Katie [00:00:02]:
Welcome to the AEC Marketing for Principles podcast. This show is designed as a conversation between sales and marketing principles to address trends, challenges, and best practices that are driving growth for professional service firms. Through our collection of discussions with subject matter experts, industry legends, and leaders, we aim to share thoughts and practical tips with our listeners that you can use for growing your AEC brands. Hosted by me, Katie Cash, senior vice president at SmartEgies, the AEC growth consulting firm that’s been developing smart business strategies for design and construction firms since 2008. Hi, everyone. Katie Cash here, and I am so excited to jump into today’s conversation. I’m talking with Kyle Peterson. And if you don’t know who Kyle is, Kyle is the principal and business leader at Nelson Worldwide, and, really, he’s responsible for the financial and operational performance for his 6 studio.
Katie [00:01:03]:
That’s right. 6 different studios fall underneath his national business unit, where he really oversees half the firm’s p and l. And, Kyle, I don’t know if I call you a recovering architect and designer, or I just really celebrate you for making the crossover from the creative side of the practice to more of the operations and business side of the practice. Maybe I just leave it to you. So why don’t you tell our listeners a little bit about you and your background and how you got to this role of this national business leader for Nelson Worldwide?
Kyle Peterson [00:01:36]:
Absolutely. Katie, I really appreciate you having me on here today. It’s exciting because the operations is often behind the scenes, and it doesn’t really get celebrated, especially in the world of sales. But I really didn’t land in this role. I created it. Not necessarily nothing specifically, but I grew up in a in a sales household. Being the creative person in my house, I was always drawing the cartoon characters in front of the screen growing up. I was imagining myself designing roller coasters or skyscrapers or being a Disney Imagineer or just Oh my gosh.
Katie [00:02:12]:
I had that dream too, but I couldn’t draw a straight line if I had to.
Kyle Peterson [00:02:15]:
Yeah. Well, thankfully for me, I did have some drawing capabilities, and so I wasn’t able to stifle that at an early age. But I went through I got into college and went through design school and graduated with an interior design degree, but focused really heavily in architecture. Even though I was in interior design, I fell in love with the structural side of architecture and the how and why things were built the way they were, what people found fascinating more than the aesthetic. And I came out of school in the the latter part of the o eight downturn in in 2011 and did not have a job for almost a year. It was really hard to break into the industry. I think a lot of us remember that time very vividly for various different reasons, but I was fighting against people that had been in the industry for 5, 7, 10 years at times for entry level positions, and it was very hard. But I networked, and I never stopped.
Kyle Peterson [00:03:14]:
And I eventually landed at a small firm, and it didn’t take long for me to realize that I wasn’t the most creative person in the firm. But I did find a very large passion in how we won work, what it took to win work, what it took to keep clients happy. And I came full circle in my recovery because growing up, knowing that I wanted to be in some sort of a creative business, my father, who was in business, and my other family members who have been in law, whatnot, they’ve turned to me and say, how do you plan on making money in architecture? Well, coming full circle, after practicing for a few years, I decided to go back to school and get my MBA. So that was a welcome back to the family moment for me, personally. But for everybody that I had befriended and become colleagues with in the industry, they were, oh, you’re going to the dark side. What are you doing? How could you leave us? You know?
Katie [00:04:14]:
You’re selling your soul. Oh my goodness.
Kyle Peterson [00:04:17]:
Yeah. So growing up in the professional world, really loving the creative side, but really finding a passion for the business side, I was determined to develop this life thesis of how do I break down this light and dark perception of business and creative. There’s a middle ground there, and that’s where I play every day. I love to be instilling creative process into the business world, which is there’s nothing more linear than business. There’s nothing more linear than making a profit. It’s revenue minus expenses equal profit. It doesn’t get more linear than that. But you install a creative process, the creative mind, the AEC world, and a little bit of chaos ensues.
