In my consultative work with the senior leadership of a broad spectrum of architecture firms, it never ceases to amaze me how many studios are still being led by principals who don’t have a handle on their firm’s day-to-day operations. Providing quality architectural services and managing a financially successful firm are not mutually exclusive. In fact, a close look at the most successful, sustainable architecture firms will reveal that they are that way largely because of how they are run, not just because of the design skills they offer.
A firm’s principals are ultimately responsible for the decisions made and the actions taken in their organisation- even when they delegate that authority to those who know more about financing, marketing, and even business management than they do. All too often principals are more heavily involved in “doing business” rather than running it, and this attitude typically devolves into an erosion of profit margins and poor cash flow as well as a general lack of vision, sluggish sales, and a weak marketing strategy.
In order for architecture firms to better understand and proactively head into the future, senior leaders need to start thinking like business owners not just architects. This includes generating a compelling vision and sales proposition, recognising and understanding cost structures, budgeting and credit controls and most importantly, giving priority to the training of up and coming talent in the areas of business and financial management.
Why Architecture and Business Management are Still Worlds Apart
Part of the reason why architectural process and sound business practices seem to be at odds is the way architecture professionals are schooled. Even with all the modern complexity that has been added to the architectural profession, and even after the recent global recession that caused many architecture studios to close shop, there is still a severe lack of educational programs that are focused on strategic, organisational and financial management and are designed specifically for architecture firms.
Even where such course work is offered, exposure to the most basic business skills is usually very limited. Most architecture schools still measure success by the quality of their graduates’ design abilities, while practically ignoring other capabilities, such as project management and communications skills. Ironically, this attitude prevails even though only a handful of architecture professionals spend their careers exclusively on design.
The result is that senior practicing architects are often put into high-level positions of leadership without all the knowledge and skills needed to do the job. Instead, firms rely on the problem-solving and management skills these architects have developed throughout their careers hoping they’ll just figure things out on their own. While some of these architects may have previous experience heading a design team, such experience by itself will not be enough to guide them along the complex strategic and organisational decisions needed to successfully run a regional studio or even a major department within the firm. In other words, senior architects with no formal training in the strategic, organisational, and financial processes of an architecture practice are basically getting thrown in the water without a life vest and are expected to just learn how to swim.
Bridging the Gap
For this situation to change, I believe there needs to be a fundamental shift in the value placed on formal training in business and financial management among mid-sized and large architecture firms in particular. While initiatives for professional learning may exist among many bigger firms, they often do not revolve around business skill development. Paradoxically, such training is perceived as a drain on resources instead of the vital element it is to the firm’s healthy organisational operation and growth. Too many senior leaders still regard time spent by professionals on business skill development as time away from work on projects.
These same senior leaders also don’t understand that formal, firm-sponsored business training initiatives can also be perceived by their top performing employees as an important part of their career development within the company. The sustained presence and emphasis of these programs will in turn help to keep talented professionals engaged in their work and loyal to the firm.
In the end, these firms will cultivate a culture of responsible management and in the process prepare the next wave of senior leaders who will be in the best position possible to take over the reigns in the future. It’s a win-win situation.