Despite the creative nature of architecture, or perhaps because of it, business models within the industry have long seemed to be neglected. This is a bit strange because business models define the product of a business; everything that that business produces or provides to a client is done in service of what the business is set up to do. Architecture has been lucky so far that this static model has, unlike the taxi or hotel business, not produced a disruptive new business model. With the advances in technology and direction of cultural expectations, architecture might finally be ripe for disruption. That being said, these changes could also help architecture adapt, become creators and curators of a spatial experience ecosystem, rather than purely the builder of building that they have traditionally been.
Perhaps given the long history of architecture, this emphasis on the historical role of architecture shouldn’t be to much of a surprise. The industry looks back with great fondness on the “master builders” of the past. From the Great Pyramids of Giza  to the Greek Temples  to Brunelleschi’s dome , architecture has always been deeply intertwined with its method of construction and engineering. It is certainly somewhat of a shame that over the last couple hundred years, with the added complexity and liability within the building industry, architecture has spun off these valuable portions of the building process: general contractors and the various building engineering fields. It has almost certainly led to a loss of agency within the profession.
The reaction to this loss of agency has rightly or, as I suggest, wrongly lead to attempts to regain this lost territory. Global firms and small upstarts alike have tried to vertically integrate their businesses back towards that “master builder” ideal. SOM and AECOM are great examples of architecture and engineering firms. SHoP prides itself on being a high design architecture and construction firm. While those firms integrate full engineering arms into their business, others are using research departments in order to push towards building engineering. Perkins+Will and SCB, for example, have been recently had job openings for research positions based on building systems designs. 2008 AIA firm of the year KieranTimberlake, one of the firms best known for their rigorous research, takes it a step further with a full research department to support their architects. The common thread here though, is that these endeavors are always pointed in one direction. Even the AIA, with its emphasis on BIM (building information modeling) and IPD (integrated project delivery) is the same. They have integrated other business models, some vertically and some horizontally, but they always do so towards a physical building as the priority.
Based on the trends of our current business and social climate, this seems to be a missed opportunity. Big “tech” (quoted because they aren’t just technology firms as they are stereotyped to be) firms have shown that the creation and distribution of products is too easily commoditized. There are too many people who can do the same thing. The “tech” firms have become purveyors of user experience and have gained their market share by aggregating around consumer demand. The products that they pedal are modularized to fit within the larger ecosystem of their brand experience. This works because, to quote Ben Thompson, it is impossible to overshoot user experience. Architecture, I suppose, is sort of like this. In the design-bid-build method of building delivery, contractors and engineers are modularized under the architect. They compete to be “plugged” into the existing contract. What is odd is that architecture firms get paid less despite their hierarchy on the food chain (and with IPD, this might not be the case any longer anyways). Regardless, the difference between how these industries operate, beyond the obvious disciplinary differences, is that the architecture firms have their eyes on the physical product . Tech firms do everything in service of user experience.
(As an aside, that is not to say that we, as architectural designers, ignore user experience, we clearly do not. It is more to say that we prioritize the formal or geometric nature of the design and fetishize the detailing of the building. This becomes apparent in the language we use in theory and during the design process: what does this material want to be? Is this tower too chunky? Should these masses or planes feel like they are sliding by each other? It is a product oriented, rather than human oriented, discussion.)
This is where WeWork becomes so fascinating. They are not so much a real estate startup, as many presume, but an experience provider within the physical world. Everything they have done of late, starting with offices and branching out to residential and education products, is built around the lifestyle or experience which they want to provide to their customers. They have integrated vertically towards experience rather than the physical product.
This isn’t to say that they ignore physical product. The “product” career page positions them, at least in part, within the design and construction field and they have numerous openings for architect and interior designer positions. This design staff is supported by BIM specialists and design researchers who help them make rigorous and informed design decisions about human/space interaction. That 2015 acquisition of Case inc seems prescient now with the influence that data and information have on society today. No, WeWork cares deeply about their their spaces. They have just positioned themselves differently. They use their spaces as an information network that informs design decisions with the end goal of better supporting their clients needs: what we might call space as a service.
They use their spaces as an information network that informs design decisions with the end goal of better supporting their clients needs: what we might call space as a service.
This is where things get tricky for architecture firms. Space as a service sounds suspiciously like suped-up architectural design once you get down into it. By applying this product to enterprise clients, they are taking away opportunities that might otherwise have gone to traditional architecture firms. Free-lancers who work in coworking spaces wouldn’t have hired architects but larger enterprise firms more likely would have. This makes perfect sense for enterprise clients too. Powered by We takes work previously done by architects, adds in facilities management expertise, and then layers on a network of information that WeWork has gathered from around the globe. This then allows WeWork to confidently make decisions about how their designs effect client experiences. It brings the question of why get just the good architectural design if you could have similar quality high design integrated seamlessly into that spaces’s operational needs? Frankly I’m not sure why you wouldn’t pick the latter unless there were some truly special needs.(Full disclosure: I’ve never been in a WeWork space thus my opinions are based on online articles, pictures, and Instagram.)
