After a devastating year of layoffs, furloughs, and closures, businesses are repositioning for the post-great recession economy. What will this new economic landscape look like? While leading economists may debate how slow the pace of recovery will be, there is little debate that the response to dramatic changes in the global economy will be key. For companies involved in commercial interior design and architecture, these changes have implications for how we work and the types of environments our clients will need.
“Two-speed economy” is a term we will hear more often. This characterizes the disparity between growth projections for advanced economies in the West and for the world’s major developing countries—in particular, Brazil, Russia, India, and China, also known as the BRIC economies. Although it shows a definite improvement over the GDP losses of 2009, the International Monetary Fund’s 2010 forecast indicates very slow growth in the United States (2.7 percent) and Europe (1.0 percent). In contrast, the IMF expects China and India to surge ahead with 10 percent and 7.7 percent growth, respectively, with more modest growth anticipated for Brazil and Russia. While some questions remain about the underlying structural strength of Russia’s economy, this dual-speed growth is a long-term trend expected to shape the global economy over the next decade.
Debt is another key issue. In dramatic contrast to the United States and Europe, India and China have no real debt. In fact they have massive surpluses and savings—household, business, and government. It is a potent combination. The recent bank bailouts alone equaled 50 percent of Europe’s GDP, while in the United States the figure was in the range of 18 percent of GDP. China’s reserves will figure significantly in its post-recession strategy. Before the recession, exports comprised about 65 percent of China’s economy. To sustain its GDP growth, economists like Paul Krugman believe China will invest heavily in domestic markets.
These statistics provide an opportunity for innovative A&D firms that have the flexibility to respond to this dramatically altered landscape of the marketplace. Strong growth in China, India, Brazil, and perhaps Russia means demand will continue for international expertise and consulting services in those markets, but there are many ramifications.
The New Global Design Practice
Gary Hamel, the London School of Business professor recently named the world’s most influential business thinker by the Wall Street Journal, speaks emphatically about the need for companies to “change as fast as change itself.” This idea can seem daunting to a profession that has pretty institutionalized ways of working, but it is essential to participating in the global market.
While being responsive always has been a basic tenet of good business, responsiveness is now a more complex proposition. It includes a range of factors—from having the flexibility to deliver the best expertise wherever in the world it is needed, to offering innovative products and services, to integrating new technologies that bridge the geographic distance.
Perhaps more challenging are the organizational implications. Global businesses need an organizational structure that provides the ability to act strategically in both local and global markets. A strong, distributed leadership team that can effectively make decisions about the whole company also is critical. Companies that are inflexible and operate in geographic or organizational silos will be less able to change in meaningful ways to relate to the rapidly evolving marketplace.
From a design perspective, architects will need to address workplaces and corporate campuses more holistically and less formally—as a series of integrated systems rather than a traditional design problem, recognizing that rapidly evolving work practices require radical approaches to planning interiors and, consequently, base buildings. Trends towards less hierarchical and more _ uid workspaces will continue as companies seek to gain efficiency—in terms of both physical space and operations—and to meet the imperatives for mobility and agility.
Leading a Sustainable Future
This systems approach circles back to another important global trend: sustainability. Last year’s Copenhagen Climate Conference may not have reached an overtly successful political outcome, but the reality of what’s behind it—the real need for a zero-carbon economy by 2050, to avoid the climate change “tipping point” of a two-degree Celsius increase in the earth’s temperature—is reflected in a recent ground shift. In April 2009, the European Parliament resolved that beginning in 2019 all new buildings in the European Union would meet zero-energy standards. For public buildings the policy would take effect by 2016. China followed in November with a commitment to reducing carbon emissions by 40 to 45 percent by 2020, relative to 2005 levels.
The business community has moved on this agenda as well. The World Business Council for Sustainable Development—an organization that promotes the business case for sustainable practices such as developing zero-energy buildings—now boasts more than 200 members including DuPont, Philips, Coca-Cola, and Toyota.
Future successful design firms will match this ground shift with a commitment to zero-emissions architecture, as well as leadership that moves the industry ahead of LEED and BREEAM. Again, having the flexibility to quickly integrate new expertise or forge new modes of collaboration will be key to achieving this goal.
Former General Electric CEO Jack Welch has written that inventing the future is a defining aspect of leadership. As professionals who bridge creativity and business, architects and designers are uniquely positioned to lead change in an increasingly global economy, rather than follow it.