Marketing: Julie D. Taylor, Hon AIA/LA
Models: Michael S. Bernard, AIA, and Nancy Kleppel, Associate AIA
Mergers: Mark Cameron
People Know Brad Pitt Wants To Be an Architect, but They Can’t Name Any Real Architects
Julie D. Taylor, Hon. AIA/LA
When Brad Pitt lusts for blueprints, and Frank Gehry “stars” on “The Simpsons,” and the term architect is used to aggrandize every other activity, one might think the profession is better understood than ever. Perhaps so. But can anyone outside the profession name five living architects? Could your clients?
Besides a few stars, it is common still for architects to bear blame but not glory, to be eclipsed by clients, and to be relegated backstage at grand openings and groundbreakings.
There may be nobility in being an unsung hero, but it doesn’t generate new business.
The answer to unwanted anonymity is more consistent communication. Marketing is the nexus between communication and sales. And sometimes, I’m afraid to say, architects can be their own worst enemies when it comes to verbal expression. You must communicate to potential clients and allies in a way that promotes your business as well as the ethos of the profession.
The economy seems to be inching its way back. Yet competition among architects for each commission remains fierce. More than ever before, architects need to understand—and more important, aggressively partake in—marketing and public relations.
Myth #1: Marketing is a 4-Letter Word
You did not spend all those years in school and all that time in licensing exams to be a marketing expert, right? However, without a notion of what marketing is, you won’t have the chance to put all that great talent and time to use. The real four-letter word for marketing is W-O-R-K. It takes work and it leads to work. Marketing is not for other people; it’s for you. Marketing is the overall term that pertains to the process of getting work. Under that rubric fall business development, marketing communications, and public relations.
A few definitions:
- Business Development: The direct means of securing clients through lead development, networking, RFQ, RFP, committee membership, interviews, design competitions.
- Marketing Communications: Relaying messages about your practice through website, corporate identity, newsletters.
- Public Relations: Partaking in activities giving you greater exposure to the public realm, such as awards programs, speaking engagements, exhibitions, and media relations.
Within all of these areas, a consistent, well-crafted message about the practice and the work is the necessary first step. Put your practice through analysis to drill down to your message, your “brand,” to define the practice. There is a natural antipathy in nearly every professional to having a complex, nuanced, and earnest practice marketed as a brand or easily-digested set of ideas. But remember, the world is a large and crowded stage—your message can be elegant, but must be concise and understandable. Enlist help from a marketing consultant, mentor, coach, or colleague to get an outside view and discover if the message is getting through.
Myth #2: Marketing Is Only Needed When
Business Is Down
The best time for marketing is always. When business is good (remember those days?), you still need to keep your name out there and cultivate new leads and jobs for the times when business is slow. Because each job is going to end eventually, and too many are on stop-and start schedules, you want always to be marketing. The best way is to integrate marketing activities into your practice and impart that everyone in your organization is part of marketing. Understand that it’s in everything you do and present: company name (a string of last names, a bunch of initials, or a word); identity (business cards, graphics); website (message and usability); digital communication (emails, e-newsletters, blogs, Facebook, Twitter). Even how the phones are answered makes an impact (human or machine?). Look at every seemingly minor element of the business and make sure it corresponds with the message of your practice.
Myth #3: If I Build It, They Will Come
If you don’t let anyone know about what you do, how will they know to hire you? An architect once told me he thought he never got published because the work just wasn’t good enough. No, he never got published because he wasn’t pro-active enough about it. Getting your work and message to the media introduces you to new audiences and bolsters your existing image among clients and peers.
In a media-saturated world, it’s even more important to be represented. Right or wrong, that’s the landscape now. Although it seems our print vehicles are getting fewer and fewer (R.I.P. Metropolitan Home, Progressive Architecture, I.D., etc.), there are still great venues in print—particularly in business-to-business trade publications. Moreover, the web has been exploding with architecture and real estate related venues—see Architizer, ArchDaily, Curbed, Globe Street, or Bisnow. In many cases, the blogs and websites are leading the news.
In addition to eight-page glossy magazine stories, there are myriad ways to get your story told. The trade publications often take bylined articles, which allow you to put forth your expertise on school design, healthcare architecture, or any number of disciplines. These publications may not be as sexy as those on the newsstand, but they do reach a very targeted audience of decision makers. You can also state your case in newspaper and online op-eds, blogs, and public comment areas. Oh, and about those glossy spreads—pursue them when you have the right project and great photography.
