A new business model

I’m reading Thomas L. Friedman‘s The World is Flat, in which he discusses the “flattening” of the world of business by the immense political and technological changes of the last few decades. He argues that because technology allows us to commmunicate seamlessly and instantaneously, much of the work previously done in-house will be increasingly outsourced to countries around the globe where workers can do it faster, cheaper, and often better. Companies that manage to adapt to these changing realities will succeed while those that do not will fall behind.

Friedman also talks about the “Business Web” – using the Web to gain access to standardized Web-delivered business tools to keep track of inventory, stay in touch with customers, schedule, budget, word process, store data, and so forth, through online subscription services. Because companies using these services no longer need to buy and update software or maintain cutting edge hardware and need fewer employees to do these tasks, they are able to realize significant savings in operating costs.

Because so much work will be outsourced, successful companies won’t be able to distinguish themselves simply by their ability to develop and use sophisticated technological systems. Rather, Friedman avers, what will separate successful firms from the pack will be their ability to “create a tailored solution” for their clients. In other words, just being technologically savvy won’t be enough – if one company can access technology, so can its competitors. What will enable a firm to capture the market will be its ability to provide personalized service and solutions that uniquely serve each client. Well, Mom-and-Pop stores have traditionally done just this, so it’s interesting to me to hear a modern business guru claiming that this is the wave of the future.

Nevertheless, Friedman’s predictions make sense, so the next question is how will design firms respond? Clearly, firms can benefit from the cost savings associated with the Business Web. Accounting, personnel, word processing, number crunching, and drawing/rendering applications could all be accessed online and the vast amounts of data generated for an AEC project could be stored off-site. Certain core tasks could be outsourced as well – CAD drawing, presentation drawings and booklets, reports, models, and code checking, to name a few. Even some aspects of project management could take place remotely. After all, establishing a schedule and making phone calls can be done from anywhere and the technology for video conferencing is readily available.

The key for design firms is to determine what can not be outsourced – and become the best at that. This, clearly, is personalized client-centric on-site work: face-to-face client interaction, discovering client needs, visually understanding the physical space, brainstorming a unique design, and on-site inspections, for example.

My sense, therefore, is that the design profession will see a shift in fee allocation with greater resources going into the client-contact side of the process and fewer into the actual production of project documents. Firms can save by outsourcing back-office tasks, computer-dependent jobs, and production work that doesn’t require physical presence at the client’s office or the project site. The most valuable workers will be those who interact well with clients and those who have the creative ideas for achieving unique solutions to the clients’ requirements.

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