At last, it looks as though architects are becoming business literate
I recently asked several architect friends if they could think of any successful architects with a business or economics background. A few suggested architects they deemed ‘entrepreneurial’ but mostly the responses were versions of ‘architects are allergic to business’. This perception is widespread but is it true? Is it still true? Does it have to be true?
Beginning in architecture school and persisting in practice, we often have an awkward relationship with business. Perhaps it starts with uninterest or a sense of superiority dressed up as vocational passion. Perhaps it continues due to a ‘if you build it they will come’ attitude that naively believes good designers will automatically have successful practices. Perhaps we’re still suffering the long shadow of ‘it isn’t polite to talk about money at the dinner table’ and ‘we need to be poor to be free’. Whatever the reasons, the result is a pitiable rate of business literacy.
Or it has been. Very tentatively, I’d like to suggest this is changing. If you visited any of the schools’ end of year shows you no doubt saw students proposing not just designs, but comprehensive back stories: a community centre acting as a nexus of smallholdings, a bartering-based market hall, a factory co-located with holiday homes, self-build co-housing that offers apprenticeships. The examples vary wildly but there’s something they increasingly have in common, and that is a business model.
Perhaps these top-up-fee-paying students are more acutely aware of the economic dissatisfaction that the last recession and its long tail brought and perpetuated. Perhaps they’re responding to the ever heightening environmental conscientiousness and its conflation with economic sustainability through movements such as de-growth. And perhaps this is exacerbated by the general sense that from Brexit to Pokemon Go, evidence abounds that the world has gone mad.
Beginning in architecture school and persisting in practice, architects often have an awkward relationship with business
Can we glean from these student projects that architecture is starting to engage better with business? I’m hopeful that these students are picking up on the notion that architects need clever business models now more than ever. But grim desperation is not the only reason that architecture is primed to cast off its business hang-ups; business models are starting to look much more like the kinds of things that interest architects.
As the climate in which architects deliver services has grown more complex and maybe hostile, so business models have changed, arguably becoming something more palatable to architects. Cass Business School’s Business Model Zoo classifies business models into four categories: product, solutions, matchmaking and multi-sided.
The oldest business models are dyadic – product based or solutions based. The product model is variations of: I make something and you buy it from me because you can’t or won’t make it yourself; or I bring something to a convenient location and you buy it from me because you can’t or don’t want to travel to get it yourself. Slightly more complicated is the solutions model, variations of: you pay me to do something you can’t or won’t do, but I can and am willing to do.
This is essentially the model architects operate under.
Emerging business models tend to be triadic – either matchmaking or multi-sided. A matchmaker brings together those who want to sell their products or solutions with their customers or clients. In a marketplace, or eBay, the stallholders pay a fee to sell their wares where they benefit from hordes of customers. The critical mass benefits both parties and the market owner reaps the rewards of bringing them together. A multi-sided model also involves interaction between three or more parties but here the host plays a more comprehensive role, brokering the relationship from start to finish.
This year’s Guerrilla Tactics conference, Super Models, which I am curating, aims to bring together small practices (join us!) to devise ways we can evolve the business viability of our industry.
Today we like small business: we feel good about supporting it and enjoy the artisan quality of its products and services. But we’ve also grown accustomed to the convenience and assurances afforded by big business. Perhaps this is why multi-sided businesses, from Airbnb to Uber, are so successful. By managing the entire exchange they give us the assurance and accountability of big with the flexibility and feel-good factor of small.
Multi-sided business models aren’t new. In essence they’re a business that profits from the cross-benefits that three or more parties can bring to each other. But as our current culture and economic climate offer fertile ground for the multi-sided model, it’s no wonder that many of the world’s most successful companies operate under it.
Business models concerned with maximising repeatability and minimising expenditure don’t ring true with our motivations as architects. But multiple stakeholders with various, sometimes conflicting, interests; a network of duties of care; malleable adjacencies; a veritable graphic equaliser of quantitative and qualitative values: this is more akin to the world we’re interested in. A business model is really starting to feel like something we can *gasp* design!
Maria Smith is a director of architecture and engineering practice Interrobang and curator of Guerrilla Tactics, 8 November, RIBA