Myth #4: I Don’t Need To Pay For It
I can count the instance of a reporter knocking on an architect’s door and asking to publish her house on one finger. Being “discovered” takes work, which you can do by yourself, or you can hire a professional. There’s no shame in paying for help in marketing your firm. There’s no mystique in pretending you did it all yourself. I’ve never understood the architects who insist they’ve never had help, when they have a public relations firm working behind the scenes. However, others are happy to introduce you to their publicist, proving that they have “arrived.”
Some architects I know are naturals in marketing and public relations. Some love
it, and others hate it. Just know that you will pay for it either way—in time or in fees. If you don’t already have an in-house marketing department or dedicated professional in your firm, then assess your current team for marketing ability. Is someone really good at personal networking, and another at writing? Allocate the non-billable hours wisely to take advantage of these other skills. Or, hire a professional. A professional can lend an outside view and broader knowledge of the marketplace to develop business plan, marketing strategy, branding, and public relations.
Myth #5: Everything Has Changed
Because the Internet and social media are now integral parts of our lives doesn’t mean everything has changed. Some things have changed, but most standards of business marketing remain true. That’s because, at least as of now, we’re still doing business with other human beings. Business is fundamentally about relationships. So, it’s not a matter of replacing your old marketing tools, but adding to them. Take advantage of the proliferation of outlets on the web to create profiles (Facebook, Architizer, Architype Source, etc.). Keep your website up to date. Respond to blog posts and newsletters. No matter what the delivery system, a story is still a story, and you need a consistent, cohesive, and comprehensible message to deliver to the audience.
The bottom line in all of this is more than the bottom line. For any type of marketing action, it’s imperative that you are both true to who you are and what your practice represents, in addition to being flexible and adaptable to the business climate. This should really be natural for architects, who by their nature deftly balance time and budget, art and science, public and private, and other seeming contradictions.
Thinking About Business Models
Nancy Kleppel, Associate AIA / Michael S. Bernard, AIA
Imagine if it were in our nature as architects to launch and maintain a practice in which a distinct design vision were integrated with a solid revenue model—a model that is of the right complexity for the firm. Armed with a solid understanding of our financial integrity, we would engage in the pursuit of market sectors and projects of appropriate scale and complexity, rather than following our desire to capture projects—only subsequently guessing at how we might do the work to realize them.
This is our recommendation: aim to build the model and find projects to suit, rather than finding the work and then building the firm to suit. The reason this is important is that you can build in (and maintain) some control over the strategic and planned growth of your practice, in good economic periods as well as in challenging ones.
Right Size, Right Place
The last three years have taught us that there is great benefit in being extremely flexible with respect to firm operations, marketing, and the manner in which we approach projects. Much was in flux over the course of the (durable and continuing) recession. In fact, the current period of unpredictability may be the landscape to which we have to adapt architectural practice for the foreseeable future. Perhaps the familiar, “static” model based on firm size will have some place in a future economy. But consider the present situation: firms have shrunk, have been acquired, and grown in size after acquisition. Firms have seen market share disappear because of “outsiders” moving into our territory (competition). Firms have moved to new geographic markets to find work in their areas of specialization (and by doing so, have become “outsiders” themselves).
We benefit by looking to our strengths to figure out where we want to be in the marketplace. We need to be brutally frank in our appraisal of our strengths and our position relative to our clients and our competition. The narrative we repeat to ourselves is of no value if it recounts only where we think we are. It must remind us of where we really are, both in terms of the sectors in which we compete for services, and with respect to our geographical location. Consider an example in which you own or work for a large, multi-regional firm in North America. Is it appropriate today to compete in many market sectors in each of your offices at a local or regional level? Is it sensible, given your firm’s “hit” rate, to compete for labs, schools, cultural, institutional projects, and so forth, in each of your regions, potentially competing with your own offices? What is appropriate and economically profitable for you to do? Is this a viable model for today’s economy? Would it perhaps be better to pause, assess, and rethink the firm’s structure and specialization, locally and nationally, differentiating each office so that they are recognized as specialists in narrowly defined market sectors? By doing so, you create the opportunity to communicate your capabilities more broadly, crafting a national identity rather than a regional one. For your firm, would such an adaptation be a strategic and potentially lucrative response to the current economic period—and to the reality of specialization on a global level?
The large firm can thus create regional offices that specialize, rather than regional offices that are generalists. By doing so, large firms begin to speak for (and to) a global market for architectural services, and perhaps more effectively. We redirect our current resources to compete globally, with other firms that are based outside of North America. Now let’s drop down a notch. Let’s say that you are the principal of a twenty-person firm in a given region, spread across a few market sectors. How can you expand your practice, or at least hold onto market share? The successful adaptation may be global affiliation, but does not exclude national or regional alliances with firms of similar or different composition, which pursue work in complementary markets. Let’s drop one more notch: the small firm. It is at this level where we most bluntly face our mortality as design professionals.
