# Should I wear black? A study on strategies in the initial phase of the architecture firm. P2 evaluation report June Sébastien Baggelaar

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3 Should I wear black? A study on strategies in the initial phase of the architecture firm. P2 evaluation report June 2010 Sébastien Baggelaar

4 Name Sébastien Baggelaar Studynumber Adress van Ostadestraat 152/4a 1072TG Amsterdam Phone University Faculty Department Graduation lab TUDelft Architecture Real Estate & Housing Design & Construction Management Date P2 report June Main mentor Second mentor Coordinator D&CM Lab Coordinator Architectural Design Management Dr. J.L. Heintz Dr. Clarine van Oel Ir. R.P Geraedts Dr.ir. M. Prins 3

5 Preface This report is about starting an architecture firm. I sensed that next to the difficulties of starting any service oriented firm, the architectural profession is a tough surrounding in which to operate. Starting architects have a difficult task to compete with relatively few means in a tight market, which is filled with fierce commercial competition. Not only do experienced firms have much more chance at winning clients, the tasks of architecture firms are also taken over by specialised firms such as project managers, further threatening the architect s position. This report is the second physical instalment of the graduation track. It recounts the progress and makes the preliminary conclusions of this P2 phase explicit and also acts as a start up of the P3 phase of the research. In this way it is the official research proposal for graduation research in the Real Estate and Housing track of the faculty of architecture of the TUDelft. I would like to thank the mentors and coordinators who guided me so far for their help: John Heintz, Clarine van Oel, Matthijs Prins and Rob Geraedts. I would also like to thank the architects for their time and to let me have a look at their views and strategies in the interviews. Sébastien Baggelaar Amsterdam, June

6 Contents Preface... 4 Contents Research Proposal Introduction Type of research project Relevance Personal motivation Personal interest Study targets Problem analysis Problem statement Research questions Final aim Research methods Readers guide Theoretical Framework: Problems Introduction Common start up problems of service oriented firms Lack of business orientation Problems due to developments in the architectural profession Theoretical framework: Strategies Introduction Inventory of used strategies Further development of the research Introduction Theory Survey Definition of the initial phase Further interviews Research organisation Scientific domain Mentor

7 5.3 Schedule Graduation company Bibliography Glossary Appendices Deel 2. Werkervaring tijdens studie Deel 3. Werkervaring professioneel voor start huidige bureau

10 disrespect generally changes to distaste during the course of the career as architects realise that their career cannot rely on the quality of their work alone. A third set of problems is related to professional developments in the architectural profession. The changing role of the architect and the decreasing demand for smaller architecture firms are exemplary problems related to such developments. These problems will be discussed in more detail later in the report. 1.7 Problem statement The initial phase is difficult for the architecture firm. This is only partly due to a lack of experience, trust, reputation and a network. The natural uncommercial business attitude of most architects and the developments in the professional business reinforce this. In an increasingly competitive market, these difficulties are becoming even harder and there isn t much help for the starting architects to face those problems. 1.8 Research questions The research will try to find an answer to the main research question: Which strategies can be used by starting architectural firms to reduce the difficulties experienced in the initial phases of the firm? Prior to answering the main research questions, these sub research questions will be needed to be answered to provide basic information. What determines the (feeling of) success for an architect? What strategies are used by starting architecture firms to gain a share in the market? What are the differences in marketing strategies between successful and unsuccessful firms? What are the differences in marketing strategies between starting firms and experienced firms? What are the correlations between strategies and self perceived success? How can starting architectural firms professionalise their business by increasing the success factors? 1.9 Final aim The final aim of this research is to expand the knowledge on managing an architecture firm, to expand the knowledge on starting a business and to combine these research fields into a new sub category of starting an architectural firm. It does so by gathering and ordering the views, strategies, characteristics and the course of starting existing firms and painting a picture of the process of the initial phase. The image of the process will point out weaknesses, strengths, voids and trends, which can benefit the starting architecture firm in their competitive quest to grow to maturity as a business in the market. The research will produce theories and guidelines for starting architects in written form which can benefit starting architects during the initial phase or to prepare them during their studies before their start. The research will not only gather quantitative data, but also qualitative data, which will strengthen the theories and prove hypotheses. 9

