The Business of Design: Balancing Creativity and Profitability

CHAPTER 1

The Foundation of a Design Practice

The business of design is a topic that baffles many, yet it’s less tricky than you might think. Designers love what they do and will do anything to practice their craft. The key word here is craft. It’s an art to design beautiful things, but it’s a skill to execute these things of beauty in a successful and meaningful way and still find room for profitability. The bottom line is not what designers worry about first. Look at these words: client, contract, negotiate, retainer, staff, design, draw, shop, expedite, present, budget, invoice, payment.

When talking to my clients, if they say they are good decision makers, I often tell them: ‘You might be a good decision maker, but chances are you are not a good decision keeper.’

—GRANT KIRKPATRICK, KAA DESIGN GROUP

"Over the past decade, my office has not only grown significantly in size but also, thanks to constantly improving technology, it has also become increasingly productive. Through Keith and his books, I’ve learned how important it is to plan and to be intentional about where and how to grow my business. The Business of Design has given me the tools to grow my business responsibly, smoothly, and enjoyably.

—ELIZABETH ROBERTS, ERA

The motivation to do it has changed. There are less people who really care about good taste and design, and more hotdoggers. It’s become a bit of a ‘celebrity’ profession, so you have to squint harder to recognize the real talents, the born-to-do-it stories, because they are not necessarily making the loudest noise.

—DAVID NETTO, DAVID NETTO DESIGN

Design is a business and an art. Designers see what the world needs. They produce it, sell it, and stand behind it. It requires vision, creativity, and judgment. Entrepreneurs and artists share these attributes.

—MARK FERGUSON, FERGUSON SHAMAMIAN ARCHITECTS

About five years into owning my business, things got a bit too big, too fast for me. Technology companies were booming again in San Francisco, and I went from being a recession-era one-woman shop to a very busy eleven-person team in the matter of a few months. We were getting hired for large jobs, and I had a ton of energy and ideas. While I felt confident with my creative contributions, my leadership ability needed help. The top ten business design practices were something I read and reread many times that year. It was grounding to have a road map of how to take on my new role and responsibility as a real business owner with some practical, easy-to-follow steps. I wrote them word for word down on paper and consulted them when I felt overwhelmed (every day for a few years). I used them as a format to how to direct employees and my schedule. It helped me connect more presently with my staff (where manners count as much as math) and keep my eyes open to the future, even when we felt like we were on top. I still utilize these practices constantly—they have remained relevant through the dawn of social media, our pivot to residential work, the pandemic, and another possible recession. The main difference now is that these principles are so deeply ingrained in how I think about my livelihood that I am able to really expand on evolving my relationships with clients and artistic process.

—LAUREN GEREMIA, GEREMIA DESIGN

With Keith’s help, we have honed every facet of the KAA Business Platform. Best practices in finances, marketing, human resources, and management have been a constant focus for over thirty years. You cannot run a great design business without great practices. But the foundation of any highly successful design business is the constant attention to a design-first mentality. As designers, we can always improve. And the improvement is rewarded. Clients want great design. They want unique, one-of-a-kind talent that will inspire them. I am grateful to be in a profession that allows us to improve our design skills with each project.

—GRANT KIRKPATRICK, KAA DESIGN GROUP

I think the foundation of a successful design business is quality of the intention, quality of the design product, quality of the communications with the client and all others associated with the project, quality of your space. This sets the tone for everything else.

—WILLIAM HEFNER, STUDIO WILLIAM HEFNER

The past ten years have been extremely more efficient and exciting because of the tools and resources that are now available; in the past our design process took longer to research, organize, and execute. Outside of travel, which for me is still the most productive and inspiring way to provide our clients with the most exclusive and unique projects, our ability to access vendors, artists, and galleries online with ease has been crucial to allowing the rest of our team to have a similar experience. Our designers can now focus more on designing and preparing presentations rather than unnecessarily wasting time in the field. Our clients have also become more exposed to our work, and the work of others, which can sometimes be a challenge when trying to maintain our vision, but on the whole, the ability to present our work through online platforms, such as Instagram, has increased our exposure in a positive way as our new clients are more excited to work with us than ever before.