This is where the introduction of Bjarke Ingels as chief architect becomes so important. The assumption behind businesses going to WeWork over traditional architecture firms is that WeWork and traditional architecture firms would be producing similar quality design work with WeWork’s additional services providing that extra value. Where previously, architecture firms were the trusted institutions in terms of crafting great spaces, the hiring of Ingels means that WeWork now has the star power to build that trust into their own brand. Beyond the information network and operational expertise that WeWork has built up over the years, making up ground in terms of respectability and trust in their design work might be the final nail in the coffin.
Where previously, architecture firms were the trusted institutions in terms of crafting great spaces, the hiring of Ingels means that WeWork now has the star power to build that trust into their own brand.
This could become the first big disruption to the architecture industry because architecture firms are not set up to compete with the WeWork model. Architecture is a product oriented business except now WeWork is providing a service on top of that product. If Powered by We takes off like it has the potential to, there are three ways that I believe that architecture firms can compete. The first is to thoroughly out design WeWork to the point that WeWork’s services can’t make up the value gap. Of course, proving the “value” of their work is something that architects have long struggled with. The second is to ignore WeWork or work in different locations/industries than it does. The third, and most interesting, option might be to match WeWork’s commitment to the entire experience supply chain. This would mean some ability and willpower to take on ownership of a space beyond construction administration. We’ll dive into this a little bit below but essentially its the creation of a sort of spatial experience product ecosystem.
First though, let’s step back and make an analogy; let’s compare WeWork to Apple. Apple started with this integrated approach to software and hardware that allowed them to build, in Ben Thompson’s words, a highly differentiated product. This product ecosystem took off with the iPod, and its relationship to iTunes, before branching out from there. They have guarded this ecosystem by carefully analyzing and managing the systems and experiences that make it up. Similarly, WeWork built a differentiated product around their CoWorking spaces. Building Information software helped them learn about how their customers react to these spaces. They are branching out into a full ecosystem of products from WeLive to Rise by We to WeGrow. It’s not a perfect analogy but it works for now.
I bring this analogy up because the third option to compete with WeWork discussed above, of architecture firms branching out into a larger portion of the experience supply chain, could use Google’s strategy as a template. Google needed an open platform on which it could project its influence into mobile and compete with Apple. Android did just that. While open source and thus customizable to the needs of OEMs, Android does the job introducing mobile users to Google’s existing services. This way, Google is able to successfully gain network influence without investing in closed, hardware-specific ecosystems like Apple. Again, not a perfect analogy since Google monetizes its products per view through advertising thus meaning more traffic generates more money. Architecture does not do this. That being said, using the open-source method of integrating into a variety of devices, or spaces, could translate.
As a hypothetical, how could an architecture firm operate in this way? The easy part of this experience ecosystem is design, it is inherent to the architectural process. The harder part would be building out a network of experiences that can inform and build off each other at a scale at which this network would actually be useful.
The easiest way to do this would probably be for a large firm to introduce an open-source software overlay, or “operating system”, for its clients and create instances of it at each location. If there are enough instances of this operating system, they could begin networking together to build patterns of use within each space as a whole thus providing the architecture firm with a wealth of information to better design with. As an open source operating system though, it would still allow each of the clients to customize the operations as necessary in order to work within their firm’s needs. Of course, this hinges on this operating system being useful enough and easy enough to use that clients are willing to use it over their own proprietary software. It also requires architecture firms to spend resources maintaining this system as WeWork does with theirs.
That being said, if done right, one could imagine this as a win-win situation. Suppose that architecture firms develop a software overlay that interfaces with the smart devices available today. They could integrate both Phillips Hue bulbs and LifX bulbs depending on which is the best fit for this location. They could then help craft lighting experiences within the space that work best for their clients needs at any time during the day. They could also develop software to learn about conference room usage on the fly and quickly adapt their space planning. They could take readings on air flow patterns in space to help craft the micro-climates that best suit individual or activity based needs. This would help the client in their spatial and employee performances. This would also provide architecture firms with an ever growing pool of knowledge with which to make informed design decisions and continue to craft client experiences even after construction stops.
This would also provide architecture firms with an ever growing pool of knowledge with which to make informed design decisions and continue to craft client experiences even after construction stops.
