The Future of the Architecture Practice
April 5, 2017 | Lance Josal
I am the CEO of a global architecture and design practice. I have been with the same firm for nearly 40 years. And in the last few years I have seen more change—fundamental, cataclysmic change—than the previous four decades combined. To hit the highlights: we bought out significant shareholders, were acquired by a Netherlands-based engineering conglomerate, we endured at least one global recession and no fewer than three regional recessions, we have moved in and out of major markets, doubled our revenue outside of the US, revamped our corporate structure and have merged with a one-time competitor, who was also purchased by the same engineering giant who acquired my firm. All pretty much par for the course, especially for a practice of our size (about 2,000 professionals) and scope.
Or is it?
Countless external factors shape today’s practice, defining hiring, marketing, positioning and, ultimately, health and profitability. Many of these drivers are beyond anyone’s control, but most require at least a cursory understanding of markets, finance, operations and strategy, not to mention a clarity of purpose about the design profession while dealing with these pressing issues daily. While we have survived and thrived through all this, finding our way is no small task not only because of the speed of change but because of the nature of that change. It’s no secret that design is a business; one that attempts to balance the qualitative and emotive judgments (design) with more quantitative and factual ones (numbers). Both require the administrative infrastructure any healthy organization needs. But I get the sense that the rules have changed and our profession is slow to catch on.
Consider mergers and acquisitions, which started to take off in our industry in the early 2000s and have hit an all-time high well after the professions of architecture, construction and engineering have consolidated. In 2015 there was a record 234 sales of US-based A/E firms, representing a 5.4 percent increase over the 222 domestic deals recorded in 2014. [Source: Morrissey Goodale] A majority of firms—some 68 percent—report their strategic plans include a merger or acquisition within the next five years. [Source: Zweig Group, 2015]
The data don’t go into the detail, but I would guess that the majority of these deals involve firms of fewer than 150 employees, a trend that doesn’t bode well for the survival of medium-sized practices, especially those with special market strengths—attractive nuggets to large engineering or corporate real estate entities looking to expand their offerings and diversify their services.
Architecture is nowhere near as commoditized as some may have feared, and some firms have emerged from the turbulence of the past decade with strengthened practices focused on fact-based design, end-user research and technology. But does the depth and endurance of recent and anticipated M&A activity suggest something else is at play? Could it be that architecture, and by extension architecture practices, are no longer as relevant as they were in the past and just another element on the real estate continuum? Or are the firms that robustly invest in research and technology breaking away and showing the profession a path for the future? Only time will tell.
Mergers, acquisitions, research and technology aren’t the only issues shaping today’s practices. We see a few other key influencers:
The growing complexity of the built environment. Buildings are no longer simply bricks and mortar; they are living, breathing organisms that require unique expertise and technical knowledge that endures well beyond the ribbon cutting. Sure, the fundamentals of architecture are reasonably unchanged, but tomorrow’s practice will need to move much closer to the science (or sorcery) of building performance, which demands a deeper and more informed understanding of systems, materials and operations. In the future, along with the commercial goal of advancing our clients businesses, I believe the profession must also think more broadly about its role in society and position itself as thought leaders in protection from natural disasters, the ravages of climate change, pollution and terroristic events, all of which seem sadly destined to increase. Who better to deal with these topics than a professional trained in life safety, resiliency and design on a global scale?
We are also well on our way to moving away from being defined as architects to a profession of design consultants valued for our holistic approach to problem-solving. My own practice has seen a significant rise in revenues generated from non-traditional design services. We have the potential to expand our sphere of influence in the world by expanding upon our strengths and playing more offense against the growing army of consultants and advisors who are carving off larger and larger pieces of our purview.
Who owns the idea? The advent of BIM, and more recently VR, 3D printing, robotics and drones, have and will profoundly impact how we practice. Far more than “lines on a page” or “conceptualized images,” a model’s intellectual property is now as valuable as the ideas behind it, even obscuring the divisions between design, construction and operations. Tools and gadgets will come and go, but we are a profession of ideas…and who owns and controls that IP will define and shape the practice of architecture. Over the decades, architects have ceded control to various consultants (program managers, construction managers, cost estimators, real estate brokers, etc.) with little or no liability, and this may be another one of those crucial moments. But ours is a profession of ideas—let’s own them.
