EllisDon also owns a luxury resort in St. Lucia called Windjammer Landing. You should, of course, spend the entire recession there, but that’s not the point here.

These are tough times in the resort business, as you would guess. As soon as people start feeling financially insecure, they cancel their vacation.

(BTW, resorts tend to be the first business to come out of recessions as well: After about a year or so, when people realize they aren’t about to lose their jobs, and they have been stuck in their house for an eon of months, their spouses tend to say things like ‘Take me to the sun, or take me to a divorce lawyer’. But that’s not the point here.)

The point is this. We resort owners like to put ourselves into a death spiral. Our occupancies drop, so we cut prices. Tour operators (who are run mainly by the airlines) call us and say ‘Everyone else is cutting prices, you better cut yours or be left in the cold’. So, lamblike, we obey. Consumers aren’t stupid. They figure out pretty quickly that they can wait until the last minute, because the longer they wait, the lower the prices are. As they wait, the resort manager panics, and cuts prices further. Then the tour operators call all the other resorts, and beat them over the head to match the idiot who just cut his prices below cost. So they do, and the consumer – so incentivized – waits. We actually reward the consumer for harming us. And good for them I say – if we are going to be so stupid, we deserve our fate.

I have never seen such obviously illogical, self destructive behavior by business owners in my life, except maybe in the construction industry.

But of course, it’s not our fault. I blame the New York bankers.

Along with Rick Maggiacomo, I had lunch with one of our key clients last week. He was pissed. Somewhat happily I guess, he wasn’t pissed at EllisDon, he was pissed at the entire construction industry.

I will try and summarize an hour of his frustration into a few sentences. He said basically this: You builders come into meetings with the clients, with the design consultants, with the whole team, and you all have more knowledge about how to make my project successful than anyone else in the room, and what do you do? You sit there. You sit there, and wait for the client and the designers to make decisions. Then you say “OK, fine”, and you go away and price things out, and if it comes in over budget, and the project fails, it’s not your fault, because you were just carrying out instructions, pricing what you were given. Except, it is your fault: You had the opportunity to lead, you had all the knowledge, yet you just sat there.

We had a vigourous discussion, not just about our failings but about how change was needed at his level as well. I have no intention of sharing that discussion widely.

But I will say one thing: If somebody’s going to be upset in order to make a project successful, it doesn’t bother me if it’s the people at EllisDon. It doesn’t bother me if it’s the consultants. I don’t really care who we upset, as long as it’s not that fellow who was sitting across the table from me and Rick.

The process needs to change. Roles need to change. Change upsets people. That’s life. But the next time we meet that client for lunch, he’s paying, and Rick and I are going to savour it. Because we are going to earn it.

What the Very Smart Clients Want

OK, I have now worked my way through denial, anger, bargaining and depression through to acceptance: EllisDon has some tough sledding ahead.

But there are some key things we that we must do to both alleviate the impact and danger of this recession, and to come out of it strong and sprinting. There are threats, but there are lots of opportunities as well. Here are my reasonably determined proposals for EllisDon in 2009.

1. All Hands On Deck: There are really only three functions at EllisDon in a recession. We need to bring in new work. Or we need to build that work. Or we need to be effectively helping the people who are carrying out those two functions, because that's all there is. I acknowledge that my primary function at this company for the next eighteen months is to help bring in as much new work as possible, everything else is secondary. If you think you are a 'Leader', forget it, we need workers. The control functions exercised by our head office staff are more critical than ever in a recession, but even these must be exercised in a way that helps our job teams succeed.

2. Much Greater Speed: Everything - absolutely everything - needs to happen faster, and then even faster again. We need to do everything urgently. Don't set a meeting for next week, set it for later today. We will call clients right now, and get her what she needs, right now. We can move faster, we can force decisions and conclusions now, we can inspire others to move faster, and if they won't be inspired, then we will leave them behind. This is not just about brains, it is also a full out sprint.

3. Don't Just Find New Work, Create It: Think about it. We have the expertise to create financial proforma's for our clients, to design and build any structure to satisfy those pro forma's, and as much expertise as anyone else to raise the equity and debt to finance the project. We say to our clients: You tell me the rent per square foot that your tenant will pay and we will do the rest - turn key, guaranteed. Or this: One fellow in our R&D Department suggested that we analyse and show clients how recladding their building will have a pay back in energy savings, with the increased rent as a bonus. There are a plethora of sustainable building initiatives available to us. Here is our mantra: We don't just listen to our (prospective) clients, we do the thinking for them, and then show them the way. We will Innovate, at every single level of this entire operation.

4. We Have Built Great Relationships, So We Will Work Them: Of course, we will be in touch with everyone and learn everything we can. But when we are talking to you, of course we are interested in the facts; but what we would rather discuss is your needs, the dangers you are facing and the opportunities you see. We will get that conversation going, jot it down, and then figure out what we can do together. That's a relationship.

5. Everything Is On The Table: I have no idea what the world will look like when this is over, but for sure much conventional wisdom will be smashed forever. Great fortunes will be made by the 'first movers'. Three words: Fast, fluid, flexible. So we need to keep those ideas coming in. It needs to make sense, but we will never know if we don't put it on the table.

In truth, this recession is one of the greatest opportunities to excel that EllisDon has ever been given. We are going in strong, and we can come out stronger. We are going to outrun, out-produce, out- innovate and out think everyone else. We are going to work our buns off, but just think about where we can find ourselves when the dust clears.

Let's Make the Recession More Painful

Transform

Design

Operate

Advise

Equip

Manage

Construct

Finance

Digitize