Two Leading Firms Look Ahead as They Turn 50

April 1, 2003 · by DesignIntelligence

Founded 50 years ago, Hammel Green & Abrahamson and Sasaki and Associates have different philosophies and strategies as they pursue continued success. As these interviews show, both firms are doing something right:

Hammel Green & Abrahamson and Sasaki and Associates are very different firms; they have different philosophies and strategies as they pursue success. But as you will see in the interviews regarding their performance and their profits, they're doing something right.

Sasaki was created by an Asian educator and landscape artist. Therefore, a multi-layered, holistic approach to design remains at Sasaki, beyond Hideo Sasaki's death in 2000. Although the firm offers an impressive array of services, including graphic design, they do so in only two offices: Boston and San Francisco.

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HGA however, has Midwestern roots with three offices in Milwaukee, Rochester, The Twin Cities of Minneapolis/St.Paul, and three offices in California in Sacramento, San Francisco, and Los Angeles. They are both hopeful about the future and looking ahead. What could hold them back? Let’s begin the interview with HGA.

Could you give us the story of your founding 50 years ago?

HGA: We were founded 50 years ago by Richard Hammel and Curtis Green, to create exceptional post-war design for schools, colleges and other public institutions. Beginning with public elementary and high schools, HGA “grew up” with the Baby Boom generation so that by the 1960s, the firm led the design of innovative performing and visual arts facilities for private liberal arts colleges across the Midwest.

How would you describe your firm today?

HGA: From the beginning, HGA has worked in a studio setting where architects, engineers, landscape architects, and interior designers all collaborate on programming and design. Today, this collaborative tradition of shared expertise continues on all projects, among all offices. Organized into client-focused practice groups, HGA offers a balanced portfolio of planning and design expertise with a focus on Corporate, Healthcare, and Arts, Community & Education clients. Collaboration, innovation and reputation are the values that have helped shape HGA.

Tell us about the present number of offices and employees—### HGA: We have 550 employees located in six offices. While each office has its own personality, we strive to establish a common culture consistent among our locations. It is common for project teams to be comprised of talent from several locations in order to bring the highest value to HGA’s clients. Our architects and engineers frequently travel to other office locations and we regularly utilize video conferencing for long-distance team meetings. Over the past year, we have implemented knowledge management software to more effectively leverage the expertise of each architect and engineer.

How would you describe your vision for the future?

HGA: The firm of the future will be an even more highly integrated architectural and engineering practice, specializing in several building types. Our work will be delivered across the country through regional offices that will bring service providers closer to our clients. While the Midwest offices will probably stabilize in terms of size, California will grow with expected population there to be about 100 within five years. HGA will continue to specialize in large, complex projects for clients seeking an innovative approach to problem solving.

What examples of your work do you think best define your firm?

HGA: Our completed work includes Healthcare—Mercy Oshkosh Replacement Hospital, Corporate Office—Medtronic Corporate Headquarters, government—Minnesota Department of Revenue, Arts and Education—Valparaiso Visual and Performing Arts, and Religious projects—Milwaukee Cathedral. HGA’s clients—whether museums, healthcare organizations, technology companies, or colleges and universities—are organizations that have distinctive needs, audiences and missions. They require environments that are not commodity designs but custom-made tools for their future ability to thrive. As the firm has grown, its greatest accomplishment is the preservation of this “individual scale” of expression—whether for clients or the HGA employees who serve them. This sense of going to work everyday knowing that you can make a difference in the final project imbues the professional lives of people at all levels and disciplines of the firm.

When did you expand beyond the first office?

HGA: In 1987 HGA opened its second office, the Great Lakes Office in Milwaukee, Wisconsin. This second location more than 300 miles from the home office was a big step for our firm’s culture. We believed that current and future clients in the Great Lakes region would benefit from a closer HGA presence. Today, that office has 120 employees who are responsible for a sizeable portion of our business. We’re up to six offices now and are exploring further geographical growth.

How would you describe your culture today?

HGA: There is a quality of community service, day-to-day work, and completed projects that continue to make HGA a desirable place to work. Each office reflects the cultural traditions and diversity of its own home area. HGA’s collaborative teams work together with our clients to create a better-built environment and that value defines our culture as a firm and transcends inevitable changes in the business climate. Our culture produces a design signature: innovation.

Of your 550 employees, how many have been with the firm for five years or more?

HGA: We are fortunate that 40 percent of our employees have been with the firm over five years. This figure is significant, particularly since we’ve grown at a rapid pace over the past few years. The potential for ownership in our broadly held organization is an advantage for attracting and retaining top talent.

How are you organized in terms of management and leadership?

HGA: The firm’s seven-member Board of Directors, elected annually by our shareholders, establishes our long-term vision and policy. Operationally, we are a non-hierarchical matrix organization. Client-focused practice groups drive our marketing, design, and architectural production. These practice groups focus in the areas of Corporate, Healthcare, and Arts Community & Education. Practice Group Councils provide integration and coordination of these groups across our various location.

