Architecture 3.0:

How to Build a Profitable Disruptive Practice

WE100

Wednesday 5/16/2012 8AM - 12PM

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Cliff Moser, AIA

• 35 years in the Design and Construction Industry.

• Executive Vice President of AECCatalyst

• Past Chair of ASQ Design and Construction Division www.asq.org/design

• Past Chair of the AIA Practice Management Knowledge Community (PMKC) www.aia.org/pm

AIA PMKC Advancing the Practice of Architecture

Mission

The Practice Management Knowledge Community’s mission is to discover, generate, organize, and share insights, resources, and tools that enable architects to practice more effectively.

Vision

To serve as the essential resource for advancing the practice of architecture.

This program is registered with the AIA/CES for continuing professional education. As such, it does not include content that may be deemed or construed to constitute approval, sponsorship or endorsement by the AIA of any method, product, service, enterprise or organization. The statements expressed by speakers, panelists, and other participants reflect their own views and do not necessarily reflect the views or positions of The American Institute of Architects or of AIA components, or those of their respective officers, directors, members, employees, or other organizations, groups or individuals associated with them. Questions related to specific products, publications, and services may be addressed at the conclusion of this presentation.

AIA/CES Quality Statement

1. Learn to provide new solutions for creating a successful design practice that utilizes innovative and disruptive processes to leverage a firm’s existing markets as well as identify new opportunities.

2. Outline how to develop a business and client base that supports disruptive processes.

3. Detail how to build a successful disruptive eco-system of staff, consultants and vendors.

4. Develop supportive but disruptive relationships with allied professional such as builders and agencies.

learning objectives

innovation and disruption

• an innovation is a new idea or process that helps create a new market and value network-

• and eventually goes on to disrupt an existing market and value network (over a few years or decades),

• displacing an earlier technology.

why disruption?

• 50% unemployment within the profession

• 70% less construction spending since 2007

• We need to help facilitate the evolution of the profession.

construction spending

construction spending

construction spending

construction job growth

architecture job growth

construction unemployment

• According to the Labor Department, the construction industry slashed 2.27 million jobs from its prerecession peak in 2007 to the trough of construction employment in January 2011.

• Just 95,000 jobs have returned, or less than 5 percent of those lost.

lost generation

• Many express concerns that these job losses may be permanent, that there may not be a sustained economic rebound for years to come.

• If these concerns are realized, we risk losing an entire generation of architects to other careers.

not just us…

lawyers too…

lawyers

• But the problems that began in the recession were not a momentary blip.

• Rather, they seem to have been the beginning of a long term shift within the profession...

disrupted lawyers

• … where companies are simply not willing to spend as much on lawyers.

• Legal outsourcing firms, the use of inexpensive contract attorneys, the decision by companies to bring more work in-house,

• and demands for cheaper rates have all put permanent pressure on profits.

disrupted professionals

• The march of improved information technology will only slim margins further

• Substitution will continue to eliminate jobs

• Expertise is now distributed

first

• Learn to provide new solutions for creating a successful design practice that

– utilizes innovative and disruptive processes to leverage a firm’s existing markets and

– identify new opportunities

– maintain existing value streams

types of disruption

• iPod and iPhone

• cds & records, mp3s & cds, streaming & mp3s

• local computing, cloud computing

• hand drafting, cad, and bim

• design bid build, design-build, ipd

disruption is the only way to evolve

• innovation

• disruption

• new business models

• upset the incumbent

types of disruption

• Level One Disruption –

– New Market

• Level Two Disruption

– Enhance Value of Existing Processes

level one disruption

• Create new processes

– Identify a new market that can utilize design-thinking.

for example

• New Software

– BIM

• New Services

– Transition Planning

– Program Management

level two disruption

• enhance existing processes.

– leverage your existing services and processes by adding new activities and tasks

– focus on creating an additive that may replace the technology you’re adding to.

for example

• Existing Conditions – look beyond sketch pad and photos. Work with a 3d Imager to scan the building and build smart objects in BIM.

