In order to prosper, firms need to both lead and manage well
There is a mutually reinforcing relationship between great design and prosperity: excellent work is (in the best cases) rewarded with prosperity, which is an essential ingredient in producing leading design.
Prosperous firms do great work and are amply rewarded for the value they contribute. These firms are distinguished by two dominant characteristics: they bring in higher fees and keep more of what they earn.
In order to prosper, firms need to both lead and manage well (the two-track path).
Firms that lead well garner higher fees and healthier top lines on their income statements. Leadership is required on a variety of levels. First, top firms lead by choosing their ideal clients through a robust and proactive new business development process. They establish relationships that allow them to lead clients through engagements, leveraging their expertise and experience to have a greater positive impact on their clients’ organizations. Leading firms are neither servants nor prima donnas. They remain one step ahead of their clients while avoiding unhealthy dynamics and behaviors.
Strong management contributes to a healthier bottom line, allowing top firms to keep more of what they earn. The key to managing well is a passion for efficiency and well-designed operations. According to Jim Cramer and Scott Simpson’s How Firms Succeed, firms should aim for a baseline profit margin of 10-12 percent but can realistically achieve 20 percent or higher.
The hallmarks of a well-managed firm include a disciplined adherence to meaningful metrics, strong communication, and the right mindset. They ignore a false dichotomy so commonly adopted by their less sophisticated peers—that good design is incompatible with business savvy.
Managing well isn’t easy, but it should become a natural part of the way a firm does business and sees itself. It should become a source of pride that compares to how the firm feels about the quality of its design work.
Bob Fisher is a principal of the Greenway Group and the associate publisher of DesignIntelligence. In those roles, he focuses on improving the business performance of design-based firms and institutions, helping firms develop a picture of how their markets are evolving and business strategies for how to thrive in the face of change.