Global Relevance is a Choice

September 4, 2009 · by James P. Cramer

Creating a global strategy is not to be taken lightly. And possessing a global strategy is an ongoing living puzzle. But the rewards can be substantial.

Creating a global strategy is not to be taken lightly. And possessing a global strategy is an ongoing living puzzle. But the rewards can be substantial.

A dilemma in the design business today is relevance. Where will you find a value niche in the future? How will you make a profit in your category? How can the environment be improved by what you do? Where are the emerging opportunities today? Where will they be tomorrow?

Our 2009-2010 DesignIntelligence Multinational Design Firm Fee Survey sheds light on these questions and more.

Between 1998 and 2009 we have been surveying leading firms on their global experiences. It has been a fascinating study. The annualized growth of professional service fees outside U.S. borders by U.S.-based architecture and design firms has been respectably and consistently strong. The leading 30 U.S. architecture and design firms that practice internationally have created a zone of measurable trust and value. Our interviews with global clients bring forward evaluation comments such “most relevant” and “unusually a good fit for our needs.”

While there has been considerable anti-American sentiment to contend with in some corners, the strength of talent and the depth of relationships with global clients have created a resiliency that has persevered through the recession. The DesignIntelligence global 30 is projected to collectively invoice 9 percent more in 2009 than 2008, which was up 32 percent over 2007.

Based on Greenway Group’s most recent interviews with architecture and design firm leaders, we project that many U.S. firms will continue to grow at faster rates outside the United States than within their own regions or within the U.S. generally.

For the most part, professional practices that have engaged in international work for seven years or more have experienced positive economic activity (including net fees, value capture, profits, and positive accounts receivable). Furthermore, near-term growth is reported as strong to excellent. The majority of firms in our current survey noted considerable growth opportunity in global markets yet to unfold.

Yet every value growth curve and every professional practice service matrix ends with a question mark. The question mark is there to remind us that value propositions must adapt to fit the context and that growth can be sustained only if the firm creates the right next business design for its international services. Old strategies most always do not address today’s context. Much time, money, and resources are wasted because firms have not recalibrated to the new context.



Historial perspective

 

This is one reason that an increasing number of professional practices are developing global strategies. This past month the Greenway Group phones and incoming e-mail brought considerable interest from firms wanting to explore entering markets outside the United States. These initiatives are driven by foreign clients entering markets within the United States, U.S. firms expanding their product and services reach, and strategic targets of opportunity development. Some see the opportunities in India, others in Canada or Vietnam. Because of the interest in these global markets, the competitive landscape is projected to intensify during the next five years. Currently, 50 percent of all new construction globally is happening in China. Market share by any one player is so tiny that the old metrics about market share do not apply in global market development.

But emerging opportunities abound categorically in Asia, the Middle East, and South America. It’s not unusual to visit with U.S. architects and engineers whose employees are traveling to Vietnam and India monthly. How long will this last? Consider: Most U.S. economists point to low single-digit growth in the built environment in most parts of the United States and high single- and double-digit growth in strategic targets of opportunity in Asia, China, India, Vietnam, the Middle East, South America, and elsewhere.

Creating a global strategy is not to be taken lightly. And possessing a global strategy is an ongoing living puzzle. This is due to uncertainty — some of it political, not just economic — in each market. Competitors come in all sizes and include some fascinating smaller design firms. All sizes of firms are developing their game plan for the future, and many mid-size firms (30-250 employees) include a vision that is increasingly of global relevance. Global strategy is not just for giant practices. Mid-size firms, including the global elites, have some distinctive advantages over the larger practices. Smaller can mean nimbler, more design capable, and more entrepreneurial with consistency of personality on site. For firms wanting to grow in relevance, regardless of size, possessing a global strategy is an imperative, not a luxury.

The most admired global practices are highly diverse and getting more so. They have different brand essence and varied value propositions. In their own way, with their own DNA, they have become famous (or will become famous over time) for different reasons. Consider several leading U.S.-based brands compared to the top non-U.S. based brands.

Anyone having the opportunity to be employed by more than one or two of these organizations (shown opposite as exemplar firms) will tell you they have dramatically different cultures. Yet several characteristics contribute to their sustained excellence, and these factors are important in every great professional design practice:

•    Continuity of leadership and vision

•    Meritocracy in compensation and authority

•    Devotion to client service

•    High ethical standards

•    High entrepreneurial energy levels

•    Long-term values and policies that resist compromise in professionalism

Firms truly possessing a global focus use very different language to express their diverse professional practices. For instance, consider the following two examples: Gensler, based in San Francisco with offices around the planet and Woods Bagot, based in Australia.

The message from Gensler’s print and digital materials:

“As architects, designers, planners, and consultants, we partner with our clients on some 3,000 projects every year. These projects can be as small as a wine label or as large as a new urban district. With more than 2,200 professionals networked across 32 locations, we serve our clients as trusted advisors, combining localized expertise with global perspective wherever new opportunities arise.

