The Dead-End of Professional Design Services — Why I’m changing from a Services Leader to Product Leader

Paths through the woods. Photo by author

After working 14+ years as a senior project leader in large-scale, complex architecture and urban design projects across the world in over 19 countries, I asked myself: Do I want to continue working on different projects for the rest of my career using the same business model?

The reasons I asked this question are because: there is a serious oversupply of design firms allowing clients to push down costs; clients no longer financially value professional design services; and as a result each new project is expected to deliver more, with less time and for less money — the professional design services business model no longer works.

The challenge overall is that designing cities and buildings are more often one-off projects with little commonality between projects. This is particularly the case for the type of large-scale complex urban projects that I am responsible for. Certainly, principles persist, some design strategies and details persist, but often the client requirements and requests are unique and they then combine with hyper local unique factors such as market conditions, development scenarios, building code and zoning laws, just to name a few key factors. It doesn’t help that there are no international building standards — each city, region, country and continent will have their own unique requirements. It doesn’t help that there are no international standards for urban metrics or urban data structures that could facilitate quick and easy transfer of urban components. It doesn’t help that there are no international databases for urban design projects and data that could facilitate quick and easy comparisons, benchmarking and referencing.

This is the problem: that the professional design services industry is ill-adapted for the future of rapid global urban development that is accelerating across the planet. We haven’t learned from the technology and software sectors. We haven’t learned from other professional consulting industries. We haven’t professionalized our business models and service or product delivery to make it scalable. We have fallen to the bottom of the value chain, below: Software Engineers, Capital Investors, Financial Engineers, Project Developers, Engineers and Contractors. All of these people capture far more value in their business than design offices.

So this is the situation… a continual decline in the value capture and financial sustainability of the professional design services of architects and urban designers. There are certainly many areas to improve our current businesses. Some examples are through:

• Optimize knowledge production and management. On the one hand, internal knowledge management can mean simply reusing designs across multiple projects to make the workflow more efficient. On the other hand, you can offer entirely new services in research, foresight, market and business strategy consulting. The trade-off is that your output becomes less unique through recycling, as many people can attest to from working with the big consulting firms — charge a lot of money for recycled content. The model here is McKinsey Consulting / McKinsey Global Institute Smart Cities or PWC Smart Cities.
• Expand your services globally. There are many different models for this, each with pros and cons. The growth phase can be unpredictable and creates real risks in terms of investment costs and for the coordination and quality of design services. The strategy here is to exploit both short-term and long-term differentials in: macro-economic trends, currency valuation, global skills, demographic trends, emerging market capital access, and so forth. An interesting model here is Group8Asia.
• Merge with other firms to create full-service design consultancy. This is attractive to some clients in that all services are in-house and you can easily win tenders against smaller firms. The model here is Aecom or Gensler.
• Merge with engineering firms to create a multi-service consultancy. This is attractive to some clients in that all services can be offered in-house for a project. You reduce the risk of multi-consultant teams but increase the risk of a lower-quality project. The model here is Arup or Arcadis.
• Expand your service offering into project development itself which moves your business up the value change for urban development. The benefit is that your design firm becomes a preferred-consultant for the development company — you create your own client, yourself. The model here is Red Company / Powerhouse.
• Change your business from Services to Products. This requires a change in business strategy, customer strategy, company team structure, investment calculations and growth financing models. While many of the skills from services are similar in products, especially when you’re dealing with B-2-Business or B-2-Government, there are still steps needed to understand product development instead of service offering. The trade-off is that you can no longer ‘offer everything’ to ‘everyone’. You will need to hyper focus on one slice of products for cities and to execute this perfectly. The model here is Sidewalk Labs / Coord / Intersection (multi-scalar and multi-strategy product offering for cities), GeoPhy (automated real estate valuations), Spacemaker (rapid area development generation and analysis), Teralytics (mobility) to name a few diverse specializations.

An open horizon. Photo by author.

If you’re so smart, why aren’t you rich?

So what is the smartest thing to do if you’re managing your own career? My choice is to move towards creating urban technology products. This means revisiting the daily work I do and asking — where are the product opportunities? This means reassessing my Service Leadership skills and how they adapt to Product Leadership skills. This means skilling-up on multiple fronts to be able to manage the types of teams I will need to lead and manage in order to develop successful urban technology products.

More articles will follow on my journey…. Please read Part 2 — Hustle! Hustle! Hustle!, Part 3 — Chance of a Nighttime, and an interlude Crash Landing. Forthcoming is Part 4 and Part 5