The obvious treasure (valuable asset) in our portfolio is the combination of our client base and the valued professional relationships our work has engendered: those human beings with whom we have worked to realize past (and ongoing) projects. This is true across market sectors, whether the projects be single-family houses or laboratories.
For example, residential clients are often individuals who give direction and who hold high-level, decision-making roles in their organizations.In addition, these clients often hold other community responsibilities, perhaps in a committee context: school boards, non-profit organizations, church groups, building and design review boards.
If we work with a high-end residential client, for example, what inhibits us from asking about their own careers and the organization that they own or within which they drive outcomes? We might begin by reviewing a successful collaboration with them, say, working with the client on their house. At the end of a project with a successful outcome, we have the opportunity to craft our mutual future together. Ask: “Is there an opportunity for us to provide services to you in your other role, for your organization? Is there an upcoming project for which we might offer our services?”
Turn the example around: Can we put ourselves in front of decision-makers on a school board that present opportunities to pursue projects with them or their contacts outside of the current project? To engage the client and to think more broadly about how we might collaborate in the future represents a strategy that supports the firm’s business model. Can we identify opportunities to leverage such business relationships so that they lead to work beyond what we are already in contract to do?
Relate these relationships back to the business model: If we build a model that indicates we need to generate a given amount in fees, and given our clients’ business areas, in which market sectors can we pursue work that meets the demands of the model?
With the elements of this strategy in place, regardless of firm size, we can work in the present tense to set up opportunities for the future. Above All: Know Your Value. The last three years have taught us that design excellence alone cannot foster a durable practice, at any scale. We have been chastened by recent events and strive to adapt to the unstable environment in which we pursue our craft. The successfully adaptive firm is vigilant and continuously aware of its place in the market, subtly adjusting and refining its course. The challenge is to maintain a stable presence in the present market and yet adjust to shifting economic winds. People need to be able to recognize you and your firm in a crowded marketplace, where many firms (and the services they offer) may resemble your own. Such a conundrum is not solved by adaptability and flexibility in the way that we render professional services that respond precisely to shifting client needs. We must also develop a strategy of subtle refinement of our authentic value, as needed, and communicate that message to current and prospective clients (not to mention to staff and the network of consultants with whom we collaborate).
What we value—and what clients value—may not be the same tomorrow as today. And they may not be in synch. The elements that define the term “value” have changed, and will continue to do so. We must strive to keep our definition of “value” current, keeping our value as high as possible. Regardless of whether your firm is XL, L, M or S—or even XS—understand where your firm stands along the “value continuum,” with respect to where and how design services can be profitable in today’s economy and that of tomorrow.
Mergers & Acquisitions: Why Design Firms Shouldn’t Ignore Them
If you were to ask the opinion of a practicing architect about the recent spate of acquisitions of large U.S. architecture firms, most would say that these acquisitions don’t have any effect on their firms. There is a common belief that what is happening ‘out there’ at the mega-firm level is an exception and has no relevance to mainstream design practices.
Even architectural press editors have a tendency to scoff. In a recent article in Architectural Record (March 2011) editor C.J. Hughes acknowledged the strategic advantages that mergers provide, but asserted that, “It is debatable whether mergers will continue as a trend.” His opinion was that practitioners would shy away from them for fear of losing their existing culture and their design voice.
Certainly, some will shy away. But, let’s not be in denial about what all this activity may mean for the future.
Factors Driving Mergers or Acquisitions
It’s important to have a historical perspective. Mergers and acquisitions, considered by some to be a recent fad, are actually a trend that started decades ago and is now picking up steam.
Secondly, the factors influencing whether to consider acquiring another firm or to be acquired haven’t changed and aren’t going to change any time soon. The reasons that are commonly articulated are:
- Access to deeper expertise or markets;
- Broader geographic reach;
- Access to the talent pool in a new region;
- Reduction in overhead costs through efficiencies of scale, resulting in more competitive pricing;
- More capital for IT and R&D;
- Stronger portfolio in specific markets, which means greater competitiveness.
In a business climate that is more competitive than ever, these reasons gain even more
In addition, one must factor in personal self-interest. The money factor will be a major consideration for the Baby Boomers nearing retirement age. Here is how it works: a major shareholder of a design firm nearing the end of his career wants to monetize all the years of hard work and sacrifice and believes he/she can’t get an adequate return by handing over the reins internally. Either their potential principals don’t have “the right stuff,” or they haven’t been compensated adequately over the years to build their net worth, so that they can buy out the retiring principal. The best chance is to sell externally.
