November 21, 2002

How to take your firm to the ‘next level’

  • Leaders need to reinvent themselves along with their firms
    RM Klein Consulting

    Joe is the principal of a small firm that has grown from eight to 20 staff members in the last two years. Despite the turmoil created by this rapid growth, Joe dreams of heading a firm twice this size. He imagines taking on larger projects and creating a firm that has value beyond his personal reputation. He knows this is possible, he’s seen other firms move up to the “next level.” But, he wonders, how?

    Before the how question can be answered for any firm, the what question must be posed. What does the next level mean? In order to increase in value, firms must continue to grow, but growth could come through expanded services, increased productivity or cultivating expertise, and not only through firm size.

    The average life span of an architectural firm is 25 to 30 years. Few survive their founders. Many firms spend their entire existence on a rollercoaster of good years and bad years, swelling and shrinking with the times, never really getting established, and never building lasting value. Some firms experience high growth, are able to sustain it for a while but eventually stagnate and decline. The rare firm keeps growing, moving to the next level by having the ability to change and periodically re-invent itself.

    A 20-person firm does not become a firm of 40 by continuing to operate like a firm of 20. To do this a firm must reinvent itself as a 40-person firm. This is a similar to the familiar self-growth adage: Be what you want to become. Organizationally, a firm must act as if it already is what it wants to become.

    Inevitably, reinventing one’s firm will mean investing in firm-building processes and systems. This investment may include devoting time to financial and marketing plans; making a commitment to continuing education; purchasing data management software; and taking the first steps toward significant systemic changes.

    Getting to the next level, however you define it, doesn’t just happen. It takes vision, discipline and action. Taking steps toward systemic change can be the most powerful aspect of this change process. And because work in design firms is project centered, the project management model is a critical system to examine.

    Take R & M Architects, for example. This firm of 15 has two strong partners, both capable in marketing, design and production. Based on project type and client relationships, each partner takes on his jobs as the primary project manager. They do all the client contact, project tracking and are the main decision makers. The project teams tend to be porous, with a good deal of shifting as projects progress. Often, but not always, there is a project architect that stays with a project through all its stages, but this role is clearly subordinate to the partners.

    Not surprisingly, the partners frequently work 60-hour weeks. And although they want to grow the firm, they can’t imagine how they could manage more projects and employees. They often complain about no longer having time to do design. They do consider adding another partner as a growth strategy, but barely have a moment to think about it seriously.

    The project management model used by R & M Architects is known as a pyramid structure. Each partner, R and M, is at the top of his own pyramid. They manage all the jobs and all information flows through them. Below R and M, most team members are moved around to where they are needed, and often, the partner is the only one with knowledge of the whole project process.

    One of the main advantages of this model is that the persons who have the most at stake are the ones leading the projects. And although this model often causes overwork and significant stress for firm leaders, many will tell you it is easier to do it themselves than to trust anyone else. This is why, to a greater or lesser extent, 90 percent of architecture firms are organized in this manner.

    Nevertheless, there are major drawbacks to the pyramid system. Partners, at the top of their pyramid, often become the main bottleneck in the work production process, causing delay and wasted effort. If a partner were to disappear for some reason, much critical knowledge would disappear with them, debilitating the organization.

    Project management in this model can be made more efficient and less stressful, but growth is still limited by the capacity of the partners. In a pyramid model, growth is only possible by adding more pyramids.

    However, growth through adding pyramids is ultimately limited. While the firm may get bigger, it is unlikely it will be more profitable, more productive or more innovative. At worst, as more partners are added, there may be a tendency toward balkanization and pigeonholing, as each partner’s pyramid becomes more and more separate from the others.

    Some firms, as they grow, will transform their pyramids into “studios,” where there are established patterns of delegated authority. But to succeed, other changes must accompany this shift. The most difficult change, and the most important, is that partners must learn to let go of project management.

    To allow a firm to grow, partners need to focus on firm management and market development, and perhaps on building expertise or design innovation. When partners mentor others to assume the project management role, talented staff members are given challenge and responsibility, which they will undoubtedly return in commitment and enthusiasm. In addition, partners gain the added benefit of firm leadership development and future succession possibilities.

    In order for partners to move out of the project manager role, it may be necessary for an organization to shift its project management model. Shared project leadership must somehow be developed.

    Creating a matrix-type organization, where members of the professional staff other than the partners are the primary project managers, is one way of doing this. In this model, partners become members of project teams as leads in their functional area of choice, such as design, production or quality control, as well as being available for mentoring the project manager. The project manager is assigned to a project at its proposal stage and follows it all the way through construction administration. They are responsible for scheduling, staffing and tracking, and have decision-making authority to go along with their responsibilities. This model is known as a matrix because at every stage of the project there are two leads working collaboratively: the project manager and a partner.

    Although the matrix model is used most often by larger firms, it is applicable to firms of all sizes. The following example is proof enough that you don’t need to be large to use a matrix in an effective way.

    AB Architecture consists of only the founding principal and one very experienced, longtime associate. For many years the pyramid model was used with AB doing all the sales, project management, most of the design and layout of the construction documents, while her associate did most of the production drafting. AB typically worked 50 hours a week, with her associate working 25 hours, more or less, depending on the workload. Periodically, AB was pushed beyond her limit, working late night after late night to meet all her commitments

    Finally, in desperation, AB decided to shift much of her project management responsibilities to her associate. Instead of doing the scheduling, code research, client contact, etc., herself, she mentored her associate, enabling him to do it, starting with one job, increasing to more responsibility over time. She became part of his team, as the chief designer and the quality control director, instead of the other way around.

    The associate’s new full-time salary strained AB’s cash flow at first, but it wasn’t long before it started to payoff. Her associate rose to the challenge, proving to be ready to take on much more than AB had imagined possible. Before long he was managing most of the projects, allowing AB to concentrate on sales, design, mentoring and firm development. Although she still tends to work 50 hours a week, AB is now considering adding another project manager and a production drafter to her staff, and, of course, going after larger projects.

    By letting go of project management, AB was able to focus on work that enabled firm growth, instead of dashing from deadline to deadline. Understanding the power of mentoring instead of managing; delegating instead of doing; trusting instead of controlling, is a huge part of what it takes to move a firm forward.

    Transforming mental models is as important to the firm growth process as changing the project management model, and the two shifts need to support one another.

    However, changing mental models of what roles we play and how things must work is probably the most difficult aspect of this process. This is because people, and organizations, have habits or patterns, that are hard to break. It has been said, “Our habits are our destiny,” and in small firms, the habits of the principals substantially influence every aspect of firm operations. These habits, good and bad, often become entrenched organizational patterns because the staff inevitably copies and deepens them.

    Every person and organization has core competency and capabilities, but people and organizations also have what could be called core incompetence. Being able to face the weaknesses of an organization (and its leaders) and working toward (self) improvement has huge potential for positioning a firm for growth and change.

    It’s not hard for most designers to envision a preferred future, but actually taking the steps to get there may be another story. It is a process that takes discipline, personal commitment, alignment of purpose and a willingness to be challenged. It must start at the top. To get to the next level, firm leaders may need to reinvent themselves along with their firms.

    Rena Klein is principal of RM Klein Consulting, providing assessment, strategy and management coaching for design firms.

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