pdf version Charting Your Course

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by David H. Maister, Weld Coxe, Hon. AIA; Nina F. Hartung; Hugh H. Hochberg; Brian J. Lewis, Robert F. Mattox, FAIA; and Peter A. Piven, FAIA 1986

The search for the best ways to organize and manage architecture firms has occupied more and more attention over the past generation. The goal is always simple: find the format that will enable the architecture firm to provide excellent service to the client, do outstanding work recognized by peers, and receive commensurate rewards in professional satisfaction and material returns. The answers, as the observation quoted above reflects, have not been so simple to find.

As management consultants with the opportunity to analyze literally hundreds of architecture firms, we have found the search for ideal management methods challenging. Each time we’ve observed a format that appears to work well for some or many firms, an exception has soon appeared, contradicting what looked like a good rule to follow. For example, some firms do outstanding work organized as project teams, others are very successful with a studio organization and still others get good results from a departmentalized project structure. One of the major puzzles for observers has been finding a relationship between the project delivery system used by firms (that is, “how we do our work”) and how the organization itself is operated (that is, “how we structure and run the firm”).

After years of study, and trial and error, a model has begun to emerge that holds promise for making some order out of these issues. At the heart of this new model is the recognition that although no one strategy fits all firms, there is a group of understandable principles with which almost any firm of architects can devise its own best strategy.

The model derives from observing that two key driving forces shape the operation, management and organization of every architecture firm: first, its choice of technology, and second, the collective values of the principals of the firm.

Technology, in this sense, refers to the particular project operating system or process employed by the firm to do its work. The choice of technology resolves such questions as: are we going to work in teams or departments? will we have one design director or do we all design our own work? values refers to the personal goals and motivation of the principals in charge of the firm. The choice of values answers these questions: why do we do what we do? What do we want to receive for our efforts?

Technology Shapes the Delivery Process

Recognition of the importance of technology in shaping architecture firms is particularly derived from work conducted by David Maister during his years as professor at the Harvard Business School. In studying other professional firms generally–especially law and accounting firms–Maister recognized a pattern in the key technologies they all use. He defines these technologies as:

Brains (expertise) firms, which provide service to clients who wish to retain “the smartest kid on the block”–at almost any cost. These firms give their clients new ideas.

Gray-hair (experience) firms, which customize ideas, but rarely are positioned at the cutting edge. Clients of these firms recognize that the problems they themselves face have probably been dealt with by other companies; the client therefore seeks an organization that can offer know-how based on past experience.

Procedure (execution) firms, which service clients who know that their problems can be handled by a broad range of firms and who are seeking a professional firm that can give them a prompt start, quick disposition and low cost.

The impact of different technologies on the shape of an architecture firm is profound. For example, a firm where the partner-in-charge directly executes the project uses a technology different from that of a firm where the partners hand the execution of projects over to project managers. Similarly, a firm that organizes projects around a single design director has a technology different from one that allows each project team to make its own design decisions.

Applying this work specifically to architecture-firm technology, three categories–similar to the generic categories above–emerge:

Strong-idea (brains) firms, which are organized to deliver singular expertise or innovation on unique projects. The project technology of strong-idea firms flexibly accommodates the nature of any assignment, and often depends on one or a few outstanding experts or “stars” to provide the last word.

Strong-service (gray-hair) firms, which are organized to deliver experience and reliability, especially on complex assignments. Their project technology is frequently designed to provide comprehensive services to clients who want to be closely involved in the process.

Strong-delivery (procedure) firms, which are organized to provide highly efficient service on similar or more-routine assignments, often to clients who seek more of a product than a service. The project technology of a delivery firm is designed to repeat previous solutions over and over again with highly reliable technical, cost and schedule compliance.

It is important to recognize that there is nothing judgmental being implied about the architectural quality of any of these technologies. At their most successful, firms specializing in each technology still exhibit strength in all areas of design, service and delivery. It is the emphasis that makes the difference. This emphasis may be shifted by the preference (strengths) of the architects in the firm, or by the marketplace.

Take the hospital market, for example. The modern hospital was first the province of hospital specialists (strong-idea firms). As the ideas these specialists developed were understood across the hospital industry and the architectural profession, the center of the hospital market shifted to strong-service firms, whose strength was the ability to offer close, experienced attention throughout the very complicated process of building or rebuilding the modern hospital. After proprietary health-care clients entered the market in recent years, a share of hospital work has gone to strong-delivery firms, which specialize in adapting the standard specifications of the proprietary owners to different situations.

Obviously, these technologies often overlap. Clients frequently want a kind of service that incorporates some aspects of more than one technology, and some architecture firms, similarly, deliver services that do not clearly fall within just one of these groups. Nevertheless, it is worth noting that there is a general progression in the way technologies evolve in every firm and every market. New ideas originate in strong-idea firms.

As the ideas become understood and accepted in the marketplace, they are then widely applied by strong-service firms. Eventually, when the ideas can be routinized and are in demand by client after client, some or all the work will move on to strong-delivery firms, where repetitive projects are turned out and efficiency is the key. Thus, it is important for firms to pay attention to how their technology matches the evolving market.

The different technologies, when they are working best, require notably different project-operating organizations, staffing patterns, decision structures, etc. Technologies in architecture firms influence:

• Choice of project process
• Project decision-making
• Staffing at the middle of the firm and below
• Identification of the firm’s best markets
• What the firm sells
• What the firm can charge
• Best management style

Technology is the fundamental driving force that shapes the professional design process of the firm, and it is becoming recognized that all really successful firms have a clear and consistent project process. Those firms that try to be all things to all types of clients tend to have the most difficulty optimizing their work and/or their organization.