Yet, just because the giant firms may be consolidating, does it have any impact on the smaller firms? Remember, the average size AIA firm is less than fifteen people.
Large Firms as Pioneers
To answer this question, let’s recognize the role that large firms have played as pioneers for the industry. Some examples:
Large firms invested in CAD early, when many professionals in smaller firms regarded it as a fad. Large firms also invested early in BIM. They made the first explorations into large international markets, like China. Principals of a large health care architectural firm created the concept of “evidence-based design” and used their credibility and commitment to the idea to give it wings. Finally, large firms developed internal knowledge networks, to spread best practices across their offices.
In all these cases, the large firms paved the way for mid-sized and smaller practices to adopt some of these tools and approaches. It is a reasonable conclusion that large firms are harbingers of what is to come. So, if large firms are pointing the way toward consolidation, you can count on it that acquisitions will be more prevalent over time.
Concerns About Large Firms
At the root of the suspicion about mergers and acquisitions are the biases of many design professionals against large firms.
It is commonly assumed that in a small firm the practice of architecture is very different from in a large firm. In large firms, “principals lose touch with projects;” “a principal goes to the interview and is never seen again;” “the culture is cold and impersonal, and an individual is not valued;” “the only interest is in the bottom line.”
There is also a bias that innovation happens only in small firms. Not only do practitioners hold to this belief, but even some consultants do. In a recent paper, “How Bleak is the Mid Size Firm Future,” Coxe Group’s Hugh Hochberg wrote, “The firms that do the most exciting, creative work with the most consistency are, with a few exceptions, small and midsize.”
Really? Is Foster’s Clark Center at Stanford not creative? Is Craig Hartman’s Cathedral of Christ the Light a “cookie-cutter” building? Is NBBJ’s Gates Foundation Headquarters in Seattle a conventional office development? What about Perkins+Will’s new university in Saudi Arabia for 8,000 students, completed in three years? Didn’t conceiving and delivering that project require considerable innovation?
We believe that the perceptions about large firms are largely just biases. Innovation can occur anywhere. It has been our experience from consulting to some of these large firms that they are keenly interested in having a strong design culture and in achieving design excellence. Most principals in large firms value their project involvement, and if you were to ask their clients, they would often say that the principal was “hands-on” and available to them when they were needed.
The “trick” is to make sure that large company structures, which are necessary to operate, don’t impede the aspirations of its professionals; and that the design culture of the firm is valued and protected.
Learning from Mistakes
When acquisitions have gone badly, it was seldom related to the structure of the deal, but rather in the melding of two firms into one. A few of these situations have been widely reported in the design press. But, surely, that was not by intent: no acquiring company wants to pay for a firm and then see its potential disintegrate.
What is significant to note is that the companies which intend to continue making acquisitions are analyzing what worked—and didn’t—in previous situations and changing their processes so as to be more successful in the future.
What does the future look like?
If there will be a lot more acquisitions and mergers in the future, what will be the complexion of architectural practice in that future world?
Our industry has already evolved to where there are a few giant companies. While many people criticize them for their failings, over time these companies will have learned how to integrate their acquisitions better, and then they will be more effective at leveraging their global footprints and achieving the efficiencies of scale.
We expect to see many firms emerge in the 500-1,500 size range, created through acquisition of mid-sized practices. The rationales for creating these combined entities are to achieve the results defined in the beginning of this article. In undertaking their acquisitions, they will have benefited from the lessons learned by the giant companies. As long as they continue as privately held businesses, they won’t have to deal with the tyranny of quarterly earnings statements for publicly traded design companies.
Design professionals in these 500-1,500 person firms will share a commitment to quality, to exemplary client service, to design excellence. They will have more specialized resources, so as to be more credible to potential clients. The companies will have more capital, so as to reinvest in improvements to the practice and the business. They will be strategically placed geographically to have access to a larger talent pool and to bring value to their client base.
Of course, there will always be room for the signature design firm, built around a strong personality and sought out for their distinctive look.
But, what does this mean for the thirty-to-eighty person firms practicing regionally? Are their days numbered? Our opinion is, they will have to be of outstanding caliber to be competitive. In their expertise, they will need to be genuine “thought leaders.” Even with fewer resources, they will still need to invest in R&D to drive innovation. Their leaders will need to have broad skills, not only in technical aspects of the profession, but also in the “soft” skills of client management and communication.