The fear of liability. Today’s litigious society, especially in the United States, has kept some architects from pursuing projects for which they are ideally suited. It has also fomented an adversarial relationship among owner/architect/ contractor/consultant. Will this ever change? Will non-traditional delivery models (IPD, PPP, etc.) herald a new, more collaborative practice? While we continue to experiment, our experiences indicate that we have yet to find the silver bullet. More concerning is that the emerging regions of Asia and the Mideast are beginning to develop litigious mindsets that we have battled for decades in North America. There are likely many solutions to this; none will be completely satisfying because they involve changing standard contract language to erase what may be a cultural problem.
Education. Are our architecture graduates prepared to enter today’s workforce? Do they have the base knowledge to succeed in today’s profession? Too much has been written about the impact of millennials in the workplace. More importantly, how are they shaping the craft of architecture and, thus, the practice of the future? We see a lot of focus on the wizardry of technology but probably not enough on practice, business or working across disciplines. The subject of motivation and professional licensing, without regard to any specific generation now or in the future, will be critical to developing future leaders and assuring the health of the profession. Some architecture programs are beginning to think progressively about practical experience as credit earned during school and other ways of shortening the timeframe for registration after graduation. This should be encouraged, as the future of the profession will correlate directly with the licensing and registration of the next generation.
So, where does that leave us going forward? With at least a few solid pieces of advice:
Creating a nimble operational and administrative infrastructure may be the only way to survive in the hyper-kinetic market of the future. It goes beyond hiring experts in core areas; it requires letting go and trusting other professionals in the orchestra and being absolutely transparent with future colleagues so that the rules of the profession are apparent and applicable to everybody.
GLOBAL IS GOOD; WORLDLY IS BETTER
We discovered a long time ago that our company had to reflect the locales in which we practice. While creating a “global” persona is a compelling and viable strategy, tomorrow’s practice will understand the importance—and better reflect and respect—the communities and cultures in which they operate. Diversity, of course, is a big part of this, and it is encouraging to see the profession become less a bastion of older white males. The data are looking better: In 2015, 42 percent of new NCARB record holders were women and now represent at least one third of candidates at each stage along the path to licensure. Racial and ethnic minorities now make up 36 percent of new NCARB record holders as well. [Source: NCARB, By the Numbers, 2016] Progress, but still a long road ahead.
THE BEST IDEA WINS
Whatever model emerges, we are a profession not of commodities but of ideas, and the good news is the future seems to value those ideas more than the product. Tomorrow’s practice has to be agile and fertile enough for ideas to percolate and take shape. It has to be brave enough to know that those ideas can come from anywhere—or anyone—so it needs to listen to and encourage many voices. And it needs to find new and different ways to share those ideas across multiple platforms and channels, increasing their value and their impact.
My colleagues are tired of hearing me say, “The best idea wins,” but it is an axiom I believe in because it fosters a peer culture—a meritocracy where everyone is invested in helping everyone else turn out the best possible work.
LET GO OF THE OLD PARADIGMS
The days of a job for life are over—at the very least, architects who have progressed in the same organization from design intern to CEO have gone the way of the dinosaurs. Today’s graduates and talent no longer have an allegiance to an organization; they are wedded to their craft. And, thanks to technology, they can practice that craft almost anywhere. We may be heading toward a profession of free agents who can move in and out of a dynamic employment model, similar to the collective creativity of a movie studio.
Whether it’s shaped by Hollywood or the design thinking of Stanford’s d.school, the structure of tomorrow’s practice may more closely resemble a consultancy of collaborative specialists (creative, financial, strategic, etc.) who come together for projects under the auspices of a director. Hierarchy will never evaporate entirely, of course—decisions need to be made, and risks and investment vary up and down the corporate ladder—but we can learn a lot from how other creative fields structure their teams.
What will happen in the next five years? It’s hard to say, but I believe the changes have only begun to manifest themselves, and I am only optimistic about the talent in driving our profession and its ability to make course corrections when necessary.
Lance K. Josal FAIA is President and CEO of CallisonRTKL Inc., the global architecture, planning and design practice.