The American Institute of Architects

Must Blue Businesses Turn Red?

0By Rena M. Klein, FAIA

0In her article “Red Business, Blue Business” (Design Intelligence, 2008), Barbara Golter Heller suggests that architectural firms need to emulate their commercial and institutional clients by being more interested in the profit motive. Without this shift, she warns, architects will fail to gain leadership in the developing practices of integrated project delivery (IPD).

0Heller uses the red/blue metaphor in its 2008 popular culture context – as shorthand for conservative or liberal political views and social values. Although Heller admits that using the red/blue divide to separate human activities is imprecise, she subscribes to the notion that it accurately describes differences in business models and approach. “Red business success is defined by profit margins, revenue growth, productivity, stock valuation, and other financial metrics. Blue businesses have a service imperative that dominates their activities, and they tend to measure success by human, social, and cultural accomplishments in addition to money.”

0Heller goes on to generalize that in the construction industry, owners are red, whether they are university administrators or private developers. Architects, engineers, and, surprisingly, building contractors are classified by Heller as blue. She describes the basic differences between the decentralization and local control of the construction industry, which she calls an “immense aggregation of cottage industries,” and the centralized management of corporate entities. “The disparate entities involved in design and construction rarely engage in meaningful analysis of their joint endeavors… This makes the blue construction sector very different from the red corporate sector, which relies heavily on analytic tools to evaluate process, customer support needs, market strategy, and financial goals on an enterprise level.”

Red or Blue for Integrated Practice?

0From this description of the construction industry emerges the central question of the article: will the developing practices of integrated project delivery be dominated by red or blue business values? “As technology permits more entities to participate directly in design and construction projects and creates a more integrated work process, red/blue cultural differences forebode friction between professional and client,” Heller writes.

0According to Heller, how this friction will be resolved is already apparent. “Owners who focus on cost-saving efficiencies and expedited schedules may not be managing a project in a way that is congruent with the expectations of designers and engineers….The desire of building owners to make the blue design and construction business process more similar to the red corporate process can be seen in the aggressive adoption rate of the design-build project delivery method that is now used on approximately 40 percent of projects.”

0Heller contends that architects are failing to adjust to a new business reality in which owners are demanding more efficient performance. “[Architects] have been unable to transcend their current modus operandi and imagine a significantly different role for themselves in the world of integrated technology. The American Institute of Architects’ Integrated Project Delivery: A Guide assumes that the existing business structure will remain intact and that integrated practice will succeed if attitudes change… In the blue world of architectural practice, normalization or standardization is anathema. Efficiency, while desirable, is not essential, nor is it measured.”

Another Point of View

0While it may be true that there are cultural differences between owners and architects, some would argue that work processes are not red or blue. Most businesses, red or blue, would say that they want efficient work processes and cost consciousness. Despite Heller’s statement that “standardization is anathema” to architects, most architectural firms are extremely concerned with the effectiveness of their operations. Differences in values create different definitions of what is efficient and effective, and what constitutes achievement.

0Heller goes on to assert, “In the red corporate sector, organizational effectiveness requires defining metrics for quantity, quality, cost, and timeliness of the work process. If architecture and engineering firms don’t apply business analysis tools to their organizations, it’s an obvious omission in the eyes of owners.” Yet, architects might easily counter, “If owners don’t apply the metrics of sustainable economics and construction to their projects, it’s an obvious omission in the eyes of the larger community.” And that’s not very good for business either.

0While standardization and central control can result in efficiency, there is also the risk of losing sensitivity to critical regionalism. Local control of the process exists because of the differences in local climate, materials, construction methods and community values. As a tenet of sustainable design, many people believe that buildings work best when the unique qualities of their context and their users are considered. Designs that respond to local considerations generally work best for the users, the community, and the environment and, as a result, often contribute to financial returns over time. Thinking only of short term profitability can result in blind spots to other factors that play a role in the long-term health of an enterprise.

0To suggest that the development of IPD should be tied to a singular concern – financial profitability for the owners – exhibits a narrow focus and a lack of foresight. Owners that impose standardization and centralized control on their design professionals risk losing the innovation and integrative thinking they need to make their projects successful.

Sustainable Economics

0Owners who do not shift their thinking risk ending up like the whaling industry of 19th century New England as described by Andrew Savitz in his book, The Triple Bottom Line (Jossey-Bass/Wiley, September 2006). After aggressively killing whales for decades and reaping steady profits from the efficiency of their work, the natural capital the whalers depended upon (the whale) was wholly depleted. The whaling industry ceased to be viable as a result. Owners who ignore the health of the community and the environment in which they build may be heading in the same direction.

0No one denies that return on investment is important and critical to both those who employ architects and to architects. Heller presents an argument that places financial considerations above “human, social and cultural accomplishments” as if these were somehow adversarial concepts. Sustainable economics shows that “red and blue” goals are actually compatible, especially if you consider long-term returns and include the cost of natural capital. Organizations such as the Rocky Mountain Institute have been on the forefront of research and education in sustainable economics and natural capitalism.

0Natural capital includes not only irreplaceable materials (old growth trees, copper, fossil fuels, etc.), but also the air, the water, and the processes of purification and regeneration that the natural world provides. All businesses depend on natural capital, yet many use the commons as if it is an infinite supplier of resources and a limitless place to dump waste. Focusing on short-term profitability merely puts off the long-term costs of natural capital, adding a high level of risk to future financial success.

