The Indicator: The Next Architecture, Part 2

Integration of Keynesian Relationships. Courtesy, The New School.

We in the profession all understand architecture can mean many different things, both types of knowledge, and ways of thinking. But to the general public, architecture means expensive, “designer” buildings. The qualifier “expensive” must be added because this is how the non-architectural population perceives it. From that narrow perspective, it requires the mobilization of equal amounts of three elements to have a building designed and built capital, a willingness to assume risk, and a generous measure of psychological instability. Maybe the latter comes after the project is complete.

More after the break.

Think about it this way. The majority of the population does not participate in the process of creating architecture from the ground up (more on this later). For most people, it’s daunting enough to invest in a thirty-year mortgage on an existing home. Once they have secured a home, they have fulfilled the “American Dream” and they spend the majority of their lives and most of their resources paying for it. Maybe they own it by the time they are ready to retire. This is the experience of the majority of low- to middle-class people. Sadly, most architectural workers fall into this category. They will not be able to afford an architectural home (or any home) of their own—unless their earning potential increases exponentially (more on this later, too!).

The Keynesian Cross of Income-Expenditure. Courtesy, The New School.

What are the implications of this? It means that while the labor market is flooded with architectural talent (think of the multitudes pouring out of architectural schools each year), the client pool is extremely limited. Think about it. RFQ meetings are packed with architects of all stripes all hoping to compete for a single small project. This is not a good sign—it never has been. The numbers don’t add up. In fact, they haven’t for years. It’s just that this extreme imbalance between demand for architecture and architects remained hidden when the economy was in better condition. That’s because there were more projects. The RFQ meetings were not as jam-packed. The architecture industry appeared to be sustainable and even growing. The underlying reality, however, was and continues to be, that there are way more architects looking for buildings to design than there are clients who want new buildings. The American economy (I focus on this because this is where my experience lies) hasn’t been able to successfully generate enough of a demand for architecture that can sufficiently support all the architects out there.

According to Robert Reich, the economy could support more architecture if wages kept pace with economic growth for the majority low-to-middle classes. If architectural workers could afford to buy architecture that would be a good indication of a truly healthy economic climate for the profession. One of Henry Ford’s greatest ideas was to make sure his workers were paid well enough to buy the cars they made. It worked. The fact that architecture cannot as an industry invest in its workers enough to enable them to purchase what they produce, e.g. houses, says a lot about the how the industry and the broader economy are failing.

Robert Reich, Aftershock, p. 21

Solutions to these systemic problems are long-term. In the short-term, there must be ways of dealing with a relatively low demand (when compared to other goods in the economy) for architecture. The low demand can only be increased when the majority of the wealth is no longer concentrated at the very top and in relatively few hands.

One of the problems is that the public thinks architects just design expensive buildings. This is what they see in the press—the popular image of the architect. What the public doesn’t see is that architects are, as the term goes, “thought leaders.” I’m not sure I like this term because, after all, I don’t necessary want to hire somebody to “think” for me. What I do want, however, is someone who can advance and compellingly communicate their thinking to define and solve problems, who can strategize different approaches to my business in terms of material, spatial, and human flows. This kind of strategizing can ultimately increase my capital flow. I don’t just want an expensive building. What I really want is a powerful spatial system that transforms and improves my business. Like it or not, the building is the superficial element, the vessel. The vessel is a vital part of the overall system but it is not the final product. It is merely the beginning. Clients want performance on all levels. The building is the facilitator.

Robert Reich, Aftershock

This leads directly to the architect’s role. A good model for conceptualizing this was developed by Nancy Egan, Paul Nakazawa, and Marjanne Pearson, the architecture business leaders I introduced in Part 1 (see their bios below).

I had the pleasure of discussing this model over cappuccino’s with Nancy. She emphasized how architects can get trapped in very narrowly-defined roles, in part because of some of the forces I described above. Additionally, architects often think of themselves in “traditional” service roles related to ideas of the profession that have not kept pace with the realities of practice and the needs of sophisticated, complicated clients.