—EDWARD YEDID, GRADE NEW YORK

How many of them actually involve design? Only a few truly deal with the design process. The rest refer to the business aspects of design, so why is it that schools focus on the smaller fraction of the practice and at best offer one or two classes dedicated to the larger one? Luckily, in 2020, many schools realize that the way they have taught for decades is not the way to teach design for twenty-first-century skills. Schools, such as the New York School of Interior Design, Parsons, Savannah College of Art and Design, all recognize the importance of an education that is interwoven with practical experience.

The design profession has been around for thousands of years, and in the beginning, architects and designers were held in high regard. They served kings and queens and were treated with the utmost respect for their craft. But somewhere along the way, the profession transformed from a title of distinction into one of subservience. (There are, of course, exceptions to this statement, evidenced by the designers who have achieved celebrity status due to their entrée into product design or television.) While many clients respect design professionals, many more believe that designers and architects are simply the hired help. You hire a lawyer because you need legal advice, and you see a doctor because you want to be healthy, but you don’t absolutely need a design professional to build or design your project. Hiring a designer is considered a luxury. Yet as a luxury profession it doesn’t command the respect of the business world in the way other professions do.

The real estate profession consistently receives a 6 percent fee every time a building is sold. An architect often struggles to get that same fee for creating that building and will receive it only once during the life of the building. This is because real estate professionals banded together to create a standard that the public finds acceptable. When architects tried to establish a similar standard through the American Institute of Architects, they were accused of price-fixing. In the decorating world, if you ask ten designers what their fee structures are, you’ll get ten different answers. This variability confuses the general consumer of these services: if there’s no established scale for pricing, you can’t trust that you’re being treated fairly.

Years ago, I went to a big-box electronics store to buy a new telephone. I noticed that a competitor had a much better price for the same phone, and when I told the salesman that I’d seen the same phone for fifty dollars less, he offered me that price. Suddenly, I didn’t trust that any price in the store was real. It put me in the position of establishing the product’s value. If we in the design profession allow our clients to negotiate fees, will they really believe that the services are actually worth the price quoted in the first place?

The profession of architecture is a business, and technical knowledge, management skills, and an understanding of business are as important as design. An architectural commission might involve preparing feasibility reports, building audits, the design of a building or of several buildings, structures, and the spaces within them. The architect participates in developing the client’s requirements for the building. Throughout the project (from planning to occupancy), the architect coordinates a design team and structural, electrical, mechanical, and other consultants. Even though this is the generally accepted definition of the profession, architectural education does not address it. It teaches only the art of design, not the art of the business.

DESIGN EDUCATION

Within the past decade, higher education has welcomed a wave of digital natives intimately immersed in the dynamism of design. These Generation Z students gravitate toward experiential learning—internships, collaborative learning assignments, and design sprints—just as readily as they embrace virtual engagement. Because Gen Z can work seamlessly across learning modalities, today’s educators must implement the most comprehensive array of professional-standard resources, tools, and technology to catalyze critical thought and practical application.

—PAULA WALLACE, President of Savannah College of Art and Design

"The business of design, both narrowly and broadly defined, is best served by interdisciplinary education. Let me explain why.

The wicked challenges of our contemporary world demand the concerted effort of fully actualized individuals—individuals with the ability to see patterns and systems in text and images and data; individuals capable of learning from the past and designing for a future that nurtures human possibility within the constraints that our natural world imposes; and individuals who engage with our world and with each other justly so as to preserve and protect that which we have inherited from our ancestors as our promise to the generations of global citizens who will follow us. It is for this reason that higher education and, in particular, interdisciplinary higher education that is at least as broad as it is deep, is a most fundamental prerequisite.

Yes, interdisciplinary education matters in the workplace. As numerous articles in respected publications attest, business students who are pushed intentionally into the humanities and other social sciences deepen their skills in visual and cultural literacy, textual analysis, and critical examination of market-driven situations, while humanities and science students who study management or accounting learn the business of creative pursuits and the commercialization of science. But, beyond this, interdisciplinary education arms us for the personal, professional, and civic engagement into which we are drafted as members of the human race."