11 1.10 Research methods The research will compose of different methods to provide information on different levels. The research sequence will incorporate multiple steps. The first two steps have been conducted in the first stages of the research. 1. The first step is to perform a literature study to find strategies for marketing, management, acquisition and starting a firm in general and to build up hypotheses on managing an architecture firm towards success. Literature study will provide a basis of knowledge on different strategies and management approaches to acquire success in general and on the management of an architecture firm. 2. Next some explorative interviews with architects assist in finding the success definition, as viewed by architects. They also provide an addition to the literature study on finding problems and strategies as defined by architects themselves. The interview is a way of finding the personal views of a (small) number of selected architects. Because the contact is very personal, the strategies can be discussed in depth and respondents are more likely to share personal strategies. The next steps are to be conducted after this report. 3. The next step is to operationalize success. Not every architect sees the same amount of each aspect as success. Some architects have a stronger emphasis on financial stability, while others see the amount of publications or the respect of peers as the definition of success. A model comprising in a distribution of each of these factors will level out the disconsensus on success amongst architects. 4. Interviews with a selection of recommended architects will provide a broader view on strategies of starting architecture firms and experienced firms. For this research a selection of different kinds of architects will be interviewed. The differentiation will include the size, experience levels, strategy and the market sectors in which they operate. 5. A survey amongst a large number of architects will give a general overview of architects strategies. It will also provide a verification to check if the strategies discovered in the interviews are also used widespread. 6. By measuring the achievements of the different architecture firms, both starting firms and experienced firms, a comparison can be made to see whether and how strategies of architecture firms with different goals reach different levels of success. 7. By finding correlations between the used strategies, characteristics and achievements of firms, the research will conclude on answering the main research question Readers guide Not all architect wished to have their interviews published. As much as possible, the information has been adjusted by omitting the sensitive information instead of revising it as to keep the raw data as much as possible intact. This may result in gaps in the interviews, but is deemed necessary as to publish the information as a clarification to the research. 10

12 2. Theoretical Framework: Problems 2.1 Introduction This report focuses on the starting architect and the problems faced by starting architects in the start up phase of their firm. This chapter will make an inventory of the problems in the first section. It will continue with an inventory of strategies used by architects with the addition of strategies as described by literature. This chapter also includes sections on the causes of the problems. The problems faced by architects are of various nature and have different backgrounds. In addition some are more severe, periodical or complex than others. It is therefore needed to categorise the problems that occur during the start up period. The problems mentioned in this chapter have been found during the preliminary interviews with starting architecture firms by asking them frankly which problems they had encountered during their careers so far. This is why it must be noted that the problems mentioned in this chapter are not just applicable to starting architects, many problems are common to all architects, but experienced architects have found ways of dealing with them. 2.2 Common start up problems of service oriented firms The first category of problems is focusing on the general problems of service oriented firms. The paradox of any starting service oriented firm is that a firm will need experience to get work, but it needs work to build experience. A lot of literature focuses on the start of the architectural practice as guidebooks. The RIBA guide (2006) and Littlefield (2005) primarily focus on these common problems. They are a natural consequence of a new firm missing experience. The starting architect misses trust, experience, portfolio, network and financial resources other architects have built up. For clients interested in recruiting an architect, a building is a big investment. They are looking for a secure way of realising their dreams and usually go for someone they know. They seek an architect as a partner who can provide the assurance that they are capable of doing the job. An established architect has a record and portfolio to prove his creative capabilities, the starting architects only has his promise, which can be far less persuasive means to convince his client. This lack of trust is typical for a service oriented business. Even if the starting architecture can persuade the client of his creative and innovative capabilities, it still lacks the experience, which often causes the client to refrain from choosing an inexperienced firm. The starting architect simply misses the persuasive means to convince potential clients and must rely on innovative means to realise projects. Architects are generally not getting work from advertisement, as this is generally viewed as a devaluation of the integrity of the architect and is generally not done. Usually work is acquired through personal contact within a network of close contacts. This is in contrast with other design related firms like graphic design or website design (van Doorn, 2004). This necessity of a network surrounding the firm is also a problem for starting architecture firms, because they usually haven t had the time to build this network yet. 11

13 2.3 Lack of business orientation The lack of trust and experience are reasonable causes for clients to hold back in choosing a starting firm in any business providing service. However the architecture sector also faces other problems. The second category is the typical mindset of the architect. Architects often feel culturally segregated from the rest of society (Cuff, 1992) and seem to have a different set of values even than other creative minds, characterised by a sense of professional honour, a lack of business mindedness, a strong disdain for marketing and the tendency of avoiding risk. Architects are generally not very business oriented. They don t feel the urge, nor see the necessity to view their architecture firm as a business. This is partially because architects see themselves primarily as artists, as stated by Gutman (1988) and because most architects are victims of the myth that the quality of their work is their best marketing tool (Littlefield, 2005). These problems seem primarily like a combination of personality and naivety, for many of these problems become less apparent as the architect becomes more experienced. Additionally, as opposed to talent and luck, business orientation and marketing can be improved and are a powerful mean of control over success. Strategic marketing is the solution for architectural firms of the future, emphasizing market and client orientation and the ability to communicate architectural qualities and services convincingly. (Haupt, 2002) Why architects are unprepared for their profession primarily at the start of their career is debatable, but many authors mostly agree that it is partly due to the way the architectural education is set up. The educational program is set up in a unique way as to prepare the students in several development phases, similar to an initiation rite to the architects mind state in practice, also called the Culture of Architecture (Cuff, 1992). Also similar to initiation rites, architects wear distinct clothes, distinctly identifying them as belonging to a group, resulting in the architect being easily recognisable as such with black glasses and clothing. This stereotyping is widely recognized and was an inspiration for the title of this report. Fig 1: The instant architect src: coudal.com fig 2: C. Rau, Why do architects wear black? src: Springer.com The main emphasis in the architecture studies is on the development of skills, knowledge and dedication and the development of oneself, rather than learning predefined textbook facts. Rather 12

