waste -Sutter Health & DPR 10% under budget $1 million a bed 6 months early $1000 per square foot 6 RFIs MEP Thursday, April 29, 2010
  • 45.
    The Value of a Promise Guaranteed Price Guaranteed Move-in Date No Change Orders 2-Year Warranty 1 Page Contract Thursday, April 29, 2010
  • 46.
  • 47.
    Call To Action •Develop a Digital Mindset and Tools •Design Resilient and Adaptable Organizations •Make Way and Leverage This Next Generation •Use Upstream Thinking to Get In Earlier and Higher •What By-Products of Your Work Can Become Products? •Don’t Miss the IPD, BIM and Reliable Results Wave •Begin Building Teams that Integrate the Supply Chain •Learn to Speak to Owners in Terms They Care About •There is an ROI for Trust. Can you Measure Yours? •Is Your Brand Promise Clear, Reliable and Truly Valuable? •Begin to Develop Strategic Foresight to Navigate Change Thursday, April 29, 2010
  • 48.
    rmiller@tagconsulting.org 214-498-3055 •Speaking •Strengths Based Leadership and Coaching •Building Resilient and Adaptable Organizations •IPD Strategies and Implementation •Market Repositioning •Creating Integrated Alliances •Business Development •Change Management Thursday, April 29, 2010