Getting Back on Your Horse: The Evolving Professional Practice

PETER KUTTNER FAIA BUILD PITTSBURGH 2015 23 APRIL 2015

KEYNOTE

Presented by:

Peter Kuttner, FAIA, Cambridge Seven Associates

Sponsored by:

Wells Fargo Insurance Services USA, Inc.

2008 – Architects are Thrown …

Simple Structure for this Conversation

Cambridge Seven’s Story

Depressing Things

Optimistic Things

Who We Are

Cambridge Seven Associates

Project We Didn’t Get

Transit

What We Do…a Diverse Practice

Aquariums and Museums

Transit

Education and Colleges

Commercial

Growing into New Markets

Aquariums and Museums

Transit

Education and Colleges

Commercial

First Project and Exposure

New England Aquarium

Focus on the Experience

New England Aquarium

Ear to the Ground and

Chutzpah

US Pavilion at EXPO ‘67

Interpreting American Culture

US Pavilion at EXPO ‘67

Circulation as Experience

Working Other Connections

Transportation Guidelines

Transportation Facilities

Reference from the AIA/BSA

Williams College Alumni Center

Academic Architecture

Williams College Alumni Center

Interiors in Academic Settings

Focus on Repeat

Business

Charles Square Mixed-Use

Hospitality as a New Market

Charles Square Mixed-Use

Hospitality and Mixed-Use

Private Client Own Backyard

Speculate

Effort Required to Manage Our Markets

Transit

Museum

Academic

Hospitality New Growth

Aquarium in Portugal

KAFD Geo-Sci Building Type

Oceanaria de Lisboa

Academic Laboratory in Florida

Cross-Field Expertise University of Miami RSMAS

Hotel Mixed-Use in Boston

Long-term Client 4 Seasons Hotel and Residences, Boston

Science Center in Saudi Arabia

KAFD Geo-Sci

Content Expertise Geo-Science Center in Riyadh, SA

Children’s Museum in China

User/Audience Understanding La Nui Children’s Museum, Hohhot, China

Economic Cycles

The Economic Cycle in the last 55 years …

8 Recessions since 1960

Good First Moves

Start firm at the beginning of 9-year expansion • Lots of time to work out the kinks • If you can’t get it right in 9 years then …

Bad Personal Moves – Stagflation!

Graduate from Architecture School in Oil Crisis • Quadrupling of oil prices by OPEC • High government spending on Vietnam War • 1973 oil crisis • 1973–1974 stock market crash • Rising unemployment along with rising inflation

The last three decades …

1 2 3 4 5

National Bureau of Economic Research

Brought to us by NBER

C7A Studio

1980 Recession – Begin the Double-Dip

• Short recession in 1980 • Followed by short period of growth • Followed by deep recession. • Unemployment stayed high between recessions • Recession began as Fed raised interest rates to fight inflation of the 1970’s • Known as the "double-dip" or "W-shaped”

Early 1980’s Recession – Cater Inflation

• Iranian Revolution increased price of oil causing 1979 energy crisis. • New regime exported oil at inconsistent intervals and lower volume • US tight monetary policy to control inflation led to another recession

Early 1990’s Recession – Greed is Good

• After peacetime expansion of the 1980s the Federal Reserve responded to growing inflation by raising interest rates from 1986 to 1989 • Subsequent 1990 oil price shock • Massive debt accumulation of the 1980s • Growing consumer pessimism with the weakened economy • JUNK BONDS

Gordon Gecko

Early 1990’s Recession – Greed is Good

• After peacetime expansion of the 1980s the Federal Reserve responded to growing inflation by raising interest rates from 1986 to 1989 • Subsequent 1990 oil price shock • Massive debt accumulation of the 1980s • Growing consumer pessimism with the weakened economy • JUNK BONDS

MA Arch 7,000 ➔ 4,000 Lost Generation of Archs

Learning from the 90’s

• 1990s were the longest period of growth in American history • Greed slowly returned along with deregulation and a new technology revolution

Early 2000’s Recession – the Dot-Com

• Collapse of the speculative dot-com bubble • Fall in business outlays and investments • The September 11th attacks on the World Trade Center

2007 - 2009 - Great Recession

• Subprime mortgage crisis • Collapse of the United States housing bubble • Oil and food prices soared • Failure or collapse of many of the United States' largest financial institutions • Crisis in the automobile industry • $700 billion bank bailout and $787 billion fiscal stimulus package

2007 - 2009 - Great Recession

• Slow Recovery and Political Gridlock • Fascination with “Shovel Ready” • Another Generation at Risk • Aging Boomer Architects

Forbes Worst Master’s Degrees

No. 9 Worst Master’s Degree for Jobs - Architecture

Tied with HR for No. 9

… and with Political Science

$94,100 over $77,800

No. 7 Most Overrated Jobs

Architect Compensation Growth

Forbes Most Prestigious Professions

Unemployment was the Real Issue

Architects – the Canary in the Coal Mine

What Did We Learn?

