Strategic Planning and Purpose Driven Leadership in the AEC Industry
Strategic Planning and Purpose Driven Leadership in the AEC Industry
What is the purpose of strategic planning? Why should we care as practice owners and what is the function of this effort? Perhaps we can begin to answer this question by defining strategy. Put simply, strategy is a set of goal-directed actions a company can take to gain and sustain a competitive advantage. A competitive advantage, however, is always relative. It defines the best way for a firm to create value for its internal and external stakeholders. Relativity is important. In the practice, profession, and business of Architecture, there are no absolute advantages. To paraphrase Simon Sinek: “Business is an infinite game in which the competitive landscape is always in flux.”
Now, building from here, let’s better understand what is a strategic plan? Without one, it would seem that a firm could wander around aimlessly without priorities. A firm without a strategic plan is one where the employees are confused about the purpose of their jobs. Strategic planning provides clarity, direction, and focus for the organization. It drives alignment and communicates your “message.”
Clarity is of course very helpful, but it doesn’t quite get at the “why.” It doesn’t quite answer our initial questions. I’ll submit my thesis that the primary purpose of strategic planning is to build a bridge, provide a structure, and define a process connecting a company’s mission and vision. Arguably, we have some more work to do defining mission and vision. In the interest of succinctness, one defines your core purpose or just cause and the other what/how you are achieving it.
A well defined strategy can help us build a company with legacy in mind. In many industries outside of the AEC sector (specifically in the startup movement and tech) it is extremely common to speak about forming businesses with exit strategy in mind. Exit strategy means knowing when to remove yourself from the business which has all its structures in place ready to outlive the founder. In our industry, we can better refer to this as leaving legacy. Legacy is when your name lives on. In order to unpack this topic in more detail, I had a conversation with Phil Keil. Phil is the Principal & Director of Strategy at Zweig Group, a consultancy firm providing business support services to Architecture firms for over 30 years in the USA and now they have joined forces with me to service the international market with strategic planning, risk management, valuation, marketing, branding, business development, ownership transition, mergers & acquisitions and more.
Philip is extremely passionate about the topic of legacy and he will actually be joining me at Disrupt Symposium, planned for 1-5th May to speak about “Strategic planning and purpose-driven leadership”.
At Disrupt, we will also have an in-depth conversation and break-out networking rooms dedicated to this topic. Disrupt brings to you practices and C-suite executives from the AEC industry to cover topics of business development, marketing, branding, communications, sales, client attraction strategies, financials, practice operations, tools of digital transformation and more. Some of the key companies involved are; UnStudio, SOM, OMA-AMO, Snohetta, Safdie Architects, Zaha Hadid Architects, Perkins & Will, Gensler and more. The event is generously supported by Graphisoft, HP, Chaos Group, Tunarch, and IE School of Architecture and Design. To join is go to www.disruptsymposium.com and secure your spot now.
Going back to the topic of building a practice with legacy in mind, Phil shared with me that doing so requires us to ask ourselves about our “purpose”. By purpose, he does not mean passion. Passion can be an important factor in your success, but it is hard work that makes us passionate. Purpose is what you truly care about. It is what you are uniquely positioned to provide and gives you the resilience to succeed. If you’re interested in learning more about why you ought to be focused on purpose rather than passion, Professor Jon Jachimowicz of Harvard Business School has conducted/discussed studies into this distinction at length. For the purpose of this article, I’d like to focus on what purpose-driven leadership and strategy mean for our firms. Before diving into some of the research and data indicating why purpose should be the foundation of your strategy, let’s look at several other examples of well-crafted purpose statements from companies you may be familiar with.
REI, who sells sporting goods, camping gear, etc. – “awaken a lifelong love of the outdoors, for all.”
Google – “To organise the world’s information and make it universally accessible and useful.”
Charles Schwab – “A relentless ally for the individual investor.”
Heineken USA – “To be the wuxia master who saves the kingdom.”
Joestein Solheim, former CEO of Ben and Jerry’s – “To be part of a global movement that makes changing the world seem fun and achievable.”
You may be thinking, this is all great, but are there tangible benefits, evidence, and data that purpose-driven leadership, organizations, and strategy have more successful outcomes? The short answer is, yes. I’ll expand briefly. For example, the Gartenberg study published in 2019’s Organisation Science 30, no.1. The study included 500,000 people across 429 firms suggesting a positive impact on both operating financial performance (return on assets) and forward-looking measures of performance (Tobin’s Q and stock returns) when the purpose is communicated with clarity – even after controlling for current performance. It also noted that this relation is driven by the perceptions of middle management and professional staff rather than senior executives.
Additionally, Thomas Malnight and Ivy Buche of IMD and Charles Dhanaraj at the Fox School of Business launched a global study of high-growth companies investigating the importance of three strategies known to drive it: creating new markets, serving broader stakeholder needs, and changing the rules of the game. What they found surprised them. There was a fourth driver that hadn’t been considered – purpose. Those in the study that were driven by purpose had average compound annual growth of 30% or more in the previous five years. A security firm from the study completely reshaped their business to align with purpose and saw sales increase from 6% of total revenue to 20% in the new sector of focus. A financial services firm in India, a country with abysmally low (3.5%) insurance penetration, following their purpose to “rise” and serve rural areas managed to grow its market and client base to serve 50% of villages and 6 million customers. They also found impacts on unifying the organizations, motivating stakeholders, and broadening impact. Finally, other research has shown purpose driven leaders gain nearly 50% more market share than their competition, they win Best Firm to Work For awards, and attract better talent.
Phil helps architecture firms see results like these by helping them design and implement the strategies that work.
Phil mentions these few things that in his experience purpose driven leaders and firms have in common:
They are introspective and self-aware.
The focus on the big picture.
They integrate purpose into their strategic plan and strategy.
They have an ethical filter.
They communicate and inculcate their values and purpose into the culture of their firm constantly and particularly on an employee’s day to day level.
They set measurable goals.
Their purpose allows them the power to innovate.
Their purpose leads them to impactful partnerships.
At this point, perhaps you are convinced and would like to take steps to transform your firm, perhaps you’re unconvinced and would like to challenge this framework, or perhaps you are just interested enough to learn more. There are two ways for you to continue this journey of discovery. Join DISRUPT, the largest virtual business of architecture symposium in the world on May 1st–5th. Alternatively, you can book a call with us. Both me and Phil are available to help you answer some of your pressing questions regarding your practice operations.