The roles architects perform across this spectrum can vary from project to project and relate to client needs that are developed with the client. But, in many cases, the client doesn’t know exactly what she needs. The architect acts as an advisor to help define the parameters of the relationship. It’s actually a lot like the legal profession.

Nancy and I also talked about something Marjanne had put up on her blog a few days before about how lawyers have billing structures that correspond to their different roles. As Marjanne noted:

Jay Shepherd commented on law-firm fees on his insightful blog, clientrevolution.com

This raises a similar question for A/E firms:

Does your firm’s pricing structure reflect the true value that you bring to your clients?

• “Vendor” services (where the client defines the problem and also identifies the solution they want implemented) are often priced on a “solution-based” fixed-fee structure.

• Consulting services (defined problem but not-yet-defined solution) and true advisory services (undefined problem and yet-to-be-identified solution options) are often billed as time-based professional hourly rates, but at the same rates that would be used to calculate fees for vendor services.

How should you be billing for your service offerings?

Lawyers probably work just as hard as architects, but they’ve figured out how to make it count and how to invest in their own businesses by communicating value. Every minute of their time is perceived as valuable. This is one reason people hate lawyers and why they make so much money! Could you imagine an architect billing this way and clients willingly paying for it?

All joking aside, the truth is that architects have complicated roles that, if more clearly articulated and defined, can translate to an expanded billing schedule that assigns value to many different tasks and services performed.

Nancy, Marjanne, and Paul have all elaborated on how architects can define roles for themselves well before the building enters the picture. They can help define problems before the client is even aware of them. Often, clients have not been able to conceptualize their problems or to frame them in real terms that make them identifiable and hence solvable. Architects do a lot of problem conceptualization but they often don’t get paid for this front-end work. They usually get paid for solving the problems of the building. Put differently, they get paid for designing and drawing the building, but not for all the time that goes into solving the issues that make design possible.

The Alchian Critique. Courtesy, The New School.

The broader economic environment does not quiet know how to position architecture’s conceptual and systems thinking talents and make them marketable. The market understands how to value a building. Architects often don’t know how to identify these talents and communicate them in marketable terms. Lawyers figured this out a long time ago. So did people in the business world. It’s time to start learning more from these sectors.

The implications of architecture embracing more sustainable business models and applying knowledge from the business world are obviously far-reaching. This must be made a priority because what is at stake is the elevation of the architectural workforce to a higher socio-economic plane. When this happens, architecture will no longer need to rationalize low compensation as noble sacrifice and architects will never again have to say things like (and I have heard this many times), “I would never recommend architecture to anyone as a career.”

Can economic momentum take hold when the broader masses recognize that architects can offer more than just “architecture”—meaning the public’s generalized view of architecture as buildings only?

You have just enjoyed Part 2 of this series. I have no idea how many parts there will be. It will stop when I get tired of it or when the problems are fixed. I suspect I will get tired before that happens. I’m already tired, so I’m going to bed now. Goodnight and good luck.

Bios

Recognized for her work on firm culture and identity, Nancy Egan is a national leader in the field of marketing professional services. As advisor, consultant, coach, and author, she works with design organizations on marketing and brand strategy, intellectual capital and content development, and the exploration of markets.

Marjanne Pearson is an industry pioneer in integrative business strategies for design firms. She works with firm leaders to address the complexities of organizational evolution, talent development, and practice sustainability, within the context of competitive advantage. [Her clients are a remarkable constellation of signature architects, emergent practices, regional powerhouses, and corporate giants.]

Paul W. Nakazawa, AIA, is a Lecturer in Architecture at the Harvard University Graduate School of Design, teaching design studios and courses in practice and the development of design-based enterprises. His current academic focus is on the spatial and programmatic development of economic clusters in cities, and the urban transformation of Rio de Janeiro. Nakazawa works internationally as a practice and business strategist to leading firms in architecture, landscape architecture, urban design and other allied professions. His expertise encompasses strategic planning, organizational development, practice management, marketing, finance, mergers and acquisitions, and large-scale project mobilization. Nakazawa is a registered architect with significant planning and building experience. He received his BA and MBA from the University of Chicago, and MArch from Harvard.