• Create BIM Execution Plan and Requirements for Owners

diffusion of innovations

• Learn from the bad bets, make part of your research and development.

• Strive for Ideality incrementation, evolution and less friction

– Examples

• Billboard Faxes vs PLTs and PDFs

• Portable hard drives vs Drop Box

• Fleet of Blackberries vs Bring your own Device (BYOD)

low end nibbler

• netflix and blockbuster

• creating queue online, waiting for delivery vs.

• going to the store and picking a video out

• soon Blockbuster was trying to compete

• Blockbuster on my android phone

– can’t use it, can’t get rid of it…

netflix disrupted itself

• introduced streaming

• stream to multiple devices

• tried to separate the dvd mail and streaming market.

the rest of the story

we don’t like disruption

• but then we say WTF?

• kodak, polaroid..

• tried to innovate, tried disruption

• but their shareholders wouldn’t give them enough leeway to make netflix mistakes…

case studies

• Level One Disruptions

AirBnB.com RISD Industrial Design & Fine Art Graduates

Kernel of an idea-

-Rent out spare bedrooms to travelers.

-Started out as “Air Bed” and Breakfast in their loft apartment for attendees of ICSID Conference in San Francisco in 2007

culver city

paris

5 million nights booked

level two disruption

• cloud services

• renting software

• outsourcing construction documents

second

• how to develop a new business base

• through level one disruption

second

• Outline how to develop a business and client base that supports disruptive processes.

– Design for problem-solving

– Design for building

• Measuring the performance of your disruption

– Balanced Scorecard Metrics

two professions

• Design for Problem-Solving

• Design for Building

design for problem-solving

• framed by design-thinking theories

• focuses your architectural training on developing system and network solutions to client problems

• design for problem-solving is main business model for Arch3.0

• design for building is a specialized activity of Arch3.0

design thinking

• architects own the origins of design thinking

– Bryan Lawson -Architects vs. Engineers-

• In 1972, psychologist, architect and design researcher Bryan Lawson, undertook research to understand the difference between problem-based solvers and solution-based solvers.

• used two groups of students – final year students in architecture and post-graduate science students – and asked them to create one-story structures from a set of colored blocks.

design thinking

• architects are the original design thinkers

– Bryan Lawson Architects vs. Engineers, 1979

• perimeter of the building was to optimize either the red or the blue color.

• rules were unspecified regarding the placement and relationship of the blocks.

• engineers used many different blocks and combinations of blocks as possible as quickly as possible.

• maximized information available to them about the allowed combinations, hoping to discover a formula.

design thinking

• architects are the original design thinkers

– Bryan Lawson Architects vs. Engineers, 1979

• architects selected blocks in order to achieve the appropriately colored perimeter.

• If this proved not to be an acceptable combination, then the next most favorably colored block combination would be substituted and so on until an acceptable solution was found.

• Engineers (traditional) problem-solving is done by analysis.

• Design problem-solving is solve through synthesis.

analysis vs. synthesis

• analysis is a breaking down of a whole into parts or components.

• synthesis is a combining of separate elements or components in order to form a coherent whole.

divergent & convergent thinking

• divergent thinking- ability to offer different, unique & variant ideas for one theme.

• convergent thinking- ability to find the “correct” solution to the given problem.

• design thinking uses divergent thinking to ideate many solutions (possible & impossible)

• then convergent thinking to prefer and realize the best resolution.

what happened?

• we created “design-thinking”

• but then abandoned it to the Industrial Designers.

• “d-Schools”

• Stanford, Art Center

we take it back

• we’re the original synthesizers

• holistically understand clients needs-

• Beyond Buildings

• Beyond Construction

design for problem-solving

• seven steps

– Define –Decide, Agree, Prioritize, Determine.

– Research –Review, Collect, Outline.

