Annual DesignIntelligence trends forecast for 2012-2015 recognizes new opportunities for greater relevance.
Ordinary organizations are at risk. In a majority of today’s professional practices, a persistent gravitational pull shuts entry ports into the future’s infinite possibilities. That’s a shame because there is much that can be gained through the implementation of bold strategy, including innovation, growth, and the opportunity to do exquisite work.
Some firms are realizing their strategy through specialization, which allows them to develop deeper and more overt value propositions. When such value is effectively communicated, it is prized by clients. While some organizations in the A/E/C industry are struggling through the uncertainty of changing value perceptions and rapidly changing business realities, we see evidence that a new era is emerging. This era is both sober and exciting.
Foresight is no crystal ball. No, it’s not that. Here is how we study trends, chart shifts, and plan scenarios: The staff of DesignIntelligence and the Greenway Group monitor firm data, best practices, changing strategies, participate in online conferences, and monitor business publications in key subject areas, including design, technology, economics, the environment, and demographics. We gather together with thought leaders including senior fellows of the Design Futures Council, to develop implications for the future of the design professions. We typically use a three-year horizon, with implications and scenarios for even further into the future. This is a type of objective futurism and helps us forget what we think we know, opening our minds to what we need to know.
DesignIntelligence is the journal of the Design Futures Council, which was co-founded by Jonas Salk, M.D., developer of the polio vaccine. He encouraged us constantly to study success in order to jump forward into new possibilities. Since the DFC’s founding in 1995, we have focused on new paradigms of success, including personal, team, studio, and organizational achievement. Salk suggested at one of our first DFC Summits in La Jolla, Calif., that the A/E/C industry could be optimized through new forms and chemistries of symbiosis. This includes thinking together, working together, and feeling together in ways that are purposeful, helpful, and ultimately powerful. Through our Summits and think tanks, we have worked on mutualism — finding mutual advantage in the future of the A/E/C industry. The birthing of DesignIntelligence was the result of the DFC’s commitment to expose leaders to possibility thinking; therefore, each issue is intended to take readers on a tour of probable possibilities.
A/E/C leaders will discover in the years ahead that new success can be realized through innovation underpinned by the emerging power of technology and the richness of imagination among people in this industry. Our 2012-2015 trends research reminds us that strategic plans in some organizations are becoming stale. Yet other organizations have developed a discipline of six-month updates to their plan, mixing strategy, execution, and measurement. Metrics too are advancing in different ways.
At the recent Design Futures Council Executive Board meeting at the Harvard Club in Boston, we engaged in conversations observing that the classical and learned professions have arrived at a moment of self-imposed peril. Working harder is no longer the solution. There is a revolution going on. While this is an uncomfortable situation, unique ideas offer boundless possibilities.
Everything is changing. This is not a bad thing, and yet change does not automatically move us forward. Change can be dangerous. Our mission at DesignIntelligence is to make sense of it all and to support your navigation forward. Oliver Wendell Holmes said, “The mind, once expanded to the dimensions of larger ideas, never returns to its original size.”
Following are 25 mind-expanding trends that move beyond problem solving to creating solutions.
25 TRENDS FOR 2012 – 2015
1. Globalization: The world is your market.
The world economy affects all firms regardless of size. North American architecture firms are increasingly seeking and winning international opportunities, and more foreign firms are expected to be competing in the United States. The recent DesignIntelligence Multinational Design Fee Survey found that the non-U.S. gross revenue of the top 30 U.S.-based design firms totaled more than $1.8 billion last year. This represents an annualized growth rate of 13.9 percent since we began conducting the research in 1998. Recognizing that the domestic market will continue to have suppressed demand, an increasing number of small and medium-sized firms will collaborate with more experienced partners to win contracts outside the United States. Firms that avoid the challenges and opportunities of global practice will find themselves at somewhat of a disadvantage. Two areas of caution: First, domestic designers are under increasing competitive pressures. The competence of design talent in many other countries is rapidly growing, and these professionals can often be hired at lower cost than their American counterparts. Second, the dysfunctional U.S. political system may tarnish American cache in general and create backlash. The result could be a weakening of U.S. mega firms, which are more reliant on foreign design work for their bottom line. Since the recession in 2007, the economy in China is up 51.3 percent, India 34.2 percent, and Brazil 14.3 percent. The fastest growing countries in the world include Macau, Mongolia, China, Laos, and India. And we see more foreign investment in the United States unfolding as well, providing opportunities for regional firms and U.S. product manufacturers.
