Scott Simpson: 'We're in the leadership business'

Scott Simpson, FAIA, is president and CEO of The Stubbins Associates, Cambridge, Mass. A registered architect in 19 states, he earned a BA in English at Yale and an MArch at Harvard and served on the national board of the AIA in 2002–3. He is co-author (with James P. Cramer) of How Firms Succeed: A Field Guide to Design Management, published by Greenway Communications and Östberg Library of Design Management.

Robert Cassidy: You have this unusual business arrangement with Kling. [Kling, a Philadelphia-based A/E firm, ranks 12th on BD&C's Giants A/E list for 2005.] How does that work?

Scott Simpson: Kling is based in Philadelphia and specializes in biotech projects, and they wanted to have a greater presence in Boston. Bob Thompson [Kling CEO Robert Thompson, AIA] approached us about a merger, but we knew that one of the parties usually loses in the merger culture war.

So we took it on as a design problem: How could we get the advantages of a merger, without the culture clash?

We call our solution "The Italian Sandwich." The bottom part of the bun is ownership. Individuals of Kling own shares in Stubbins, and individuals of Stubbins own shares of Kling, but neither firm owns the other.

The top of the bun is leadership. Bob and Brad [Bradford White Fiske, AIA, senior principal of Kling] sit on our board, and I sit on Kling's board. By overlapping the leadership of both firms, we can align our strategies.

In the middle of the sandwich, we have the geographical operating units: Philadelphia, Raleigh/Durham (N.C.), Washington, D.C., and San Francisco for Kling, and Cambridge and Las Vegas for Stubbins.

The beauty of this model is that Stubbins gets access to Kling offices, Kling engineering, and a talent pool of people, for zero overhead. It doesn't cost me a dime to get access to Kling's assets. We just pay for them on a fee-for-service basis when we use them, and we decide when we want to use them. At the same time, Kling gets access to our offices and to our markets in higher education, healthcare, and hospitality.

This gives us critical mass. When the deal was signed, in April 2003, Stubbins immediately went from a 100-person firm to having the capacity of a 400-person firm. We can now offer Kling's integrated engineering services, which we couldn't do just as Stubbins. That gives us enhanced marketing capability. We're getting opportunities to compete for jobs we never would have seen otherwise. We can go after mega-projects, such as a new nano-technology lab at Case Western Reserve and a chemistry lab at the University of Delaware.

There are cost savings, too. As a combined organization, we can have one liability insurance policy, one healthcare insurance plan, unified accounting, purchasing, IT services, and so on.

This model allows both organizations to retain their identity but each can still align with the other organization as necessary, for basically no capital investment. To the best of my knowledge, we're the only entity in the country to have done this.

RC: Any thought of adding another firm?

SS: Yes, we're talking to a couple of very substantial entities.

RC: In your book, you come down hard on design firms for not running their practices in a businesslike way. What do you most firms do wrong?

SS: The single biggest mistake? Architects fail to articulate a value proposition for every project they undertake. They talk primarily in terms of aesthetics, but they leave out so much of the value of the business proposition. Architecture is a value-added enterprise, but architects don't have the value proposition, so their fee structures don't reflect the values that they offer.

Let me give an example. When we do a project for Novartis, they expect a 60% efficiency ratio as a measure of utilization. Our designs for Novartis are 80–85% efficient. The average savings on their projects is $5.38 million and more than eight months in delivery time. With one project for Novartis, if they didn't move in to the new building in time, it would have cost them $1 million a month in rent at their old location. We finished the project 12 months ahead of time, and saved them $12 million in rent.

RC: They must have liked that.

SS: Yes, they gave us a substantial bonus, in the seven-figure range, for all our work with them.

RC: You have a trademarked program called HyperTrack, but lots of firms talk about "fast track" or "super track." Is HyperTrack just another form of design/build?

SS: No. Design/build is a contractor-driven process. In the HyperTrack model, design drives the process, although the CM is at the table for every meeting, to check costs, schedules, design suggestions.

It's a very integrated thing. We're erasing the line between the separate disciplines of construction management, design, and engineering. We're making a truly integrated team, including the owner. This makes your liability go to zero, because you can't point a finger at anyone else.

In the current state of affairs, you have almost a medieval separation of powers, with everybody disagreeing. We want to erase those lines of separation and create an integrated approach that shifts the value proposition. It's a process where the team members work together simultaneously, and we layer in the technology. It lowers costs to the owner, and quality goes way up.

RC: Any evidence that HyperTrack works?

SS: [The biotech firm] Amgen came to us and told us they had land in Cambridge that was going to be downzoned in less than a month from an FAR of 4.0, to 2.5, unless they could get a building permit in that time. So, in 28 days, we did the working drawings for a 363,000-sf building and got the permit. We saved them $32 million in asset value.

RC: If you were to act as a consultant to go into a typical architecture or A/E firm, what would you advise them to do?

SS: In terms of quick fixes, I'd look at four things: marketing, operations, professional services, and finances. In terms of marketing, what's their budget? Are they devoting enough resources to marketing? Then I'd review the firm's hit rate: Are they getting a high enough percentage of the jobs they go after? Then I'd look at their cost of doing business.

On the operations side, I'd look at how they trace their money, how they set up their budgets, and what their management metrics are.

In terms of professional services, how do they utilize their talent? Do they have the right mix of people? Is there a leadership program in place? Is there a quality control program? Are they training their people?

Finally, are they making enough profit to reinvest in the firm, in new equipment, IT resources, people, and so on.

RC: Do you think most firms would welcome such a review?

SS: Well, that raises the issue of leadership. Architects are not taught about team leadership. We want to change that paradigm. I believe architects are in the leadership business, and design is our medium. It's our responsibility as architects to lead teams of people: contractors, subcontractors, specialty firms, even owners. Architects have to see themselves as design leaders.