Acknowledgements

I would like to Thank Nancy Egan, Paul Nakazawa, and Marjanne Pearson for always taking the time to share their experience and wisdom. More to follow in this series.

I would also like to thank my editor, Sherin Wing for slashing and burning through this to help me get enough sleep so I am not cranky. Just as architects need good advisors, writers need good editors. And we all need a decent amount of sleep so our brains don’t implode.


, a weekly column focusing on the culture, business and economics of architecture, is written by Guy Horton. The opinions expressed in are Guy Horton’s alone and do not represent those of ArchDaily and it’s affiliates. Based in Los Angeles, he is a frequent contributor to Architectural Record, The Architect’s Newspaper and other publications. He also writes on architecture for The Huffington Post. Follow Guy on Twitter.

Cite: Horton, Guy. "The Indicator: The Next Architecture, Part 2" 10 Mar 2011. ArchDaily. Accessed 18 Dec 2014. <http://www.archdaily.com/?p=119008>
  • http://www.vitaleds.com Ted Vitale

    While I do agree with everything the author is saying, some of the points made don’t really seem logical. One such example is the comparison of architects and layers. Though similar in what they bill clients for (as an advisor), its impossible to compare the two. Nobody is being forced to have buildings “designed” for them, where-as the layer is defending/prosecuting a client who has a direct need for them, whether they want to or not. Unfortunately no matter how you cut it the design industry is always slighted because design is considered a non-essential element by the general public. Until that mentality changes, the money is always going to be just out of reach and there are going to be others out there undercutting prices and producing bad design, creating an ever more apparent gap between the quality of design work and affordable construction of dwellings.

  • Fatemah ALAsadi

    I, agree with you the architect not has enough
    rent for design,because there is no architecture culture, and peopls not foredoomed architect thking,they thought its have no time to do that

  • Philip Bruno

    The important concept that needs to be communicated to the public, is the value inherent in good Architecture. Architecture (with a capital A) is an investment. The pay off comes when the organization of the building exceeds the expectations of the client. In other words, form shouldn’t be the first thing considered, nor program. What should be considered is that which the client isn’t thinking about. No one person sees all angles, precisely why our profession is now a collaborative process, and not just between architects, but across engineering professions as well.

    Form becomes secondary. What architects are hired for (whether the client knows it or not) are their ideas on how to organize and make sense of a complex issue. We create interfaces between people and environments. Who else can do that? What’s lacking is the publication of architectural designs that have achieved organizational clarity in the way people interact with their environment. If we can prove that our designs make for an advantageous investment, we can more easily convince clients to invest in our profession.

  • Mihran Keolyan

    The best and simplest point made in the text was the “supply and demand” issue. It’s actually a bit funny that you have such a basic point in economics, accompanied by some complex charts and math explaining Keynesian economic methodology. These are the Oscillations of the economy and unluckily for us we are living through a downtrend on the oscillator after a prolonged uptrend. The only way to work through this is natural deflation where Architects would begin to leave the profession and less and less people would choose Architecture as a profession. This is caused by the lack of demand for Architects and Architects willing to work for less and less money to get jobs. There would be not enough money made by Architects to entice people in the future to choose that as a career path.
    So less and less people will enter the field and the profession will revert to a balance.

  • Jana Brankova

    I think both explanations complement. When there was an uptrend all architecture industry could move to an expensive design, now during the downtrend maybe its time to do architecture more clever, I hate it “economic and sustainable”. Dont know. What I know is that nearly graduated, me and most of my friends dont want to continue our lives and careers like that otherwise we will die in 30 or 40. The rivality is so high that the future isnt very promising and many students think of changing the profession or to leave to China which seams to be the only place on Earth where there is a lack of architects. Other option which many young colleagues chose around Europe is to participate on different types of internships or to continue studying because the social system will support them. More generally, there is too much university graduated (I say in Europe because that is my experience). And there is no need for them.

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