MANAGEMENT FOR DESIGN WINTER RELEASE 2018
The Value of Benchmarking How does your business stack up? How does your current performance compare to previous performance? How about other businesses in your industry? What does the future look like for you, your competitors, or your industry as a whole? The answer to these questions lies in benchmarking—but what value does benchmarking actually provide in architecture, engineering, and design businesses, and how can it be used to give your business an edge? Quite simply, benchmarking is a radar for change; in and of itself, benchmarking is only a means to an end—and it’s worthless if not accompanied by a call to change. The value is not in the benchmarking, but in the decisions you make, as leaders, to create change that will enhance your performance. Benchmarking leads to focus on change and provides a clear direction for the change process. There are two components to benchmarking performance: 1. Comparing your business with your own historical and expected performance 2. Comparing yourself to the industry and other businesses By benchmarking in these areas, there will always be a call to action, a call to change. For instance, for a business that’s operating in the top quartile, benchmarking could highlight areas where they are doing well and should provide a focus for how to maintain their advantage, as well as presenting an opportunity to raise their standards. Alternatively, for business in the bottom quartile, benchmarking identifies areas of opportunity where they can make improvements such as: 1. Reviewing fees 2. The work they are taking on 3. How they’re producing it 4. Employment costs
Case study In the chart below, we have a snapshot of a monthly management report for a Management for Design client. Their total income is approximately $10m, with a profit margin of 40%. According to industry benchmarks, they’re at the top of their game, in the top quartile of their industry, and are exemplifying superior performance.
But are they really at the top of their game? Their total income sure is, and so is their profit margin. However, when we drill down further, we find that their total employment costs to total income are running at 35%—less than their historical averages, and over 20 points below the industry average. How does that show up in the operations? The principals are buried in projects, with little to no opportunity to work on areas that could potentially improve, or to focus on where the company needs to head. By comprehensively measuring across all areas of the business, they have the numbers to know that billable time is high, income per employee is high, average hours worked is high, but work coming in from new clients is low in comparison to previous years. Therefore, the current position for this business is not sustainable. Armed with this information, they can now focus their attention and make the necessary decisions to see them well into the future.
Decision making You need to compare to how you are tracking yearly as well as comparing your results with those of appropriate peers, that is, businesses that are similar in size and business model to your own. Chances are that benchmarking will reveal many areas of your business that can be strengthened. For example, your results relative to your peers may present opportunities to: 1. Raise your standards 2. Focus on growing revenue 3. Reducing your labour 4. Increase your use of productivity-enhancing technologies 5. Or take numerous other actions. Conclusion Measure. Assess. Create change. Ultimately, if you want to run a successful business you need to know what’s going on in your business, so you need to be measuring as you go. Monitor your progress from year to year. And then compare yourself to your peers. Management For Design adds certainty to business decisions by combining your vision and hard data. We uncover the fundamentals of your business, identify areas for improvement and enable sound, evidence-based decisions, to move your business and projects forward confidently with fewer surprises. For more information, contact Gordana Milosevska on gmilosevska@m4d.com.au.
Leading a Design Business In design businesses, it’s common for leaders to be the face of the business, to nurture existing and future clients, as well as be the key initiators of design. But it’s often also the case that leaders have a challenging time separating themselves from the day to day activities of the business—allowing for time and energy to focus on building the business, improving the operations, surrounding themselves with great people, and nurturing the future leaders.
This approach often results in profitability taking a back seat to producing brilliant design, which is great for the clients, but not so great for the design practice. As a leader of a design business you are confronted by a set of circumstances (challenges) that are somewhat unique: • Often the leader is the face of the business • Leaders are typically the key initiator of design and client relationships • Leaders have a difficult time separating themselves from the day to day activities of the business • Leaders often don’t share financials • Effective business management is considered secondary to other considerations, including design capability, client relationships, and delivering projects • Profit and profitability can take a back seat to producing great design • The entrepreneurial drive of the founders is usually not found in the second generation • Client relationships tend to be deeper, stronger, and more personalised
How important are sound business principles in your business? How do you demonstrate and drive this? Do you have a culture of empowerment? It’s incumbent on business leaders to lead by example and set the tone. Not only that, entrepreneurial vision and drive are often not inherent in the next tier of management, so enthusiasm for your vision, clear strategic objectives that filter through to every aspect of the business, and empowering your people are key to driving your business forward. What are the priorities for your business and how do you communicate these to your team? Do you pursue a culture of trust, sharing, collaboration, empowerment, performance, and profit? Talk about what you believe in, be open, and address those values in the everyday conversations that you’re having with your people. Use phrases that are inclusive of the collective whole of your business, using the tone and language that reinforces ‘this is important to us’. Successful leaders, more often than not, exhibit the following personal qualities: • Have a clear purpose • Keep to clear and actionable goals and priorities • Are relationship builders • Understand and challenge their people • Understand the true value of their time • Constantly ask themselves ‘am I the right person to be doing this’ • Focus on what will make a difference • Accept and embrace performance criteria • Are realistic (self-assessment) • Follow up and create energy • Effectively balance life and work • Let go of design decisions and client relationships • Mentor others • Actively pursue professional development
In most design businesses there are critical elements of the business that the leaders need to drive and ensure they contribute to continuously – the ‘business drivers’. In a design business, these are typically to generate work, to nurture client relationships and to design and deliver great work.
