Alice Prussin: January and February?
Patty Glasow: Exactly right.
Reed Powers: That is the reaction in the markets; it was stymied.
Patty Glasow: And then it started again at the end of February; we started getting calls from manufacturers.
Peter Pfau: How do you encourage it from the manufacturing end? You are so far down the stream from us that I would guess that what you get are more people are asking for bids but not delivered, right?
Reed Powers: We are really fortunate because we are privately owned, and we have always been product-driven; you do not have to worry about satisfying stockholders. We are a fiscally conservative, market-aggressive company, and we made a decision almost five years ago to study the digital side of the business. That has helped our business the past two years, and we can see it helping us in the future.
Jim Young: In January and February everybody was shocked at how fast it happened. As you look at these forecasts, you can see your backlog, you know what is going to happen in the next three months. It is getting harder to predict the releases; six weeks can have a pretty big impact. We have the benefit of having a presence in North America, so some parts of the country are significant, and in some parts nothing is happening. It gives us a little bit of balance.
Patty Glasow: It seems like everybody has narrowed his or her window. Three months is what used to be the equivalent of six months to a year.
Peter Pfau: It is not really whether the downturn is ending but whether we feel like there is enough flow of business beginning to come in that we can project work flow. That is what everyone is facing now. I think things are better. We have new work; I know other people have new work.
Ken Lewis: A lot of [clients] are saying, “It’s a rough time. What kind of discounts are you going to offer?” We have been happy to have that conversation, where we know a project can go ahead if we are willing to consider some adjustment to our fees. The trick is recovering from that in the long term.
Does this mean then that the business model for design has to fundamentally change to adapt to these conditions? Ken Lewis: I do not think that the way we do architecture has changed, but we are seeing a change in the delivery method and seeing a lot more design, which is front-loaded without the appropriate stipend. We have had to create a very different paradigm for the go or no-go decision.
Jim Young: We quickly are getting in an uncomfortable position of becoming a designer on projects rather than just providing the applications to the designer. We have the expertise to do it, but there is a fine line.
Patty Glasow: Everyone is trying to find ways to cut corners, to make their fee stretch: How do I do the coordination I need to do, the design, the oversight? But I cannot do it like I used to because now my fee is at stake. So how do you push all of those services into that fee, and one way is to lower profit but you can only do that so much.
Reed Powers: I hate to see this trend, because it sounds to me a bit like the healthcare business, where you practice medicine from a defensive posture.
Primo Orpilla: You’ve got to document.
Patty Glasow: Our firm has never had a lawsuit against it, for 39 years. Since mid last year, we have seen four lawsuits against projects that we were involved with. That is what happens in these economic times. What saved us is being able to pull all our documents and say, “This is what we did.” Then being able to step back and say, “Now, you guys go at it, but it has nothing to do with us.”
Alice Prussin: I have heard this concern from lighting designers too. Everything is moving so fast—the lack of coordination. It puts additional pressure on the designer, the manufacturer, everyone.
Kami Kinkaid: We need senior people reviewing these projects. Junior and mid-level people have not been through this before. You need experienced eyes to look at drawings and documents.
How do you maintain a positive attitude and boost morale? Ken Lewis: A big part of it is communicating with employees. We talk openly, in a practical, straightforward manner. When it comes to layoffs, everybody used to hide. Now we get together and talk about staffing in the broader sense. The dynamic is much more participatory, because everyone knows what you are doing is rational—its a pragmatic process and not an emotional one.
Patty Glasow: You surround yourself with people you enjoy working with, and not taking things too personally.
Kami Kinkaid: Its important to hear from the firm principals. It helps the office understand what is going on in terms of the big picture.
Peter Pfau: Communication is big. Firm leaders need to have a perspective that “this too shall pass.”
Alice Prussin: It winds up being an opportunity to connect with your colleagues and find out what they are doing.
Primo Orpilla: Your first reaction is to go bury yourself and not talk about it, but I think you have to talk about what is going on. Tenants are looking to a whole new set of criteria—LEED and sustainability.
Jim Young: The marketplace is demanding it.
Primo Orpilla: It’s the difference between someone hiring you.
Reed Powers: It certainly makes it a more competitive environment out there. You need to be out there marketing at all times. If you don’t someone else will.