DesignIntelligence talked with Dan Noble—president and CEO of HKS— recently to find out how he sees the future evolution of the architecture and design profession, centralized and decentralized leadership in multi-office firms, structuring the teams of the future, and more. Dan’s focus is on the big picture of ideas.
DesignIntelligence: How do you see leadership and design organizations changing in the future?
Dan Noble: Leadership and organizational structures will be flatter. I believe there’ll be more opportunity for ownership; or at least a different avenue to ownership. Things like limited partnerships or connected types of peripheral work to our traditional core business have an enormous potential in our industry. For example, we developed a group, LOGE, which is a limited partnership that helps us perform financial and operational feasibility studies and potentially tap into funds to help these large complicated, institutional, PPP consortiums get off the ground. We can also organize and manage long-term operational and life cycle performance aspects of these structures that sometimes go on for fifty years.
I think younger people are looking for ways to have ownership or skin in the game without the long-term commitment we were expecting. If they have the goods, they want opportunities to challenge their talents—now. We can tap into this passion by developing R&D initiatives, sustainability foci, development of artificial intelligence and nontraditional teaming opportunities to our current work offerings. We can channel this talent and energy into startup initiatives and skunk-work type exercises for one-off projects that bring value to our clients and amplify our revenue stream. Architecture attracts creative types that are also grounded with a pragmatic sensibility; a kind of person that can push creativity and innovation and do it with their head in the skies, but also with their feet firmly planted on the ground. This is a perfect combination for design thinking and problem seeking/solving for many different activities and revenue streams.
DI: What is your view of centralized versus decentralized leadership in the multi-office firm?
DN: There are pros and cons. The centralized leadership format is very efficient and provides a unique ability to control quality and disperse innovation across the enterprise. We have 600 people in Dallas that leverage efficiency through technology, a culture of communication and a concentration of talent. We also have 900 people in our other 23 offices, so we average about 40 people in our other offices. These offices are regionally organized typically with two or three other offices that allow them to play above their weight—as one virtual office in the region with over 100 people—and we’re one profit center, sharing of unique specialized talent is encouraged. So, we are able to do more, almost anywhere. This requires a culture of trust, teamwork, and open communication. For us, the ideal structure is this centralized operations group with distributed strategic leadership, one that encourages autonomy and an entrepreneurial spirit but has loose protocols in place to maintain quality and our brand. This organization allows our regional offices to leverage the full value of our proposition across the entire enterprise and enables a guy like Shannon Kraus, who’s running an office in DC of about 60 people, to compete toe to toe with a 300-person firm in the same market.
Also, our overhead and rent in Dallas are inexpensive compared to many of our other offices. Plus, you can get anywhere from Dallas very quickly. Being centralized with a low overhead structure makes financial sense. The flip side of this is that we sometimes get labeled as a Dallas firm even though fifty percent more of our firm is from outside Dallas.
DI: How do you see market demands and the client needs evolving in the future?
DN: Hopefully they will find value in a more strategic, innovative, research-oriented relationship with the design team. I think firms will be less about designing just buildings and more about design thinking which will include buildings but also be connected to a more robust solution that includes financial analysis, demographic studies, population-based planning, operations, life-cycle costs, building performance, analytics research, feedback and artificial intelligence. Architects can do so much more than just create shelter; they can understand their clients’ business and be an ally to the business at hand on all fronts.
I think the shared economy will play a larger role as well. If you look around Dallas now you’ll see, I think, five bicycle rideshare programs. When we start getting into bigger things, such as the shared economy of cars and office spaces, what are you going to do with things like parking garages? Do you need them? Do you need them part-time? Will they be repurposed? Many unintended consequences and opportunities will spring up from innovations born of the shared economy.
DI: What is the future of service offerings and business models for an architecture and design firm?
DN: Firms will need to rise above the fee-based commoditized world where the front-end capital cost and building structure is the end game. We will need to develop a relationship with our clients where the dial is pointed to the long-term life cycle cost and the value of performance for the buildings but, more importantly, for the people who interact within and around it. The building could become less relevant than the people inside the building and how they use it through time.
We will still develop well-designed buildings that are attractive, that don’t leak and that keep the cold out and the heat in when needed. That’s sort of the price of admission; that’s baseline. That’s maybe fifty percent of the equation. The other fifty percent deals with questions like: How are the people going to use the building? How flexible is the building going to be? When things change, as the shared economy example we just talked about, what can the building do to respond to that? How does a parking garage become a mixed-use development? Those kinds of things require a bit more curious client.
DI: How will design teams be structured in the future to deal with this new way of designing and delivering projects and providing new types of services?
DN: Design teams will consist of design thinkers who are inspired by the notion that we actually can and do create environments that enhance the human experience. They will include diverse specialties such as anthropologists, ethnographers, sociologists, behavioral psychologists, engineers, doctors, athletes and be much more about thinking holistically than limited to myopic disciplines. Sort of like treating the whole patient. Design thinking.
Many of these disciplines exist on our teams today. Those are the people that will help to shape the environments going forward. The architects can take that input and interpret it into the logistics and aesthetics it takes to make space out of it.
The building and how people interact with it is all connected—it is organic, so just as you treat the whole patient in the health field, you treat the whole experience in the building environment. If you treat the building and you think of that building as an organism, it’s not really totally alive until it’s filled with the systems, the people and how they interact with it over time through the space. The users change it immensely.
DI: What questions do you most struggle with as a leader?
DN: Well, I ask myself, is all this just wishful thinking; idealistic wishful thinking? Grist for the mill? Or is it really something that will gain traction? Will clients look beyond quarterly returns and into a longer, higher value, payback proposition? Like I said, right now we enjoy a client base of 10–15 percent that are interested in seeing beyond the first capital cost and really examine the total life cycle costs. They are investing in that. But that’s not enough to sustain this kind of more robust overall business model. We need more clients that are interested in this more intense engagement. Is it realistic? Will people see the value in it? And what about our investment clients—does this even resonate with them?
I just don’t know the answer to that. I wish I did. I clearly see the value, but sometimes you get caught up inside your own head and lose objectivity. Are we so embroiled in this sort of thinking that we can’t see that it really isn’t broadly feasible? It’s a process and a commitment that delivers higher value and better life cycle results. It’s a great idea but, when you get down to it, it’s got to be worth the time and money for our clients and investors.
There are always things you can’t answer, like: How long will the economy remain strong? Will the fragile geopolitical situation explode? On the one hand, you could say: You shouldn’t worry about things you can’t control. That might be a wise man’s response. But if you’re trying to plan a firm’s future, those are the things that are a little frustrating and, ironically, the ones that can keep you up at night.
Dan Noble is president and CEO of HKS, Inc.