—CARLENA K. COCHI FICANO, PhD, Professor of Economics and Chair, Department of Business and Accounting, Hartwick College

Let’s take a look at design education. If you want to be an architect, the schooling looks something like this: either you enroll in an accredited five-year program and receive a Bachelor of Architecture degree, or you can continue for an additional year and receive a Master of Architecture. You can also follow the more traditional route of a four-year liberal arts degree followed by two or three years of graduate school toward a Master of Architecture. In the interior design field, you can pursue a four-year Bachelor of Interior Design degree, or you can simply call yourself an interior designer, since this profession currently has no educational or licensing requirements. A lawyer with an advanced degree can take the bar exam and become licensed to practice law. But a degree in architecture does not automatically make you eligible for the exams you need to pass to be licensed. In fact, you can’t even call yourself an architect until you’re licensed, and you can’t become licensed until you’ve completed 5,600 hours or two and a half years of training under a licensed architect before you’re even eligible to take the licensing exams. This is why fewer than twenty-five percent of architectural-school graduates have a license to practice architecture. It is also surprising to learn in 2020 that a first-year legal intern could earn up to $126,000 a year, while a first-year architectural graduate could earn up to $68,000 a year—with almost the same length of education. A first-year interior designer in 2020 typically earns around $48,000.

Today more and more schools are focusing on new methods of traditional education in design schools. Schools are thinking of ways of educating their students beyond your typical classroom or studio structures, combining a hybrid of teaching with online access to practicing professionals. Students are more aware than ever of what they have access to through the internet. In business school, instead of learning about economics from a tenured professor, they can learn from top executives at major companies. They no longer want to settle for a single point of view but from many resources on the same subject. Today’s learning has also become focused on multidisciplinary thinking. You don’t just learn how to draw you also learn how to run a business, to cross-pollinate the design school with the business school or the design school with computer science. Schools like Parsons in New York and the Savannah College of Art and Design (SCAD) have programs that educate their students in multidisciplinary ways. In fact, SCAD is the only architectural school in the country that has a program that allows an architectural student to graduate with a license. This is because they worked with the State of Georgia to fulfill those requirements and experience while attending the school. President Paula Wallace of SCAD says the following,

From day one, SCAD has prioritized the professional preparation and career attainment of students, the very heart of the SCAD mission. SCADpro, the university’s in-house design consultancy and innovation studio, anchors the curriculum and, over the past decade, has partnered nearly 6,000 students with more than 260 leading companies to develop real-world, real-time design solutions. Internships and experiential learning opportunities, such as those featured in the Integrated Path to Architectural Licensing (IPAL), provide theory-to-practice engagements both within and outside the classroom. And from their first moments at SCAD, students garner the guidance of industry-veteran professors and SCADamp communication coaches, who help SCAD Bees develop the preeminent portfolios and professional skill sets for which our alumni are renowned.

It is my firm belief that one of the most beneficial things you can do while in college is an internship. One, it helps you understand the real world of the profession you are entering, and two, it exposes you to practicing designers to learn the real day-to-day activities of your profession.

You have a real passion for design, and you know you don’t want to be a lawyer. You stand there with diploma in hand (or not, in the case of some interior designers). What do you do next? There are basically two choices if you want to practice your craft: You can join a firm and start your work life surrounded by people who have knowledge to share. In this case, hand this book over to your new boss. Or you can start your own design firm (but you can’t call yourself an architect or sign your own drawings unless you’re licensed). If you choose this route, make sure you hang on to this book for dear life.

If you join a firm, be a sponge. Take in all that you can about every aspect of the practice. Learn everything you can about the projects you’re working on, the vision behind a project’s design, the terms of the contract, the design process, the project’s construction. Understand who all the players on the team are, internally and externally. Observe how the people around you interact with each other and how they navigate the design process, the business process, and the people process. Being alert is the key to your growth and future in this profession. If you choose to work for a firm, the diagrams on page 31 show the traditional paths you can expect to follow. FIGURES 1 + 2

ARCHITECTURE FIRM HIERARCHICAL DIAGRAM

FIGURE 1

This graph demonstrates the path of the architect and the supporting staff needed for a thriving architectural business. The circles are the technical evolution of an architect from first joining a firm until he or she reaches the position of partner. The bars that surround the chart are the positions of support that are needed to run a healthy, vibrant architectural practice. They are also layered, in the case of CFO/bookkeeper and marketing director/coordinator. In both cases the bar closest to the circles represents the first layer of need for these categories, and as you grow the second layer of need then comes into play.

INTERIOR DESIGN FIRM HIERARCHICAL DIAGRAM