Insightfufl Analysis of the Currents Reshaping the Future of the Design Professions.
1. More than a promise, firms will be delivering genuinely integrated and more overtly collaborative professional practices in architecture, interiors, engineering, and construction.
Although technology is clearly one of the major change drivers in the design professions it is accompanied by other significant factors. When we take technology, practice innovation, and organization skills together we find that firms are truly becoming more integrated in a variety of strategic ways. Underlying all of this is mutual respect and rules. Several of the leading firms in the world today have integrated architecture and interior design to such a finely tuned level that clients are singing their praises and word of mouth is bringing in new work – consistently.
Unified professional teams are not only housed within a single firm. They can also operate on the basis of strategic alliances between firms as well. How are firms migrating toward truly collaborative models? Primarily through organizational design and incentive systems. The Beck Group is a large full service real estate organization based in Dallas, Texas, with offices throughout the South, that offers design and construction services. A telling example offered by Beck of the inherent faults of non-integrated services is that of an engineer designing a building structure based on a 30-day old set of architectural drawings while the architect continues making design changes, which ultimately cause coordination problems and costly rework during fabrication and construction. However, knowledge-centric integration allows and expects each discipline to contribute knowledge in the form of rules, algorithms, and proprietary practices – an approach not followed since the master builder dominated the industry during the 19th century, when building design was substantially simpler and one person could hold most of the necessary knowledge in their head. The industry has been plagued by inefficient and wasteful processes, and every discipline has been commoditized, resulting in anemic margins. But now, with new integration models, systems, rules, tools, and attitudes, a whole new industry is unfolding. The British Airport Authority now insists on integration expertise and Business Roundtable clients who are sharing information are singing its praises.
The trend’s bottom line: architects, engineers, designers, and contractors will begin to jointly share both the authority and responsibility for design, means and methods, costs, and delivery schedules by sharing contract risks on a project-by-project basis and/or integrating the disciplines within the same firm.
2. Design-build service delivery growth will continue to outpace all other delivery options.
The barriers that have blocked this service delivery method in K-12 school and government building sectors are now crumbling. Some states report share gain increases of more than 3.5 percent a year toward design-build service delivery (vs. other delivery methods including construction management and design-award-build approaches where there are separate contracts). The associations that once fought design-build innovation are now developing documents and standards to support it and the insurance industry is now providing regular updates, counsel, and options. We define “design-build” as providing a single point of responsibility for both design and construction, using just one contract with a design/build entity. Firms poised to grow are strategically embracing design-build. It is significantly easier for leading firms to rapidly and steadily increase their revenues and profits using design-build models, citing the numerous flaws in traditional models of design-bid-build. From the Federal levels of procurement to large scale developers, design-build will be increasingly accepted and adopted. Later this year, DI will be publishing a list of the fastest growing firms in America, those that have a recent history and foreseeable expectation of long-term growth. You will notice a trend in many of these fast-growth firms toward a design-build strategy of one kind or another. Design-build has been pioneered by a handful of farsighted firms; these firms are focused on creating new growth and new value by addressing the hassles and issues of complexity in the construction industry. And, in the future, more and more clients will demand innovation, often requesting design/build delivery. A Design Futures Council think tank has projected that the growth of design/build projects could reach 70 percent of market share and become the dominant delivery system of the future.
3. Globalization will impact every design and construction organization in America and will include such issues as outsourcing, anti-Americanism, currency valuation swings, and issues of global competitiveness.
These all weigh as factors upon US based firms, even those practicing as regional firms in less populated states. A 120 person Midwest firm was recently surveyed to ascertain the design origins and manufacture of the staff’s clothing. A significant percentage was designed outside the United States, 91% was manufactured outside the country. And the automobiles driven by the staff? Seventy eight percent were foreign. Thus, we see similar occurrences in the design and manufacture of many of the significant buildings inside the United States. The new deYoung Museum in San Francisco, for example, has been designed by the Swiss firm Herzog and DeMeuron, with many of the building components manufactured at an international scale. In city after city, foreign architects are designing high profile projects. US based multi-national firms are also doing quite well in terms of the exportation of design services. US firms are increasingly working outside the country despite anti-American sentiment.
China is growing at a rate just above 9 percent GNP growth and will become the world’s largest economy. The largest design marketplace in the world? China. And, we quickly expect China to export design talent and services and emerge as a global competitor in both design and production of building materials. Just a few years ago steel prices spiked due to increased demand in China. Today, China is making most of its own steel and has begun exporting steel as well.