– Ideation –Brainstorm, Identify, Generate.

– Prototype –Combine, Expand, Feedback, Present.

– Objectives –Review, Set-Aside, Select.

– Implement –Task, Plan, Resource, Execute, Present

– Learn –Feedback, Discuss, Measure, Document.

design for problem-solving

• posits that design for building is a separate specialized activity within the practice.

• …that design for problem-solving is the core activity of the profession.

• states that you first build a practice based on design for problem-solving

• …then create a specialized group for design for building (if at all).

design thinking

design thinking

how to measure success

• Balanced scorecard metrics

– A focus on more than financial performance and information within your practice.

• People, Processes, Customers, Financial

– Use to support strategy around your competencies and then add to the edges.

balanced scorecard

• People – the people in your practice

• Processes – the way you do your work

• Customers – not just clients –external/internal

• Financial – the way you get paid

balanced scorecard

Why a Balanced Scorecard?

• To ensure that all parts of the organization are measured.

• To identify and manage people, processes, customers and financial perspectives.

• To capture knowledge and information.

• To identify and measure intangible assets.

• To align organizational goals to strategy.

3 Types of Balanced Scorecards

• Project-Based Balanced Scorecard

– Project Specific. Implement at particular phase, or through project start to finish.

• Initiative-Based Balanced Scorecard

– Build around a specific initiative: • Quality Assurance/Quality Control

• Marketing or Business Development Initiative

• Organization-Based Balanced Scorecard

– Holistic metrics for entire organization

Project-Based Balanced Scorecard

• Implement at any project phase.

• Establish Mission/Vision Statements.

• Create Goals.

• Identify Strategy.

• Create Tactics for Achieving Strategy.

• Identify and weigh indicators/metrics.

• Construction Administration Phase BSC.

– Mission & Vision

– Identify Leading/Lagging Indicators

– Weigh by using Analytical Hierarchy Method

– Determine Reporting Period

– Set goals.

– Measure/report goals

– Re-set goals.

– Modify Measures. (PDCA)

Project-Based Balanced Scorecard

Project Goal Perspective Objective Lag Measure Lead Measure Target

Build an

outstanding

Project

Processes On-time

construction

delivery

1 RFI Turnaround

2 Submittal

Turnaround

3 Error Free

Drawings

4 Timely Field

Decisions

5. Inspection

Approval

1. Anticipated

Drawings

2. Scheduled

Work.

3. Team

Innovation

4. Team Problem

Solving

90% weighted

Project-Based Balanced Scorecard

Subm

itta

l Turn

aro

und

RFI T

urn

aro

und

Err

or

Fre

e D

raw

ings

Tim

ely

Fie

ld D

ecis

ions

Insp

ection A

ppro

val

Submittal Turnaround 1 1 1/5 1/9 1/9RFI Turnaround 1 1 1/4 1/8 1/9Error Free Drawings 5 4 1 2 1Timely Field Decisions 9 8 2 1 2Inspection Approval 9 9 2 1 1

•Submittal Turnaround

•RFI Turnaround

•Error Free Drawings

•Timely Field Decisions

•Inspection Approval

Rank each measure against each other in order to determine which measure is more important.

Project-Based Balanced Scorecard

Subm

itta

l Turn

aro

und

RFI T

urn

aro

und

Err

or

Fre

e D

raw

ings

Tim

ely

Fie

ld D

ecis

ions

Inspection A

ppro

val

Submittal Turnaround 1.00 1.00 0.20 0.11 0.11

RFI Turnaround 1.00 1.00 0.25 0.13 0.11

Error Free Drawings 5.00 4.00 1.00 2.00 1.00

Timely Field Decisions 9.00 8.00 2.00 1.00 2.00

Inspection Approval 9.00 9.00 2.00 1.00 1.00Total 25.00 23.00 5.45 4.24 4.22

•Submittal Turnaround

•RFI Turnaround

•Error Free Drawings

•Timely Field Decisions

•Inspection Approval

Complete paired ranking and total each column.

