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In the last decade or so, all facets of our economy
have been touched by a trend known in the banking world as disintermediation,
which refers to the bypassing of channels, or the removal of the traditional
middle man in many business transactions. Spurred by the ability
to access information, via the Internet, that intermediaries such as banks
traditionally provided, consumers are increasingly able to price and locate
goods and services themselves, thereby eroding traditional intermediaries
market share of these services. In other words, we have become extremely
efficient in separating all of the parts, and defining specialties and
areas of expertise, in every segment of society.
But we know that for every societal trend there
is an equal and opposite retrend. We are now moving from disintermediationthrough
which we bypassed and blurred many things and, in fact, created an overload
of informationto a time of reintermediation. We are
now entering a new economy that needs intermediaries who can define and
bring together the specialties that have been created.
So what is this new economy? Its a fundamentally
new way of working that is knowledge based, as opposed to information
based. There are three important distinctions between knowledge and information:
Information can sit in a drawer, but
knowledge has to reside in a human head
Knowledge is more difficult to pick up and transfer than information
Knowledge requires assimilation, understanding, and commitment.
(See The Social Life of Information,
by Seeley Brown and Paul Duguid.)
As
we discussed in previous issues, the information-based economy is to the
new knowledge-based economy, as traditional architecture,
which concentrates on a building, is to ARCHITECTURE, which
creates an overarching framework enabling development of every aspect
of a project.
The trend toward a knowledge-based economy provides
a great opportunity for architectswho are trained and experienced
in integrating large amounts of informationto help clients rethink
and remake their business worlds. There is a need for a new ARCHITECTURE
to set frameworks for integrating the whole, just as there is a continuing
need for the architecture of buildings in the traditional sense.
Read the following examples from some architects
on the cutting edge. You will see that the first challenge in this new
economy is for all firms and individuals to choose the role they wish
to play.
Richard W. Hobbs, FAIA
Resident Fellow, Marketplace Trends
Clients want it
Robin Ellerthorpe, FAIA, OWP&P Consultants, tells us that many clients
now are requesting an overarching ARCHITECTURE. They are beginning to
value a holistic development process over the projects life cycle,
as opposed to just wanting a building.
Happily
for architects, this client awareness is happening just as many firms
are looking to expand their range of services as a growth strategy. The
question for your firm is: How far beyond the building do you reach into
the market? The answer for you might lie in the approach you decide to
take. Do you develop a subset of the traditional skills within your firm
(architecture) or do you want to invent a new process within
or connected to your firm (ARCHITECTURE)?
There are, of course, myriad variations and steps
in between. To find your niche, ask yourself what business you are in.
An architecture firm might say they are in the business of designing
buildings. An ARCHITECTURE firm might say they are in the information
interaction and interface design business. You can define your business
by product or process, customer or client, or core competency or skill
set. (See All the Right Moves, by Constantinos C. Markides.)
Check out the competition
When architects look at expanding into areas beyond their traditional
scope, they may find that their competition is not necessarily other architects.
Its the consulting firm that can offer the best example
of what an ARCHITECTURE firm would do. As an example, look at the McClier
Corporation Web site, which states McClier will design it, build
it, and pick out throw pillows. Or, listen to AECOM Technology,
whose motto is, AECOM Technology means never having to say architecture,
engineering, construction management, operation, and maintenance.
The grandfather of these business, Arthur Andersen Consulting, providesin
the accounting fieldan example of how a profession can evolve. (See
www.arthurandersen com.) In the 1950s, Arthur Andersen began a consulting
practice that by 1984 proved more profitable than the traditional accounting
and tax business. In 1989, the firm created a spinoff called Andersen
Consulting, devoted to business and technology consulting. A more recent
start-up is Razorfish, born in 1995. Quoted in Wired magazines September
issue, the firm says they ask clients to re-contextualize what it
is to be a business service, in other words, they are helping old-economy
companies gain entry to the new economy. (We will compare the business
strategies of these companies in a future issue.) (See www.razor-fish.com.)
It can be profitable
The range of services consulting firms provide can translate into big
profits. The AIA Firm Survey 20002002 research indicates that the
architecture firm might have a profitability of 11 to 20 percent, based
on a $90,000 to $100,000 per-employee annual billing. A consulting firm
might have a profitability of 20 to 35 percent on a $120,000 to $140,000
per-employee annual billing.
