Expanding Your Practice Overseas
Data Source: Victor O. Schinnerer & Company, Inc.
Your firm has established a significant presence in your home state as well as in desired markets. You’ve targeted specific project types, those that best fit the skills of your professional staff, and have grown substantially, both in terms of staff and revenue. But do you want to expand beyond that? How do you take your firm global and penetrate growing international markets?
At the annual DesignDC conference held by the Washington, DC and Potomac Valley, MD chapters of The American Institute of Architects in 2007, one particular presentation featured two methods that appear to be quite effective.
Establish Offices Abroad
Maybe you have a client with offices in Tokyo and Hong Kong that is looking to expand to Shanghai and Beijing. You want your firm to be involved with these projects. While this undertaking is possible, it can be difficult.
According to Karl Stumpf, vice president with RTKL’s Miami office, “The start-up costs can be significant; from consultants, to legal counsel, to marketing, and all costs associated with getting an office up-and-running.”
The learning curve can also be challenging as professionals in the new office attempt to learn not only local design aesthetics and principles, but the nuances of local culture and politics.
So what’s been the secret to RTKL’s success in establishing offices overseas? Internships. RTKL strategically hired foreign nationals and brought others on board as interns and teamed them with home-grown talent. These interns developed into valuable professionals that helped RTKL to open offices in the interns’ home country. This enabled RTKL to maintain an ultra-sensitivity to local customs and culture.
Forge Global Alliances
The time and effort needed to establish an office overseas is substantial. After careful evaluation you’ve decided that the investment is too much for your firm, but you know that your firm’s professional service capabilities would appeal to foreign clients. Forming global alliances with overseas firms might be the most efficient and attainable goal for your firm.
IA Interior Architects (IA), an interiors firm based in Washington, DC with 14 U.S. offices and offices in London and New Delhi, has used this approach to establish 46 alliance partnerships with firms worldwide. This gives IA over 1,000 design professionals at their disposal for design services. IA uses cutting-edge technology and a team-centric approach for each project. According to David Bourke, principal and account director with IA, “This enables IA to offer project solutions that are worldwide in vision and reach, but local in terms of service and presence.”
On any given project, IA assigns an account manager, someone that communicates directly with the client and has overall responsibility for the project. An account manager from the alliance firm is also assigned and is tasked with strategic studies, coordinating staff and resources, and master planning. There is an account manager from the alliance firm that serves as the local contact for the client, with authority to approve the final design. The final member of the project management team is the representative from the alliance firm that implements the design and coordinates local consultants and project close-out. Such an approach allows IA to serve their U.S-based clients with overseas operations and their foreign-based clients at the local and international level. Each member of the project team is focused on one thing: responding to the client’s needs by pursuing the highest level of quality and service.
Managing a project team in this manner may seem difficult due to most of the team being located abroad. IA has developed an in-depth responsibilities matrix that avoids duplication of effort and allows the team to clearly define each member’s responsibilities at the outset of the project.
Use Sound Risk Management Principles
There are several risk management principles that both speakers agreed upon. Whenever possible, get the client to agree to payment in either U.S. dollars or English pounds sterling. Getting paid in local dollars can cause major problems if the local currency suddenly devaluates, and the firm can incur significant taxes when the firm transfers the money out of the country.
As with any project, negotiate sound contracts that appropriately allocate risks and responsibilities.