Posted in practice on April 9, 2015 1:28 pm EDT

Crafting Specifics

What kind of year will it be for your church design business? In large part, that will depend on how you communicate the value of what you do to your clients.


 

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TAGS: architectural design, business, philosophy,

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By Christian Doering

Despite global turmoil, 2015 looks to be a good year for the economy as a whole and for religious construction in particular. What kind of year will it be for your business, specifically?

… for your business to make a profit, your client has to agree to pay you more for the work than it costs you to produce it.

In large part that will depend on how you communicate the value of what you do to clients. In order to capture a share of that value, you must reach an agreement on what the project is worth. Just a quick reminder: for your business to make a profit, your client has to agree to pay you more for the work than it costs you to produce it.

Two modalities of doing business

Harvard Business School lecturer Frank Cespedes says there are only two reasons someone would do that. One way to be profitable is to keep your costs so low that you can sell equivalent (or near-equivalent) goods and services for less than anyone else, and still turn a profit. For example, the only way to cut your hair for less than Super Cuts is to do it yourself.

One reason Super Cuts can offer the lowest prices is that they hire recent beauty school graduates, often giving them their first job, at a low hourly rate. Turnover is high and the skill level is variable. You might run into a first-timer, or someone who’s developed their craft and is ready to move on to a higher-paying salon. Either way, the person who cuts your hair is expected to do just that and no more. The shop itself will be pretty bare bones, and you won’t expect extras like free beverages, hot towels or style consultations beyond the most basic. But for keeping your kids, or yourself, presentable (if not particularly stylish or unique), you can’t beat the deal.

At the other end of the spectrum are high-priced, high-service branded salons. It’s not just a symptom of income inequality that these places are at least as busy as Super Cuts. They offer “affordable” luxury, personal attention and even an enhanced sense of personal worth. Stylists deploy both tonsorial and social skills to establish personal client bases. It can be very hard to get an appointment with a star cutter in a high-status salon like this.

Both these kinds of businesses know exactly what they’re doing. One is offering a commodity service in the most efficient manner and at the highest possible cost. The other is offering a unique experience and a personal look, and creating the impression of scarcity. These three factors increase your willingness to pay, your personal definition of affordable luxury.

In between these two, there are the myriads of salons that seem to come and go at random intervals. The people who start them know how to cut hair, and they know that they want to earn more than Super Cuts pays. Beyond that, however, they don’t have a value proposition. So they get squeezed in the middle—unable to trim costs to the bone, but equally unable to charge enough of a premium to make their operation viable over the long term.

Yes, architectural design is a totally different field, but in this way the two businesses are the same: you must choose one value proposition or the other. Lowest price/cost or highest value/performance? When you’re deciding and defining, keep in mind that “low cost” is not low enough—only the lowest cost will attract the volume of business you will need to maintain a very high level of efficiency. Similarly, “high performance” is not the same as the highest performance. Only the best of the best can name their price while maintaining a reasonably consistent flow of projects.

If you’re aiming for lowest cost, your questions are almost all quantitative. How few staff? How few hours? How few meetings? How few changes? If this is starting to sound like design/build to you, it should. For an increasing number of clients, design/build appears to be the lowest cost option. There’s no way to get closer cooperation between designer and constructor than by making them the same entity. If there’s a conflict of interest between the aesthetic and the practical, design/build has a tendency to go for the practical every time. Once the threshold of acceptability is reached, design/build attempts to eliminate anything that increases construction complexity, time or cost.

Questions of methodology and expediency

Design/build minimizes risk along with cost. The owner gets a bid up front, instead of separate contracts for a design that will be bid on and priced after it’s accepted. Integrated Project Delivery (IPD) can do an excellent job of eliminating risk while balancing the incentives to do things well and do them efficiently. But IPD is legally and financially complex: by combining designer and constructor, design/build dodges most of those issues.

If you’re a design firm, the lowest cost value proposition is a tough one. Price your work as low as you want: design/build can appear, at least, to offer the same thing for free.

But is it really the same? I would argue it’s not, especially if you adopt the “high quality/high performance” value proposition. Special emphasis on the word “quality,” because while lowest cost is a purely quantitative proposition, the unique (or at least highly desirable) proposition is fundamentally qualitative. This is where the value of your services should dovetail with the values of your client. To explore those values, you must ask yourself—and ask clients to ask themselves—“What makes a space sacred?”

For centuries, the answer to that question was the architecture. The Gothic builders, for instance, conveyed a powerful, profound message with flying buttresses, arches and spires. One could argue that the humbler white clapboard structures of New England Protestant denominations are no less eloquent, in their own way.

Many congregations today seem to have decided that audiovisual technology can turn any geometry, even the brutal efficiency of the retail outlet, into a worship space. But it seems important to ask yourself if these are the right clients for your firm. Will their values, their vision of a house of worship, lead them to value imaginative, creative design?

I am certainly not suggesting that you lead a charge back to the 19th century: that would be insane. What I am suggesting is that before the lights go down, and after they come up again, some congregations might like to feel they are in a place that’s out of the ordinary, separate from the day-to-day. Sacred, not secular. A space that inherently adds impact, depth and meaning to the messages communicated within. It may be that interpersonal contact and natural lighting are as important to some congregations as digital graphics. LED displays, with their increased brightness and ability to coexist with ambient light, may open a way to combine these two styles of worship. If your value proposition appeals to these congregations, you can use this year to form productive—and profitable—relationships.

 

 

 

 

Learn more about the companies in this story:

Harvard Business School

 

Integrated Project Delivery

 

 

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