The first thing to say about change is that change itself is changing! Let’s study the trends and issues that are most important today in order to achieve a vital and satisfying professional future.
In this issue we would like to share some of the new thinking coming from the Design Futures Council about change . . . and to start a conversation on new alliances and how they are being used by several best of class firms. The first thing to say about change is that change itself is changing! Our clients have prompted us to think about change and to study the trends and issues that are most important today to achieve a vital and satisfying professional future. They have asked us questions that are not easy to answer. Questions about:
Leadership and transition issues,
Dilemmas in innovation toward better delivery systems,
Meeting the changing client expectations, and
What about strategic planning—and continually refreshing the culture of the organization toward excellence?
The pace of change is exponentially faster than it has been—ever. With change, we are seeing in this industry not only linear innovation—that which you might plan for—but non-linear and unexpected changes. That’s why we say: “don’t plan— invent. Put in place a future invention process that develops both your future vision and a sustainable business model.”
There is evidence that agility and responsiveness to change is a key component of today’s healthy firm. As a principal of one firm said to me: “To dawdle is to die.” When architects and other design professionals all sell the same thing and when services are delivered the same way then it is the organizational equivalent of inbreeding, reflecting an absence of variety.
It doesn’t take long for clients to recognize when services go stale—or become irrelevant compared to the other choices in the market. Clients aren’t just looking at licensed architects and interior designers—but a full range of choices and competitors that are challenging the traditional role of the design professional.
Ideas mutate in nature and as well in design. Right now, some firms are experiencing more inertia than evolution. These firms are finding it difficult to renew themselves. As a result, some of them are dying. Most often, employees see and understand the decline long before the partners do.
Is it too radical to say that the industry is in a revolution? It seems that the answer is no. Radical change is with us and, for many, it is out ahead of us as well. In the design professions though, to be ahead of the curve is rare.
There are important questions to anticipate—and answer. What will be fundamentally different —and what could still be the same? Does the digital potential strengthen or weaken the architect in the future? Does the potential of e-business solutions strengthen design firms . . . or obliterate them? What does the relevant firm of today do to sustain and strengthen its position? Must you stay on the cutting edge or die? Where is the cutting edge anyway? And, is there a way to win in commodity priced services?
By commodity market, I mean one where the key variable is price. Some firms are fighting commoditization through lower costs, through marketing and branding and by bundling products with services and making for new levels of efficiency. Yes, it’s entirely possible to run a profitable firm as a commodity (for example for those firms that specialize in the rollout of retail chain stores). However many firms tell us that it often isn’t as rewarding—and some say that it’s just not as much fun.
The term “best practices” has come to include the following attributes:
Hire, train, and keep capable people
Find profitable niches
Select clients with great care
Display strong communication skills internally and externally
Nurture an innovative culture
Achieve or beat profit goals
Address growth in both quality and quantity
Know risks and protect themselves
Plan for leadership and ownership transitions
Perhaps, you are actually running a best practice or work in one. If that is the case, you likely also know that even best practice firms accept that, while they can’t predict the future, it’s worthwhile to study trends and then anticipate scenarios for it.
As some of you have come to understand in case after case, we can actually create the future. Many design leaders see worry as a misuse of the imagination. Instead, they are motivated to intercept the future—and make it a better one.
Each design firm is in the information business. If you think about it, it has always been this way. Think back to the Gothic cathedral. Information did not come to people—people had to go to information. Today we have broadband Internet connectivity in many locations in this country. Digital networks make it possible to link rich information to people wherever they are.
Therefore, the architecture business will be substantially affected by the shifting economics of information because information is a component of value in the design firm’s value chain.
Every design firm either has a competitive advantage or they don’t. Each day firms either get stronger or weaker—more relevant or less. In the words of one client we interviewed, “these people are so busy catching up that they don’t take time to understand their future potential.”
Let’s look at what me might call “the ascendant architect”—the architect who is relevant and successfully changing in surprising and sometimes contradictory ways to gain advantage and win attention. These are the firms who are capturing new value from their services. They differ dramatically from those that are leaking value by not recognizing the opportunities to close the gap between their core competencies, and services and their clients’ needs.
What are the areas that ascendant architects anticipate?
A new industry is being created. With it, the demands for a new profession will be defined not only by government regulations but also by innovation in practice management, leadership, and design creativity.
