Survival of the Fittest?

Published on July 11, 2013 by AIA P&F Bulletin

Good News?  “Tracking AIA’s architecture billings index shows continued strength in construction.  January was a good month for the architectural profession, possibly the best month since the beginning of the financial crisis and recession.”  (Architect magazine)

Finally…good news.  But wait, do long-term global trends bear good news for architects?   Consider just a few of the impacts and changes brought by the information age. 

Jaron Lanier
http://ideas.time.com/contributor/jaron-lanier/

·         Free Internet access – but is it really free?  Siren servers using algorithms know much more about you then you care to admit.  Information is flowing to a few (Amazon, Google, Apple, plus financial institutions).  New technology has allowed the leaders to skirt (or get ahead of) outdated regulations (1987’s Black Monday, Long-Term Capital, and Enron).

INFORMATION = POWER and wealth.  Consider the rapid flow of wealth to a few, and the shrinking middle-class. 

Read “Who Owns the Future”, by Jaron Lanier. 

·         Bye, bye mom and pop stores.  Make way for big boxes.  Walmart analyzes information on you and your buying needs/desires.  They understand the most you will pay for a ‘good deal’.  And they shop the world for the cheapest manufacturing (and shipping) of those goods. 

http://mg312.files.wordpress.com/2011/11/walmart-movie-posters1.jpg

·         Music industry – how can today’s artist survive when recordings are easily copied, for free? 

·         Medical profession – today, doctors are working for Kaiser, rather than deal with the headaches of private practice, collections, insurance claims, and liabilities.  How can they possibly keep up with the rapid advances of science, medicine and new technology? 

·         An ever-increasing proportion of graduate architects are working for the government, private corporations, and entertainment.

·         Global shifts in attitudes toward materials and infrastructure (think global warming and sustainability).

The massing of wealth comes with having the best information.  If Walmart knows what the customer wants in a particular region, and they know where the goods can be made cheapest in the world, and how to get those goods here for less than others, they win.  Google is doing it.  And Apple, and all the other successful companies crunching numbers in Silicon Valley.  They are getting information from you and me, free, as we use our Smart Phones.  What our desires are, our habits, our impulses.  They use massive computers and algorithms, constantly absorbing more and more information.  That information guides marketing, and so forth. 

What Does This Have to do With Architecture?  Think of how we design today, and in fact how architects have designed forever.  We use intuition and our experience to organize uses and circulation.  Structures, electrical and HVAC systems are designed by our colleagues, the engineers.  We determine the style, usually following the “form givers”, the magazines, or possibly our clients’ own whims about what their “palace” should look like.  It’s a lot like “haut couture” in the fashion world. 

Now imagine if we could take the information tools the “1%” use to control our lives, and apply them to every facet of our design processes.  Architects would ask the questions that guide our design decisions -- program questions, site questions, information about building materials, materials performance, etc.  Analytical tools would run algorithms to gather all this information to guide architects in a new INFORMED WORLD.  By collectively sharing our findings, we would slowly gather intelligent building blocks, and begin to truly optimize our designs. 

Our research may find that a new building is not the best choice.  Maybe an existing building could be programmed and modified to accommodate the need.  Maybe the way our client runs her business can be changed. 

In the first chapter of Cheryl Sandberg’s book “Lean In”, she asks “What would you do if you weren’t afraid?”  While her book seems to be about balancing work and family, the question can resonate with our whole profession.  We’ve been battered for five years.  We’re afraid of losing our jobs, of meeting payroll, of paying bills, and wondering how we can ever retire.  And we’re afraid others are encroaching on our profession.  Think design-build.  Think about the fee cutting, the frugal attitudes of our clients.  This is life in the 21^st century. 

And Think About the Ratio of Architect’s Fees To Construction Costs, and Building Operations – A-E fees are 10% of construction cost.  Yet the decisions we make can make or break a building owner.  I don’t know the numbers, but the cost of operating a building over a building’s lifetime – 50 years plus, must be 100 x, or more than our fee.  And what if the building location, size, organization, etc. is wrong. 

I designed a building for Lockheed in Sunnyvale 30 years ago – 200,000 SF.  No expense was spared to build in flexibility.  Raised floors, long spans, big floor-to-floor dimensions.  The building is gone.  Demolished. Property sold to a Silicon Valley giant.  Lockheed’s needs had changed.  And the developer valued the location, the land.

The value of informed decisions by architects is huge.  What we design today is largely intuitive and “follow-the-leader” design.  Our clients may mimic what the first-man-in did.  But timing is everything, and the followers may be too late.  We just have to look to Dubai and today’s empty buildings.  Eight years ago there seemed to be no stopping them. 

If we could design INTELLIGENTLY, our value as architects would be huge.  If we could demonstrate that our knowledge brings huge first-cost savings, and substantial reduction in operating costs, our fees could soar.  Don’t worry.  The fashion aspects of our profession will not go away.  But the underlying substance of our designs – the decisions to build or remodel, to optimize the size and organization, and the innovation of our building systems could be immensely improved. 

The sea change will start in schools, at MIT with cooperation between computer programmers and architects.  And maybe in Silicon Valley and Stanford, when they discover the immense opportunities in the building industry.  It won’t start with the AIA.  Or with the ‘old guys’.  They are afraid of change.  They resist change.  They don’t want to share.  They will be secretive to their graves. 

The Good Old Days – Not one to talk about how good it was in the past, but I do remember the benefits of one large Los Angeles-based A-E firm I worked for in the 60s-70s.  Company-owned cars washed and serviced by the office manager and his staff.  Secretaries for VPs and partners.  First-class air travel.  A company chef, preparing lunch for the partners every day.  And in our 20’s, we made enough to vacation in Europe each summer AND buy a home. 