Katie [00:05:07]:
Well, it’s not quite as simple as you treat your people well. They do good work. You do good work. You get more good work. No. I mean, it’s competitive, and there’s pricing strategies, and there’s pipeline building and workload forecasting. I mean, there’s a lot that goes into it, not just how to sell it, but how to do it. And how do you build a brand around a service industry where the service really comes down to how do you staff the job and how are they servicing the clients?
Kyle Peterson [00:05:33]:
At the end of the day, our product is our people. Our people are our creatives. And a creative industry that doesn’t require business as a core fundamental of school. And those that become principals and organizations, they’ve learned it through hard knocks. They’ve learned it through experience.
Katie [00:05:52]:
Isn’t that crazy? I mean, you mentioned you have family that’s in the law practice. Even if you just wanna be a contract lawyer, you gotta learn everything else
Kyle Peterson [00:06:01]:
Mhmm. Before you
Katie [00:06:01]:
can be that. Well, if you wanna be an architect or an engineer or a contractor, you just really learn that profession. You don’t learn the the business behind it.
Kyle Peterson [00:06:09]:
Forgive me because I don’t remember the exact statistic here, but it was published by McKinsey or one of these agency firms that looks at every industry and analyzes it with great scrutiny. I think it’s something to the degree of over 90% of architecture firms are owned and operated by architects.
Katie [00:06:28]:
Oh, for sure.
Kyle Peterson [00:06:28]:
Yeah. Practicing architects. And that’s not a problem. There’s nothing wrong with that. But running a business is very different than running an architectural project. And we owe it to ourselves to understand what it takes to do both of those if we’re gonna operate as 90% of our industry being managed by creators.
Katie [00:06:52]:
Yeah. Yeah.
Kyle Peterson [00:06:53]:
And that’s where I like to play. I like to play and help us understand what are our clients looking for every day. Because when we get to the stage of RFP or RFQ, architecture is a commodity. I hate to be so blunt, but it is. The value goes beyond the architecture. Architecture is simply a conduit to what the client is trying to achieve.
Katie [00:07:16]:
Absolutely. And it becomes even more challenging depending on what market you’re in. Mhmm. Working with unsophisticated buyers that only buy architecture, what, once every decade or 30 or 50 years? It’s the only project they ever have experience with, maybe outside of building a home or renovating a home.
Kyle Peterson [00:07:35]:
If we were truly in the business of selling architecture, then we would be back in the gothic world where architecture was ornate or the renaissance. Or we all go to Rome or or to other parts of the world because they have history and architecture where, effectively, the state or the church or whoever was in charge gave them unlimited funds to design whatever they wanted to design. We’re not in that world anymore, unfortunately, more often than not.
Katie [00:08:02]:
You gotta look at those hourly rates. You got a budget. You got a deadline. The real world today.
Kyle Peterson [00:08:08]:
And that’s why I like to really partner with our sales teams very deeply. Not often does I think in many organizations, not just in this industry, but in service industries, for sure, does sales crossover with operations? But I think the best organizations do exactly that because our sales folks, our marketing teams, they need to understand what it is we’re actually providing to our clients and vice versa. Our delivery teams, operationally, need to know what we promised those clients when we sold it to them.
Katie [00:08:41]:
I mean, I’m a big believer in my entire career. I’ve dedicated to working in design and construction, and it was really impressed upon me early in my career of, hey. If you’re gonna work in marketing and you’re gonna put sales and marketing collateral together for our firm, you need to understand our business. Because how else are you gonna tell the story? How else are you gonna connect why xyz buyer should hire our firm over anybody else? And so I don’t know that everybody has a mentor that is that direct with them, but I’ll be here on air today, any marketer listening. If you don’t know how your firm makes money and you don’t know the businesses that your team is serving your clientele, your audience, you need to perk up. You need to ask some questions. Get invested there because it’s only gonna make you more successful.