One immediate example is in staffing. Strong-idea firms will hire the best and the brightest right out of school and expect turnover after a few years. Strong-service firms seek career-oriented professionals and try to retain them so their experience is available to future clients. Strong-delivery firms, on the other hand, will hire paraprofessionals and use computers to apply standard details and procedures over and over again at the most efficient cost.

The senior partner in charge project manager of a strong-service firm, who is accustomed to giving individual attention to each aspect of complex projects, is rarely geared to provide the fast, efficient, routinized service desired by the strong-delivery client. Thus, the difference in staffing models makes each technology so distinct that it would be difficult to have all three models operating in top form in the same firm. The tables that accompany this article illustrate similar contrasts in strategies for all the different areas of the firm influenced by its choice of technology.

Values Also Shape Management Styles

The second driving force that shapes architecture organizations is the values of the professionals leading the firm. The fundamental differences in values become evident if one examines the word “practice,” which is so often used by professionals to describe their organizations, in contrast to the word “business.”

Practice, as defined by Webster, is “the carrying on or exercise of a profession or occupation as a way of life.” Business, on the other hand, is defined as a “commercial or mercantile activity customarily engaged in as a means of livelihood.”

When the two definitions are compared from a management perspective, what stands out is the contrast between “a way of life” and “a means of livelihood.” What is becoming evident is that many architecture firms are practices first and businesses second, while others are businesses first and practices second. Therein lies a whole new perspective about what goes on in such organizations. he basic difference is their bottom line:

Practice-centered professionals, who see their calling as “a way of life, “ typically have as their major goal the opportunity to serve others and produce examples of the discipline they represent. Their bottom line is qualitative: How do we feel about what we are doing? How did the job come out?

Business-centered professionals, who practice their calling as “a means of livelihood,” more likely have as their personal objective a quantitative bottom line, which is more focused on the tangible rewards of their efforts: How did we do?

As with technologies, it must be emphasized that there is nothing more noble about either choice of values. The choice is an entirely personal, largely self-serving one, derived from how individual architects view their missions in life and what they hope to get out of their lives in return for working.

What is important about the distinction is the recognition that although all successful architects clearly strike a balance between practice values and business values, it makes a significant difference which of the two is primary. The choice can be expressed as a spectrum with practice-centered architecture firms at one end and business-centered firms at the other.

The different positions (practice-centered versus business-centered) will lead to very different choices in significant areas of organization and management. Practice-centered firms, for example, tend to prefer partnership structures, where the leadership is collegial and decision making is often by consensus. Business-centered firms, in contrast, work well in corporate models, where there is a clear hierarchy of roles and decision making is by chain of command.

The practice-centered model is frequently preferred by principals who like to work as closer/doers: getting and carrying out their own work.The business-centered model is frequently preferred by principals who see marketing as a departmentalized function, with the work handed to operating departments to carry out.

Both values can produce equally successful results in client service, design quality and even profitability.The choice of values, however, can make significant difference in the best way to structure the firm.Values in architecture firms influence:

• Organizational structure
• Organizational decision-making
• Staffing at the top
• How the firm markets
• Identification of the firm’s best clients
• Marketing organization
• Profit strategy
• Rewards
• Management style

What is most valuable about recognizing values as a key force shaping architecture firms is seeing how important it is that all the leading professionals in the firm share similar goals.Depending on these values, different organizational patterns will work best.Any effort to compromise values will inevitably weaken some of the choices or organizations, and consequently weaken the firm.

Matrix Integrates Technology and Values

When the two key driving forces described above–technology and values–are looked at in combination, they form a matrix within which the differences between firms, and the best strategies for different firms, becomes clear.The matrix produces six basic types of firms, each of which will have a distinctive “best strategy” for each consideration described above.Examples of each of these best strategies are given in the accompanying tables (Figure 1to 7).

The model gives, for the first time, a clear picture of why some firms succeed doing things one way, while others can be equally successful doing things quite differently.Also clear is that it will be very difficult to optimize any firm that mingles too many of the different strategies.And when this recognition is combined with the understanding that the best clients and best markets for each different technology are quite distinct, it is possible to take a whole new view of how firms can best position their strengths to serve their clients.

In a recent test of the implications of this new model, the Coxe group surveyed by questionnaire a sample of about 100 firms of different sizes, different markets and different organizational formats.After answering a series of questions to define its position on the matrix, each firm was asked to rate its level of satisfaction with the way the firm was currently operating.The results showed the highest level of consistency in conforming to the best strategies for their position also reported the highest level of satisfaction with the way their organizations were working.

The Coxe group plans additional research to further validate the implications of the model, but this initial sample confirms the essential hypothesis.Those firms that have a clear notion of what they do best (their technology) and a common set of goals (their values) have always succeeded the best–for themselves and for their clients.

The chart below, and those on the following pages, reveal rudimentary “master strategies” for each category of architecture firm.Once a firm decides which type of practice is (e.g. an “A,” “B,” “C,” “D,” “E,” or “F” firm), it can follow the suggestions in the appropriate box to gain insight into the best ways to organize and manage the firm.

Figure 1

Best Strategies for PROJECT PROCESS AND DECISION MAKING

Figure 2

Best Strategies for ORGANIZATIONAL STRUCTURE AND DECISION MAKING

Figure 3

Best Strategies for STAFF RECRUITMENT AND DEVELOPMENT

Figure 4

Best Strategies for SALES MESSAGE AND TYPE OF CLIENTS

Figure 5

Best Strategies for MARKETING APPROACH AND MARKETING ORGANIZATION

Figure 6

Best Strategies for PRICING AND REWARDS

Figure 7

Best Strategies for LEADERSHIP AND MANAGEMENT