2007 Unfolding: Mastering the Future

January 1, 2007 · by James P. Cramer

New, quite simply superior, project integration strategies and processes will be coming into full view in 2007. And with talent in short supply, those with scarce skills and intelligent strategies will be significantly redefining the design professions and influencing the entire real estate economy.

Productivity will have a packed agenda in 2007. The predictions for disruptive change cannot be all bad for firms with visionary leadership. Our first prediction for 2007 is that progress will proceed apace. Nevertheless, it will be different.

Speaking of predictions and forecasts, we believe that to a large degree that the future for our industry, when projected three years forward, is knowable –it then becomes increasingly fuzzy. It is most useful then to create scenarios for longer range planning. We do not have a crystal ball. We do however, chart directional changes and paradigm shifts through the study of micro and macro trends and demographic shifts.

Looking back over the last decade of forecasts in DI, we have been remarkably on target. However, during this same period we have been amazed and amused by the many flawed predictions, both private and public. We have found that most forecasts fail for the following reasons:

  1. Unexamined assumptions especially when economic times are good
  2. Limited expertise in our industry and a failure to ask smart questions
  3. Blind optimism that brings a shallow analysis
  4. Lack of imagination
  5. Mechanical extrapolations of trends that use linear projections.

Add to these reasons the people in our professions in denial about trends as it affects their specific service area or span of management control; they may accept that there will be change but they fail to estimate its impact. Denial can lead to a spiral of regress and you can see this in firms and organizations in every city. Some of these once vital firms have now lost their edge, their vision, and their courage to embrace change as a friend.

It is hard to imagine here today as we sit in our library centric assembly and editorial offices that we mailed our first issue of DesignIntelligence back in May 1994 out of a nascent, makeshift two-person office in Reston, VA. Approximately 90 of you have been with us from that beginning when we circulated the fledgling six to twelve page letter. Back then, we focused only on changes and strategies affecting the design professions. While often tempted by other subjects we researched just the trends, the signal and the subtle transformations. Our mission, our focus, and our passion to anticipate the future has not changed, but it has grown. Now we stand at a new precipice. At no time in our history have we understood there to be so much disruption, transformation, and opportunity as there is today.

Yes, we understand that some in the professions are sadly in retreat and decline. Yet we can report that a typical reader of DI is in a firm that has grown over 20 percent in the last twenty-four months and has established healthy profitability that exceeds 14.5 percent annually. And now, our thought leader panels reveal that the growth curve is changing shape and that the trajectory is going to be both different and positive. Those with creativity and agility should be able to move into this new entrepreneurial space, and to do so with not only success but with genuine satisfaction and a feeling of real significance.

Our purpose here, just as it was in 1994, is to help you navigate change and to find new opportunity in adversity. So let us explore some of these changes, paradigm shifts, and new economic scenarios.

The Language of Change
In today’s world of 6.5 billion people, there are nearly six thousand languages. Yet the newest generation – the children in the world – are learning to speak just three thousand of these languages. Moreover, that number will continue to shrink as languages consolidate, globalization marches forward, and the Internet expands. A similar phenomenon is happening in our industry, an industry being revalued and redefined, an industry that has grown beyond the confines of Architecture, Engineering, and Construction and an industry ripe for a new perspective, a new language, a new name, which embraces and embodies this change.

Our DI panel of experts articulates that the language of BIM will be setting new standards. Prepare for revenues per full time equivalent (FTE) to radically morph to efficiency levels never before contemplated. These new standards make the architecture profession far more attractive to those wishing positions of leadership in our expanding industry (the number two GDP economy in the United States). You can expect then that this will propel architects to redefine professional practice boundaries beyond traditional AEC and to move gradually into positions once outside the established parameters of the architect of the 20th century. Thus, traditional practices will feel the heat. BIM is not just offering up a new language, but a new climate.

While the hype has died down the reality is accelerating for this new BIM language. In most instances, those resistant to adopting this new language have either given up or changed their position. BIM (such as Revit) is not quite “ready for prime time” on all projects but that day is fast approaching. It takes time to digest. Moreover, it will unfold more slowly in certain geographies and sector markets than others. Many past steps in the fields of innovation have taken longer than expected to penetrate the underlying systematic economy of the design, construction, and real estate marketplace.

