#194: COMPLEXITY AND CONTRADICTION IN TRANSITION PLANS
West Olympic Science Hub, Los Angeles, California, by BA Collective (rendering from bacollective.com)
All great businesses evolve. This cliché we know. But how does a celebrated name-brand architecture firm evolve beyond the celebrated founder? Some companies have lost their cache with the exit of its founder. What will become of Gehry Partners when Frank Gehry retires? On the other hand, Zaha Hadid Architects continues to flourish beyond the 2016 passing of its name founder. Legacies can progress with thoughtful planning or sink under its own weight of arrogance.
Many strategic companies speak of the transition plan, which comprises many things, e.g., business plan, org chart, stock ledger, legal documents, etc.—all with an eye towards an unknown future. A transition plan represents the significant act where the founder(s) pass on the firm’s ownership and operations to the next generation of (patiently-waiting) leaders. Whether a mom-pop studio of a few architects or a corporation of several thousand, transitions can bring about ego battles, company politics and seismic cultural shifts, as well as promising opportunities.
Beware of a condition known as founder-itis. When inflicted, an aging founder simply won’t let go of the reins, often forcing promising successors to desert the firm. Their prospects within the company dwindle each year as the founder keeps a choking grip on the dimming future.
Some name-brand firms can suffer from transitions. After the starchitect-founder retires, will a client still commission this firm—a business that no longer offers the creative force of said starchitect, but rather untested new personalities or artificially-elevated middle managers? Or perhaps the host of new leaders will be an even stronger design force? But with the current zeitgeist of hyper media and celebrity fascination, the shadow of our industry’s luminaries (Gehry, Hadid, Koolhaas, Mayne, Meier, Zumthor, or any Pritzker Prize-honored architect) is long and omnipresent?
A tactical founder can reap many rewards with an exit strategy into a setting sun: overseeing the company’s reputation into new promising hands, maintaining an executive salary with partial ownership, profit sharing, reduced liability, and having an enjoyable place to continue working part time as a productive architect—as this founder sails off into semi-retirement, then full retirement.
When should founders consider a transition plan? Most management advisors recommend as early as possible, such as 40 or 50 years old. But with most architects rarely retiring at the national average of 66, and with some architects working decades longer (Philip Johnson and I.M. Pei into their 90s!), many founders will delay the discussion as long as possible, such as into their 70s or beyond.
The recommended early planning is simply because it can take years to come up with a plan, choose successors or nurture leaders, define shifting duties, and inform stakeholders and the marketplace. In addition, there are the legal and financial terms: How much is the company worth; how many successors will buy into the firm and what percentage equity for each; or how much stock will the founder maintain over the years as it eventually reduces to zero? After creating a plan, the implementation can take years or over a decade.
To signal transitions and an eye to the future, I.M. Pei & Associates became Pei Cobb Freed & Partners in 1989, Polshek Partnership became Ennead in 2010, and Richard Meier & Partners became Meier Partners in 2021, to name a few in New York. In Los Angeles, Anshen + Allen became CO Architects in 2010, Ehrlich Architects became EYRC in 2015, and Belzberg Architects became BA Collective in 2023. It is often said: all good businesses evolve. Stay tuned.