As with all trends, opposing scenarios will also prove significant for the future of design careers. Increasing localization remains a counter trend to globalization – a European Enterprise Institute for Public Policy Research report states that confidence in the federal government has dropped from 70 to 58 percent since 1972, and that “trust” in US government has dropped to 34 percent. The bottom line for this trend: The accelerated impact of globalization on the design profession and the AEC industry will continue as a major force.
4. Expect increasingly significant talent shortages in architecture and design professions,
a trend that will only get worse over the next three years according to Greenway Group and DesignIntelligence research. We are graduating immensely talented people from our architecture and design schools. They are moving into a marketplace that has changed significantly from just a decade ago. The firms recruiting M.Arch graduates for example now include Electronic Arts, DreamWorks, Starbucks, IBM, CB Richard Ellis and others outside of private professional practices. Graduates can often earn more than $50,000 with incentive plans that tempt them away from traditional professional practice. The number of graduates entering the IDP track in architecture does not appear to be keeping up with the demand for talent. In addition to this, we must also consider the loss of a significant percentage of generational talent in the early 1990s due to the recession in real estate in the United States. Today the demand for design and construction industry talent is at record highs. Bottom line: this trend bodes well for higher salaries but also increased management headaches brought upon by these talent shortages.
5. BIM technology will transform the language of design from drawings to models and will grow in use exponentially between 2006 and 2009.
There will be rapid adoption of BIM (Building Information Modeling) technology. Those failing to adopt and adapt will lose their relevancy to client audiences. The shift from computer aided drawing to BIM is enormous. BIM is a revolutionary paradigm change. Under the old rules, CAD drawings were in separate files; coordination between disciplines was a challenge, and version control was complex. One change in a plan did not change anything in the other drawings and thus manual changes across documentation were required. Rife with the potential for oversight and error, CAD was ripe for transformation. Now BIM offers up faster options, with project data maintained in a single file. Coordination between disciplines is much easier; version control is easier; take-offs and estimates are now possible. The designer can now create a 3D model of a project and automatically generate plans, elevations, sections and details from this model. The designer can modify the plan and model and the related views are automatically updated. BIM technology is at the leading edge of the design profession’s future and will explode into relevancy in the next three years. I recently spoke at ICSC Centerbuild in Scottsdale and during the question and response period an architect from a medium sized firm in Texas told us of her BIM experiences in retail design. She has shaved nearly 75 percent of required time while simultaneously enhancing project quality. BIM technology is an idea whose time has come. Strategic firms will have an aggressive action plan for adoption and the creation of new strategic advantages.
6. Demographics and generational changes will significantly alter context for professional practice in the future.
It is well known that the population in the US and much of the rest of the world is getting older. Life expectancy continues to increase, with many individuals expecting to live well into their 90’s; 75 year life spans are no longer rare. In terms of demographics we are conducting a grand social experiment with the question being how shall we organize society when so many people are over age 65? Life spans in the next 30 years may increase by as much as 10-20 years. Architects and designers will need to make sense of the subsequent and emerging economic and design questions.
There are also signal generational differences. For instance, for the first time ever, we have “digital natives”, born since about 1982, entering the professions. The rest of us are what has been called “digital immigrants” – those who may be “pretty good” with computers but the digital world is always new to them. For digital natives, computers and the digital world are normal, the way it has always been. “Baby boomers” (there are 76 million in the United States) invented the Internet and now Generation X’ers are transforming it into what it is and will be.
We also expect to see architects and designers, along with other knowledge workers, take part in significant geographic migration, shifting living preferences from the North to South.
Bottom line: we are now at the tipping point of a fundamental restructuring that will revolutionize the design professions and address the needs of those we serve. We will see the end of traditional retirement and the reinvention of the final phases of life. Get ready for a demographic and generational roller coaster ride. Add to this, the projection from the Brookings Institute, that the built environment in the US will double by 2035 and we have a dilemma of sizable proposition – a design problem indeed.
7. Process differentiation and corresponding brand and trademark status are significant anti-commoditization factors for design firms.
Architects and designers take it for granted that their drawings and models are protected under copyright laws, but few realize that processes are valued and understood as having value too. Processes (and the firm cultures that drive them) are thus huge differentiators for design organizations. Moreover, processes and products are harder to commoditize than services.
What are design processes? We define processes as those carefully considered, precisely controlled, and constantly improving sequences or steps leading to a design or building – the predetermined result. Leading firms often have unique processes that add significant value. These processes can make for faster projects, better buildings, and innovative solutions. One of the most widespread and overused design clichés used by thousands of firms during the last decade is “providing solutions.” There is nothing wrong with the phrase itself except that nearly every firm employs the phrase and this tends to homogenize firms as providing “service sameness”, making firms seem more similar than different in the client’s mind. That is precisely why process differentiation can be a hidden asset, an intangible intellectual property. Hidden assets can be the missing element for firms differentiating themselves and building profitable growth channels.
