Sunday, June 6, 2010

Three Pivot Points That Are Influencing the Future of FM

Students of history will tell you that most often the course of human events is a steady march.  Along the way there are pivot points which redirect the journey, sometimes in small ways, sometimes in dramatic ways.  Most often, however, history is a march of progress made in incremental fashion, each increment building on, expanding and improving those that preceded it. 
The same can be said of the history and future of Facility Management.  We are today a logical result of what has gone before and contributors to what will follow.  In that latter role it is important that we survey our profession and discern where today’s pivot points are and work to guide the profession through them.  In my view there are three pivots occurring now which will have near term and lasting effect.  These are social and economic changes occurring in the world, strategic shifts in how FM relates to the world around it, and finally the knowledge management shifts with which FM integrates with business.
This is the first of a three part post that will examine each of these pivots in turn.

Pivot One:  Social and Economic Change
We have all heard about the new generations of workers now flooding the employment ranks and their differences from older generations.  More profound, however, is the realization that the world’s population numbers are changing in broad and fundamental ways, as evidenced by the following data (Martin Walker, “The World’s New Numbers,” The Wilson Quarterly, Spring, 2009).
  • In 1998 the number of people in the developed world over the age of 60 outnumbered those below the age of 15 for the first time.  By 2047 the world as a whole will reach that point.
  • The world’s median age today is 28, by the middle of the century it will be 38.
  • Of mid-20th century demographic titans Russia, Japan, Britain, Germany, Italy, and the U.S., today only Russia, Japan and the U.S. remain in the top ten.
  • China, today’s demographic colossus, will have a shrinking population in 2050.
These population changes have direct implication to FM because FM has always reflected the realities of the world and businesses it serves.  As economic power shifts around the globe we will be challenged to be in front of the shifts, enabling government, business and society as the world adapts.  Those who are not cognizant of the changing landscape will be disadvantaged at the beginning.  Conversely, those who do understand will have opportunities in developing regions that have need but do not have the knowledge or technical infrastructure required to sustain development.  We will be increasingly challenged to envision, plan, build and support operations that span countries, cultures, and companies.
In concert with this fundamentally changing world population add economic stress resulting from continuing global financial challenges.  The challenges and the stress are going to be with us a while.  Recent difficulties in Europe and a potential “second dip” in the U.S. portend an extended period of capital fragility.  Governments are cutting back on programs across the board.  This idling of one of our largest development engines will have a near term effect as projects slow down, and a long term effect as the pipeline for future projects and initiatives further constricts.
It is true that a mild recovery appears to be underway in the U.S., but it is mild and global economic issues will continue to add pressure that may stifle the early momentum.   G20 Finance ministers yesterday dropped their support of fiscal stimulus plans, making it clear that they no longer believe expansionary policies are sustainable or effective as a way of supporting economic recovery.  From the G20 communiqué: 
“The recent events highlight the importance of sustainable public finances and the need for our countries to put in place credible, growth-friendly measures, to deliver fiscal sustainability, differentiated for and tailored to national circumstances.  Those countries with serious fiscal challenges need to accelerate the pace of consolidation.”

Note especially the emphasis on individual nations being responsible for cleaning their own houses as best befits their situation.  
For FM’s it is important to realize what this global financial crisis means to us strategically and operationally.  This is the “dark side” of globalization.  It was great and now it’s not, and it’s really not.  The interdependencies that have become the nervous system of international finance affect us indirectly but quickly.  The U.S. and to a slightly lesser extent Europe are primarily consumer economies.  With governments now less able and less willing to spend their way out of recession pressure on the private sector to take a stronger leadership position is increased.  That is hard to do when unemployment prevents consumers from spending.
Employment indices for Europe and the U.S. paint the picture. 

Euro zone unemployment exceeds 10%  (EuroStat, June 5, 2010)

U.S. job losses are deep and long  (Calculated Risk Blog, June 6, 2010)

The combination of these two large events; the shifting of global population and age demographics along with extended and widespread financial stress, represent a pivot that has and will continue to change the course of human history.  Nations, industries, businesses, families and individuals are all affected, and all are reacting.  In this environment it is FM/CRE’s responsibility to steer a studied and well-considered course, to advise our constituencies, and to provide leadership when and where opportunities present themselves.

Next week:  Pivot Two – Strategic Alignment in an Era of Ambiguity

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