But what about all the areas of the business? For a design business to be truly successful, the leaders’ attention is needed across strategy, communications, design, delivery, innovation, operations, human resources, and financial control. Having said that, most architecture, engineering, and design (AED) leaders that are elevated to senior roles or directors’ positions don’t have the necessary business management expertise to manage, direct, and drive a successful business that performs across these key business drivers
As a leader, you need to be clear about your expectations around client outcomes, project and financial performance, and managing deliverables. None of this comes overnight and it typically requires small steps. It comes through a well-constructed plan, time and experience, and the assistance of your team—the team of experts you surround yourself with. It goes without saying that what’s required is a balance between the time you spend ‘in the business’ and ‘on the business’. You need the time out from project-related activities to make this happen. Be clear about where the business is heading and be prepared to engage your key people in why, where and how you will get there. Ideally, you will be able to empower your staff, hand over control and give some of the responsibility and accountability for achieving your business objectives to others. Your objective as a leader should be to empower your key people to take on responsibility for project and design delivery, project performance, client relationships, and business systems. Set them up to succeed and flow responsibility for decision making through the business.
Ask yourself the following questions of your key people (and future leaders): • Are they trained? • Do they have the necessary skills? • How much responsibility and accountability do they have? • Are they responsible for performance (project deliverables)? • Do they have the information and tools they need? • Are they financially literate? • Do they embrace technology? • Do they delegate effectively? • And if they don’t have the necessary (or desired) capability, work with them to develop a plan to make it happen. Motivate your team by driving a culture of leadership and ownership succession. Articulate and provide an opportunity for future leaders and be clear about what it takes to become a leader in your practice. By providing a transparent path to leadership you will set the standard for future growth.
Here are some steps to create a culture of leadership among your key people: • Involve your people in articulating and clarifying your business ‘drivers’ and desired business outcomes e.g. strategy, rainmaking, design, innovation project delivery etc. • Define, articulate and measure the performance criteria across these business ‘drivers’ • Ensure your key people are working in their core capability (set them up to succeed) • Understand and nurture their inherent personal strengths/weaknesses, temperament, and abilities • Include measurable criteria in your executive agreements • Provide individual (and team) contribution requirements and link these to the profit/bonus pool • Provide regular (and expert) feedback on performance on a quarterly or 6 monthly basis Your business can be the vehicle that enables you to shape and control your destiny – both in life and your career. Your challenge as a design leader is to balance the creative and commercial aspects of what you do. Successful and effective leaders today, more often than not, are doing less and achieving more. To borrow from Mies Van Der Rohe ‘less is more’.
Social Marketing for AED Businesses In our industry, where traditional advertising is often considered taboo, social media marketing has quickly become a crucial communications tool. Most successful architecture, engineering, and design businesses use it to augment their corporate media and marketing messages, reaching thousands of people each day. When done well, it’s one of the least expensive ways to promote your business and engage with current and potential clients. Whether it’s using Instagram to show off your latest projects, Twitter to engage journalists or your peers, Facebook to announce the award you just won, or using LinkedIn to recruit the best new talent, the key to effective social media marketing is a strategy.
What are your goals and who is your audience? You need to know what you’re trying to achieve if you want to know if your efforts are paying off. Do you want to offer more services to your existing clients, attract new clients from a different sector, make more connections with your community or industry peers, or to grow your company’s brand presence? Once you’re decide, the next step is to think about the target audience for each of these goals: •
When are they online?
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What social networks do they use?
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Which articles do they read?
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Which images inspire them?
Get started It’s easy to get overwhelmed by every “best social media tips” article you read online, but don’t let that stall you, make a small start and build momentum from there. You can start with as little as 5-10 minutes per day—like and retweet your favourite Twitter and Facebook posts, comment on your peers’ Instagram photos, share an interesting article on LinkedIn. Increase your engagement each day and get a feel for your voice—participate in industry conversations, follow journalists and reply to their articles, find and discover relevant enclaves within each network.
What to post When you’re ready to start posting your own content—make it count. Current social media algorithms favour both quality and quantity, so there’s nothing ‘too good’ and no ‘too often’ to post. Next time you have a conversation that comes to an interesting conclusion or idea, don’t just store it in your head, write it down and share it. Start to view all your conversations and interactions through the lens of an editor—you’ll be surprised where some of your best ideas come from. Networks like Facebook, Twitter and LinkedIn will reward you for richer content, so aim to post photos, videos, and links along with your words. A well-selected stock image can go a long way to getting your carefully written blog article a bigger audience. Instagram is a visual medium, so you want to post your very best photos. Don’t limit yourself to just your own completed projects though, interesting sketches, renders, field trips, and inspiration photos should help to diversify your content and give you plenty to post about. Continue to post interesting, polished content to your social channels, and you’ll see growth in your followers and engagement. Use a variety of hashtags to increase views of your posts, trying different variations each time to find what works best for you.
