2015 Session 3: Office and Firm Management

Date: December 5, 2014
Location: House of Sweden
Time: 12:00 pm – 5:00pm
Led by: Anthony Monica, Assoc. AIA & Seth Wilschutz, AIA, LEED AP BD+C

Session 3 PDF


The third session of the Christopher Kelley Leadership Development Program (CKLDP) was held at the House of Sweden on Friday, December 7.  The session focused on office and firm management, and featured segments on starting a firm, successful financial management within the design profession, a summary on ownership transition and firm valuation, and finally a presentation on firm management on a global scale.  Scholars Seth Wilschutz and Anthony Monica organized the event.

1The afternoon got off to a lively start with roundtable discussion on starting an architecture firm.  Speakers Janet Bloomberg (KUBE Architecture), Christopher Gordon (KGD Architecture) and Alexander Zaras (Zaras & Neudorfer Architects) contributed a wide array of opinions relating to the early days of setting up a firm.  Ms. Bloomberg explained that, after going into practice “blind” to some of the realities and requirements of running a firm, KUBE has enjoyed success thanks to a combination of design focus, strong and long-lasting client relationships, an effort to stay ahead of potential problems, and doing a diverse assortment of marketing efforts.  Having started the firm shortly before the Great Recession, it took KUBE about 8 years before Ms. Bloomberg started realizing some significant financial success.  By contrast, Mr. Zaras did so less than two months into his foray into firm ownership.  Also in stark contrast to KUBE, Mr. Zaras’ firm does absolutely no marketing, and takes work as it comes, a model apparently similar to that of McKim, Mead, & White.  Mr. Zaras also shared arguably the most controversial opinions of the day, explaining that his firm has zero overhead expenses and also has no financial value as an entity.  This last comment related to the idea that he would eventually hand over the firm to a loyal employee, likely on the day that he is no longer able to practice.  He explained the importance of hiring a lawyer who is also a CPA, in an effort to keep the cumbersome paperwork of firm management to an absolute minimum.  In contrast to Mr. Zaras, Mr. Gordon explained that the idea of firm valuation and succession was one of the key issues he and his partners considered from the earliest days of KGD, which was set up as a ‘C’ Corporation for ease of scalability.  All contributors agreed that open and honest communication between partners is an absolute requirement.  They also agreed that it is helpful to have a spouse or significant other who can cover the cost of living during those lean early days of practice!

2During the second session, Michael Tardif (Building Life Cycle Group, Inc.) provided a starter course on financial management for design professionals.  Mr. Tardiff opened the presentation with a series of big-picture concepts to explain the vital importance of financial management.  He then provided more details including a typical chart of accounts, the absolute necessity of accurate time keeping, financial planning strategies and tools, and a wide array of financial reports and useful metrics that can be efficiently utilized by firm leadership to make strategic management and marketing decisions.  He explained that, if the right systems are in place, a firm leader can effectively manage firm finances spending only 4 hours per month on the effort.

3Herb Cannon (AEC Management Solutions) delivered a summary on firm ownership transition and valuation as the third presentation.  Mr. Cannon started by stressing the importance of a clear understanding of where your firm, including any potential new partners, fit on a diagram indicating primary and secondary areas of emphasis between two broad categories of “practice” and “business” focus.  He talked about several topics related to ownership transition, including the difference between a “qualifications” and “commodity” oriented firm.  He also summarized the diverse set of requirements for a firm leader, including that key, hard-to-identify characteristic that is so vital: entrepreneurship.  Mr. Cannon described two general approaches to ownership transition: share appreciated, in hopes to eventually sell to an outside bidder, and the use of current distributions that can help lead to internal transitions. In conclusion, Mr. Cannon walked the scholars through a case study, using several methods to calculate firm value for a weighted-average final sum to be used for an internal transition.

4The final session on global firm management was delivered by Mark Regulinski (SOM).  The presentation included a broad overview of the firm’s geographical and disciplinary organization under their 22 current partners.  He presented an overlapping Venn diagram indicating the 3 main areas of firm partner focus: technical, management and design, which Mr. Regulinski related to Vitruvius’ firmness, commodity and delight.  Using the diagram he explained that, in order for SOM to realize success, they need team members who operate at the edges of these three realms, but also those who work as collaborators between.  He described the SOM Journal, an internal critique effort aggregating external review commentary that helped the firm re-focus their self-image in an effort to return to core principles of simplicity, structural clarity and sustainability, with an emphasis on innovation and craft.  In addition to a few project case studies, Mr. Regulinski discussed the Great Lakes Initiative and a strategic partnership with the Renselear Polytechnic Institute’s Center for Architecture, Science and Ecology.5