Nevertheless, the language of design is changing from a language of drawing to the language of modeling – at staggered speeds depending on with whom you speak. This new BIM language of modeling will change the service function of the architect and designer from drawing lines on paper to designing an integrated database. This database not only describes the design attributes of a building, it will also incorporate other highly relevant data such as quantity take-offs, engineered systems coordination, and costs. The data, assembled in a variety of ways, including three-dimensional representations, will make the arcane system of “plans, sections, and elevations” obsolete as the primary means of communicating design intent. Thus, today we have the challenge of a much richer language to learn, and we will be capable of conveying even more meaning and will have an expanded span of influence (but not control) in the future. This will also demand a higher level of sophistication from the users of the language, which now includes not only the traditional design leader (the architect), but the owner, engineers, consultants, contractors, and product manufacturers as well.

This new language will eventually change the game for everyone. That is why architects and designers are stealthily being called into new leadership positions – an architect who becomes the CEO of a construction company does not in fact leave the profession but instead redefines it. This will have the effect of naturally expanding the definition of the architect; the opposite of this will also be true for those not wishing to participate in the restructuring.

Essentially this is a call to quarterback the planning, design, construction, and real estate teams, and if you find yourself on a team without a quarterback in 2007, it’s probably time to find a new team, help create a team, or move into the quarterback position yourself.

The Race to Save the Future
Six months ago, I wrote a special section for Business Week on the trends in green and sustainable building. I explained that energy would be a dominant defining issue of the 21st Century. Populations will grow, economies will change, and there will be needs and expectations for our built environment to accommodate change. This will increasingly affect our natural environment. We have gotten into some very bad habits. We have contributed to global warming that threatens future generations. Energy demand is soaring and our fossil fuel fields (except for troublesome coal) are maturing. We are in a crisis. I realize that right now, as you are reading this issue, that some of you will challenge the hyperbole. Yet from every vantage point we have, like it or not, the term crisis gains credibility. For this reason, cities and corporations are beginning to adopt new policies on energy and sustainability.

Late in 2006, the city of Boston adopted a new zoning code requiring USGBC standards for buildings in excess of 50,000 sq. ft. As this new energy future unfolds, we will see that to a large degree it will be architects and engineers who will reshape the next era of energy from cities such as Boston, Chicago, Stockholm, and Barcelona to other cities around the world. The confluence of smart business, clever engineering, and pragmatic innovative uses of natural resources holds great hope for making a better world. There will be a compelling call for creativity, action, and leadership. To emphasize, we believe that leadership in the face of adversity will be most highly valued. The leading role will be the key to opening the eyes of the rest of the world toward making sense out of these pending calamities and current environmental and social crises.

The next issue of DI is devoted entirely to these dilemmas and to the Santa Fe Priorities, guidelines adopted by the Design Futures Council. Let this become a blueprint for progress and hope in the midst of what will increasingly feel, to billions of people, like deep despair. Going green will not only be the right thing to do but there is also a strong business case (green is green) for you and your firm to get involved as well. Every design organization should have a business plan that incorporates sustainability. The world’s experts will agree that it is to be the architects, designers, engineers, contractors, and building product manufacturers who will increasingly be called upon to play a, perhaps the, pivotal role in saving the environment.

Intelligence Amplification
To help us think forward let us step back into the 20th Century for a moment. It was back in 1960 that consulting engineer Ove Arup was to reach the firm’s retirement age of sixty-five. However, something quite extraordinary happened that year as he was instead awarded the honorary permanent age of sixty-four by his partners (enabling him to continue his work as founding partner of Ove Arup & Partners). Not long thereafter, the Royal Institute of British Architects awarded him the RIBA Gold Medal for promoting the advancement of architecture (The RIBA award was inaugurated by Queen Victoria in 1848 and had never been given to an engineer). How could one man transcend these and so many other boundaries during his lifetime? In his RIBA acceptance speech, he stated that his firm was trying to eliminate the psychological barriers to teamwork, to create a kind of composite brain for each project. With his partners, he created an ethos of enthusiastic enquiry and mutual support throughout the firm that would break down traditional barriers through leadership, new research, and development. That key speech reverberates even more today as our world becomes smaller and the expertise of the design professions becomes increasingly relevant, and perhaps vital, to people on every continent.