2. Bright spots can be found domestically.
You won’t find this story in the media, but many firms are reporting some thawing in formerly frozen domestic market sectors. Warming up nicely is the demand for urban design. With human populations shifting to urban cores worldwide, the demand for new models of cities — particularly sustainable cities — is growing rapidly. And this trend is translating into the desire for better stewardship of existing cities throughout North America, including those in need of serious reimaging and rehabilitation. Additional markets that are warming include health care facilities, higher education, mixed use, multi-family housing, and private-sector renovation, including corporate interiors work. Overall growth is expected to be slow, but when you look at the U.S. construction economy on a county-by-county basis compared to three years ago, you will see emerging areas of strength. The unemployment rate for design and construction professionals is a sober and lingering condition we will not escape in 2012, however. Looking ahead we see construction industry growth rates of 1.5% in 2012, 2.6% in 2013, 2.4% in 2014, and perhaps 2.7% in 2015. But more important than macro-economic numbers are the bright spots in regional sectors.
3. Become a BIM master.
Building information modeling marches on, with the evolution of this technology now beginning to focus beyond mere implementation and onto mastery. The BIM model has become the working platform for the building team; traditional architectural models for liability insurance, risk mitigation, and design control are no longer viable. Project delivery efficiency will be won by firms that master the technology in all phases of a project. It’s not just about delivering better service but additional services as well: Take facility management as one example. Design and construction leaders should not be so preoccupied by the economy that they forget to install an advanced BIM strategy. BIM is not only table stakes in this era but will become the enemy of slow-to-adapt professionals and firms.
4. Talent is in dynamic transition.
Retirement among the ranks of baby boomers will result in a meaningful loss of expertise in the design professions, so the competition to retain experienced and talented middle and junior staff will be huge. This staffing situation will be exacerbated due to many recent young architecture and design graduates having fled the professions (or the professions having fled them). But great firms will attract great staff. Recruiting the best talent will depend on being able to offer experience, mentoring, compensation, and an attractive uplifting culture. Leaders will need to find opportunities to accelerate the training and advancement of younger staff for these individuals to have a lasting impact on the firm. Smart strategies to transition leadership will be required to ensure robust continuity of firms.
5. Services expand to fill bold categories.
Architects are finding they need to broaden their scope and go deeper with clients in order to fend off competition from outside the industry. Look for increased diversity in the services provided by firms, with organizations expanding their comfortable slate of offerings to embrace design thinking and innovation far beyond the expected and the traditional. Along with diversification into activities associated with existing facilities and facilities management, specialization in niche services and deep expertise within small markets will be viewed as practical strategies for firms that seek differentiation in the marketplace. New services and practices will emerge quickly as the nimble seek to wrest market share from lumbering firms that hesitate to take bold action. The future favors energetic.
6. Green is not just good; it’s necessary.
Sustainable design is no longer discretionary; it’s mandatory in most domestic design, with LEED becoming a universal standard. Ironically, the warm embrace of green buildings could signal the decline of LEED. With building codes increasingly including LEED criteria, the importance of LEED certification will be reduced. Continue to educate owners and give them data about the benefits of sustainability in terms of building performance and operating costs, and they will continue to demand designs that reduce energy and water use. Sustainability services will continue on an economic upswing, with broad expertise required in professional practices.
7. Project delivery gets reengineered.
Integrated project delivery, lean delivery, aggressive design-build, and other collaborative models are the order of the day. There remain skeptical clients, architects, and construction managers to be converted, but IPD and IPD-ish collaborations will be increasingly sought as clients demand ever more predictable costs and schedules for their projects. The ability of firms to be dexterous in collaboration and information sharing is ever more important as owners increasingly seek high-quality designs delivered in superior fashion.
8. Find the financing.
Sadly, lack of funding for needed projects isn’t an emerging trend. It’s been a roadblock for some time. There remain many projects on the boards that could address productivity improvements, energy savings, failing facilities, and crumbling infrastructure. With private corporations and banks sitting on cash they are unwilling to commit, the onus is on firms to create relationships, innovations, and alternate financing options to move projects beyond the idea stage. The erosion of public-sector funding can be seen as an opportunity to seek non-traditional delivery approaches, including public-private partnerships.
9. The client is still king.
Clients are not going to become less demanding. They will have ever smarter questions to ask professionals in the future. Creating value beyond the building is a key to growth. Look deeply into your operations and refine the processes therein to align them with the current and future needs of clients. Parallel staff capabilities with the marketplace demands of speed, knowledge, communication, and reactivity. Focus on the fundamentals: clients, people, quality, and performance. Investments you make to solidify strategic client relationships — delighting clients with best-of-class design and service — will be sound ones. Not only will you be primed for fending off known competitors, but satisfied clients will be less likely to look outside the architecture profession for services historically provided by architects. There is one other understanding that has been shared about clients. They almost always want more than professionals think they do. Firms should offer wide as well as deep services whenever possible.