Project-Based Balanced Scorecard

Subm

ittal Turnaround

RFI Turnaround

Error Free D

raw

ings

Tim

ely

Fie

ld D

ecis

ions

Inspectio

n Approval

Total

Norm

alized Total

Submittal Turnaround 0.04 0.04 0.04 0.03 0.03 0.17 0.03

RFI Turnaround 0.04 0.04 0.05 0.03 0.03 0.18 0.04

Error Free Drawings 0.20 0.17 0.18 0.47 0.24 1.27 0.25

Timely Field Decisions 0.36 0.35 0.37 0.24 0.47 1.78 0.36

Inspection Approval 0.36 0.39 0.37 0.24 0.24 1.59 0.32

Total 1.00 1.00 1.00 1.00 1.00 5.00 1.00

Normalize each issue to determine ranking against each other.

Then normalize total.

Rankings:

Submittal Turnaround .03 RFI Turnaround .04 Error-Free Dwgs .25 Field Decisions .36 Inspection Approval .32

Project-Based Balanced Scorecard

-Submittals 3% below goal of 90%. Therefore the team multiplies 0.97*0.03 = 0.0291

-RFIs were 5% below the goal of 90%. 0.95*0.04 = 0.038

-Error Free Drawings were above the goal by 8%. Therefore the team multiplies 1.08*0.25 = 0.27

Create Goals and Reporting Periods.

-Timely Field Decision. Unfortunately, this metric will bring down the goal for the month. 65% creates a 25% gap. 0.75*0.36 = 0.27 -Inspection. Again, a bad month leaves the team 20% shy of its goal of 90%. 0.8*0.32 = .256.

Project-Based Balanced Scorecard

Adding the totals brings the month’s achievement goal as follows: 0.029 + 0.038 + 0.27 + 0.27 + 0.27 + 0.256 = 0.836 or 84% of the team’s process goals for the month, which, is close to the target of 90%.

Use a matrix measure to determine what the team believes to be important (in other words a 100% win in Inspection, Field Walks, and Error free drawings) deliver its results immediately. Instead of relying on arbitrary or immediate metrics, the team can begin to create and implement stretch goals in order to create endorsed and sustaining improvement.

Project-Based Balanced Scorecard

people

• Measures the activities of the stakeholders in your network

– all staff

• modelers, architects, and admin

– consultants

– vendors

Arch3.0 people

• Flexible workforce

• Contractors, Partners and Consultants

• Bring your own device

processes

• The activities you use to perform your work

Arch3.0 processes

• no longer beholden to an incumbent

• autodesk, google, bentley, archicad

• cloud-based services

• focus on deliverable not the tool

• bring your own device

customers

• These are the stakeholders within your network with a focus on their needs as customers and clients.

Arch3.0 customers

• everyone is a customer

– staff, consultants, building contractors, agencies

• channel partners

– strengthen supply chain

financial

• These are the traditional series of metrics for identifying the performance of your organization, including Profit/Loss, booked work, etc.

• The disruptive practice focuses on creating new metrics with alternate performance requirements.

Arch3.0 financial

• fee from downloads

• new approach to intellectual property

• collaborative model

• no longer focus on fee for labor

ideo case study

• the disruptive practice pioneer

– industrial design firm that formed design thinking

third

• Detail how to build a successful disruptive eco-system of staff, consultants and vendors.

– How to leverage your relationships with your stakeholders

– Open network innovation

• Design for Problem-Solving

• Design for Building

recognizing your networks

• Arch2.0 was based on ownership and hiding

• Arch3.0 is based on sharing and transparency

• identify and leverage your networks

– multiple networks within your profession, personal and social life

leveraging your network

strength of weak ties

structural holes

• these are the breaks between networks

• you make yourself the bridge between the networks

between groups

open innovation networks

• The challenge-

– How to use new social networks to be more than repositories?

