Designing a World-Class Architecture Firm. Patrick MacLeamy
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innovation. In many firms, designers only actively participated during the design phase. Then, they turned over responsibility to a production team led by a project architect. Gyo understood that design was a process—not a phase—and must continue from the beginning of design through the end of construction. Thus, another innovation was that Gyo or his designated designer remained with each project throughout production, as the technical team prepared drawings and specifications. HOK designers reviewed details, materials, and anything else that would affect the final design of the building. Design involvement even continued during construction, when designers reviewed contractor shop drawings, material samples and, finally, colors. Even after construction was complete, one step remained for the designer: touring the finished building with the owner to assess the finished design.
But it wasn't just the design department that followed projects from beginning to end. HOK assigned one person from each of the firm's disciplines to go after a job, and then the same team saw the project through. Believe it or not, many firms at the time assigned staff to a project on an as-needed basis, with people coming and going when they needed to put out fires for some other client. Instead, at HOK, the founders would identify the designer, project manager, and project architect for each project, and make those people part of the pitch. If HOK landed the contract, that same designer would conceive the building, the project architect would make sure the design worked, and the project manager would follow up to see that everything happened on time and on budget. The insight here is that designers are creative, but less grounded. It helps to pair them with a project architect who oversees the technical design and a project manager who keeps things on track. Then, by keeping the entire team together, they develop a kind of institutional memory for the details of the project that is invaluable.
Core Boards Innovation
Speaking of HOK's different disciplines, the founders encouraged people with similar roles to meet together to share their knowledge and help each other to succeed. Hellmuth's marketers met together in this fashion, as did Obata's designers and Kassabaum's people too. In fact, two groups formed In Kassabaum's department—one for project managers and another for project architects—since Kassabaum wore two hats at HOK and had teams for each. These groups were open to people in each department, regardless of their seniority, and encouraged a free flow of ideas. HOK eventually named them “core boards” because they represented the four core competencies of the firm: marketing, design, management, and production.
Staffing Innovation
In addition to architects, HOK employed other design professionals who worked with the architects, as well as on their own projects. The first landscape architect HOK hired, Neil Porterfield, was a University of Pennsylvania graduate with a passion for planning. In conversations with me, he described large-scale planning as essential for saving the planet from wasteful, unplanned development. I, too, came to believe in the power of good planning to improve the world and this would play a big role in my later career.
Chip Reay, the first graphic designer at HOK, was engaged in multiple projects including designing museum displays and environmental graphics. He also helped Obata with presentations for his latest designs. Chip's office was crammed with magazines, drawings, and reports—on the walls, on his worktable, and stacked on the floor. He was a fluid, creative thinker, and Obata often relied on him to help brainstorm design ideas for challenging projects.
Interior design was not yet a recognized profession, but several architects in the department were focused on designing the interiors of buildings, including the furniture. Most architecture firms had small sample rooms next to a library of building product catalogs, but, at HOK, the samples filled a big room, and included furniture in addition to architectural products. Looking back, it was a sign that HOK already understood that design was the entire building, inside, and out, not just a pretty façade.
Since Hellmuth believed public relations was important for building an architecture firm's name recognition, he hired Bill Remington as a public relations specialist, one of the first in-house PR people in architecture. Remington's job was to get HOK published in newspapers and magazines, especially in the architectural press. Hellmuth often used reprints from magazine articles as persuasive props during meetings with prospective clients.
Paul Watson, the HOK in-house lawyer tasked with reviewing all owner-architect contracts, occupied his own office a few steps away from George Kassabaum. I was to learn later that HOK was probably the first design firm to employ an attorney full time instead of relying on legal advice from a local law firm. HOK's founders were interested not just in designing great buildings, but also in designing a great firm. That included bringing nonarchitects on board to help build the business. What nondesign professionals could you bring in house to enhance your own company?
Ownership Innovation
When Hellmuth, Obata, and Kassabaum founded HOK in 1955, Hellmuth was determined to avoid the shortcomings he had observed at traditional partnerships. Remember, the first flaw was that most partnerships distributed all cash profit to the partners at the end of each year, leaving little to no cash for operating the firm the following year. Of course, it's better to take a portion of your capital and invest it back into growing or improving your firm. The second defect was that when the partners were ready to retire, no one working in the firm could afford to buy them out. The partners were left with the choice of selling the firm to outsiders or closing it down.
Hellmuth had seen this pattern with his own father and uncle and wanted to avoid it. That's why he and the other founders established HOK as a corporation instead of a partnership. This was highly unusual for an architecture firm at that time and meant that HOK's ownership would be in the form of stock. Hellmuth, as the senior founder, received 50% of the shares, whereas Obata and Kassabaum each received 25%. Seven years later, Obata and Kassabaum both bought some of Hellmuth's stock so that each owned an equal third of HOK.
The founders wanted to design a world-class architecture firm and adopted some farsighted stock-ownership restrictions to support their vision. These included ideas that could be valuable to other designers as well:
HOK Stock Rules
1 HOK stock is for active employees onlyStock ownership was limited to active employees, including the founders. When someone retired or left the company for any reason, they were required to sell their HOK stock back to the company and the company was required to buy it at the current month's price.
2 HOK stock may not be part of an inheritanceIf an active employee dies, heirs receive the cash value from the employee's stock, not shares. This provision was designed to prevent surviving spouses or children of employees from having a say in the operation of the firm.
3 The founders' stock ownership is age-limitedThe founders were required to sell their stock back to the company at age 65. They could continue working at HOK but could no longer be an owner. This provision prevented a weakness of many firms, where the owners stay on too long and leave the staff with no ability to buy them out. This provision only applied to the founders.
4 Stock ownership will be in a parent companyThe founders were confident HOK would open offices in other cities, and a number of separate companies would need to be formed to allow for that to happen. However, they wanted stock to be issued from only one company, which eventually became HOK's parent company.
This ownership relationship required HOK to operate in a more businesslike way. The founders never took all the money out of the firm at the end of the year as a partnership might, instead reinvesting some of each year's profit back into the company. They made good livings, but never became fabulously wealthy, because they chose to put money back into the company. They had a bigger mission in mind than just dollars—they were investing in the long-term future of the firm.
The founders developed a plan to offer stock to key employees as a method of expanding ownership to the next generation of leaders. Their goal was to create a virtuous cycle. As senior leaders retired, upcoming leaders would become owners. They also