Improvements in information technology, product manufacturing, shipping and transportation, pre-fabrication, off-site assembly of complex components, and the ability to work in a 24-7 environment essentially mean that traditional industry specific borders will no longer be a defining factor in planning, design, construction, and real estate. From cars to clothing, this phenomenon has already changed the way we obtain goods – so why not the way we build? Essentially this means that all firms have the potential to practice globally – and that global firms can practice locally. The result will be greatly increased competition and downward pressure on fees, but at the same time, there will be a big premium paid for branded firms – those who provide highly specialized services and can convince the market that they have a unique value proposition. These will become the new standards of high-definition value. This characteristic will affect today’s commoditized services and premium services as well. High-definition value can be articulated in most firms – it is what clients will increasingly expect from global firms large and small. And remember, design goes far beyond aesthetics; metrics matter in all areas of building and environmental performance.

Four fundamental paradigm shifts in design are shaping not only what we do but also how we do it. The first big change (which Scott Simpson and I write about in The Next Architect, Östberg Library of Design Management 2006) is that the myth of the solitary design genius has given way to the reality of team-based design – the engagement of many talented minds working simultaneously and cooperatively to solve problems and create solutions. The team-spirited and social art nature of design will continue to accelerate. Additionally, technology will permit designers to display their thought processes and decision-making options in four dimensions rather than merely two. Thus, design will be more and more transparent and will be accessible to clients encouraging broad participation.

Another startling paradigm – categorically awesome when calculated with differences from just ten years ago – is speed. Breathtaking advances in how fast things are done, from travel to communications, and even delicate surgery have recently occurred. Next we will see building project time cut in half, and then in half again.

Insights—Not Just Data
Last year a new study was released in Britain revealing that billions of dollars were being wasted on school design and quality in that country. The survey by the Commission for Architecture and the Built Environment (CABE), found that 50 percent of the schools built between 2000 and 2005 were “poor,” with only 19 percent rating “excellent” or “good.” It also said that nine of the ten worst designed new schools were built using the controversial private finance initiative (PFI). These findings are a blow to those of us who seek exemplary, inspiring, and innovative school buildings. The study also found that many of the schools failed to provide natural daylight and ventilation. The British officials will have to find a better way to design and build schools but while the government reviews its mistakes regarding quality we believe that they will soon come to realize that innovative design solutions and processes can achieve quality design, quality building, and great learning experiences. Further, quality buildings can often be delivered faster than traditional service delivery and construction with little cost difference – recent US studies show no significant cost increases for the construction of LEED certified projects over conventional construction methods. The necessary changes will require a huge shift in attitude – working together as a team, trading information in a truly transparent manner. Yes, this may be counter-intuitive in today’s corporate-styled world; too many people have been invested for far too long in conventional thinking and it is impossible to change a dysfunctional system overnight. Nevertheless, the next generation of processes, systems, and attitudes will continue to innovate toward new success models that will guarantee buildings that are sustainable, of consistent quality, and that will be exemplary and inspiring places for learning.

Mastering Uncertainty
Strategic anticipation is a defining quality of the world’s best firms. Borrowing from a Søren Kierkegaard paraphrase, the future can only be understood backward, but it must be managed forward. One of the most important lessons that I have learned working with leading professional practices is that they have a sense for both agility and anticipation. This has become a competitive advantage – a differentiator for them. However, often an unfortunate thought pattern in firms holds that a good economy will equally affect all professional practice firms and a poor economy will adversely affect all firms. This is false and dangerous thinking. Past success is often the enemy of tomorrow’s success. Complacency, brought on by success, can lull a firm toward mediocrity. In 2007, dozens of firms in the US will be abruptly, or slowly, shut down. They will be those who have been so caught up in doing things a certain way that they have become blinded by their own conventions. They will have accepted the status quo because it is familiar and it works; they stop thinking about making improvements – even small ones. Professionals cannot master uncertainty without anticipation and the establishment of new scenarios, those “what ifs” we talk about in our workshops and conferences.

We have taken notice that several of the professional associations in our industry are increasingly using Peter Drucker’s “knowledge worker” reference. Committees at the AIA went from category-specific committees to Professional Interest Areas (PIAs), and are now referred to as Knowledge Communities. This is fine so long as we understand that knowledge workers in our broader economy (physicists, professors, doctors, and others paid to think) have a growing reputation as saboteurs of progress. This battle occurs because new paradigms often put knowledge workers into a position where they are threatened, where they lack competence in terms of the new progress underfoot. New technology, inventions, discoveries, and processes usually mean that knowledge workers must change and become part of a new unfolding and often reinvented system. This is why continuous learning is so important. Improved productivity is happening so rapidly right now that many in our profession are awestruck by the new metrics. Increasing the effectiveness of knowledge workers (architects, designers, engineers, landscape architects, and contractors) is perhaps the biggest challenge for firm leaders who want to achieve best practice. Leading firms will establish a vanguard position on not only what is designed, but also how the entire process – from incubation to execution and throughout the entire lifecycle – is managed. This places a big premium on architects and designers who are agile, anticipate what is next, and manage uncertainty.