“Our work reflects an enduring commitment to sustainability and the belief that design is one of the most powerful strategic tools for securing lasting competitive advantage.”

Contrast this with a firm explaining its global reach very differently.

The message from Woods Bagot’s print and digital materials:

“By 2010 Woods Bagot will be a global leader in design and consulting underpinned by research.

“But how to get there? We know that to be a global leader in the 21st century we need to be intelligent, adaptive, nimble, and innovative. We need to harness our knowledge and apply it effectively to make us smarter and create intelligent designs. We need to foster our talents and feed our passion. And we need to act as one on a global scale by sharing and collaborating without boundaries.

“As a company, we know where we are heading, we know the steps to get there, and we have guiding behaviours that will make our vision a reality — our five core values.

“Woods Bagot core values are:

Include - We share and communicate without boundaries

Enable - We build trust and respect to achieve outstanding results

Care - We support and mentor to grow opportunities and realize full potential

Engage - We take initiative and responsibility to make a contribution

Intrepid - We fearlessly investigate to generate an authentic idea.”


Both firms are successful global practices. Their language illuminates some of the differences between them. They both strive to be the best, thus they understand themselves, frame themselves, and explain themselves — but uniquely.

Globalization for architecture and engineering firms has evolved into a competition for share of clients’ minds and a desire to communicate distinctively about professional practice value propositions and devotion to client services.

When Greenway Group interviews clients as an independent service, we typically conduct 45-minute face-to-face interviews with clients to derive a weighted evaluation of feelings and beliefs with regard to relevance and service niches. From these studies it is possible to objectify the subjective — the sometimes elusive reasons choices are made.

Based on this method of investigation, I offer the following observations, projections, and advice:

1.    Global professional service delivery growth will outpace U.S. focused service delivery growth.

2.    It’s not just strategy that matters but who’s in your strategy. Talent counts.

3.    Strategic choices need to recognize that context in each global market is changing rapidly; therefore, strategies need to be adjusted to align with these new contexts. Without this, strategy is dead.

4.    In the decision-maker power structures of foreign markets, the grapevine is lightning fast both digitally and politically. Firms can’t afford to participate in a bad project, so always keep ethical and professional standards at the highest levels.

5.    A day without learning is nearly impossible if you are practicing in the global markets. Track these lessons and incorporate them into your internal training models.

6.    The exemplar professional practices do not let setbacks define them. They have an entrepreneurial vision and an admirable energy that bounces the firm back into the market with new savvy after each setback.

7.    A half-hearted commitment to going global is worse than no commitment at all.

8.    Challenge all limiting beliefs about global practice. For instance: Cash flow is always a problem; it’s difficult to make money; our staff hates to travel; working with the prime is too complex; you can’t get paid up front. Take the exact opposite of each of these, and you will find that there is often a way for responsible professional practice growth. It takes imagination, not rationalization.

Do you want to move your organization into the growth zones of global practice? Can you add value to overseas clients? Do you understand who the toughest competitors are and how your value is unique? Do you have a business and profit model you have confidence in? Do you know what your strategic control points are? Can you answer this question: How can our firm become the client’s first choice?

The United States is now in a slow growth cycle. Things are different than they were.

There is an unfolding context for success at each level in the marketplace: city, county, state, region, country, continent, and world. Sustainable professional practice is not only possible but most probable in this new period. While the strategic questions remain large, the options hold promise for change, growth, and higher levels of value-adding services.

Take the art of thinking and playing big to heart. Firms that are successful in global practice get to be in the front seat of our industry, creating the future.


James P. Cramer is founding editor of Design­Intelligence and co-chair of the Design Futures Council. He is chairman of the Greenway Group, a foresight management consultancy that helps organizations navigate change to add value.

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Exemplar Firms

Consider the exemplars in four categories organized by Greenway Group based on impact in global marketplace (with weight given to current and projected growth rates in the down economy).

U.S.-based Global Practice Exemplars

• Cannon Design

• Gensler

• HKS

• HOK

• Kohn Pedersen Fox Associates

• NBBJ

• Perkins + Will

• Skidmore, Owings & Merrill

Foreign Global Practice Exemplars

• Aedas

• Atkins

• Foster and Partners

• Nikken Sekkei Ltd.

• RMJM

• Stantec

• Woods Bagot

• Rogers Stirk Harbour

U.S. Niche Global Practice Exemplars

• Adrian Smith + Gordon Gill Architecture

• Gehry Partners

• Goettsch Partners

• Murphy/Jahn Architects

• Pelli Clarke Pelli Architects

• Pickard Chilton

• Rafael Viñoly Architects

• Morphosis

Foreign Niche Global Practice Exemplars

• Arata Isozaki & Associates

• David Chipperfield Architects

• Grimshaw Architects

• Renzo Piano Building Workshop

• Herzog & de Meuron

• Santiago Calatrava

• Zaha Hadid Architects

• Snohetta

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