Amplify your reach Now you have a growing social media presence, how can you increase your audience? Try experimenting with promoted content. Promoted or ‘boosted’ content is a means of paying to increase the number of impressions and views you will receive. Pick your posts, set a budget, and let the algorithm work for you. Again, it’s best to start relatively small and experiment with images, headlines, and content types, until you’re comfortable with larger budgets here.
Converting If you’re planning to turn your social media marketing efforts into measurable client returns, you need to ensure you’re directing people back to your website, which has clear calls-to-action—like mail-list subscriptions and contact forms. Phrase these from the point of view of the potential client and the benefits you can provide them. The more consistent the language and imagery is between your social channels and website, the more likely you are to convert your new leads.
Investigate, iterate, and improve All popular social media networks feature analytics, so you can measure which posts are performing better than others. Use this data to constantly improve your content and create meaningful posts that will engage your target audience. Regularly review your performance against your initial goals, and course correct any time you notice that your engagement is slipping.
So, whether you’re the owner of a small practice with less than five employees, or the leader of a large multinational firm, with the right content, some care, and strategic thinking, your voice and the voice of your business can gain an audience that will reap rewards.
The Benefits of Managed Technology Services with M4D Are you struggling to adequately meet your technology requirements inhouse? Are you under-skilled, under-resourced, or unsure how you can make improvements? Businesses of all sizes can benefit from outsourcing their technology requirements through a managed technology service partner.
AED Industry experts At M4D we understand the technology requirements of the architecture, engineering and design industries, from Autodesk to desktops; project, resource, and financial management.
Reduce Risk Balancing new software, hardware, severs, suppliers, possible technology down times, system maintenance, support tickets, and hiring the right people to get it all done... handling all your technology in-house can be expensive and hard to get right.
Controlled & Predictable Spending Under a managed service contract, you can plan for your regular technology expenditures well in advance and avoid and unforeseen costs.
Level the Playing Field Larger companies typically have in-house teams of full-time technology professionals. But, small to medium sized businesses can’t afford this luxury on their own. Our managed technology services give you the resources of a much larger practice.
Compliance and Security We’re familiar with all the relevant security and compliance technology standards—ensuring that you and all your data is safe.
Greater Scalability We can quickly and economically scale your technology offering up or down much faster that you could with an in-house technology team.
Quickly Implement New Technology We use our experience and understanding to identify and quickly implement new technologies into your business, ensuring your systems and processes stay up to date.
Stay Focused on Your Core Business We help you stay focused on your business needs while we deal with the complex technology solutions. By helping you run your practice efficiently and plan for the future, we free up your time to focus on creating great design and building your business.
New M4D Team Members We’re pleased to welcome two new accountants to M4D, Oliver Chan and Rodrigo Valerio. Both Oliver and Rodrigo come from diverse backgrounds in accounting, bringing unique perspectives and experience to our finance team. Working closely with our clients, our accountants assist to prepare invoices, perform reconciliation of AR and bank accounts, assist with accounts payable, and help with a range of client queries.
Reading List The Inevitable: Understanding the 12 Technological Forces That Will Shape Our Future Kevin Kelly Kevin Kelly provides an optimistic road map for the future, showing how the coming changes in our lives—from virtual reality in the home, to an on-demand economy, to artificial intelligence embedded in everything we manufacture—can be understood as the result of a few long-term, accelerating forces. The Industries of the Future Alec Ross Ross provides a “lucid and informed guide” (Financial Times) to the changes coming in the next ten years. He examines the fields that will most shape our economic future, including robotics and artificial intelligence, cybercrime and cybersecurity, the commercialization of genomics, the next step for big data, and the impact of digital technology on money and markets.. A Fortunate Life Albert Facey A true classic of Australian literature, his simply written autobiography is an inspiration. Born in 1894, Albert Facey lived the rough frontier life of a sheep farmer, survived the gore of Gallipoli, raised a family through the Depression, and spent 60 years with his beloved wife, Evelyn. Despite enduring hardships we can barely imagine today, Facey always saw his life as a “fortunate” one. A Course Called Scotland: Searching the Home of Golf for the Secret to Its Game Tom Coyne A Course Called Scotland, a hilarious golf and travel adventure throughout the birthplace of the sport and home to some of the oldest and most beloved courses in the world, including St. Andrews, Turnberry, Dornoch, Prestwick, Troon, and Carnoustie. The Field Study Handbook Jan Chipchase Travel anywhere, make sense of the world, and make a difference. The how-to, why-to guide to running international field research to inform and inspire product, brand, strategy, policy and communications. Described as “The canonical classic reference for cross-cultural research” and “A blueprint of the future”.