Foresight into Overt Actions
Many situations that leaders in our industry face are inherently ambiguous. Therefore, it is dangerous for firms to base their future strategic plans primarily upon what they already have in existing plans. Quite often firms do not take into account the future changes imaginable with respect to economic shifts, significant changes in their clients businesses, wild cards, and their own broad business opportunities and threats. Moreover, some firms may indeed have a great strategic plan only to discover that their behavioral actions do not match with their stated priorities. Other firms may lack the leadership courage to implement their plans. Good plans can go stale through apathy, inanity, or inaction.

Growing firms are using the scenario method as a part of their dialog about the future. It not only informs, but tends to motivate as well.

Scenarios create alternatives in the face of uncertainty. Scenarios are sets of contrasting future conditions to account for and consider as a firm’s strategic plan is designed to help them succeed. Scenarios prepare a firm for radically different future situations. This process facilitates a firm’s forward motion to deal with any event, including the extreme cases. There are five techniques to create comprehensive scenarios for a firm. These techniques are:

  1. Analysis of the current performance culture (such as Greenway’s LEAP® analysis), agenda, priorities, core values, and goals.

  2. Conduct an environmental scan, which includes external factors, demographics, and other influences on the condition of the firm (this can be done on a county-by-county and country-by-country basis in the respective marketplace of the firm).

  3. Projections, ideations, and visioning that anticipate the future, including the building of initial alternatives.

  4. Analysis of the alternatives to form plausible scenario structures with descriptions using visual and word pictures of possible outcomes.

  5. Identification of the threats in all scenarios and the development of overt action models that turn risks into opportunities. This also includes the wild card analysis that accounts for disruptive situations and their subsequent impacts.

The final task is to include a master navigation system to enable a firm to make adjustments as conditions warrant. This can be accomplished using a scenario dashboard.

Firms that anticipate and use a strategic scenario process will also tend towards better internal communications and the increased agility to deal with the changes certain to arise – those inevitable surprises.

We are beneficiaries of the innovations and breakthroughs that have already happened. Now, acting future-wise can become a constant habit pattern that will support your organization’s new growth and sustainable health.

Always keep in mind that there is often a dark side to accompany the positive aspects of change. The innovations we anticipate (that are largely good) will produce side effects of unintended consequences. These too should be contemplated in your scenario imagination.

Our forecast for 2007 is for a global economic growth of 3.4 percent. This will be down modestly from last year. The US economy for architects, designers, engineers, and contractors in the real estate arena will slow to just below three percent. China will keep a fast growth pace but will likely be down from last year’s 10.5 percent. On each continent, we anticipate a modest economic cycle slow-down that will have little effect on successful firms. However, as our charts in this issue show, specific building sectors will vary considerably. Clearly, architects who find themselves in bad steady-state local economies and who are dependent on new school construction, for instance, will have little to celebrate. Yet economic buoyancy seems likely for most readers of DesignIntelligence.

With the decline in dollar valuation, the foreign client outsourcing of architectural and design services to US firms will progress again in 2007 despite rising anti-American sentiment. We expect only modest inflation, increasing profitability within our industry; new efficiencies bring higher revenues per FTE and higher profits per partner. With anticipation, maturity of judgment, and some luck, we expect a year of progress and prosperity with some anticipatory heartburn and a few surprises along the way.

Post Comment

What's Your Role in the Interior Design Process?

Sep 15, 2014 · by Cameron Forte

Whether you are developing a new office building or simply redoing your current one, a proper interior design process is crucial to the success of the project. Read full »

Richard Tomlinson: Career Retrospective

Sep 3, 2014 · by Richard F. Tomlinson II

A partner from SOM shares lessons from a storied and prolific career Read full »

Global Market Share is Expanding for U.S.-Based Firms

Sep 3, 2014 · by James P. Cramer

U.S.-based multinational firms are thriving in a growing global market Read full »

Work on What You Love

Aug 21, 2014 · by Bruce Mau

Bruce Mau's Commencement Address: RISD, 2014 Read full »

SCADpad

Webcast: Future Ready

Topics

DI.net RSS Feeds

DI.net on Twitter

Research Support