Text Rick Linley
Design professionals are expert at creating well-designed, operative built environments. Unfortunately, many are not as adept at designing and effectively operating their own firms. Running a design practice is often regarded as the dark side of the profession and treated with indifference. Yet optimizing a firm’s activities allows it to deal with the “new normal” of increasingly complex built environments, unique project delivery approaches, new sustainability requirements and clients demanding higher value. In short, these days only strong firms will succeed. Differentiating a practice and aligning it with a firm’s operating model are key steps in strengthening any firm.
The first step is for firm leaders to overcome the notion that a practice can be good at everything, and all things to all people. The benefits of switching from a general practice to a specialized practice model were recently outlined in this publication (see CA, July 2014).
So, if you’re not going to be great at everything, what will make your firm different? In their 1987 book Success Strategies for Design Professionals, the Coxe Group was one of the first to identify three practice types (other thinkers on this topic include David Maister, Michael Treacy and Fred Wiersema, as well as Fred Crawford and Ryan Mathews). Here are the three firm types described by the Coxe Group:
Strong Delivery
This firm type is excellent in the efficient delivery of projects. Design and client services are maintained at competent levels, but these firms are differentiated in the marketplace as fast, efficient and inexpensive.
Strong Service
This firm type is excellent in the provision of intimate client service. Ideas and efficiency are maintained at competent levels, but these firms are differentiated as experts in understanding a client’s issues and then working closely with them to create
a total solution.
Strong Idea
This firm type is excellent in solving unique problems. Efficiency and client service are maintained at competent levels, but these firms differentiate by providing leading-edge designs for clients requiring unique solutions.
Idea firms tend to receive the most media coverage. But one differentiator is not nobler than another—they are simply different. Each practice type is built on the inherent strengths of a firm and each one can be wildly successful, whether success is defined quantitatively or qualitatively.
Consider your own experience when purchasing products and services. When you shop at Costco (delivery retailer) you expect low cost—you don’t expect personalized service or boutique-like stores. When you consult with your local accountant for tax advice (service provider) you expect customized service. You don’t expect the cheapest prices or unique solutions to unique problems. If you were fortunate enough to be looking for a race-bred vehicle, you may choose a Ferrari (idea car). You’d expect the latest in automotive innovation, but you wouldn’t expect to find one cheap or to get its V12 engine serviced at the corner garage. What you expect in each of these cases is for the provider of the product or service to absolutely excel in ideas, service or delivery. You expect they will be competent, although not necessarily outstanding, in the two areas in which they’re not specialized.
Once design firm leaders let go of the generalist mindset and choose a differentiator, the really hard work begins: aligning that choice with a firm’s operating model. Regardless of firm type, operating models are composed of similar elements. These include: client acquisition, staff attraction/retention, professional development, project delivery, pricing of services, leadership/ ownership transition, risk management, staff utilization, backlog management, financial management, compensation, and many other factors. Each element of the operating model must be configured to suit the chosen differentiator. Let’s look at two elements in a bit more depth.
Client Acquisition
If yours is a Strong Delivery firm, your client acquisition strategy needs to be low-cost and fast. You’re likely on a first-name basis with builders and developers who are your typical clients. You don’t have time to write exhaustive proposals or have frequent lunches to uncover prospective clients.
If yours is a Strong Service firm, your client acquisition strategy is based on being connected in each of your practice communities. Each pursuit is led by a principal who is an expert in the client’s industry and is aware of upcoming projects through a mature network. An ace marketing team works with these principals to create customized responses to both formal and informal requests for proposals.
If yours is a Strong Idea firm, the lead principal will be held in high regard as an idea person. That principal is networked with movers and shakers on boards responsible for selecting innovators to tackle unique problems. The lead principal’s reputation has been developed through numerous design awards, publications, teaching and speaking engagements.
Compensation
In a Strong Delivery firm, the objective is to keep overhead low and retain only the most productive staff. The firm might have a two-tier compensation system, with salary and bonuses for the firm’s key technical staff, and salary only for other staff. The firm may contract with overseas production services or have an overseas office led by a partner. This way, compensation costs are kept low and the firm can operate on a 24-hour clock.
In a Strong Service firm, the objective is to develop and retain experienced professionals. Compensation might be hourly plus overtime, or salary with an overtime component. Salaries are likely set at or above industry average for each position in the firm. Management personnel could be on salary with a range of bonus potentials once the firm or business unit attains its profit goals for the year. Profit-sharing may also be employed. Extra perks may be in place to encourage retention such as additional vacation, a premium benefits package, extra holiday time and professional development opportunities.
In a Strong Idea firm, the objective is to attract the best and the brightest thinkers. It’s an “up or out” culture with frequent staff turnover, reinforced by salary structure. Entry-level staff are generally paid at or below industry norms. A high level of project experimentation and innovation are understood to be requirements for promotion, and are part of personal exploration time that is often uncompensated. Generous bonuses may be awarded to senior staff when the firm is profitable.
These are just two of the elements of a firm’s operating system. Each element needs to be configured in a way that aligns with a firm’s differentiator. It’s important to be very careful when attempting to emulate the systems of other firms or when incorporating the latest best practices from industry newsletters. Your firm’s differentiator must be the driver of your operating model.
An added benefit of the alignment exercise is that it serves to reveal any internal disconnects that might exist. For example, one partner may think he is building an Idea firm while others are trying to build a Delivery firm. Or a practice might be facing a decision to pursue the wrong type of client, potentially dragging the firm down for years into the future. Alignment is an ongoing process, refined as a firm evolves. It creates the excitement of getting everyone on the bus, in the right seat and going in the same direction.
Look at the design firms in your community. Check out their websites. Can you identify the successful ones? In all likelihood they are Idea, Serv
ice and Delivery practices that have achieved alignment. It is probable that they have further distinguished themselves in terms of project types, geographic reach, service offerings and other factors. By choosing a differentiator and aligning it with an operating model, design firms increase the impact they have on the built environment, deliver greater value to their clients, become better compensated, and have more fun.
Rick Linley is the President of Strong Practice Strategies, a consultancy helping principals of evolving design firms to strengthen their practices. His experience as COO of Smith Carter Architects and Engineers Inc. resulted in first-hand experience with differentiation and alignment. Rick can be reached through www.strongpracticestrategies.com.