At the Stubbins Associates, a highly competitive new process called Hypertrack™ has brought them both business press and client satisfaction. Their five point value process is quite different from any other firm offering. Stubbins Associates’ clients and the differentiated process have created a buzz of sorts in the fields of higher education facilities and lab and pharmaceutical buildings. In the management consulting arena, The Greenway Group uses its LEAP ™ process that encompasses leadership, empowerment, and accountability diagnostics to improve the operating culture of professional organizations. IDEO has managed to integrate process brand differentiation into their firm name and is now one of today’s most celebrated design firms. And the IDEO formula for innovation is being reinvented every year. There is a dramatic shift in how work gets done and this shift will be labeled, trademarked, and become even more pronounced in upcoming years.
8. Fast architecture is becoming expected as speed of service delivery produces quality design and schedule enhancements.
How long does good design take? Increasingly, the answer given by leading firms is perhaps a 15-50 percent reduction from traditional norms depending on building and client type. Hammel Green and Abrahamson (HGA), and their six national offices, have moved this concept into aggressive action models. They provide insight into value migration as speed becomes increasingly important. According to HGA, clients drive the need for faster design solutions for a variety of reasons including: product to market – getting to market quickly drove the construction of many computer manufacturing and assembly facilities; leadership transition – the pending retirement of a CEO or other leader has placed some Fortune 500 Corporations on a super fast-track to complete projects in record time; mergers and acquisitions – the need to quickly integrate cultures of merged companies, another factor that leads to accelerated project design and delivery; regulatory considerations – pending regulatory changes (such as zoning changes impacting the value of land) have pushed projects forward in record time; and real estate factors – a major state government building, where pending lease expirations, challenging renewal negotiations, and previously unsuccessful attempts to have a building design on budget, motivated HGA to move to design-build accountability. While not always the case, some architects and designers find that limited time can be a positive constraint that stimulates and enhances the creative energy. Leading firms agree: months of design time can be eliminated and design fees can be expanded as value is re-measured.
9. Performance (productivity) increases will improve by double digit percentages in design from 2006 to 2009.
It’s awesome, really, to walk into an architecture firm and hear stories about performance and productivity increases of 7 to 11 percent a year over the last four years. And, while the construction industry as a whole has not seen such increases, there are reports of spotty yet dramatic increases there as well. In construction we learn about strategic partitioning, new modular processes, easier to install materials, robotics, BIM, integration systems, and Six-Sigma processes that eliminate waste between design stages and construction phases leading up to occupancy. We see now that the most significant performance enhancements lie just ahead. Do not be surprised that innovation will be resisted by the knowledge workers stuck in 20th Century processes and habit patterns. Closely analyze the performance benchmarks in your firm as professional fees per full time equivalent (FTE) exceed $135,000 in 2005, topping $200,000 in 2008. The most competitive organizations will take steps to raise the bar sooner, rather than later, as it relates to performance and productivity.
10. Architects are designing buildings of course and even more significantly – they are designing experiences.
We have dedicated several issues of DesignIntelligence to this trend in the past. It is still one of our top twenty trends and is not as well understood in certain building categories, specifically education, medical, and corporate. Make no mistake, however, as it is just as relevant in these building sectors as in hospitality, retail, and sports. The new game is to infuse exceptional and emotional experiences into space making. It’s the experience that counts, not the building. Starbucks and Apple understand this, of course, but so does Target, Stanford, Cleveland Clinic, and Boeing, all of whom have worked with architects and designers to create communities of passionate and loyal employees and customers. Each individual’s experience in a building, space, or environment includes an emotional reaction and the underlying architecture is responsible. Using refreshable information, messaging, images, luminosity, digital technology, special components of shaping and choreographing social experiences is the key. There is strong ROI to good design. Customers aren’t just paying for a cup of coffee at Starbucks – they are satisfying the soul. This trend’s bottom line: get clear and get excited about how your organization delivers an exceptional experience for your staff, your clients, and for the end users of your buildings and products.