10. Can architects escape commodification?
One of the greatest fears of architects in this time of austerity is the commodification of their services, leading to the marginalization of the profession. Will owners and the public continue to value unique, robust, even whimsical structures? Are architects losing ground to general contractors and owners? Does professional licensure matter as much as it used to? Do professional associations have enough clout to fully support the professions? These are serious concerns. However, architects who strive to create authentic human experiences for a public that increasingly understands and values quality in design can find work that is meaningful and unique. The design business needs to reinvent itself with regard to claiming creative ground and becoming urban thought leaders as well as taking a leadership role in the building profession. The best firms will define themselves on the opposite end of commodification — quintessence.
11. Words to the wise: collaboration and integration.
The ability to craft collaborative interdisciplinary teams that can move quickly and effectively to deliver exceptional results is a signature of best-in-class firms of every size. Collaboration in all aspects of the design and construction spectrum will increase in importance in the pursuit of integrated design processes and services. Integrated teams are able to offer an expanded knowledge base, a wider breadth of expertise, and greater innovation to clients. Never underestimate the value of being both likable and psychologically open to the achievement of world-class collaboration.
12. Renewing the focus on entrepreneurism.
One positive outcome of recessions is that they drive firms of all sizes to buckle down. Reducing unnecessary overhead, streamlining business processes, and reinvigorating the strategic plan are necessities. Another positive outcome can be the renewal of focused marketing opportunities. Loyalty among clients is tougher to retain, and doing excellent work is not in itself a guarantee of a continued client relationship. How firms articulate the value of their services can contribute to their own brand in addition to the overall status of the design professions. Staff throughout the organization can and should be empowered to market profitable and profound work. Energize them in this regard.
13. Energy is an economic and design driver.
Demographic growth and increasing economic wealth, particularly in developing countries, will create unprecedented energy demand. Leaders seeking new services to add to their menu should look at opportunities presented by energy. Expect to find more design teams tackling energy modeling and design of distributed renewable energy systems, including wind, solar, and combined heat and power. Owners and clients have higher expectations for energy and environmental performance and with those expectations, the demand for proof. They demand real metrics to support sustainable design ideas, and the task of harnessing and sharing that data can be yours if you’ll have it. Also in the realm of energy will be development opportunities associated with unconventional gas (such as Marcellus Shale and Alberta Tar Sands) as well as an increasing number and size of projects in locations with oil and gas as economic drivers (such as Texas, Oklahoma, the Dakotas, the Middle East, and Russia).
14. Side effects of the U.S. economy.
American business has come to accept the fact that the current domestic market climate will be the norm for years to come. The stalled economy and continued high unemployment in the A/E/C industry have battered the morale of professional staff as well as that of leaders. So this is exactly the time to leverage whatever bright spots can be found or created in a firm, to be proactive in enabling the redesign of the design and construction industry, and to become ready to recognize and grasp opportunities. Don’t make the mistake of using the recession a primary indicator of economic harm. Look deeper. Professional practices can add or destroy value in any economy. Two side effects of the down economy are myopia and emotional recession. Both are counter-intuitively bigger issues than the economy itself.
15. Buildings tell their story.
Here’s another opportunity for firm leaders willing to expand their mind-sets and their staff skill sets. With low-cost sensors and computing power becoming the norm, data can be pulled from buildings at a more reasonable cost than ever. Firms willing to increase their data mining capabilities by moving toward smart building technology implementation will see their demand on an upswing. Structures will no longer be judged solely on aesthetic merit and LEED status. Effectiveness based on measurable values will not only help sell structures, but it will also cement the reputation of firms that are able to create a winning blend of design and performance.
16. Products are increasingly transparent and accountable.
The use of Environmental Product Declarations and life cycle assessments is growing, creating greater transparency of product ingredients and the environmental performance of companies. Product emissions and toxicity disclosures are also finding a foothold. Building products and interior furnishings will be increasingly measured for their energy efficiency and sustainability.
17. Fee pressure doesn’t let up.
The downward pressure on fees is as intense as it’s ever been. Firms that give in to competition on fees will find themselves less able to attract and retain high-quality staff, so it’s time to look for new models of success. In his recent DesignIntelligence article “Creating Value in the Current Economy” (November/December 2011), Scott Simpson addresses this conundrum and offers advice: “Architects need to adjust their business models to reflect these new realities. Design is not limited to making new objects; it also deals with systems, processes, and procedures that in the aggregate support a new way of delivering the goods. When dealing with clients, consultants, and contractors, it’s important to make these differences explicit so that they can be fully appreciated (and paid for).” Stop thinking about cutting fees and start innovating new ways to create value.
18. Mid-sized firms go deep.
The age of the mega firm is dawning. The consolidation of the design industry marches on, and we should expect more mergers and acquisitions as the market becomes increasingly complex and global. Scale has been and will continue to be strategic. International reach is an advantage to leverage economies of scale, especially in technology, marketing, and production. However, global goliaths are vulnerable to leadership weaknesses and economic shifts, and smaller niche firms can create enviable success an inch wide and a mile deep. Firms of 150 staff can have greater knowledge in select market slices than their gigantic brethren. Achieving this status isn’t easy, but it can be rewarding. There is considerable smart money on the future strength of the medium-size and boutique firm offering up likable relationships and expert knowledge.