Kyle Peterson [00:09:31]:
Yeah. The best marketers understand every facet of the business. I know of some businesses outside of this industry where the marketer is the project manager, in essence. They are the fulcrum or that keystone, using an architectural term here, keystone in an arch, that holds up the side of production or manufacturing and the client. Without them, they fall in on each other because that marketer has to understand what the manufacturing team has to go through to produce the product, but the manufacturing team doesn’t know what product they’re producing unless they know what the client’s buying. So the marketer, to your point, is that key to understanding both sides of the business model. And I know we’re, at Nelson, really trying to hone in on having our marketing team be an integral embedded part of our our not just our sales engine, but understanding what kind of architecture do we deliver, where is interiors embedded, when do we bring in certain partners or not bring in certain partners, What is that client journey, that customer journey that brings us to winning work, etcetera, so that they really can play well and position us well in the market?
Katie [00:10:48]:
Absolutely. So, Kyle, this season on the podcast, our kind of focus, our theme, if you will, is all about impact. So people that have made an impact on the industry, projects making impacts on local communities, and, like, strategies that are making a big impact on organizations. And I feel like you, in kind of creating this position that you’ve made, has really made an impact on the Nelson Organization, and you’re really transforming architecture from being this highly designed centric practice to more of this design with business focused practice where you’re empowering your internal principles, those internal clients, the people that make up your business unit with real world business data that you’re capturing from your sales and marketing teams. And there’s one thing I feel like I’ve picked up on in in the few conversations you and I’ve had together, and that’s this passion point that you seem to have around the relationship of design excellence. Like, we’re not telling anybody go out there and produce bad design. Nobody wants that. But this idea of design excellence and then financial success.
Katie [00:11:59]:
So can you maybe talk a little bit about this passion point that brings those together, and how do you see design and business truly working together in a design shop rather than an opposition? Because sometimes those things feel like oil and water, and they should never mix.
Kyle Peterson [00:12:16]:
Yeah. Yeah. It’s a great question. We, at Nelson, led by by Ozzie Nelson, our CEO and chairman, design is a business at the end of the day. And we’re really trying to infuse the business side of architecture into our designers from a very early age because we know that the schools don’t do that. And and we want them to, and we’re trying to partner with some schools to help bring that to the forefront. But, really, until it’s required, it’s not gonna change. So at Nelson, myself and my peers, the other business leaders in the organization, we partner with our practice leaders on a national level to bring that creative, bring that sound fundamental financial focus, and find that middle ground.
Kyle Peterson [00:13:01]:
And how we’re doing that is, at least within my sphere, is really driving that expectation within project managers and lead architects that our time is valuable or fundamental. Our service is architecture. Yes. But we deliver architecture through a medium of time. And because every project has a deadline, and we have to meet that deadline. And that time and that deadline cost money. So we have to learn to know, as one of my former colleagues and mentors would say, know when to put the thinking cap down and put the doing cap on.
Katie [00:13:42]:
I like that.
Kyle Peterson [00:13:43]:
And it’s a struggle because every designer and I like how you called me a recovering designer. I don’t ever be a recovering designer because or fully recovered if that is such a thing, because I’m always tinkering. But every designer is always tinkering. It’s never perfect because there’s always a way to change it. And there’s a beauty about that in the creative space. But on the business side, we have to know when to stop. And if we don’t stop, we either run the project into financial trouble or we upset the client because we betrayed the budget or we hit the deadlines.
Katie [00:14:23]:
Oh my gosh. It’s so funny. So okay. 2 things I wanna talk about that kind of piggyback on what you just said. 1 is this real need for curriculum to provide a more holistic view of the modern day practice. I think that’s for architects, engineers, and even contractors. So Judy Sparks, my boss and and the founder of SmartOGs, she previously taught at Georgia Tech for their masters in architecture program. It was an elective, but it was essentially a marketing course that these master students took thinking this is gonna be a easy elective.
Katie [00:15:01]:
And they’re all like, oh my gosh. This was harder than my studio work. Like, oh my goodness. They had no idea what it takes to win work and to position and all these other things. Well, now, currently, she’s still teaching at Georgia Tech, but this year, she’s doing it underneath the school of construction. And so kind of having an entry into those young minds and helping them understand that business. But more and more I hear from our clients this point of frustration with I think there’s 2 challenges here. 1 is they’ve got kids coming out of school that know all of the tools.
