The Vertical Integration of the Design Industry
Diagram comparing vertical and horizontal integration. Forward integration typically involves the purchase or control of distributors while backwards integration refers to the purchase or control of suppliers.
The recent consolidation of the design industry into a dozen multi-national A/E firms such as AECOM, Stantec, and WSP/Parsons Brinkerhoff is partly based on the strategy of vertically integrating all of the engineering and design disciplines necessary to do large scale master plans that include transportation infrastructure investment. These city-building projects, typically sponsored by public/private development entities in Asia and the Middle East, are the big prizes of A/E consulting because of their large fee budgets, length of duration, and range of complex issues. A new crop of super-sized assignments has incentivized super-sized firms that can provide the full bandwidth of consulting services.
These firms are less adept at providing integrated services for smaller scale projects. Internal communication and accounting protocols produce a drag on efficiency that is directly translated to higher fees per deliverables provided. Other issues include minimum consulting fee requirements, relatively high billable rates, and the internal bureaucracies necessitated by including a wide range of business units under one roof.
Despite the bureaucratic pratfalls, vertical integration can also have advantages for smaller and more nimble firms. At Utile, disciplines are aligned across two axes that intersect at the architectural scale. The first includes strategic planning, master planning, urban design, and a commissioned work of architecture, typically funded by a public entity. The second scales down from a commissioned work of architecture, to interior design, environmental design, and wayfinding. Occasionally, projects bridge both chains. For example the Boston Harbor Island Pavilion included strategic and site planning (to select a site for the structure and determine its program), architecture, environmental graphic design, and wayfinding. Our recent work for the Portland Housing Authority exhibits an even wider range of scales and steps. An initial assessment of the authority’s full assets resulted in the master plan for repositioning of one of its properties, and now the design of a specific building. It is anticipated that interior design, environmental design and wayfinding will follow.
But what distinguishes the vertical integration strategy of a smaller design firm from the large A/E enterprises besides their size and resulting bureaucracy? Most importantly, the engineering disciplines are not components of Utile for strategic cultural reasons. Most engineers have been trained to use data-driven and linear methodologies that thwart the ability to prioritize conceptual narratives, rather than “problem-solving” as the prime driver of projects. By not including in-house engineers, Utile also has the freedom to customize its teams based on the specific skills required for a specific project. Paul Kassabian, a talented structural engineer with SGH, was Utile’s primary design collaborator for the Boston Harbor Park Pavilion, while on other public realm projects, the role of the structural engineer has been perfunctory.
Utile’s second strategy is to develop a network of like-minded designers that parallel the expertise within the firm. This is done to expand capacity, enrich the design discourse, and increase business development opportunities. Utile works with over,under, another Boston-based design firm, on urban design work in the Middle East and large-scale environmental design projects that require a bigger bandwidth of personal and creative ideas. Likewise, Utile teams with Reed Hilderbrand, a nationally-recognized landscape architecture firm, on campus planning projects even where landscape architecture is not the prime driver of the process. Beyond these firms, Utile has established a broad range of collaborative relationships – Utile’s posse – thus creating the disciplinary capacity of a much larger firm, but with a more conceptually-focused approach to projects.
These strategies allow us to focus on the creation of a narrative-rich conceptual framework rather than a purely technical response to a given problem. The firm is also distinguished by its focus on physical and spatial opportunities early in the planning process, cascading from the general planning decisions to the built detail. It is precisely at the boundaries of disciplinary expertise where the firm finds its most fertile and productive design opportunities. Examples include the ways that decisions about the sub-parcelization of large tracts of land can be tied to strategies for encouraging specific urban building types or the way that environmental graphic design can influence the overall composition of a plan by helping to create visual hierarchies with an overall spatial sequence.
Utile’s design management approach is partly influenced by the years the firm principals spent at Machado and Silvetti Associates. Founding partners Jorge Silvetti and Rodolfo Machado believed that projects should be a Gesamtkunstwerk [1] of custom-designed buildings, landscapes, and components from the scale of an urban district to the design of a bench. The Getty Villa, led by Utile principals Tim and Mimi Love, is the most extreme built example. The $270 million project included the complete reconfiguration of the site and existing museum into a fully integrated design. From new buildings, to site walls, terraces, trellises, railings, terrazzo floors, light fixtures, and display cases, everything was custom-designed, partly in response to a narrative tied to an orchestrated spatial sequence. The craft opportunities suggested by a wide range of materials provided the other framework for design elaboration.
Utile principals Tim Love and Matthew Littell executed a public project with similar goals at Dewey Square in Boston. A framework that was partly driven by the goal of including both public agencies and private property owners in the plan’s execution resulted in the construction of a plaza that extended from public property to the Federal Reserve Bank parcel and five subway kiosks that provide access to the South Station stop on the MBTA’s Red Line. Like the Getty Villa, the paving and kiosks were designed as a cohesive ensemble from the scale of the overall plan composition to the construction details. Unfortunately, the full plan has not been implemented.
Utile’s approach and pedigree suggest that broader experiential and social goals need to supersede specific chains of design decisions. This requires design leadership that is adept at moving between discussions with clients and stakeholders, typically where master narratives emerge and are refined, along with project design teams to execute complex projects. This is precisely where the lateral bureaucracies of large firms fail. At firms like AECOM and Stantec, projects are typically headed by a senior specialist in a single engineering discipline incapable of conjuring master narratives to drive a project, or a “design director” who promotes the core mission of the firm in relation of broader design culture rather than drill into the opportunistic specificity of a project. One type of leader is focused exclusively on problem-solving while the other on the broader value of “design excellence.” Neither can lead a project to a better-than-mediocre outcome.
–Tim
[1] Or “Total Work of Art,” a term first used in 19th Century German aesthetic theory and is most closely associated with Richard Wagner’s opera productions at Bayreuth. In early 20th century Vienna, the term was used to contrast the integrated architecture and interior design of the Secessionists, such as Joseph Maria Olbrich and Josef Hoffman, with the more open ended and flexible design approach of Adolf Loos and Josef Frank.