6 myths in the ae industry

The Six Major Myths About A/E Industry

Presented by:

Mike Phillips, AIA

About The Presenter

Mike Phillips AIA

President

Phillips Architecture PA

DesignFacilitator LLC

Mike Phillips AIA, IIDA, ASID, is the President and Founder of Phillips Architecture PA,

a 20-year old multi-disciplinary design firm in Raleigh, NC, name to the PSMJ Circle of

Excellence and winner of ZweigWhite's Best Firm to Work for award in 2007 and 2009.

A registered architect and certified interior designer, Phillips has incorporated his more

than 25 years of commercial interiors and architectural experience into the development

of a method of collecting and incorporating feedback to benefit design firms and their

clients.

Six Major Myths About the A/E Industry

by DesignFacilitator

THE INDUSTRY EXPERTS ON COLLECTING AND INCORPORATING

CLIENT FEEDBACK

• HAVE ANALYZED OVER 30,000 SURVEY RESPONSES

TO REVEAL ACCURATE PERCEPTIONS OF A/E/I INDUSTRY CLIENTS

• CONSTANTLY TRACKING AND UPDATING OUR UNDERSTANDING

OF HOW A/E/I CLIENTS SEE DESIGN FIRMS

• FEEDBACK TOOL DESIGNED BY ARCHITECTURAL FIRM

AND CUSTOMIZED FOR USE BY A/E/I INDUSTRY

Part 1Why Firms Collecting Feedback are More Profitable

and How to Join their Ranks

Showed attendees most effective methods of gathering feedback from

their clients

Part 2The Six Major Myths

About A/E Clients

Contact us if you would like to schedule a presentation of Parts 1 or 2


WHAT IS A MYTH?

myth \’mith\ noun [Greek mythos]first known use: 1830

1: a thing having only an imaginary or unverifiable existence

2: an ill-founded belief

3: an unfounded or false notion

4: an unproved or false collective belief used to justify disruptive behavior


WHAT PAINS DO THESE MYTHS

CAUSE OUR INDUSTRY?

1. Leads firms to misconceptions

2. Produces harmful behaviors & trends

3. Undermines credibility of design firms

4. Disrupts industry prosperity

ANTIDOTE:

Feedback from your clients

dispels negative perceptions.


REALITY:

A. Professional design fees typically

represent less than

5% of project costs.

Total Project Costs

Design

Costs

1 “CLIENTS THINK WE

OVERCHARGE FOR OUR WORK.”MYTH1

MYTH


REALITY:

B. We tend to overpromise

1MYTH

“CLIENTS THINK WE

OVERCHARGE FOR OUR WORK.”

(Especially when we are competing for projects.)

and underprice


greatly in excess of our entire fee.

1MYTH

“CLIENTS THINK WE

OVERCHARGE FOR OUR WORK.”

REALITY:

C. We are creating a sophisticated solution to complex

problems.

Our solutions can add value and reduce project cost


REALITY:

D. Feedback collected from clients

measures perceptions

relative to expectations.

Clients indicate that designers are

exceeding their expectations.

National

Average

Score: 5.2

21% of

scores

above

Excellent

1MYTH

“CLIENTS THINK WE OVERCHARGE

FOR OUR WORK.”


Symptoms:

A. Designers make assumptions that

“no news is good news.”

B. Minor irritations, if not discovered,

“CLIENTS WILL TELL US

IF THEY THINK SOMETHING IS WRONG.”2MYTH

will fester!


Strategies to Bridge the Gap:

A. Determine who is responsible for asking for feedback.(Hint: It’s not the client)

B. Ask client for feedback to helprelieve client’s frustration.

C. Incorporate feedback / refine process to address issue / improve value

2MYTH


IF THEY THINK SOMETHING IS WRONG.”

(Hint: Smaller problems, fewer lawsuits)


2MYTH


IF THEY THINK SOMETHING IS WRONG.”

0% 10% 20% 30% 40% 50%

Feedback Average

Industry Average

Client Average

Response Rates to SurveysREALITY:

Clients only tend to tell

if asked.

