This year will bring little comfort to architecture firms that are just hanging on, hoping to ride out this recession without making fundamental changes in mindset, behavior, and practice. Ironically, the potential of architects and allied professionals to make substantive contributions for the betterment of society has never been greater, yet we are trapped in an emotional quagmire of wanting to “recover.”
So, let’s be clear—the foreseeable future only requires about half of the pre-recession workforce in architecture. Those who remain in the profession need to augment their knowledge, create and deliver a much higher level of value, and be open and willing to work productively in a highly complex and often disrupted business and societal environment.
Market downturns and recessions would be far less damaging if individuals and their respective organizations were more skeptical about success in good times and less panicked in difficult ones. The rule-of-rules in the world is that change is a condition of life. So leading firms never assume that the underpinning of their success is permanent.
When things seem most successful and secure, top managers in such practices insist the most strongly that their organizations stay tuned into changes in the business world. In the most challenging times, they act tactically to limit losses while continuing to make strategic investments.
In this recession, these actions have included very difficult decisions, such as laying off significant numbers of staff with years of dedicated service; remaking practices from the ground up by reconceptualizing business models, service offerings, and the number of staff required to address the future needs of clients and markets; and moving into new markets and territories of practice.
Unfortunately, the story for the majority of practices is a litany of casualties due to lack of foresight and procrastination in the face of major change. The common casualties are vision, communication, focus, development, and investment. They are commonly displaced by short-term survival tactics, suspension of communications and developmental initiatives, and complete loss of discrimination regarding what work the firm pursues.
Firms that have fallen into the latter group of behaviors need to reestablish a discipline of returning to first principles as the basis for moving forward. Here’s how.
Step 1. Constantly articulate and reevaluate your firm’s vision.
The basis for every sustainable enterprise is the investment of people in efforts that are meaningful. The first principles that generate practices and the core values that inform them endure over time. The larger an organization becomes, the more critical it is for the principles and values of the firm to be made explicit, and to be constantly revisited as a way to promote an effective firm culture.
The failure of markets is not a failure of a firm’s values, but it signals the need to reevaluate the firm’s goals and strategy in light of disruptive changes. A firm’s vision fails when the collective is unable to chart a new course.
In many ways, the industry’s continued emphasis on marketing professional services serves to contain the profession within fairly narrow boundaries. Without new visions for practice—sited in a broader context of issues, ranging from cultural change to the growth of cities—how can we imagine that the profession can produce a whole new constellation of value?
Step 2. Make sure your firm has a well-understood theory of business and practice—one that fits its size.
Having a clear vision for your firm is necessary, but that alone is not sufficient to have a sustainable enterprise. The key propositions about what your company really does and what accounts for success need to be well understood if you want to fully capture opportunities for organizational learning and growth. These propositions are not immutable, but the lack of them reduces firms to completely reactive behaviors.
The increasing scale of horizontally and vertically integrated practices—i.e., AECOM, URS Corp., Jacobs, and Stantec—signals profound changes in critical parameters of practice, including capabilities to service clients globally; scalar issues of business risk and financial capacity tied to larger projects; and single-source responsibility tied to more integrated forms of project delivery.
Since most of the super-large firms are publicly owned entities, their drive for market dominance over the coming years will shift the paradigm in ways that are parallel to other professions, such as medicine, in which an increasing percentage of doctors work for healthcare systems instead of private practices. Assuming that the current trend in industry consolidation can be sustained through the treacherous straits of the global financial crisis, the prognosis for midsize practices grounded in a business model of commodity service and delivery is increasingly uncertain.
Small practices can survive if they are principally focused on a specific locale or network and serve as a community resource. But small-to-midsize firms that have a strong propositional basis in practice, are able to work across different fields of knowledge, are technology-savvy, and are woven into multiple networks of societal stakeholders may have the brightest future. They include a category of firm whose output is represented as “cultural production,” working across the full spectrum of scale and type of objects, territory, and infrastructure. Such practices exist mostly in networks that include established knowledge communities in educational institutions, governmental bodies, and major corporations.
The fork in the road that is coming into clearer focus reveals an increasing scale of organizations providing commodity service and delivery on one hand, and on the other a class of practices driven by the production of knowledge and content. The two classes of firms potentially have an even greater universe of collaborative possibilities and value creation when they come together to address the most challenging problems of our time.
Step 3. Take a hard look at your firm’s developmental assets and make sure you’re investing in the right things.
How many firms find that they are pitted against competitors they have never seen before, for work that they could have easily won before the recession? How many principals find that their marketing departments are putting out proposals that completely miss the boat on what their clients are looking for now? How many firms find that their ownership transition plan has failed because the presumed successors cannot provide the needed leadership and vision?
The developmental assets of architecture firms are largely intangible and reside in people and complex webs of connectivity that bind them together. There are four classes of assets: ideas (intellectual capital); image (symbolic capital—the power to represent ideas, convey meaning, and communicate identity); networks (social capital); and capabilities (implementation capital—the abilities to conceive, program, plan, develop, and deliver work). These four asset classes, when properly connected and orchestrated, catapult firms from being above average to being exceptional.
When the underlying paradigm of society shifts, the edifice of these assets—which represent years of dedicated effort and financial investment—is badly shaken, if not toppled. The canonical modes of practice, whether general practice, market-sector leadership, or “starchitecture,” are repudiated, and the investment strategies that correspond to a firm’s developmental assets are all open to question.
The leadership and other key members of firms, who have built successful careers in various modes of practice, understandably have a very difficult time letting go and embracing an uncertain future. But in a time when investment capital is scarce, the alignment of vision and strategy is imperative. We can say with a high degree of confidence that investing in yesterday’s success is, at best, misguided.
Step 4. Face and embrace the future.
The profession of architecture in the United States was codified during the 19th century. While many aspects of the profession have changed substantially since then, traces of past modes of thought and behavior are far from expunged. Collectively, we remain captive to 19th-century notions of organization. It is clear that further changes in architectural business models and organizational structures will track the global trend of outdated social, political, and economic structures being shed.
For the moment, architectural practice appears to embrace two distinct, but complementary, trajectories. The first aims to capture the service and delivery needs of a world that will be increasingly urban, and the vast utilitarian and infrastructural needs of a rapidly expanding population. The second is sited in the multiple layers of issues and meanings of complex societies and is directed at the development of communities and cultures.
The opportunities for our profession, equipped with our unique capacities for spatial thinking and design, reside in embracing these challenges.