14 than a single or a few theories, each architect is urged to define a new solution reflecting on the current state of society (Cuff, 1992). By being taught that some qualities, like talent, passion and good aesthetic judgement cannot be taught, but is rather due to a given talent, the separation from the general public is accompanied with the development of a sense of having certified taste. (Cuff, 1992) However, the main criticism of the architectural program is the emphasis on the conceptual and knowledge of architecture, not preparing the students for the practice of architecture. It must be noted that in the Netherlands this only applies to the Technical Universities of Delft and in less degree of Eindhoven. Several architects observed that many architecture firms do not wish to employ graduates of these institutions and consequently wondering if the current curriculum is efficiently suited to the current professional environment. [The architectural] education is steering us towards becoming starchitects?, but those aren t needed anymore (O. Vos 2010). We were always focusing on our own projects and the buildability was left out. The most important thing I realised is that architecture is about working together (O. Langejan, 2010) 2.4 Problems due to developments in the architectural profession The third category of problems is of a more contemporary nature and puts the focus on the professional development in the past years. These changes range from developments in the last years to developments in the last 25 years The deterioration of the architectural profession towards an aesthetical advisor The most often mentioned threat to the architectural profession is the changing of the architectural position. In a traditional organisation of the functions in a building project, the architect is advisor, designer, manager and a representative of the client. However, primarily in medium sized and larger sized projects, this simple distribution of tasks can no longer be found in the contemporary building industry. fig 3: Traditional organisational diagram fig 4: Contemporary organisational diagram Nowadays, project managers are hired to control costs, time and the process. During the past decades, architects have gradually gained an image of arrogant soloist, focused on their own personal interests, like fame and artistic expression. In the process architects neglect the demands of clients ruining projects, with costs going over budget several times being no exception. This image is also viewed by the younger generation of architects, who complain that today, architects are not trusted by clients to realise their projects. 13

15 Next to the lack of trust in the management capabilities of architects, other developments also threaten the once singular position of the architect. The extremely rapid rise in capabilities of computer aided design and 3D visualisation programs ask too much of architects to master it all by themselves. Global concerns about the environment have intensified the legislation on environmental issues, resulting in environmental advisors and mechanical consultants specified in these issues. Architects simply do not have the time and capacity to be able to deal with all issues. The main problems are that the architect loses control over his design and that dividing the same total budget amongst more actors will result in a lower fee for the architect Decreasing demand for small architecture firms The number of architecture firms is growing each year, but the amount of work is not growing at the same rate. (Vogel, 2008) Particularly the past year has seen a spectacular rise in the number of architecture firms. The recent financial crisis has primarily been the cause for this. Because of the growing distrust in the financial and real estate market and the difficulties for investors to find backup financing for their plans, there is a decrease of workload, which has been resulting in a wave of architects being fired in larger firms. (BNA, 2009) All these architects, having difficulties finding work at other firms, have turned to form small architecture firms of their own, being the main reason of the rise in architecture firms. The 90 s have been characterised by a seemingly never ending growth in both the economy and the amount of work for architects. The rise of the starchitect was a result of this optimism. A lot has changed in the last decennium and optimism has given way to insecurity. Developers are reacting to the feelings of insecurity and have found refuge in awarding more projects to medium and large size firms in search of security, leaving the smaller firms out. This situation of less work for more firms is increasing the competitiveness in the sector. Haupt (2002) also sees the growing liberalization of the market as well as the constant rise in the numbers of competitors (independent and commercial planners) to be the source of intensified competition and worsened working conditions Tendering on price Due to recent regulations, for architects, offering a fixed fee price as a percentage of the total sum is no longer practice. It has become more common to bid on the fee, thus stimulating free market competition. A disadvantage is the fact that architects were already working with tight budgets and are now lowering their own fees even more, resulting in lower salaries in the general architecture profession European tendering A threat that is widely seen amongst architects, particularly those of higher age, is the recent developments in European tendering. These European regulations for governmental assignments are initially meant to improve the supply and demand chain within the entirety of Europe to give every firm an equal chance of winning a bid from any European government. This would improve transparency and mutual recognition (europeseaanbestedingen.eu). The regulations are instated to have a fair treatment of all firms within the European Union equally. Often, however, instances get around these regulations by setting high demands on experience, which are impossible to meet by starting architecture firms. This causes the regulations to back fire and result in fewer orders for the smaller architecture firms. 14

