What Does It Take to Lead an Architectural or Engineering Firm in 2016?
Over the past 35 years, I’ve had the distinct pleasure of serving as the business and legal advisor to more than 1,000 design firms, from some of the largest firms to those headed by a single design principal. Over that span of time, I have guided many firms through four different downturns in the economy, through the best of times, and through the transition between how the practices operated in the 1980s into the 21st Century.
From my experience, it seems there are certain truths that must be recognized if you and your firm are to ensure future success:
1. Market conditions are far more volatile now than they were in the 20th century.
It used to be that all businesses developed short term and long-term business plans, with a reasonable level of certainty. There was a collective sense that the future — even with an occasional recession — represented unending progress. Leaders of firms planned on spending on new computers and skills training, and enjoyed a certain comfort level regarding their clients’ capital improvement needs.
Today, there are few urban planners, heads of corporate capital planning units, hotels and hospital chains — not to mention transportation specialists — who can capably predict where their industry is heading. The uncertainties about taxes, technology and turbulence in local, national and global events make predictions highly unreliable. The takeaway? We can no longer base future business on the examples of past success.
2. Revolving-door clientele has become an unreliable basis for stable work.
Principals of a certain age will recall that during the 1960s and ’70s, design firms could count on a number of rock solid clients for 30–60% of their annual revenue. I advised many established firms who had regular work from clients like AT&T, the Catholic Archdiocese, major hotel chains, insurance companies, local and city agencies, and non-profits.
Today, there are few architectural or engineering firms fortunate enough to secure multiple assignments each year from steady clients, or enjoy the resulting ease in hiring, retaining and training talented employees. This is partially because clients have become more fickle, hopping from one firm to the next for the each new assignment. It is also because clients rarely get the high level of personal service that would entice them to engage in repeat business. Few principals have been trained to create the deep personal relationships that once characterized the strong roots at the heart of steady accounts. When you get your first assignment from a new client, you must stay close to that client for the first six months, so that they know the high level of service you are providing — so high, that you can unabashedly ask for the second and third assignment, knowing you have a great chance of getting it.
3. Too few firms are willing to invest in the dual keys to advancement: talent and technology.
Get to know the leading firms in your field, and you realize that their leaders are only successful because they employ the most talented individuals in the business. They know those talented individuals can only be hired and retained because their firms are committed to investing in technologies that allow them to push the boundaries of design and produce astounding work.
This is not about gambling on the future; it is about understanding that large institutions, corporations, developers, and governments are all looking for solutions that will employ the latest technology: from digital software that tracks sophisticated data and transforms it into visionary concepts, to recognizing how the internet of things will bring new levels of connectivity to projects in the years ahead.
Principals must immerse themselves in the ways that advanced technology are already being implemented in the industry. From augmented/virtual reality, to pre-fab/modular construction, to innovative and environmentally-sustainable products, you must learn all that is available about advancements in building technology, and make it part of your organization’s culture and business discussions. Talent will not be attracted to your firm without tangible proof that you are at the front line of technological advancement.
4. Firm leadership must constantly seek out new points of view to thrive.
Just because you’ve been running the firm does not mean you have all the answers. Assuming that business as it’s always been is the right course for the future could be your biggest mistake. A recent article by McKinsey & Co. points out the dangers of “groupthink,” and why it is critical that you not surround yourself with people unwilling to challenge your assumptions.
It is time for design professionals to recognize that letting the smart young talent into the decision-making process will bring in new concepts that will guide the firm through future developments. Moreover, seeking dissenting opinions will uncover new ways of solving old problems. As author and professor Arthur Grant notes:
Find somebody who genuinely holds a different opinion and invite them into the conversation. Look for the person who’s in the silent minority and ask them, “What do you think?” Go out of your way to figure out who has a contrarian view on the topic that you’re debating, and ask that person to present the view, and give them a chance to prepare for it.
The predictable linear progression that typified 20th century business is no longer a valid model. Clients’ needs and desires are vastly different, and far more variable, than they were then, and market conditions are less predictable. Leaders of the design profession must adopt and implement technological advancements within their firms to attract and retain talented young design professionals, win challenging and interesting commissions, and cement their future success. Those who fail to do so will be left behind.