When asked,

clients respond at

10 times the average rate.


“CLIENTS DON’T TALK TO OTHER

CLIENTS

ABOUT OUR FIRM.”

3MYTH

Research Refutes:

Julie Olson and Renee Godwin,

conducting research for the

SMPS Foundation, found

word-of-mouth communication

(including clients talking to other clients)

to be one of the most pervasive modes

of referral and reputation building

for design firms.

“Growing Your Business Using the Untapped Power of Word-of-Mouth Marketing” August 2008


“CLIENTS DON’T TALK TO OTHER

CLIENTS

ABOUT OUR FIRM.”

3MYTH

Realities:

Clients talk to SIX clients (or potential clients) about your firm, especially after having a problem.

Word-of-mouth referrals and recommendations provide powerful avenues for new work.

Improving client perceptions of your firm’s value helps build sustainable financial prosperity for your firm.


Effective Strategy:

In design projects where client

feedback is collected,

problems that are found . . .

3MYTH

“CLIENTS DON’T TALK TO OTHER CLIENTS

ABOUT OUR FIRM.”

are immediately followed by

improved responses 83% of the time.


Effective Strategy:

Use client feedback as an

“EARLY WARNING SYSTEM”

to spot and attend to problems

and create for your firm

higher client satisfaction and better referrals.

3MYTH

“CLIENTS DON’T TALK TO OTHER CLIENTS

ABOUT OUR FIRM.”


“FIRM LEADERS HAVE ALL THE DATA THEY NEED

TO MAKE THE BEST STRATEGIC DECISIONS.”

95% OF DESIGN FIRMS

DON’T COLLECT CLIENT FEEDBACK.

What we don’t know can hurt us.

We don’t know what we don’t know.

Some of what we know are “MYTHS.”

Myths promote detrimental strategies.

4MYTH




95% OF DESIGN FIRMS

DON’T COLLECT CLIENT FEEDBACK.

4MYTH

“You can’t manage what you don’t measure.”

-Peter F. Drucker

Measuring client satisfaction with feedback

provides actionable data for management.


High

ProfitLoss Average

Profit

Unacceptable - 1

Met Expectations- 4

Exceptional - 7

ExpertPotential

Poor Fit Burn Out

4MYTH



Measuring client satisfaction

improves team awareness

and team performance.

Improves expert status with client.

“Whatever is measured, improves.”Elton Mayo

Behavioral Sociologist


“MOTIVATING A DESIGN TEAM IS BEST DONE

WITH EITHER THE CARROT OR THE STICK.”5MYTH

car rot–and–stick adj. [Sociology]

first known use: 1876

1: characterized by the use of both reward and

punishment to induce group cooperation

Origin:

From the traditional alternatives

of driving a donkey on by either

holding out a carrot or whipping with a stick.


But, the traditional thinking of either using:

• the “carrot” (rewards)

• the “stick” (penalties)

to produce optimum behaviors is problematic

for professional service firms.

Seen as manipulation,

it produces resistance and resentment,

and creates a “battleground” environment


WITH EITHER THE CARROT OR THE STICK.”5MYTH

which turns staff and leaders into enemies.


5MYTH


WITH EITHER THE CARROT OR THE STICK.”

More effective for professional firms,

is to provide valid measurements

to track and promote performance.

“Whatever is measured, improves.”

To cultivate optimum outcomes:

• Define desired results (by consensus)

• Measure current results (financial and feedback)

• Promote process refinement to improve results (staff = stakeholders)


“GOOD STAFF LEAVE DESIGN

FIRMS

BECAUSE OF MONEY.”

MAJOR ISSUE:

LOSING KEY STAFF . . .

(IS ALWAYS A PROBLEM).

• Recession reduces available financial rewards

• More prosperous firms can more easily steal your staff

• Departing staff may take your hard-earned clients with them

• Each staff loss = >$100K in cost & lost revenue (PSMJ Resources, Inc.)