19 4. Further development of the research 4.1 Introduction This report marks the moment of the conclusions of the P2 phase of the research. This is the preparation phase prior to the actual data collection of the research. The majority of data collection to answer the research questions will be conducted in the P3 phase. This chapter will give an overview of the further developments in the research, a survey and more interviews. 4.2 Theory Firm typologies It is easy to stereotype architects, but in practice we will find that not all firms are the same. There are as many types of firms as that there are firms itself. There is a lot of literature written to try and put firms in typologies easy to operationalize. Coxe (1987) uses a method to categorise firms into typologies. The method starts by making a distinction between three firm profiles; the Strong idea firm, the Strong delivery firm and the Strong Service firm. This categorisation makes a division based on personality, strengths and views on the architecture firm. In addition to a division in firm profile, firms are also divided in different management strategies. The practice centered business has a loose firm structure and focuses on the design, while the business centered practice is rather structured and focused on the business related matters. These firm profiles and management approaches form a total of six firm typologies. Although Coxe is not alone in defining categories for architecture firms, his method is widely used in more or less its pure form. However, the method has the disadvantage that not all architects are clearly classifiable and architects themselves are reluctant to admit they only focus on one aspect of the profession. It is important to divide architects into typologies, because it makes a clear distinction in the personalities of architects. Not all personalities benefit from the same strategies. A categorisation of the firms in the survey will find the most useful strategies for each firm The definition of success The definition of success as given by architects will give insight on the fields architects view as success factors and breaks down the success in a number of factors, which can be measured separately. These factors can be found with exploratory interviews with architects. As mentioned by Haupt (2002), and van Doorn (2004), many architects don t have the same definition of success as entrepreneurs in other sectors. Many architects see themselves mainly as artists and don t see financial security necessarily as an indicator of success (Littlefield, 2005). Another characteristic of the view on success is that it changes as the architect becomes more experienced. Despite this, success can be broken down in different factors, which are always present, but in a different degree, as valued by each architect by his or her personal preferences 18

20 These factors could be compared to the ingredients, which are all necessary to form a meal, with each architect having its own recipe with the amount of the ingredients according to his or her own taste. Income Income is considered a basic condition for a successful career. Especially when the responsibility for a family is involved, financial stability is a required. Financial success is measured by determining the average income within the field. This differs for the amount of years one is active. In this research the average income for a graduated architecture student after five years will be used to set a benchmark for the financial factor of success in the architecture firm. The average income of an architect five years after graduation is 2.525, per month according to E. Berkhout (2008) in the Elsevier magazine, which publishes a leading yearly report on graduates average incomes. This corresponds to a yearly income of ,. In the architects CAO (Collectieve arbeids overeenkomst) (a collective bargaining agreement or CBA in English) this corresponds to a Scale F level of salary after five years. (Zuidweg, 2009) Reputation Many architects see reputation as an important factor of success. (van Doorn, 2004) Even though the reputation of an architect is subjective, a general indicator of reputation which will be used in this research is the amount of publications an architect of his firm has. This method is also used by Architectenwerk to measure the popularity and reputation of architects and list the most published architects in a top 40 list, (ArchitectenWerk, 2009). Publication of their work is considered by architects as the measure of the acceptance and significance of their work, but also published interviews or the demand at universities for lectures can be an indicator to measure success. It is important to make a distinction between the reputation built up within the circle of peers and the reputation built up in the market. Architects prefer to be lauded by peers, but the reputation within the market of laypersons will secure the architect of more work. This distinction will be made in the research. Firm consistency With reputation and income, the future of the company itself is not guaranteed. The architecture firm needs a consistent flow of work. This condition implies the work portfolio is satisfying the need of future consistency. The consistency is measured in this research as the correspondence of factors in conformity with the market, such as the amount of work, the diversity of the work, the value of the company, etc. The benchmark to measure these factors is the average architecture firm Achievements and goals It should be mentioned that some of the success factors will not be met by starting architecture firms within the five year limitation set in this research. They don t get published at all or their firm don t reach a minimum level of income. The success factors are more often wishes than realities and some architects will state their goals for success more realistically than others. This makes it difficult to measure success objectively. A way to measure the success is to separate success into to two other factors. An architect s feeling of success is defined by his achievements as a section of his goals. Both these factors can be measured independently. 19

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