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  • 1.  The future of the architecture firm: Big or Small?

    Posted 09-26-2014 05:18 PM
    This message has been cross posted to the following Discussion Forums: Project Delivery and Regional and Urban Design Committee .
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    Friday, September 26, 2014

    Firms: Is Small Beautiful but Big Better?

    "Those professions that do not change will render themselves obsolete,"  "Those that are able to transform themselves - and I mean 'transform' - will thrive and prosper." Dr Frank Shaw, foresight director at the Centre for Future Studies.
    Last week at the American Institute's "Knowledge Leadership Assembly" (KLA), the Small Firm Roundtable group told their story of feeling neglected by AIA, of taking matters into their own hands and have stunning success in gathering both members and financial support for their group. The vast majority of AIA member firms are small, especially under the Roundtable's definition: "if you wear more than one hat in your firm, then you are small." (21% of architects are self employed, three times the national average for all professions, 25% of all architecture firms are sole practitioners and 75% have less than 50 employees). I can't even count the hats I wear, and never was it questioned that my firm was small, but is this prevailing smallness of architecture firms a plus or a sign of times gone by?
    US Merger Mania picking up again
    The week when KLA gathered in Minneapolis the latest acquisition by architecture/engineering..... 
    Read full article

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    Klaus Philipsen FAIA
    Archplan Inc. Philipsen Architects
    Baltimore MD
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    Friday, September 26, 2014

    Firms: Is Small Beautiful but Big Better?

    "Those professions that do not change will render themselves obsolete,"  "Those that are able to transform themselves - and I mean 'transform' - will thrive and prosper." Dr Frank Shaw, foresight director at the Centre for Future Studies.
    Last week at the American Institute's "Knowledge Leadership Assembly" (KLA), the Small Firm Roundtable group told their story of feeling neglected by AIA, of taking matters into their own hands and have stunning success in gathering both members and financial support for their group. The vast majority of AIA member firms are small, especially under the Roundtable's definition: "if you wear more than one hat in your firm, then you are small." (21% of architects are self employed, three times the national average for all professions, 25% of all architecture firms are sole practitioners and 75% have less than 50 employees). I can't even count the hats I wear, and never was it questioned that my firm was small, but is this prevailing smallness of architecture firms a plus or a sign of times gone by?
    US Merger Mania picking up again
    The week when KLA gathered in Minneapolis the latest acquisition by architecture/engineering 

    Friday, September 26, 2014

    Firms: Is Small Beautiful but Big Better?

    "Those professions that do not change will render themselves obsolete,"  "Those that are able to transform themselves - and I mean 'transform' - will thrive and prosper." Dr Frank Shaw, foresight director at the Centre for Future Studies.
    Last week at the American Institute's "Knowledge Leadership Assembly" (KLA), the Small Firm Roundtable group told their story of feeling neglected by AIA, of taking matters into their own hands and have stunning success in gathering both members and financial support for their group. The vast majority of AIA member firms are small, especially under the Roundtable's definition: "if you wear more than one hat in your firm, then you are small." (21% of architects are self employed, three times the national average for all professions, 25% of all architecture firms are sole practitioners and 75% have less than 50 employees). I can't even count the hats I wear, and never was it questioned that my firm was small, but is this prevailing smallness of architecture firms a plus or a sign of times gone by?
    US Merger Mania picking up again
    The week when KLA gathered in Minneapolis the latest acquisition by architecture/engineering 


  • 2.  RE: The future of the architecture firm: Big or Small?

    Posted 09-29-2014 06:02 PM
    Nikolaus, in addition to the interesting perspectives you raised about mergers & acquisitions, the largest factor driving consolidation right now is the pending retirements of firm owners, many of who founded firms in the 1970s.  Because of a dearth of younger architects interested in ownership these Baby Boomers have far fewer transition options than a decade ago.  And closing a firm, whether it is smaller or mid-sized firm, is seldom an option because of the ongoing professional liabilities, even after a 2 or 3-year tail end E&O policy is purchased.

    For a good list of factors driving the consolidation, and how smaller firms can prepare for this, readers might want to purchase the Ownership Transition chapter of AIA's Architects' Handbook of Professional Practice, 15th edition, which is available from AIA for, I believe, $19.95. (Disclaimer:  I authored this section; however I don't receive any of the proceeds.  Simply my 15 minutes of fame).

    Relative to your question about "is bigger better," there are many examples throughout many industries of companies that became "too big to succeed."  They lose touch with their clientele, no one has ownership of specific initiatives, decisions take too long to make, and the company gets mired in a giant morass of systems and procedures.  Hopefully, as architecture firms consolidate and grow in size, which is increasingly inevitable, they will learn how to avoid the "too big to succeed" syndrome.

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    Michael Strogoff FAIA
    President
    Strogoff Consulting
    Mill Valley CA
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  • 3.  RE: The future of the architecture firm: Big or Small?

    Posted 09-30-2014 06:36 PM
    Michael, I think there are other factors at work that may be contributing equally (or possibly more) to the consolidation trend. Virtually all Boom Generation-owned firms have Generation X senior architects on staff who are eager to become owners within their firms. However, the personality differences between Xers and Boomers can be a factor in the reluctance to pass ownership to the next generation. Gen X tends to be more pragmatic and less likely to build the idealistic Boomer "legacy" while historically, Boomers have not had much confidence in Gen X's values, talent, intellect or ethics. Simultaneously, some small firms jettisoned their Gen X staff (middle-level management) in order to survive the recession, leaving Boomer owners with a junior staff comprised entirely of Millennials (many still not licensed yet, most still changing jobs every 3 to 5 years and most still preferring a mobile lifestyle). Meanwhile, large firms now tend to get a greater percentage of the available work than small firms, giving them cash to make offers on smaller firms, motivated by the desire to diversify. The acquisition offers from these large buyers easily surpass the offers from a recession-diminished, cash-poor Gen X senior staff.

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    Sean Catherall AIA
    Senior Project Manager
    DAVE ROBINSON ARCHITECTS
    Salt Lake City UT
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    Original Message


  • 4.  RE: The future of the architecture firm: Big or Small?

    Posted 10-01-2014 06:38 PM
    Sean and Michael, I agree to some extent with both of your analyses, but I feel there is another element that reflects poorly on the boomers (of whom I am one).  As a generation of practitioners, especially in smaller firms, we have not generally created a legacy of practice to bequeath or sell. We may have designed some good (even great) buildings, but we have not captured the way we do our professional business in a way that is of interest to the next generation. When the various recessions largely destroyed traditional mentoring and hollowed out middle management ( as you noted, Sean), we did not step in and fill the gap. It was easier to hire younger folks cheaply, throw them into the mix and leave it to contractors to help us complete our construction documents with the help of countless RFI's. To reverse this and create value that is of value to our successors, we need to capture how we do what we do in the way that contractors do - an operations manual for our practice of architecture, as it were. By this I mean that, for example, if you have a successful career designing multiple residential projects in the midwest, or first nations projects in western Canada (my home), you need to capture the particulars of those clients, communities, climates and construction types (to name just 4 categories) and make them available to staff in a way that they can see adds value to your enterprise, so might be worth investing in. And we need to do it at a fraction of the cost of generic guides such as those sponsored by AIA and others. By the way, larger firms are no better at this than smaller ones, in my experience. Good debate,

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    Brian Palmquist Architect AIBC MRAIC Intl. Assoc. AIA BEP CP LEED AP
    President
    Quality-by-Design Software Ltd
    Vancouver BC
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    Original Message