In lean times, you take what you can get. For architecture firms still climbing out of a recession-sized hole, that can translate into bidding for just about any viable project that comes along, even if it’s outside their zone of expertise. That can be seen as a sign of desperation or as an instinctual survival tactic. Ray Kogan, AIA, sees it as a mistake.
The president of Kogan & Company, an Arlington, Va.–based strategy and management consultancy, Kogan has been advising architecture and engineering firms for 20 years. He argues that during times of reduced demand, firms should be identifying what they’re good at and focusing on becoming experts in specific niches. Don’t diversify, he says: Specialize. “It’s really just plain market forces,” Kogan says. “When people want something, a service of any sort, they typically want the comfort level that goes with hiring an individual who’s experienced with that service.”
Kogan suggests that firms pick a handful of focus areas in which they’ve had market success. The trick is finding markets that are independently driven and that have economic cycles that counter or offset each other—office development and K–12 education, for instance. “I think that as much discipline as a firm can muster to stay focused on what they’re best at, especially if they have their eggs in several strategically independent baskets, they’ll do better in the long term,” Kogan says.
Michael E. Porter, a Harvard Business School professor, has studied some of the problems with diversification. In his book On Competition, he mentions that in a long-term study of 33 large U.S. corporations, diversification generally did not result in higher profitability or greater competitive advantage. The common problem identified in Porter’s study is that companies simply aren’t very good at strategizing their way across diverse markets.
Some architecture firms have embraced specialization, if somewhat reluctantly at first. The Boudreaux Group, a 38-year-old firm based in Columbia, S.C., had long seen itself as a generalist studio. But after a recent reorganization, the firm decided to narrow its focus.“We’re in the early stages of making the transition from doing a little bit of everything, and trying to be all things to all people, to really defining what our core markets are,” says Heather Mitchell, AIA, the firm’s president. “We’re trying to focus more on less.”
That has meant favoring markets the firm excels in—higher education, religious facilities, municipal government—and abandoning growing sectors it has considered entering, such as healthcare. For a 17-person firm, Mitchell says, targeting a new market, even a thriving one, would take too much time and money. “It’s a risk you have to take to get better and to be perceived as leaders in the markets you’re trying to grow,” Mitchell says. “But it is very hard to let go. I’m struggling with that.”
Treanor Architects, an 80-person firm with offices in Kansas, Missouri, and Texas, has long based its practice around highly focused specializations. Dedicated teams of architects handle projects in different sectors: student life, science and technology, justice, and historic preservation. Dan Rowe, AIA, the company’s president, says that such focus has helped his firm to establish credibility and dominance in the marketplace. He’s found that to be seen as a leader in a specific market, architects need to know more than just how to design the building. They need to be able to think like their clients and understand their concerns. “We know what keeps them up at night,” Rowe says.