This does not seem to be completely out of the realm of architecture. Some firms have completed parts of this transformation. Gensler, for example, has a large latent client network that would be necessary for an ecosystem like this to be successful. It also has a culture that encourages experience focused research and even app development. On the other end of the spectrum, KieranTimberlake’s Pointelist allows for real time quantitative analysis of the built environment. While I am not privy to the extent to which this product is used, it seems the idea is that it will eventually become an enterprise service for KT’s clients. Given the opportunity, it is not hard to see this scaling up. The question is whether architecture firms are willing to augment their more traditional business models in order to take on this added responsibility.
Switching from a product focus to an experience focus won’t be easy. WeWork has an inherent advantage in that regard. They were built from the start to serve their client’s needs and provide a superior working experience. It’s the progression from there that makes them so potentially disruptive. Architecture, on the other hand, has centuries of tradition pulling them towards the “master builder” mindset. That doesn’t mean that they don’t, or we don’t, have the skills to adjust. After all, design is still a huge part of experience. We just need to focus on the greater human experience rather than fetishize the building.
- Imhotep is taught to be the first architect or at least he is where I went to school. He shows deep the tradition of master builder really goes.
- Ancient Greek Architecture took on the idea of the ideal building with mathematics, proportion, and strict rules as to when to use built elements.
- Brunelleschi’s Dome
- Aggregation Theory, by Ben Thompson, tries to explain how large tech companies were able to gain their dominant market share. The short version is that, in the past, large companies gained ground by controlling the supply of products. With the internet, and its smaller marginal costs, market dominance is now produced by companies aggregating consumer demand.
- Conservation of Attractive Profits discusses how profit is moved around in the value chain of businesses. To quote straight from that link, “ The law states that when modularity and commoditization cause attractive profits to disappear at one stage in the value chain, the opportunity to earn attractive profits with proprietary products will usually emerge at an adjacent stage.” This basically means that profit needs to exist somewhere and if it is taken away at one location, it will move on to another. Another quote, as an example, is from the AirBnB example: “ In other words, the implication of Airbnb building a platform of trust is not that a homestay is now more trustworthy than a hotel; rather, it’s that the trust advantage of a hotel has been neutralized, allowing homestays to compete on new vectors, including convenience, cost, and environmental factors.”
- We look to starchitects, for example, not for their superior user experience but for their “innovative form.” Another example might be how Dezeen recently published an article celebrating a glass study not how well the family lived in the home.
- The WeWork experience is great than just offices these days. As documented quite well here, they are becoming a whole lifestyle: work, live and play.
- To quote straight from the WeWork Product career page: “ We may come across simply as a coworking community provider, but we’re really one of the most sophisticated, fast-moving design and construction companies in the world.”
- In WeWork’s spaces, the human/space interaction is a constant learning experience. “ Once members start to settle in, his team begins reviewing usage patterns to see “what’s working and what’s not.””
- The aquisition of Case inc. made a lot of sense at the time. WeWork wanted to get to know their spaces. It makes a lot more sense now though though with the growing importance of data and increased knowledge in how to use it.
- Space as a Service sounds suspiciously similar to Architecture+ but really I’m not sure why this hasn’t been done before. It makes too much sense to keep helping your clients get value out of their spaces after you build it. Not only does it continue the revenue stream, it also provides the opportunity to design the evolve into its best version for a particular client.
- WeWork Enterprise
- The Bjarke Ingels news should not have been as surprising as it was. It makes too much sense. It helps WeWork build credibility and gives BIG a consistent stream of work. It will be interesting to see if this turns into a Netflix/Television provider relationship though in terms of how content is generated.
- I don’t remember which episode of Exponent was the one that best addressed market disruption but they discuss it quite a bit and they are all worth listening too. The general gist of it though is that firms are constructed with a particular mindset and a particular culture. This mindset and culture is an asset it its growth until the market changes. Then it becomes an liability in that it is so hard to change.
- Apple, as discussed by Stratechery.
- This would have the additional benefit of not allowing technology companies to have the final say in who runs the smart home.
- Gensler’s Experience Index
- Gensler’s Poppy Seed was an app that didn’t seem to catch on. The concept is pretty great though. It would be extremely helpful for architecture firms to know how people feel in the spaces they design. The question is how do you get the interaction between user and app to be seamless enough that it’ll get used. I imagine there just was not enough value to the user to record their emotions in the spaces they occupied.
- KieranTimberlake’s Pointelist is for sure used in their office space to monitor temperature and correlate that data with survey’s about their employee’s comfort. Nestled within the FAQs is the suggestion that this may one day become an enterprise product.