August 1, 2003
by Sharon VanderKaay
A gap in the marketplace is emerging which architects are particularly qualified to fill if we rethink, repackage and update the capabilities we already possess. Instead of contemplating a future based on scarcity in terms of traditional market share, we can capitalize on an abundance of new leadership roles and gain a chance to break out of old fee structures.
As we move away from a post-industrial era to a knowledge-based economy, few people understand exactly how a “knowledge economy” applies to our profession. A key symptom of this confusion is that the techno-centric term information is often used interchangeably with knowledge, which is human-centric. Unique value is created when the human brain turns information into knowledge; even greater value is created when knowledge is converted to innovation.
Some architects are particularly adept at turning this information about our clients into innovation. Near the low end of the value chain is the architect who delivers programmed requirements with little attention to business trends or new project delivery models. Further up the value chain are the innovative synthesizers who combine market and demographic data with ideas from seemingly unrelated fields.
In contrast to the predictable, stable industrial age, clients now face unprecedented challenges. The need to create new financing models, to mitigate new risks, to spend funds more intelligently or to draw more people into a facility–all require an unconventional approach. As a result, the demand is rising for creative thinkers who at one time were considered expensive wildcards. Questions concerning what, how and where to build take on a new dimension when we shift from merely proposing solutions to promoting the benefits of our integrative thinking process.
The current economic shake-up and resulting gap in services is opening an escape route from commoditized fees. Old school models of the remote, Under-Appreciated Architect will not fill this leadership void. Generic services will continue to be worth generic fees and valuable services that are communicated generically will earn generic fees.
Fees in the emerging innovation economy will increasingly be tied to a value proposition. A value proposition is a clearly articulated statement outlining the tangible and intangible benefits of an offering in the eyes of the purchaser. What is particularly interesting about the notion of value proposition is that it can transcend hourly rates, multipliers or percentage of construction costs.
How have other professions applied the value proposition concept? Until recently, management consultants sold their traditional linear thinking for three or more times the standard architect’s fee. It was not unusual for clients to pay between $7,000 and $10,000 per day for strategic planning or so-called “creativity-enhancing” workshops. As our knowledge-based economy matures, the appetite for artificial games and narrow, deductive thinking is diminishing. New models for thinking together could be derived from the architect’s natural integrative process.
An outstanding example of an innovative value proposition is Starbuck’s contrarian approach. Founder and CEO Howard Shultz didn’t set out to solve the “cheaper coffee problem” when the going rate was 75 per cup. Instead, he created an attractive $3.75 value proposition by focusing on variables ranging from design quality to staff training. Schultz chose to excel in his niche market. He did not believe those who said: “But customers only want to pay for the Dunkin’ Donuts coffee shop experience.”
We can begin to expand our role by bridging, borrowing and branding across disciplines.
Architects have traditionally concentrated on bonding with fellow architects, thus neglecting opportunities to bridge across other professions. Today, we must make connections with diverse organizations as everyone wrestles with the need for innovation. If you can’t imagine yourself presenting at a “Reinventing the CFO” conference, then you probably need to work on your bridging skills.
Take advantage of the opportunity to borrow elected techniques from other professions. What do real estate agents say when someone challenges their fee? How do branding consultants package and price their services? Why do you return to certain sales or service professionals? A wealth of universal lessons can be extracted from simple, everyday interactions and applied to the architectural profession.
If you have a particular point of view or hard-won special expertise, consider giving your intellectual capital a proper name. Accountants and business consultants know that generic terms and vague claims beget generic fees. A good example of branding is a product I have developed over the past few years. Known as “Critical Eye,” this customized, branded workshop helps clients make more informed decisions regarding aesthetic issues.
Most of the ideas described above are not new to the profession. What’s new is a focused effort to benefit from the shift to valuing specialized knowledge, and to sparking bolder innovation through enriched client interaction. Too many talented architects are leaving money on the table by not expanding, packaging and selling what they already know.
Where are you on the value proposition spectrum?
Level One: Order Taker
You listen to the client’s requirements and deliver (on time, on budget) results.
Level Two: Problem Solver
You interpret your client’s needs and gain buy-in for an expert solution.
Level Three: Opportunity Seeker
You lead visioning events that emphasize shared responsibility for results.
Level Four: Innovator-Leader
You orchestrate a creative process that results in breakthrough project planning, design and delivery; you have the ability to leverage business knowledge and make the best use of the client’s time and budget.
Industrial Era Services
–standard programming methodologies
–achieving buy-in for solutions
–fear of losing control over the design process
–enduring a remote, mysterious process
–declaring that “we listen to you”
Knowledge Era Services
–engage people in clarifying their priorities and options
–co-create with similar and complementary disciplines
–gain solid influence through the ability to lead clients in thinking through their situation
–demonstrate to clients that planning and design is not a simple, linear process
–apply specific tools and methods
Sharon VanderKaay, Associate AIA, is director of communications at Murphy Hilgers Architects Inc. She is a frequent presenter at conferences on topics related to the knowledge economy and intellectual capital. [email protected] (416) 467-1482.