Susan Hensey, AIA, of Little & Associates, says
that the more planning and technology services (further from architecture,
the building) you can provide, the greater the value for the
client and therefore the greater the profit for the architect. The client,
she says, is used to paying a higher fee for those services from other
consultants and does not engage in fee negotiation.
The client is quick to realize that when architects
get involved in a project, their integrated-design-process thinking kicks
in, and they actively work on behalf of the client, Hensey points out.
So the key for architects is getting in the door. Once the architect is
in the door, and the relationship and understanding of the clients
business strategy increases, services awarded to architects likewise will
increase.
Its bigger
than a building
Another challenge in creating an ARCHITECTURE firm is acquiring and integrating
the diverse skill sets you need for the services you want to provide.
Andersen Consulting, for instance, had this difficulty integrating accountants
and MBAs with technology people when it started up its accounting consultancy.
Architecture firms can have the same challenge integrating psychologists,
planners, economists, computer programmers, and other technical experts.
Little
& Associates defines itself as a design enterprise and
in doing so speaks of the total facility solution. This range
of services provided, expressed in its corporate culture and business
statements alike, lessens the need to totally reconcile diverse competencies,
background experiences, salary levels, and billing rates within one company.
Many architects could take a lesson: the overall challenge to creating
an ARCHITECTURE firm is that most architects still see themselves as related
to the project rather than to an expanded range of services in an ongoing
cycle of user-interface processes. Clients also seem to be ahead of many
architects in recognizing this need.
The challenge for ARCHITECTURE firms will be learning
to coordinate and work with an extremely diverse group of professionals.
Right now, only about 10 to15 percent of the staffs of many consulting
businesses are licensed architects or architecturally trained. The traditional
architecture firm with five or more employees would keep its licensed
architects and architecturally trained staff at 30 to 40 percent. The
AIAs Aligining the Institute for the Millennium (AIM) strategic
plan recognizes and promotes the need for architects to reach beyond our
traditional circles both as a profession and for our client base.
Everyone can contribute
to a more diverse profession
One wonders how we can defineor even predicta profession of
the future, given the stunning mix of generations (not to mention race,
gender, and ethnicity) in the workforce and as a client base. Harnessing
the advantages of this generational diversity, including its related skill
sets and experience factors, could be a key to success for persons designing
the workplace and those managing and using it.
I predict that reintermediation of knowledge will bring the
generations together, using technologythe Internetas the universal
connector. Nexters (born 19802000) of multitasking capabilities
and technical savvy, Generation Xers (19601980) unintimidated by
authority, Baby Boomers (19431960) skilled as relationship builders
and team players, and Veterans (19221943) with experience drawn
from traditional values of hard workall will work together to redefine
a profession that allows architects a clear choice. (See Generations at
Work, by Zemke, Raines, and Filipczak.) Some will produce the architecture;
others will integrate the ARCHITECTURE.
What will you do? Let us know, rhobbs@aia.org.
Going global
The AIA Marketplace Research program identifies emerging global trends,
assesses their potential effect on the profession, and offers architects
alternative ideas for action.
Here are some global trends from an insiders
guide to the future presentation by futurist Edith Weiner, Weiner
Edrich Brown Inc., New York City.
The speed at which technology is changing
is changing us (project turnaround times are more important than ever)
We are moving from an owning economy to a renting and leasing economy
(major financial ramifications for many of our clients and our own office
management)
The Americanization of the global economy, i.e., the
adoption of American-style capitalism throughout the world, makes the
risk of capital lower and safer (making international practicewith
greater accountability and transparencyall the more attractive)
Organizations are in a constant state of change keeping up with
the speed of change (flexibility will be key)
Assets will not be defined financially, but rather by access to
the client (architects with strong relationships to the client may have
a competitive edge)
Reintermediation is replacing disintermediation
(see definitions to the left )
The overriding issue in all organizations today is casual dressits
not the clothes themselves, but defining productivity and the boundaries
and authority of the workplace, and blurring ones work and oneself
(black turtlenecks and Corbu glasses are in!).
RWH
Copyright 2001 The American Institute of Architects.
All rights reserved.
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