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The strategic choice of a design firm is to provide supreme design service. All choices are originated with keeping the strategy in mind. Following the sequence of reading this diagram lets now look at the central choices. The central varying choices are to hire talented design professionals, to lease or by high-end office space and to use most advanced software. The unique choice is to enter design competitions.
Hiring talented design professionals will allow for a supreme design service and development of a consistent branded style that increases the firm’s reputation. It may appear obvious that for this type of firm this is the type of staff needed, but according to my experience firms compromise hiring decision based on availability and salary request. A few studies have been done on this topic in human resource field. The book Topgrading points out that hiring “A” players for a position is a key competitive advantage (Smart, 2005, p. 5) and the article Making Human Capital a Source of Competitive Advantage describes the importance of “attracting and retaining the right people” to gain and keep a competitive advantage (Lawler, 2009, p. 1). It is logical that in a business where human talent determines the project outcome, one should hire the best, most talented people available. If it is not possible to hire the right people, it may be better to reconsider the strategy. If supreme design service is not provided, other design firms will start to take over and the vicious cycle will begin despite the investment in other choices.
High-end office space will reinforce the client’s perception of the firm's abilities and attract high-end clients that are willing to pay for them. In addition, it would add value to locate in a prestigious place to reinforce the overall impression. A case study was done by the Commission for Architect and the Built Environment on J Walter Thompson, an advertising agency that changed their office location and used this to reinvent their image. The company believes that after the upgrade it became easier to recruit employees and clients (CABE, 2005, p. 53).
Using the most advanced software leads to the production of impressive project illustrations that are a way of attracting clients. In addition, it will aid in winning design competitions that has the consequence of acting like an advertisement in design publications, attracting new clients. Not every office can afford the top-rated software because of purchasing cost, switching cost and, at times, fear of transition. There are different grades to software and it is related to price. For example Catia is the software used on The Bird’s Nest stadium built for the Beijing Olympics. It costs between $9000 and $65000 per license. Revit is a 3d software program gaining popularity in the US that costs $4000 per license. AutoCAD that has been used by offices for decades. And finally, SketchUP is a 3d software program with few features that can be downloaded for free. There are other types of software, but the main point is that price does reflect either the quality or popularity of particular software. However, not only the purchase cost but the cost of training prevents offices from switching software. Training people how to use new software leads to mistakes and slower production in the time it takes to learn. From my experience, Revit takes a minimum of three months to transition in, and can take a couple of years to master. Not every firm can afford to lose productivity for this span of time. Firms may choose to change staff to users who are already trained, in which case they will be faced with costs associated with laying off old staff and training new staff to the office standards. And finally, people fear switching to new software. I witnessed it in one office I worked for that was transitioning into Revit. Senior staff felt very vulnerable to change and relied heavily on junior staff for guidance.
Even though there are advantages to having better grade software, there are costs associated with it that not every firm is willing to take on. For the design firm type, software is one of the key elements that will help in winning competitions. This brings us to the unique choice to enter these design competitions. The reason for why this is a unique choice is because if other firm types compete in design competitions, they will most likely lose because they do not have the same supreme design service aim and the assets as human talent and software to support it.
Let’s now look at the reinforcing choices. In this firm type the ability of staff to design in branded style is an asset to hold on to. This leads to the reinforcing choice of applying retention strategies in order to keep the talented professionals from leaving the firm. Based on the literature review the retention policy is not clear-cut. The journal article Retaining Talent: Replacing Misconceptions with Evidence-Based suggests paying attention to areas of: socialization, training and development, compensation and rewards, supervision and engagement. The underlining point of the article is that employees leave not just because they want a better paying job, but also because of job dissatisfaction based on these criteria. It is possible to retain employees that decide to leave, and not necessarily with financial means. Alternative types of benefits such as flexible work hours, team building or continuing education will increase overall employee satisfaction and keep employees (Allen, Bryant, & Vardaman, 2010). However, according to another article Rewarding and Training the Best: Compensation Strategies for Top Performers most employees do leave first because of pay dissatisfaction, second because of dissatisfaction with management and third because of lack of promotion opportunities. This article also examines the different reward strategies based on age and gender that greatly vary (Menefee & Murphy, 2004). To conclude, many factors influence employees’ decision to leave or stay in the company. A small architecture firm usually cannot afford to hire an HR person to help with retention and reward strategies. However, due to the small size of an office, a manager’s retention strategy can be to stay in close contact with employees to monitor their satisfaction with their job. The act of finding the time to have a conversation between a manager and a regular employee is already one of the means to retaining this employee.
A distinct factor that will indirectly strengthen retention, specifically in the architecture business, is having clients that give design freedom and are willing to pay more for the design. This is a rare opportunity that is sometimes available in design firm office type.
Another reinforcing choice is to provide full architecture service by adding Construction Documents (CD) and Construction Administration (CA) services. It will lead to higher risk, but by being more convenient to the client it will earn the firm good reputation for project delivery. The risk can be limited by the software that was chosen if it has features that check for system collisions. This will avoid some problems that arise during construction process. This is a typical choice for other types of offices and will not be mentioned later. The importance of mentioning this choice here is the actual opportunity to choose not to be a full service firm and just concentrate on conceptual design as the core expertise of the design firm.
Now that all the choices have been discussed we can look at the virtuous cycle consequences that are the result of choices made. Design firms differ with other types of firms due to the fact that the design brand has an inelastic demand and carries the possibility to raise the fees as the brand strengthens. A study based on empirical evidence was done concluding that revenue premium can measure brand equity (Ailawadi, Lehmann, & Neslin, 2003).
Other factors like “brand loyalty, premium pricing, lower price elasticity, and greater trade” arise from brand strength Tuominen (1999, p79) cites Keller (1998). Thus, the ability to charge higher fees will lead to higher profit and as the firm is increasing its financial value and number of new clients there is an opportunity to grow. This opportunity, however, will be evaluated by the firm manager based on his/her position in being rich vs. being the king dilemma (Wasserman, 2008) and the decision will depend on the strength of attachment to control all aspects of work. Whether or not the owner decides to grow at this point it will be important to either manage growth or stability in such way to retain the virtuous cycle.
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