Do you have the guts to be a visionary?

Bill Scheessele is chairman and chief executive officer of MBDi, a business development professional services firm.

We’ve seen some of the signs indicating a radical change in the government contracting industry. These are:

• Ongoing adjustments in acquisition management with 30 major acquisitions programs eliminated or cut back.
• 70 percent to 80 percent of reactive, dependent capture opportunities cut in half.
• Dwindling business opportunities in many areas.
• Fewer new starts of big defense programs.
• A shift to less expensive weapons systems.

Now we’re hearing definitive pronouncements requiring change in the industry. Chairman of the Joint Chiefs Adm. Michael Mullen recently indicated the current rate of defense spending is unsustainable and it’s unrealistic to expect the recent growth trend to continue.

The going-forward budget deficit is putting greater pressure on the Treasury Department to fund Social Security, Medicare and other non-defense needs. According to the Congressional Budget Office, a significant decline in the relative share of national security in the federal budget is already expected. The Pentagon’s current plan has defense spending falling from above 4 percent of GDP currently, to 3.2 percent of GDP in 2015 and 2.6 percent in 2028.

Secretary of Defense Robert Gates used the United States’ worsening fiscal condition to trigger dramatic change in the Defense Department’s ways of doing business in his May 8 address at the Eisenhower Library, marking the 65th anniversary of the victory in Europe in World War II. "Given America's difficult economic circumstances and parlous fiscal condition, military spending on things large and small can and should expect closer, harsher scrutiny,” Gates said.

Gates also made the point that under President Dwight D. Eisenhower, "real choices were made, priorities set, and limits enforced" when it came to the defense budget.

It’s hard to believe there are still those in industry who expect conditions to return to the way they were a few years ago. However, given these statements and the breadth of change just beginning to creep in, it’s futile to continue a revenue growth strategy using old and outdated business development, capture and proposal processes appropriate for the previous climate. “The gusher has been turned off, and will stay off for a good period of time,” Gates said.

There are some striking similarities between this state of affairs in government contracting to the energy industry’s deregulation era. During that time, the whole world turned upside down for energy utilities, where they originally had no competition. Segments went from a safe regulated environment with guaranteed profit to having to compete for customers, hunt for and create opportunities, not just capture what was handed to them.

During this turbulent time in that industry, it took the vision and smarts of some executives who visualized the coming evolution and proactively reorganized their companies. Firms were repositioned to compete in the marketplace before the cataclysm hit. One of these visionary leaders was Bill Lee of Duke Power. He proactively prepared his largely engineering oriented workforce for a transition to a competitive culture long before the “sky fell” and other firms were reactively scrambling to deal with this new reality.

The time is right for another generation of visionary leaders to take control and position their firms for the new era in government contracting.

In this new climate with dwindling opportunities and growing competition, companies making expected bottom line numbers on a consistent basis requires more than cost cutting. It demands a strategy of smart revenue growth with proactive business development as the catalyst.

Visionary leadership takes guts. Demanding change in business development culture is a hot seat position, which is not easy or popular. But it’s a role embraced by the few change-agent leaders who become legends in their industry.