This new industry will be created by those who take responsibility and are willing to be held accountable for it. Look what’s happening in medicine: The human genome, DNA tracking, new vaccines for cancer, artificial blood, organ transplants, bloodless surgery, and cholesterol lowering medication saving thousands of lives a year from heart disease. Creative prevention and wellness programs now lead to increased longevity unimaginable just a few generations ago. In law, changes are radical as attorneys scramble to redefine their own professional practices as the body of knowledge required to excel in a particular area precludes excellence across all the areas of practice.
In the A/E/C industry—there are firms who are also designing and building a very different future. Even though there are architects who “talk rather than do” and those who, when given a choice between a future they’ve deliberately built and a future that they’ve fallen into, opt for the passive model. There is an understanding that not only have we entered a new century—but also a new industry, one that has more in common with aviation and technology than with the tarnished construction industry of the previous century.
Technology may become more invisible and more taken for granted but it will annihilate traditional industry practices. There will be a seamless continuum between conceiving forms and implementing them. I recently visited the Frank Gehry Café in New York City. Nothing in that space would be possible without the technology of Catia®—the program used to design the Boeing 777 and the PT Cruiser.
Design processes migrated forward from 2-D forward to 3-D and then 4-D. Soon, there will be real time feedback from every stroke of the pen. We should not fool ourselves into thinking that the end of Internet and technological breakthroughs is in sight—instead the horizons are expanding—and new threats and opportunities will be of breakaway nature.
The Internet’s power lies in its ubiquity and simplicity. It has the ability to permeate and catalyze our economy in a manner comparable to the interstate highway system. To a casual observer, it may appear that technology is receding in importance. In reality, the next net platforms and hi-tech solutions are bulking up in preparation for the next big wave of growth.
Building solutions will be pre-assembled at a large scale. Owners and manufacturers could create powerful alliances, eliminating many process steps. We believe that there will be fewer people needed—and there will be diminished labor requirements, thanks to new robotics and efficient systems of best practices. Clients can get custom projects that are almost like one-off building. As we read in the last issue of DI, author Joe Pine calls this “mass customization.” Gensler and Tom Pfeiffer call it “smart business.” If you go to workstage.com you’ll see how an alliance is creating buildings that are mass produced and yet individual to each owner and user.
Building Construction will be 20-40% more efficient. Better information and technical coordination is the best opportunity for value enhancement and greater efficiency. We are moving from fragmentation to united solution. Just as you used to have to buy twelve pieces of office equipment to have a home office—now you can just go to Kinko’s.
Designer buildings will become more in demand and more common. High-end design solutions could be pre-assembled and Pritzker Prize Architects could design even inexpensive building types like those chain motels that surround local airports. There is a new point of intersection between popular and professional taste—we have entered a period where it seems that everyone wants good design. This phenomenon is hurting American architects who wish to do museums. Go from city to city and European and Asians are taking the lead on design innovation.
We are moving from elite to universal. Just as a color printer a few years ago cost $10,000, today, they are one-twentieth of that. Likewise, signature designer buildings are not just for patron clients anymore. Not only does Michael Graves get a premium fee to design a building, he captures a 3% royalty on each sale of his patented product designs.
Advanced integration will be highly valued. Integrated delivery will become nearly 60% of all project delivery by 2008 as opposed to less than 30% today. And traditional and design-bid-build will actually decline from 59% today to approximately 31% in 2008. With the convergence of design and construction, it stands to reason that firms with the best business skills and design talent will have the competitive advantage.
Real innovation in design happens in context. That context today requires highly collaborative processes. The myth of a split between designers and contractors is becoming a charming artifact of the past. Where there is obvious binary opposition in this industry, there is also the greatest opportunity for breakaway new value propositions. Take a counter position to conventional wisdom and you’re likely to be onto something that offers new and fresh value.
This new industry convergence is motivated by efficiency and motivated by quality. Take a moment next time you are on the Internet and check out the websites for four contractors held in high repute and then take four best of class architecture firms and you will see what I’m talking about. Go, for instance, to Haskell, Gensler, Tishman, HGA, Opus, RTKL, BECK and NBBJ—firms which have established reputations in design or construction. But if you go to their website you can’t immediately tell which is a construction company and which the design firm.
Typical commercial projects may be delivered in half the time. Currently, 20% of total delivery time on a typical office building is in design. This, some say, can be eliminated by 60%. It is becoming somewhat of a myth that good design takes a long time. It was once true—but the time required to design and create projects is shrinking. If it’s not you who is taking less time to do this work then someone else is creating both great design and quality —all at a speed that was unthinkable only a few years ago.