What Did We Discover

Questions to Ask Ourselves

After the last recovery we had become spoiled again

Marketing happened only when projects were complete

We were out of less lucrative market … public work

We had no work in Boston … infatuated with distant work

… we needed to identify what to be done and who to do it

What Kind of Firm Do We Want to Be?

What kind of firm are we?

Is there a best size?

Do we want to grow?

How do we handle our markets?

Who will deal with these markets?

What do we do with this crop of projects?

Defining a Vision

1+1=3 Josef Albers (1888-1976)

Bauhaus ……..…. 1925 -1933 Black Mountain … 1934 -1949 Yale University …. 1950 -1958

What Kind of Firm are We?

Core Business Values

1. Breakthrough Ideas 2. Product Leadership 3. Client Intimacy 4.  Love of Community 5. Organizing the Complex 6. Elegant Efficiency

What Kind of Firm are We?

Core Business Values

1. Breakthrough Ideas Einstein Gehry 2. Product Leadership Niche Specialist, Green, 3. Client Intimacy Market Partner Gensler 4.  Love of Community Gatekeeper Chamber, Planning Bd 5. Organizing the Complex Orchestrators NBBJ, Proj Mgr 6. Elegant Efficiency Builders Repeat Prototypes

Is There a Best Size?

Levels 1 2 3 4 5 6 7 8 9

1 2 4 8 16 32 64 128 256 No. of Staff

C7A at 7th level and 7 staff levels

Sr Assoc

Assoc/PM

Design

Support

Do We Want to Grow?

Advantages •  Revenue •  Opportunities •  Variety •  Exposure •  Fame •  Impact

Disadvantages •  High Cost •  Quality Control •  Need for People •  Management Focus

Do We Want to Grow?

Advantages •  Revenue •  Opportunities •  Variety •  Exposure •  Fame •  Impact

Disadvantages •  High Cost •  Quality Control •  Need for People •  Management Focus

Growth other than SIZE •  Quality •  Services Offered •  Variety •  Better Clients •  Better Projects

How Do We Manage Our Markets?

Transit

Museum

Academic

Hospitality New Growth

Adding New Services in Core Markets

Transit

Museum

Academic

Hospitality Exhibit Design

Exhibits as Immersive Educational Interiors

Maymont Nature Center

Basketball Hall of Fame

New England Sports Museum

USS Nautilus Submarine Museum

Where is the market?

How to uncover work?

Is there a network?

Who are the clients?

Where to advertise?

What to send them?

What conferences?

What publicity?

What award programs?

Can we write articles?

Who should do this?

Transit Museum Academic Hospitality Exhibits

How do We Deal With Our Markets?

Questions

Academic Transit

Museum

Target for National Projects

NEA NAIB

Tennessee Seward

Lisbon Genoa Kuwait

Target for International Projects

Seoul Hohhot

Riyadh

Calgary Montreal

Taiwan

Calgary

Reacting to the Great Recession

Staff and Salary

Reacting to Recession

Balancing immediate:

• Reductions in Force … senior, junior, last in …

• Salary Reductions … across the board, senior only …

Subletting Studio Space

Space Efficiency – Renovating for Density

Renovation– Working in the Hallways

Renovation – More Casual Interaction

Efficiencies - Outsourcing

• Public Relations

• Library and Vendor

• Human Resources

… Partners take new responsibilities

• CAD Support

• Print Service Plan

• Network Maintenance

Efficiencies – Using US Global Services

US Department of Commerce

• Country Offices

• Boston Office Services

• Online Information

AIA Trade Mission to Saudi Arabia and Qatar

Programs to retain staff & young people in the profession

• Within the firm

• Through the AIA

Commitment to the Next Generation

• Cope with missing generation

• Important to millennials

• Identify future leadership

Many Aspects of Mentoring

Set Ownership transition in place in mid-90’s:

• Maximum ownership of 15%

• Fixed amount of corporate stock

• Agreed upon formula for valuation

• Bonus new shareholders for purchase

• Buyout starts at 60 and ends at 69

Ownership Transition

Trends in Architecture’s Future

Non-Traditional Practices

Computing and New Technologies

Reaching out to the Public

Women and Minorities in the Profession

Energy Conservation and Standards

Kermit Baker Outlook

Kermit Baker - Growth

Kermit Baker – Aging Architects

Kermit Baker – Young Firms

Kermit Baker - Firm Concerns

Mergers and Acquisitions

A Changing Profession

The Vanishing Mid-Sized Firm

Balancing

Boutiques and Bohemouths

Balancing

Boutiques and Bohemouths

AIA Foresight

Firm Strategies – More Sophisticated Clients

Firm Strategies – New Technologies + Old Fees

Firm Strategies – Flexible Collaborative Workspace

Firm Strategies – Virtual Firm

Design Intelligence Transforming Trends

Collaboration

Grapple With Our Own Inconsistencies

This concludes The American Institute of Architects Continuing Education Systems Course

Peter Kuttner Cambridge Seven Associates, Inc. 1050 Massachusetts Avenue Cambridge, MA 02138 617.492.7000 pkuttner@c7a.com www.c7a.com

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