11. Green and sustainable designs make architects and designers indispensable in the future.
Not long ago, just before the 2004 presidential elections, Walter Cronkite wrote in the Philadelphia Enquirer that: “Global warming is at least as important as gay marriage or the cost of Social Security. And if it is not seriously debated in the general election, it will measure the irresponsibility of the entire political class. This is an issue that cannot, and must not, be ignored any longer.” Well, at the moment, it appears that the US government is showing less real interest and leadership than the world expects of us. And certainly it is a national security issue. Still, many of the design associations including the American Institute of Architects are joining with the US Green Building Council, taking a leadership role, and proving that hope is possible even in an absence of collective political wisdom. We are nearing the moment of “peak oil” when half the worlds supply will be used up. It could be 2025; it could be 2007; a few argue that it has already taken place. Whenever it hits, we will have roughly eight years to supplant half of what we currently accomplish with petroleum, with alternative means. The next energy era is the biggest design enterprise opportunity in the history of the planet. It is not hyperbolic to call it an extreme rescue measure for planet earth. Architects and designers hold the key to turning this carbon and environmental crisis around, bringing innovation and creative energy to real-world solutions. The Design Futures Council Leadership Summit on Sustainable Design has assembled a new Focus on the Future report that lays out roles and responsibilities and “live commitments” of more than 100 of the world’s design leaders. Join with them. It’s not only about doing well by doing good, it’s also vital to the planets sustainability.
12. New technology visions will radically reshape the future design professions.
New and emerging technologies are being re-imagined in leading design firms to provide distinctive value propositions. These technology visions will optimize new tools such as VOIP, nanototech, artificial intelligence, visualizations, and other performance-boosting solutions. Archpartners, for instance, supplies an outsourcing service that specializes in computer generated visualizations and animations for evaluation and communication purposes; they partner with design firms and present pre-construction design intentions in an effective and convincing manner. Reality Online, a division of Accenture, imagines new workspace solutions using hyper tools. They envision a world in which objects can sense, reason, communicate, and act; where for every physical object or event, there will be a corresponding virtual double. They also envision the time between stimulus and response as approaching zero, and a world where privacy and business insight will be bought and sold in a market that rewards those who build trust and harness real-time economic issues. All over the world, design firms are innovating way beyond their web sites. Many of these organizations have a clear, demiurgic business vision that merges technology, design talent, and business success. Between 2006 and 2010 we expect to see a new supply chain of value as design decisions are made in real time and as prototypes are built around key components of the client’s vision. New design relevancy takes place by utilizing the most talented designers and the latest technology. Architects and designers will no longer talk about going online because reality itself will be online, says Glover Ferguson of Accenture. There will be new pilot projects and ongoing collaborations emerging daily as the design professions are re-imagined to be both different and better. NBBJ’s new radical workplace model in Seattle and their new book Change Design carries the message that innovative business vision is critical to high-performing value to clients.
13. Building lifecycle management solutions expand services; designers take on facility management and become maintenance and restoration experts, commissioning consultants, and programming and strategic space consultants.
Buildings just like people have predictable life spans. With people we understand that there are medical doctors who are involved from birth to death and each year most of us have contact with doctors who prescribe advice and medicines for our wellness, health, and for corrective measure. The lifespan of the human being has strong connectivity with the doctors of medicine. By contrast, it has traditionally been the role of the architect, engineer, and interior designer to be involved in only the planning, birthing, and initial occupancy of a building, with the ongoing linear and non-linear considerations left to other professionals and often to non-professionals. This limited role and responsibility of architects and designers, however, is beginning to change dramatically as we consider new streams of professional fees now generated by lifecycle building services. Now, because architects and designers have schedules and technology that address maintenance and product durability, it is possible and advisable for them to be involved with a building during its entire lifespan, including renewal, restoration, and flexible adaptive reuse. Some architecture firms are becoming data central for their clients where they become in essence “chief architect and facility advisor” for their client on an ongoing retainer-outsourcing basis. And it is also true that some real estate service providers are hiring architects (licensed in jurisdictions of relevancy) to provide this function in a corporate setting, aside from professional practice.
One question that often comes to mind is whether architects and designers possess enough passion to really fill in the gaps of services required; after all, these are not always the most challenging creative puzzles offered in facilities issues. Our research has found, in fact, that there is indeed a passion for expanded services and a growing number of design professionals are more than willing to take on such roles within the likes of GSA, Microsoft, CB Richard Ellis, Virgin, G.E., and Target, as well as within design firms, where they become outsourced facility management experts. The demand for such services is expected to grow at a rate double that of the otherwise growth rate in the industry.
From a business point of view, firms can improve their growth prospects although this will scarcely happen overnight. A strategic client relationship program and value pricing can redefine a firm’s brand equity to emphasize lifecycle services. And, while this strategy will not appeal to a majority of firms we expect growth to exceed 4.5 percent per year.