There will be radical new value propositions in design and construction—new processes, new technologies, new business models, new strategies. Firms are positioning themselves in the value chain by offering both richness and reach— including alliances. You have no doubt heard of some of these new alliances such as the Global Design Alliance—which now numbers almost 20 firms. The concept is that GDA’s combined brainpower gives clients seeking expertise and value a network of options, and offers an idea-sharing network where innovative, breakaway ideas get shared. Consider also the new alliance between Callison, Wimberly Allison Tong & Goo, and Thompson Ventulett and Stainback. Here we see the specialties of retail, hospitality and hotel design and convention centers converging into an alliance for better marketplace positioning, communication, and service delivery under an umbrella alliance.
There is a trend toward both full service and smaller niche firms. Take Haskell on the one hand, and Glenn Murcutt on the other. Haskell is a full service real estate organization that includes financing, pre-design consulting, design and architecture; construction services and post design services all in an integrated design-build model.
In the instance of Glenn Murcutt (who last month won the Thomas Jefferson Award at the University of Virginia and recently won the top architecture awards in both Denmark and Australia), we see how an architect, operating out of his house, can gain international attention while doing great design charging a 12% flat fee. He has no staff and prefers to supervise construction on each of his form-giving projects—many in the outback of Australia. Is he successful? You can count the ways simply by watching him smile as he talks about his clients and his work.
The first thing to say about change is that change itself is changing! Our clients have prompted us to think about change and to study the trends and issues that are most important today to achieve a vital and satisfying professional future.
New alliances are being formed to enable firms to address the following practice trends:
1. Embrace change,
2. Provide solutions, not just designs,
3. Utilize strategic and project alliances to deliver value,
4. Commit to technology,
5. Make speed a reality,
6. Find new ways to get attenttion in the information economy,
7. Be an expert in the business of their clients.
There is much to say about alliances. Alliances have become popular because they help firms position themselves for success.
Firms say they enter into alliances for the following reasons:
Capitalize on their core competencies
Turn their weaknesses into positive competitive strengths via the alliance team
To become more performance conscious
To generates greater success in highly complex situations
To increase both depth and confidence in the work of the team
To position themselves as a clear expert leader anticipatory of the clients needs, wants, and expectations
The word alliance was first used in the English language in the 14th century. Simply put, the meaning is “a state of union or combination; the act of uniting” or “to form a combination for a common objective.”
Alliances can be quick, lively, responsive—that which we call alacrity in alliances. This is the combination of talents to create an eager willingness and readiness for the future.
We look for the word align in alliance. Align is the action of bringing two or more firms into a particular policy, alliance, or power. At the opposite end of alliance is alienation: a process whereby firms become progressively estranged from central aspects of an objective. As many firms have discovered, alliances do not always work out. They can also be exploitive, contradictory and antagonistic. Competition and self-interest can eclipse community and cooperation.
The Alliance Wave
We have created what we call the Alliance Wave. Let me explain by examining the following flow of the wave.
1. At the top of the chart on page 12 you see the seeds are planted and this is the initial ally—a cooperative activity together.
2. Next, information is relayed from primary definers of the potential of an alliance.
3. This produces alliant social reaction that leads to an energy flow bringing parties together to dig deeper into the potential.
4. Next, we see a behavior of cooperation and of aligning strengths.
5. It follows that there is an increase in the competence of the alliant activity as the group grows in confidence and competence.
6. Systems are put into place and there is an increase in alliant control and structure
7. The Alliance Wave continues to be innovative and more efficient methods and practices.
The alliance wave will alienate some, of course. They will spin outside the wave by choice or they will become “the weakest link” inside the wave. But the momentum and alacrity of the wave will build strength so long that it aligns with the needs of client audiences and the prevailing economic conditions in the market. Alliances need strong leadership just as sports teams need good coaches and orchestras need experienced conductors.
As firms visualize their future, they frequently characterize is as:
Developing a coherent point of view about the future. No firm outperforms its own aspirations. The point of view should be expansive and motivating.
Unfolding a vision and a plan—this most often non-linear about their futures invention. Their business plan is edgy and doesn’t just rely on last year’s success formula.
Creating a coalition or alliance to deliver stronger solutions.
Extinguishing inertia in their organizations. That is to say that they have co-opted and neutralized the anti-change forces within their firm.
Using a vocabulary of action and motivation—they don’t acknowledge binary opposites very often —instead they build bridges and build binary unifying business logic.
Renewal of goals and consistently achieving them.
If you want to change anything major, you will have to do it with other people. Where does it begin? It begins with an idea, a point of view, and you.