Presently how many principals do you have? Are they elected? What does it take to achieve principal?

HGA: We have 45 principals. Principals are Officers of the firm and are elected by the Board of Directors. They are required to make a significant one-time financial investment in company stock with subsequent smaller investments. Our definition of Officer is someone with business acumen, credibility, a visionary, and who provides leadership and influence. Whether a specialist is client relations, project management, design or a department head, each officer provides leadership in his or her area of expertise in the architecture and engineering professions.

Could you give us a summary of markets served?

HGA: Striking an appropriate balance between focus and diversity in our practice has helped HGA be successful over the years. Respectively, the relative portion of our business by practice areas is corporate 45 percent, healthcare 30 percent and arts, community and education 25 percent. Corporate was our fastest growing market a few years ago. Healthcare is the market sector most broadly served by all six office locations.

How about recent profits?

Total fee revenues for 2002:
$70 million

When we look at profits on net service revenues, it looks like this:
2002: 15%
2001: 20%
2000: 22%
(pre-tax, pre-incentive)

What’s changed the most in the last few years?

HGA: We’ve seen significant changes in the speed of project delivery. New ways of collaboration between owners, designers, suppliers, and builders working together have helped us achieve delivery of large complex buildings in timeframes previously thought impossible. Internally, the biggest change relates to doubling the number of HGA offices in only three years. While these additional locations have proven to be a distinct advantage for the clients we serve, our leadership is working much harder to engender a consistent culture throughout the firm.

What is your outlook for the next three years? Do you see trends that are reshaping the future of your firm?

HGA:The outlook for the next three years is challenging. New clients will be harder to find. Selective marketing and sales will improve our success rate. Strengthening the consistency of services to existing clients will be key. More than ever, we will want to do all of our clients’ work—not just the prestigious new buildings.

Work in the Corporate sector is down significantly from the high level of activity of two to four years ago. There is an excess of office space in most U.S. cities that will take a few years to work off. We anticipate increased activity in tenant improvement work. We have adjusted to the downturn in the Corporate sector by pursuing more work in the Government arena.

The Healthcare sector remains strong and we forecast our revenues will grow in this area in 2003. Demographics and technology are driving this market, however healthcare providers are increasingly looking at ways to control rapidly rising costs.

Work in Arts, Community & Education, especially projects for non-profits that are dependent on private contributions, will decline in the short term. State budget deficits will sap funding from public higher education. Science & technology work is a bright spot.

What is the current most challenging project before you?

HGA: Recently, we’ve been the executive firm for a multi-billion dollar expansion at the Minneapolis-St. Paul International Airport and on this project we coordinated the activities of well over a dozen other design firms. Challenges also are found in the numerous partnerships and strategic alliances we sometimes engage in, especially when working far from one of our six offices. In these situations, we work hard with the leadership of our partner organization so that we approach the assignment with a common vision.

Could you relay a painful learning experience?

HGA: A most painful learning experience, and it’s happened more than once, is being selected, after an intense marketing and sales effort, for a project and then for one reason or another, the project never goes ahead. It is important to ask the right questions early in order to identify and react to the warning signs.

How are employees rewarded, beyond salary?

HGA: Achieving personal satisfaction from our work is both rewarding and motivating to all of us at HGA. This satisfaction comes in many forms, including accolades received from both our clients and peers. We strive to select high quality clients who closely partner with us in the design process and who appreciate the collaborative approach and innovation our talented employees bring to their assignment. The challenging economic environment requires that design firm leadership work especially hard to maintain the intangible rewards such as culture and high morale, that are just as important as the financial ones.

Do you want to grow the firm beyond its present size as to staff, or are you where you want to be?

HGA:If HGA doesn’t grow, it will become stagnant. We want to continue our growth to better serve our clients and provide even greater opportunities for young and emerging talent in our organization. We believe we can grow in any economy—it will just be in different ways.

This interview was conducted with HGA’s COO Stephen Fiskum and CEO Daniel Avchen.

Let’s turn to another significant 50th anniversary, Sasaki Associates. What is the story of your founding?

Sasaki: Founded in 1953 by Hideo Sasaki, Sasaki Associates has evolved from a group of his Harvard GSD students working in a basement office to a 260-person interdisciplinary firm with owners representing management and all major design disciplines—planning, urban design, architecture, landscape architecture, civil engineering, and interior design. Since its inception, the firm has been guided by Sasaki’s commitment to a collaborative style of design. He believed that the best design solution is achieved through an interdisciplinary process that studies all the factors impacting design and then integrates these parts with a clear eye to the whole design. It is this philosophy that has been the firm’s mainstay, enabling it to adapt to the evolving needs of the marketplace through 50 years of economic, political and social change.

How would you describe your firm today?

