Back from the Brink: A Strategy for Reinvention

April 15, 1998 · by Kerry Harding

From a near-death experience, CUH2A finds that retooling itself to what it was is the best strategy for tomorrow's markets.

For years, CUH2A was known as the nation’s premier designer of academic and corporate science facilities. In the ‘80s, it focused its efforts on developing a niche market in pharmaceutical facilities. When the bottom dropped out, CUH2A found itself ill prepared to respond to changing market conditions. Word on the street was that the firm would either soon be acquired or dissolved. The president himself left and the firm became easy pickings for recruiters. Now, less than five years after “the fiasco” the firm has expanded well beyond its Princeton base, opening offices in Richmond, VA, Washington, DC and Chicago, and penetrated new markets such as strategic facilities planning and themed entertainment. When DI sought to uncover the strategies responsible for such a dramatic turnaround, a look at the the firm’s early years was first necessary.

During the ‘60s and ‘70s, the firm took on a “generalist” practice, focusing primarily on academic, institutional, renovation and public projects, later developing a significant practice in the Middle East. In the late ‘70s, the firm began a strategic marketing initiative to Fortune 100 corporations, ultimately leading to its selection in 1981 to design Pfizer’s new research building.

The glory days of the ‘80s propelled the firm’s current staff to almost 300, working on mostly R&D as well as academic facilities. In an attempt to diversify into criminal justice, a lead criminal justice planner was brought on board, and, coupled with a CUH2A Principal, invested a significant amount of time and money. While there was some local success, several attempts at winning projects in teaming relationships with other firms were unsuccessful and the effort was abandoned.

The late ‘80s was a period of contraction rather than expansion. The president at the time was nearing retirement and decided to focus solely on the R&D market sector and essentially abandon the others. While there were many good reasons for this strategy, it led to significant difficulties in the early ‘90s. The growing tide toward managed care and health care cost containment lead to a greater emphasis on the part of the pharmaceutical companies to more tightly controlled capital spending. This trend was exacerbated by the uncertain future of healthcare following the 1992 election. Although CUH2A had large, ongoing projects that barely maintained its practice for another year or two, 1993-1995 were the most difficult years in the firm’s 30 year history.

Furthermore, going through several years of not needing to market resulted in a lack of focus and their forgetting how to win jobs. The president, who was the last of the founding principals, finally retired in 1993. It was here that a significant strategic mistake was made. The person selected to lead the firm following his retirement made a fundamental and incompatible change in leadership style and philosophy. CUH2A had always drawn its strength from being a consensus building organization which provided enormous individual opportunity for its staff to be entrepreneurial. There had been a spirit of camaraderie in the office that made its employees feel like a family. The new leadership style totally changed all this. People lost their self-confidence and the fun evaporated from their work. At a time when they needed to most expand their practice, they were poorly equipped to do so and a number of key staff left for other firms.

The turning point came in the fall of 1995 when the principals decided to make hard business decisions and force a leadership change. The CEO was fired and the remaining principals conducted a facilitated, two-day planning “advance” to focus on new directions. They solicited input from all employees on areas for improvement and their feelings as to what the firm’s core values should be. During the advance, they discussed why they had been successful in the past, what they liked about their business, and what they currently missed. As a result of the advance, they developed a mission statement and refocused the firm’s organization and efforts to serve clients through project teams.

One of the benefits of unleashing people’s entrepreneurial spirit was their sense of ownership in the firm’s success including their active participation in the marketing effort. Now management found many people coming forward with leads. One such opportunity resulted in a few projects with Six Flags while others allowed the firm to develop an emerging core market area in entertainment and hospitality. Other market areas, developed in a similar fashion, put the firm in a position of much greater market diversity.
Significant changes implemented on the operations side helped restore the firm back to health. Additional work had resulted in the need for aggressive recruiting of both senior and junior staff. The firm learned from senior staff who had been trained at other firms how to do things better and gained energy and momentum from the younger people who brought boundless enthusiasm. They sought out key people who had left the firm, many of whom returned after seeing the new environment.

In addition to returning to its consensus-driven roots, the board significantly flattened the organization, bringing definition and clarity to the roles of the president/CEO and the chairman of the board of directors. Marketing would now report to the chairman while all other members of the firm would report to the president who would be responsible for operations and finance. They soon realized that their ability to grow and react to opportunities with agility was hindered by a structure that had all 16 principals on the board. This led, last year, to the formation of a new seven-member board of directors, empowered by the shareholders to provide leadership and management.

On the marketing front, the marketing structure was simplified, with a new strong director of marketing responsible for all internal marketing activities and public relations, freeing up the business development directors to focus on sales and related client activities.

But what of the future? Now up to 275 people from a ‘95 low of 121, CUH2A anticipates further market and geographic diversification with the goal of expanding its core market share and reaching into additional compatible markets with a wider array of specialty services. With today’s clients demanding more proximate and immediate responsive capabilities, the firm will respond by opening additional offices or forming local strategic alliances. CUH2A’s merger with Washington, DC-based Cooper Lecky came as a result of their search to enter the market with a significant presence. Previous alliances in the Washington market had not worked out from a cultural perspective and this time, the fit was right.

As he looks back, CUH2A Chairman John Rivers says his management team learned some valuable lessons on what works best:

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