Prior to business models analysis, I looked into The Architect’s Handbook of Professional Practice to revisit architecture firms' archetypes as basic units of analysis. Surely, no architecture firm is a true example of a particular archetype, but analyzing traditional archetypes as well as emerging archetypes allowed me to have a broad view on businesses within our profession and later compare them to one another.
The business models' analysis and optimization was done with a visual framework resembling a flowchart called Choices and Consequences designed by Casadesus & Ricart. I modified it by using concepts of Edward Tufte who specializes in data visualization and effective methods of presenting information, to make the business model diagrams more effective.
To see in-depth reasoning behind the modification of Choices and Consequences framework please click here and behind its selection click here.
How to read the diagrams?
Follow the sequence of strategic choice (1), central choices (2), reinforcing choices (3) and virtuous cycle consequences. Strategic choice will state the strategy, central choices will identify the key elements of a particular firm type and reinforcing choices will show how central choices are supported. And finally, virtuous cycle consequences are located on the left side of the diagram and explain the consequences of all choices. See diagram below.
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1. Design Firm Model
“The Einsteins”
2. Local Firm Model
“The Community Leaders”
3. Market Expert Model
“The Market Partner”
4. Niche Expert Model
“The Niche Experts”
5. Efficiency Firm Model
“The Efficiency Experts”
“The Orchestrators” Archetype - Facilitator Architecture Firm - is usually in the scope of large architecture/engineering/construction firms and will not be analyzed in this work.
6. Non-Specialized Firm Model
“Any Project that Comes Through The Door”
This is a type that is not mentioned in The Architect’s Professional Handbook, but it exists among small architecture firms. By working on any project that a firm is asked to do, the firm does not become specialized in anything and thus does not have a competitive advantage. Even though firm owners will attract certain types of clients unintentionally, it is better to make a clear strategy for a more sustainable firm development (Klein, 2010, p. 13). The most obvious path for this firm type to get a clear strategy is to get integrated within the community and become a “Community Leader”. This however may take several years.
Below are examples of firm types that are hybrids or joint ventures between architecture offices, consultants and builders referred to by Rena Klein as “integrated practice” (Klein, 2010, p. 173). They are rarer than traditional archetypes because they involve more diversified experience and are often more risky. However, there are financial upsides to these firm types due to the competitive advantage that comes from either providing similar quality of service for lower price or from being more convenient for the client. It must be noted that these are not stand-alone types and must be built on one of the first six archetypes in order to lead to a successful strategy.
7. One Stop Shop (IPD) Model
“Integrated Project Delivery”
A partnership between an architect, consultants and a contractor that enables collaboration earlier in the process compared to traditional Design-Bid-Build (DBB) sequence of project delivery. IPD that is used in One-Stop Shop allows detecting potential problems earlier and delivering the project in a most efficient manner.
8. Arch-Contractor Model
“Architect-Led Design-Build”
In this type of firm, the architect takes the role of a general contractor in addition his/her traditional roles. The building is being designed conscious of staying within the clients’ budget and the risk is high for the architect to go beyond the budget. The process is faster than traditional DBB, the cost to the client is less and the architect gets a larger scope of work.
There are architecture firms that offer additional services like sustainable design or structural engineering in-house. There are certain efficiencies that could be gained, for example easier communication within one office however, they are not very effective in generating higher returns, it is just an increase in scope. Communication with other consultants, especially the general contractor, still has to take place in a traditional manner. If the architecture side of the office is not succeeding this approach can be seen as a diversification strategy, however it will not protect the office from overall economic tendencies affecting the industry. This strategy also takes away from the time that a firm can use to specialize in its core area of expertise. It is not questionable that it is unique to have an architect also engineer a building and this could be used for promotion and marketing purposes. For example, Santiago Calatrava uses structure of a building as a design element and is highly successful with it. However, this type of success is based more on other variables than add on service. I do not see too much potential in this strategy and will not discuss it further.
9. Arch-Developer Model
"Architect-Developer"
The architect becomes an owner in developing a building for him/herself and then selling or leasing it out. This firm type has the highest risk, but has the potential to receive the highest profit if the staff can do a precise due diligence, if the economic conditions are stable and if there are few complications with the construction process.
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