19. Keeping up with technology.
There is a general increase in the role of technology in our lives and with that, an increased reliance on it. Advanced technologies will continue to make the professions and the A/E/C industry as a whole more efficient and effective. BIM is just the beginning. Rapidly improving communications technology, mobile computing, social media, and the overall consumerization of information technology are blurring the line between business and social life. And they are placing greater demands on all businesses to keep up, particularly in terms of structuring, organizing, and delivering information and data. We are entering a time when the difference between architect and machine blurs, and design sensitivity and artificial intelligence fundamentally alter professional practices.
20. Asia grows.
The long-term market shift to China and Asia continues, and this growth will have an increasing impact on the world’s financial dynamics. This will sustain demand for natural resources including iron, ore, copper, and energy. It will also sustain demand for design services and can help make up the gap in U.S. work. 2012 marks the 20th anniversary of architecture licensing laws in China, and this year it is predicted that there will be 12 new colleges of architecture and design in China. The economic growth is projected as follows: China 8.2 percent, India 7.8 percent, Japan 2.2 percent, Indonesia 6.3 percent, Singapore 4 percent, Sri Lanka 6.3 percent, Vietnam 6.3 percent, and Taiwan 3 percent. There will be upsets and surprises along the way, so stay resilient.
21. Prove it.
It’s not enough to tell a client that a particular design solution is the right one. You need to prove it. This puts emphasis on computational design analysis as well as a firm’s ability to understand patterns, trends, and observations in their own work over time. Move rapidly to roll up key design proof points in support of decision making. Evidence-based design and proof statements about return on investment can be seen as both marketing opportunities and chances to create value for clients. As with so many of the trends this year, offering clients a competitive advantage in their markets becomes leverage for design firms.
22. Public works need work.
Domestic and international infrastructure is showing its age. Yes, there is pressure on fees, and some American municipalities have tightened their belts nearly to the point of suffocation. But trends toward public-private partnerships as well as leases around public transportation hold promise for future projects. And changing demographics such as the move toward urban living will affect the nature of projects needed by the public. Perhaps educating the public about what improved infrastructure can lead to — energy savings and better education to name just two — will help shake loose some funding.
23. The new workplace is wherever you work.
There has been greater acceptance of the virtual workplace, with the where of work being less important than ever. This trend affects design firms in a number of ways. Architects and interior designers will find that clients have less need for private office space and more need for areas conducive to multi-functionality. Building footprints may be smaller overall. There will be fewer physical workstations tied to a desktop computer and used by a specific individual, more of a need for flexible space wherein employees can shift their work locations, use mobile computing devices, and work in ever-changing teams. We’re nearing a time when less than 50 percent of the work force will work in traditional offices.
24. Satisfy the need for speed.
Increased throughput will become a key competitive strategy. The ability to make good decisions lightning-quick will be prized. Responding to clients’ increasing expectations for speed of delivery, a select group of architects will stop creating unique designs for each commissioned project, converting to lean and efficient output. No, this work will not be as creative, but some clients will value the lower cost combined with really good — if not great — aesthetics. Advancing technology in general will aid this process.
25. Education requires a reboot.
A concerning outcome of the recession has been the number of architecture graduates unable to find work in the profession they chose. Architecture school enrollments are holding steady, but how long will that last? Practitioners also fear that there is a declining talent pool of design educators. Even more problematic, they say, is the increasing disconnect between what is taught in the academy versus the knowledge and skill required for emerging professionals to succeed. Design schools must teach in accordance with current and projected design practice.
DesignIntelligence has been forecasting trends for the future of the A/E/C Industry for 16 years. We’ve had our share of hits and misses, but there has always been an underlying attitude of optimism about progress that is possible amid all the change. Now, despite the lingering hangover from the much-discussed economic woes, we see encouragement ahead.
In the words of Jonas Salk: “There are secrets to success that we often do not think about.” Thus, we also believe that new secrets will unfold in future meetings of the Design Futures Council, and results will materialize when strong leaders take action on these new opportunities. From the analysis of future trends and shifts, it is our hope to connect everything and empower everyone. We hope to enable the initiatives of architects and designers everywhere, for we believe in the infinite ingenuity and future relevance of the design professions.
James P. Cramer is chairman and CEO of the Greenway Group, a foresight management consultancy. Cramer is president of the Design Futures Council, the publisher and founding editor of DesignIntelligence, and former chief executive of the American Institute of Architects.
Jane Gaboury is the editor and associate publisher of DesignIntelligence. She is Greenway’s principal for publishing and editorial as well as a senior consultant.