14. Clients will demand specialization and high-definition value from their design consultants. There is significant value migration away from generalist practices.
From the research conducted within the last twelve months, the world’s leading clients want their architects to be “the experts in each field of specialization” in this order: A. specific building type expertise and competence; B. strong leadership skills with specialized repute; C. trust and confidence in zone of specialty; D. familiarity and comfort with innovation in categories of specialization.
Buildings that think, smart walls and ceilings, structures as computers, will all become commonplace. Each firm should be able to readily answer this question: What are we famous for? High definition premium value is being delivered by the most successful design organizations. Premium value is the upper most value delivered by a professional design practice. High definition means that there is recognition for expertise, competence, and confidence approaching levels of mystique. The high-definition label means that clients are clear and certain about the value proposition; no fog, no misunderstandings, no missed expectations. High definition value is focused, committed, and smart, a trend that operates in all regions and in all sizes of firms. There is a world of new opportunity in the design professions. The mass market for architects and designers is no longer supreme. Money is being made in the niches. Filling those niches are firms offering clearest value. With so many new tools and communication systems in place design is a 24/7 proposition. The differences between design firms are becoming more noticeable, distinguished, and these are being communicated with impressive panache.
15. Strategic optimism is a palpable advantage where designers offer a deep expertise and wisdom of professionalism in the client’s field of business.
It won’t be in the official RFPs but the attitude of strategic optimism will be a key differentiating point for the most successful and sought after designers. Confident and informed experts will lead the industry. We have found, that when you combine strategic optimism with great talent and a plan, that a paragon status unfolds and significant results follow. Attitude is a resource like money, time, and materials. When the characteristic of strategic optimism exists in the firm there is a belief that the ability to enhance, improve and differentiate everything is infinite.
In the future of this industry there will be casualties. There are vast limiting beliefs about this industries future. There are also victimization attitudes and the design professions are weakened by the sometimes poor execution of projects that result in the conditions of chronically soft and/or shrinking business conditions. Commonly limiting beliefs include the likes of: “architects don’t make much money so I won’t either”; “architects don’t manage businesses very well so I won’t either”; “firm is large so we can’t be fast too”; “we’re not smart enough to be a leader of the changes necessary to make us competitive again”; or “I’m too old to learn BIM and 3-D CAD”. Strategic optimism is not blind optimism and it is not happy talk. It is not myopic. It is informed, knowledgeable, and possesses vision for the future. Strategic optimists use scenarios to create future invention visions; these form alternative ideas toward new relevancy and a springboard away from professional stagnation. One or just a few changes in your outlook, behavior, and action regarding the year ahead will change your destiny.
Architects and designers posses the means to becoming the artists and creators of their own careers.
Each of the trends discussed in this issue of DesignIntelligence are full of possibility, as you develop your agenda for the future. However, keep in mind the paradoxical nature of design as often the opposite of each trend could in theory hold the essence of competitive advantage for you and your firm. DFC Senior Fellow Richard Farson reminds us that paradoxes in professional practice often provide unique, often hidden opportunities. So, in each area question the trends and consider going against the grain. Consider Santiago Calatrava, for instance, who interviews so well when he is hand sketching his biomimicry ideas despite his firm’s technology residing in a class all its own. He also brings gemutlichkeit – a genuine warmth and congeniality – along with his neo-Teutonic and Latin personality.
Questions that you need to ask as you chart your own future strategies:
How are the trends in professional practice relevant to my practice?
How are my clients needs changing
What should I do differently in the future to cope with trends and change?
How is the essence of my practice likely to be altered?
What paradoxes are most applicable to me? What new vision of my firm could result from them?
How may I allay doubt within the firm regarding necessary change?
What will be the new essence of my professional practice? What will be the unique promise to our clients/
Finally, DFC Senior Fellow Peter Schwartz reminds us to stay alert for wild cards and inevitable surprises. Sever weather can be expected. Suicide car bombings; stock market fluctuations; and failed real estate investments. Wild cards are explosions on the continuum located between downside scenarios or dystopias, and upside scenarios or utopias. Wild cards usually indicate a massively transformational change. The future is not something that just happens to us but the future is something we do, something we create. And, for architects and designers, this is the design of a better future, the creation of a future we prefer. This, as Bill Caudill used to remind me, is possible.
Innovation transforms the customer as well as the product Read full »
A moment of potential transformation for the A/E/C industry Read full »
As design firms cope with the aftermath of the recession, the shape of professional practice is beginning to look quite different. Read full »
There are two kinds of trends: those that affect the firm from the outside and those that are created from within. Read full »
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