Construction Industry Impact

0Heller discusses the impact that the construction industry has on the Gross Domestic Product but fails to mention the other impacts of this $1.2 trillion industry. Thomas Fisher outlines these impacts in his book Architectural Design and Ethics: Tools for Survival (Architectural Press, 2008), “[The construction industry consumes] sixteen percent of the available fresh water annually, forty percent of the world’s total energy use, about one-third of the emissions of heat-trapping carbon dioxide from fossil fuel burning, two-fifths of the acid rain causing sulphur-dioxide and nitrogen-oxides, and forty percent of the total materials flow in the global economy. At the same time, construction waste constitutes between one-quarter and one-third of all U.S. landfills.”

0Given these conditions, all stakeholders in the construction industry, including owners, must see beyond short-term gain. The efficiencies realized through the use of Building Information Modeling (BIM) and IPD can provide time and money to improve design solutions, sustainable building performance, and project delivery processes. This dividend of integrated technology is critical to a future of zero-emissions buildings that are in themselves energy independent.

0Heller also puts forth the notion that integrated manufacturing is being seen by owners as a model for integrated project delivery. She suggests that the use of modular design templates by some major corporate entities demonstrate owners’ desire to reduce design and construction costs. “The manufacturing business model has established a beachhead in the construction sector,” she warns. That may be true, but perhaps Heller has not yet noticed the many architects who are in the vanguard of designing modular housing and commercial projects. These projects incorporate both sustainable design strategies and cost savings tactics. Heller presents a circumstance as adversarial when a “both and” solution can stem from innovative design and is already occurring.

0Examples of architect led, factory built projects include:

Prefabs.com and Rotating Tower

Turn Red Business Blue

0Heller exhorts architects to take on leadership in IPD, but seems to confuse leadership and management, which involve similar but different skill sets. Leaders set direction, managers plan budgets and schedules; leaders motivate and inspire, managers control and problem-solve. Heller asks the architect to be “an orchestra conductor who is willing to take both credit and blame for the quality of the symphony,” while also saying that “architects cannot remain content to delegate serious business and management functions to other groups.”

0While management is an important subset within the skills of most architects, leadership is a core competency. Creative, visionary, and integrative thinking is nurtured in architecture school and at all levels of practice. Management is learned on the job and is often a secondary interest. While many would agree that architects could benefit from more training in management, and more attention to work processes, it is unlikely that managing the business processes of design and construction would leverage the strengths of the profession, even if it would make “architectural practice more lucrative,” as Heller suggests.

0The AIA has taken significant steps to give institutional support to both sustainability and integrated project delivery. While many of the habitual defensive practices of the current project delivery practices are still in place, as Heller notes, many architects are moving toward integrated practice, as Heller also notes. The vision of architect as leader of the integrated team includes an emphasis on design as the central activity of IPD. Architects bring a holistic approach to the table, and integrated practice will require the integrated design thinking. As Einstein famously observed, “We can not solve our problems with the same thinking we used when we created them.”

0Instead of the blue design and construction industry turning red, what if the owners turned blue? If architects do assume the lead as integrated practice develops, it will likely be because the economic bottom line is not the only bottom line considered. The contributions of architects in reshaping the construction industry will be about assuming leadership in doing what is right for people and the planet, not just what will maximize profit.

0As explained by Thomas Fisher, “The challenge that designers face, when engaging in a value-creating process, is dealing with clients, communities, and consumers who sometimes do not understand this way of working and who see creative exploration as a waste of time and money. But here is where the ethical turn in design can reposition the field in eyes of many people… [The old tension] between the client who just wants something that works and the designer who also wants something that inspires takes on a new twist when what most inspires us is also what works best for the greatest number of those affected by it…. Both [client and designer] want to accomplish the most with the least, and achieve the greatest benefit at the lowest cost. The ethical turn in design provides one way of linking what has, for too long, been viewed as opposing positions.” (Architectural Design and Ethics: Tools for Survival, Architectural Press, 2008)

A Cautionary Tale

0Heller closes her article by offering the story of the Health Maintenance Organization (HMO) takeover of the medical services industry. She warns that if the design and construction industry doesn’t adopt the business orientation of their corporate clients and if architects don’t take the lead in this process, then some other (big) business entity will step in. If that happens, according to Heller, architects may lose much of the autonomy and influence they now possess.

0Heller sums up her argument as follows: “Architects must infuse some red values into their blue business model if they are to succeed in the new world of integrated practice. If they remain politically fragmented and ambivalent, the historic values and mission of the profession are in jeopardy.”

0The question to ponder at the end of this article is, what happens to the “historic values and mission of the profession” if architects do as Heller suggests?

0##

0Rena M. Klein, FAIA, principal of R.M. Klein Consulting, in Seattle, Washington, is a member of the Soloso Editorial Content Review Board and serves as the Subject Matter Expert for Practice.

0Keywords: Practice, Leadership, Integrated Practice, Integrated Project Delivery, Ethics, Sustainable Economics, Critique

    
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Title:
Must Blue Businesses Turn Red?

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Contributor:
The American Institute of Architects

Published:
7/1/08 12:00 PM

Posted Date:
7/22/08 2:32 PM

Last Viewed:
3/24/10 12:10 PM

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