– How to engage your staff/stakeholders to participate in the network conversations?

– How to use social networks to leverage your weak ties and bridge structural holes

facebook

linkedin

new flavor of the month

• Pinterest

• Tumblr

• Plaxo

• Google+

• MySpace

• ?

tumblr

pinterest

social media

• Create a blog tailored to a specific market. If you are a leader in a given market, chances are you see things about your client's industry that they can't see on their own. Creative approaches, common mistakes, insight into the clients they are chasing or simply lessons unique to their built environment. People enjoy reading about themselves. Creating the blog from a journalistic perspective helps cut down the natural resistance to over-branded pieces and it is possible to build an audience of consistent followers.

• Tag the photos you post. When clients first start dreaming about their projects they typically start looking for similar projects that have already been built. When you post your photos—either as part of your website or on a social media platform like Flickr—take the time to tag them in the ways that your clients would look for them.

social media

• Add your high-profile projects to Wikipedia. Wikipedia provides the opportunity to create a public record. Stadiums, theatres and other high profile projects frequently have entries. Make sure that statistics are entered for your projects

• Coach your team to use LinkedIn. If someone is searching for one of your employees, chances are that LinkedIn will come up in search ahead of their profile on your company’s website. Make sure your team has fully completed profiles and that their corporate e-mail address is listed so they are easily found. Coach them on building a network that helps them expand into your client’s world.

• Social media gives the opportunity to let client’s see behind the curtain and the glossy portfolio.

design for problem-solving and design for building

• HOK

– Blended practice

– Specialists in social media, sustainability, client management

design for building

• Barker Rinker Seacat

– Community Center and Natatorium designers

– Problem-Solving became consultancy as well as architect of record.

fourth

• develop supportive but disruptive relationships with allied professionals such as builders and agencies.

– how can you earn fee in these traditionally adversarial relationships?

– how can you expand the Arch3.0 two practice model to successfully create and engage this market.

fourth

• Design for Problem Solving

– BIM Execution and Management Plan

– Teaching

– Board Member Role

• Design for Building

– Design-Build

– IPD

– Design Assist

design for problem solving

• design for problem-solving

– focus on identifying your client’s needs and requirements

– assist them in the seven step process

design for building

• design for building

– Collaborative models

– IPD, Design-Build, Design Assist

– Scoping Documents

Activity

design a disruption

• Break into balanced scorecard groups

• People, processes, customers, finance

– one group-

– Identify a Design for Problem Solving Activity

– another group

– Identify a Design for Building Activity

• Identify a level one or level two innovation for each perspective

and then

• Identify performance metrics

• That will ensure the disruption is nurtured.

for example

• I’m in the financial new disruption group

• identify a new disruption

– I pay the client to work for them

– what?

– Arcosanti, habitat for humanity, church missions

• then identify performance metrics for people, processes, customer, and financial that support the new disruption

people

• access to the customer expertise and clients

• use to learn new skillsets

– metrics-

– amount of time onsite with client

– percentage of billing to free job vs paid job

processes

• use the customers hardware and software

• no local office

customers

• identify the internal and external customers

– internal

• your staff, the consultants

– external

• the client’s staff and consultants

financial

• how do we manage costs?

– do we get paid for expenses, do we pay our consultants?

CASE STUDIES

KA Connect

ka connect

ka connect

integrated knowledge platform

founders dna

create the standard

client platform

partner with academia

non-profit spin-off

innovation x-prize

tech studio

software spin-off

product spin-off

summary

• Arch3.0

– disruption

• level one and level two

– two practices

• design for problem-solving

• design for building

– network effects

• manage your weak ties and structural holes

– recognize and leverage your strengths

128

• Cliff Moser, AIA

Speaker [List alphabetically by last name regardless of speaking order]

Contact Information Cliff Moser, AIA

310.947.8509

cliff.moser@gmail.com

cliffm@aeccatalyst.com