Sasaki: Sasaki Associates has surprisingly remained true to the original core philosophy of its founder. While the firm’s disciplines have become more and more specialized in order to respond to market forces, we understand better than anyone how to bring multiple disciplines to bear to make the end result richer. We relish the opportunity to transform difficult assignments into breakthrough work for our clients.

What projects best define your interdisciplinary work?

Sasaki: It is with large, complex projects that engage multiple disciplines that the firm excels. Examples of such projects include our work for the City of Charleston, S.C., restoring their historic waterfront district; the master plan and building design for the American University in Cairo, Egypt; and the repositioning of Technology Square in Cambridge, Mass. for MIT.

How has your firm expanded? Are there limits to growth in your view?

Sasaki: The firm has expanded geographically, where we now provide services worldwide, such as for the 2008 Olympic Games in Beijing, China. The firm also expanded its disciplines from historically being a planning and landscape architecture firm to over time adding architecture, civil engineering, and interior design services. The only limit to our growth is the ability to attract talented staff.

Can you give us an idea of how your staff would define your culture? What is it like to work at Sasaki?

Sasaki: Most staff today would describe working at Sasaki as being like an extension of their education. Given the interdisciplinary nature of the practice, staff are exposed to many different ideas, knowledge, and opinions. For those who have spent time in other design firms, they view Sasaki as less hierarchical than traditional design firms, yet still retaining a solid corporate structure of support functions. The staff is definitely more diverse—we’re a group of multicultural, multilingual professionals from 28 countries with a wide variety of skills and viewpoints.

Of your employees, how many have been with the firm for five years or more?

Sasaki: 120 of the current 260 employees have been with the firm for five or more years.

How do your charge fees? Can you share with us revenue and profit goals?

Sasaki: We charge fees in a variety of ways, depending on the project and client preference. These include lump sum, percentage of construction cost, and time and expense. Revenue approximates $50 million. Our profit goals are 20 percent and for the past 5 years we have successfully met this goal.

2002 - 28.1%
2001 - 28.0%
2000 - 30.2%
1999 - 30.5%
1998 - 26.9%
(Profits before discretionary expenses and income tax as a percentage of net revenues.)

You presently have 37 principals or so. Are they elected? What does it take to achieve principal?

Sasaki: Principals are elected. To be considered, candidates must possess professional excellence as well as marketing and business skills.

Of those, what is their experience level? How long with Sasaki?

Sasaki: On average, Principals have 20 years of experience. Their length of time at Sasaki ranges for one year to more than 45 years.

Your Firm has a History of teaching—how many staff also serve as educators?

Sasaki: Historically many Senior Associates and Principals have taught at local institutions. Currently over a dozen Principals actively teach at the Harvard University Graduate School of Design.

What presently are your predominant market sector(s)? Could you give us the percentages of each?

Sasaki:
Corporate/Commercial: 40%
Institutional: 40%
Public Sector: 20%

We see significant growth in our International markets, which are primarily China and the Southern Mediterranean. We see stable or no growth in the College and University marketplace and a tightening market in both the Public and Corporate markets.

As a historically multidisciplinary firm—what’s changed the most in the last decade?

Sasaki: Clients are looking for more integrated solutions, thus our historical approach is becoming more expected by the marketplace.

What are your plans for the next three years, new offices, and additional staff? What new strategies will you put in place?

We currently have no plans for additional offices, but will continue to concentrate on providing high-quality design services to our clients. We prepare a strategic plan every three to five years, and review it annually during the annual budget and business planning cycle.

What is the largest or most challenging project before you today?

Sasaki: The American University in Cairo where we are not only designing three buildings, but are also coordinating the efforts of several other design firms to have an entirely new, 2 million square foot campus in place by 2007.

Could you relay a painful learning experience?

Sasaki: In the late 1980s we opened several small regional offices that because of their size were not able replicate the skill sets required to sustain themselves with the level of services that met our expectations.

How are employees rewarded, beyond salary?

Sasaki: Every employee receives a year-end bonus as well as a significant Profit Sharing contribution.

Do you want to grow the firm beyond its present size as to staff, or are you where you want to be?

Sasaki: Growth will be totally based on the marketplace and our ability to hire quality staff. There are no plans to grow for growth’s sake.

The reasons behind creating the Sasaki Foundation?

Sasaki: The Hideo Sasaki Foundation’s mission is to support continuing education, research and writing in the planning and design disciplines. The Foundation accomplishes its mission by sponsoring research, hosting and supporting symposia on planning and design issues, and awarding scholarships to deserving and promising planning and design students and professionals. The firm created the Foundation to honor Hideo Sasaki’s legacy of the combination of teaching and practice.

What trends and changes do you foresee on the horizon?

Sasaki: We see a continued emphasis on globalization and a focus on integrated solutions with an increasing importance on quality.

This interview was conducted with Sasaki’s CFO Jim Sukeforth.

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