6MYTH


PSMJ: Top 3 Reasons

Why Key Staff Leave:

1. Talents Not Seen

2. Contributions Not Appreciated

3. Growth Not Supported

6MYTH

“GOOD STAFF LEAVE DESIGN FIRMS



PROBLEM SOLUTION

6MYTH

“GOOD STAFF LEAVE DESIGN FIRMS


Measure performance

Applaud successes ASAP

Identify effective training

1. Talents Not Seen

2. Contributions Not Appreciated

3. Growth Not Supported


MAJOR MYTHS, DEBUNKED BY USING CLIENT FEEDBACK!6

“CLIENTS WILL TELL

US IF THEY THINK

SOMETHING IS WRONG.”

“CLIENTS DON’T TALK

TO OTHER CLIENTS

ABOUT OUR FIRM.”

“FIRM LEADERS HAVE ALL

THE DATA THEY NEED TO

MAKE THE BEST STRATEGIC

DECISIONS.”

“MOTIVATING A DESIGN

TEAM IS BEST DONE WITH

EITHER THE CARROT OR

THE STICK.”


“GOOD STAFF LEAVE

DESIGN FIRMS BECAUSE

OF MONEY”

“CLIENTS THINK WE

OVERCHARGE FOR

OUR WORK.”

National Feedback

Client feedback from firms across North

America helped debunk the 6 major myths

harming the A/E industry.

Individual Firm Feedback

When we look at client feedback on a

firm-by-firm basis, we discover additional

interesting client behavior patterns.

ADDITIONAL DISCOVERIES FROM CLIENT FEEDBACK


SAME CLIENT DIFFERENT FIRMS

Different firms can receive

dramatically different feedback

from the same client.

0% 20% 40% 60% 80% 100%

Firm A

Firm B

Survey Response Rate

Differences include:

• 300% increase in responses


Firm A

Firm B

Average Feedback Score

Different firms can receive





• Significantly higher satisfaction



0% 5% 10% 15% 20%

Firm A

Firm B

Scores Below AcceptableDifferent firms can receive





• Significantly higher satisfaction

• Significantly lower dissatisfaction

Tracking each client’s satisfaction

with feedback provides the data

that increases a team’s value.



The same firm can receive


from different clients.

Differences indicate:

• Broader range of expectations

• Larger number dissatisfied responses

• Feedback is about the client

Tracking each client’s satisfaction with

feedback identifies how to best adjust

to each client’s different expectations.

Clie

nt

A

Range of Feedback Scores

SAME FIRM DIFFERENT CLIENTS


Clie

nt

B

The same client can “see”

dramatically different results from

different teams within the same firm.


• Major variations in perceived value

Team A

Team B

Team C

Average Feedback Scores

SAME CLIENT DIFFERENT TEAMS








• 10 times the number of problems

0% 2% 4% 6% 8% 10% 12%

Team A

Team B

Team C

Scores Below “Acceptable”








• More surveys produce better scores

0 10 20 30 40 50 60 70

Team A

Team B

Team C

Surveys sent in 6 months









• More surveys produce better scores

• Twice the client response rate

Tracking each team’s results with

feedback identifies the best

assignments of teams to clients.

0% 10% 20% 30% 40% 50% 60% 70%

Team A

Team B

Team C

Rate of Survey Responses



LESSONS LEARNED:

FEEDBACK FROM A/E CLIENTS

• Busted the 6 Major A/E industry Myths

• Confirmed Client-Firm Dynamic:

- Different clients have different expectations

- Clients perceive differences between firms

- Clients perceive differences between teams

within a single firm

• Tracks Client Expectations to Allow:

-Teams to understand client expectations

-Teams to adjust to client expectations

-Teams to build “expert status” with clients

• Building “expert status” with your firm’s clients

is most effective strategy for creating healthy,

sustainable prosperity.


Questions?

Mike Phillips AIA President

Phillips Architecture PADesignFacilitator LLC

Mike Phillips AIA, IIDA, ASID, is the President and Founder of Phillips Architecture PA, a 20-year old multi-disciplinary design firm in Raleigh, NC, name to the PSMJ Circle of Excellence and winner of ZweigWhite's Best Firm to Work for award in 2007 and 2009.

www.designfacilitator.com

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