But it wasn’t sweet for everyone.  Don’t forget the rows of draftsmen supervised by the Chief Draftsman.  “Asses and elbows”, is what they expected.  And few professional women and minorities. 

The cost of setting up an office was minimal.  Pencils, a few sawhorses and doors, and you were in business.

Models of Today’s Firms - Some things haven’t changed:

·         Economy of scale

·         The advantages of specialization

·         The value of relationships

Small Firms

What they offer:  It’s all about relationships, ‘hands on’, personal service. Responsive. Flexible.

What’s their risk, vulnerabilities?  Tough to compete with large firms, lacking depth, knowledge.  Cost of doing business (hardware, software, marketing, classes, memberships) in proportion to revenue is excessive.

Medium-sized Firms

What they offer:  Specialization.  Knowledge.  These are the “school firms”, designers of high-end custom homes, and multi-family residential.   

What’s their risk, vulnerabilities?  They lack diversity.  These are the guys that really take a hit when the economy crashes.  Recessions put the brakes on public funding, and residential financing. 

Large Firms

What they offer:  Knowledge in several building types.  You have diversity and specialization.  The ability to have specialized staff, with exceptional knowledge.  Connections in the race for more work.  Revenues to support extraordinary marketing efforts (i.e. competitions and fee-cutting).

What’s their risk, vulnerabilities?  A large payroll, and poor management.  As the giant jobs shrink, you have to chase many smaller jobs.  Inefficiencies that can be absorbed due to economy of scale, can catch up with you. 

OLD SCHOOL- Every Architectural Student’s Dream - In school, we dreamed of having our own practice and DESIGNING.  Upon graduation, the real world begins to hit us in the face. 

I was a partner in a large firm, and understand the merits, and the challenges.  Too many meetings and travel, and considerable bureaucracy.  It seems unavoidable.   

The greatest rewards for me as an architect in a small practice have been developing relationships with clients –hands-on, personal relationships.  In a small practice, we each share a larger portion of the credit or a successful project. 

So, how does a small firm survive?  This may be your last chance for a modest living. 

1.      Understand what’s going on – See “7 Reasons Architecture (As We Know It) Is over” by Steve Mouzon; “Who Owns the Future”, by Jaron Lanier; and “Steve Jobs”, by Walter Isaacson.  Adapting to the new reality is the key. 

2.      Prepare a clear plan for the future – Where do you want to go?  What role does each person in your office have in reaching your destination?

3.       Develop individual knowledge leaders in your office – Join the professional organization serving that area of knowledge, and participate.  Use national resources like AIA’s Knowledge Communities, BRIK (newly formed by the National Institute of Building Science), and NCEF.  AIA says only 6% of member firms offer research as a service. 

4.      Seek natural, common-sense economies like sharing staff, and office equipment. This means finding a firm with similar goals you can form a long-term relationship with. 

5.      Selectively choose business opportunities you have a realistic chance of competing for.  This may be enhanced by teaming with the firm you are sharing staff and equipment with. 

6.      Bring real benefits to your clients, like:

Kimon Onuma
http://www.boiledarchitecture.com/
wp-content/uploads/2012/07/kimon.png

a.       Information and advice on emerging codes such as the IGCC Green Code issued March 2012 and CalGreen;

b.      Big Data - Data sharing (see chapter member Kimon Onuma, FAIA, and Bulletin article “Where Were You April 17th?”).  Onuma illustrated his software that links diverse databases for the California community college system to facilitate building maintenance and repairs.  The key is to link them together in an easy-to-understand program that anyone, not just a data scientist, can access. 

c.       Fund raising by understanding the process of State funding (i.e. schools), utility credits and crowdfunding, such as Kickstarter. 

NEW SCHOOL – The Millennials Don’t Care About the Grand Old Traditions of the Profession and Frank Lloyd Wright – They are in love with their Smart Phones and the information it brings them.  They live for social media.  They are urban dwellers.  They use public transportation.  They are expected to be more “civic-minded”.  They aren’t compelled to have kids, or to marry.  Their needs seem to be less, more modest.  They want a balanced life, not dedicating ALL to architecture. 

Those already well along in the profession don’t need to be left behind.  We’re already ‘on board’ in the information age. We’re embracing much of the new technology.  We love it.  Can we take the giant leap, forming a “New School” of architects that embrace information to make truly INFORMED DECISIONS FOR OUR CLIENTS.  Achievement will take huge investments of time and technology.  To pull it off will require:

1. Leadership
2. Clear goals
3. Cooperation and collaboration to share information
4. Massive funding

Possibilities: 

Option 1 – Big Firms Provide the Leadership - The largest firms might be able ‘grab’ the future through their leadership and collaboration with other large firms and builders. 

Option 2 – AIA Provides the Leadership, Gets Public Grants, Shares Information with Members - It will never happen.  AIA best serves small practitioners.  Most small firms cling to the dreams of the “Old School”. The big firms don’t need  AIA.  Plus AIA’s leadership changes every year, therefore lacking continuity of vision.  AIA leadership has all the challenges of a truly diverse board, representing all the diversity of our nation and International members. 

Option 3 – Academia - Public schools won’t have the funds.  Private schools might.  But will petty in-fighting in academia hold them back.  They’ve demonstrated leadership with 3D printers, but using this technology for more than model building is a long ways off. 

Option 4 – Silicon Valley and the Technologists Discover Architecture – Someone’s going to realize that with construction as 20% of our economy, there’s money to be made by applying the same tools of Big Data to our industry is going to make money. 

I’ll put my money on Silicon Valley and the Technologists.  Architects can tell them what information is needed for intelligent design, and to provide interface with our industry.  And so far, we’re protected by “levees” in the words of Jaron Lanier.  Levees are regulations, the Practice Act.