Katie [00:15:38]:
Like, they’re Super Big Wiz and Revit, and they’re really efficient in CAD and all of that, but they don’t know how to critically problem solve. So if there’s a gray area or the client wants to make a change on the fly, it’s really hard for them to work through that process. And then I’m also hearing this challenge of, hey, schools. I need you all to teach them how to estimate a project in terms of this is the budget. How much time do you have to do the task I’m asking you to do, and how can you understand when you take off that thinking hat and put on the doing hat Mhmm. And get it done. And so there’s some challenges with that. For any of our listeners that are feeling that pain point, I would encourage you to lean into your local colleges and universities, forge a partnership.
Katie [00:16:28]:
Many of these design and construction programs have advisory boards. They are thirsty for industry feedback. A number of them are really perking up like Georgia Tech has, and they’re changing curriculums to meet the needs of the industry. So I’d encourage you to lead into that.
Kyle Peterson [00:16:45]:
Yeah. If I can jump in there and and respond. It’s really fascinating what Judy’s doing because it is a bit of a like I said earlier, it’s a bit of a personal goal of mine to have that become an integral part of architecture. Because like you say, just even the fundamentals of how long you should spend on a project is something that is a pretty big hurdle for a newly graduated designer or architect to understand. And these are techs that aren’t yet fully licensed because they need those credited hours, etcetera. But
Katie [00:17:17]:
Project financial literacy is a real learning curve.
Kyle Peterson [00:17:20]:
You have 14 weeks to do a project in school. And a lot of times, designers are procrastinators. So we wait until the last so many weeks to get it done, but you have to moderate in the real world and you have to budget and you have to stay on task and iterate. And those iterations have to be quick, but they have to be on point and you have to take feedback quickly because a client will come in and say that’s you know, I love that, but let’s change this, so let’s do this here. And what’s interesting about what you’re talking about, architecture lacking those base fundamentals of not even just what is a income statement and what is a balance sheet and some of those more accounting heavy elements of business, which is where I operate a lot day to day. But it’s time management and it’s budgets on a project. And what where did these come from and how do you win work in what you mentioned? Looking at it from the other side of the fence, though, thinking about business and what it takes to get an MBA, you’ll also hear folks like Elon Musk say, I’m never gonna hire an MBA. Because MBAs come out with, more often than not, the same manufactured type response to everything.
Kyle Peterson [00:18:39]:
This is how you need to run a business. And that works. Sure. Definitely does. Business schools all over the country and all over the world have been successful with placing recent grads in Fortune 5 100, Fortune 100 multinational firms, and they will continue to do so because, again, fundamentals of business don’t change. Revenue, expense, profit. Right? Yes. Gonna change.
Kyle Peterson [00:19:08]:
But every business and the world we live in is changing at an exponential rate. 10 years ago, we were still talking about how you implement Revit into a business and move away from CAD. 3 years ago, we were talking about how AI was this chaos tool that was gonna be implemented. It was never gonna work. Well, now every major firm in this industry is using AI in some capacity, and we’re migrating more towards that being a fundamental pillar in our delivery models. It’s changing rapidly. Technology is going to continue to force that change. So you can’t think super linear like an MBA, and you can’t ignore the business of change in architecture.
Kyle Peterson [00:19:55]:
There has to be a middle ground there, or else you won’t survive. And that’s what makes me passionate about what we do at Nelson and where I play every day is helping both of those sides of the coin really understand that we have to change or else change will be thrust upon us.
Katie [00:20:12]:
It’s so important of what you’re doing, bringing some true business practices, business acumen to the creative practice because those brains do work differently. I know you’re unique and you have both interwoven there, but I’m just thinking about I have a client that I’ve worked with for years and their CEO comes to us and is like, hey. We spent $1,000,000 last year going to trade shows, and we have no leads. None. We don’t know where the next project is coming from. And I was like, first of all, I was like, you spent $1,000,000? Like, where did you go? How many shows? Who’s going? That’s a really big budget. This wasn’t a huge problem. Yep.
Katie [00:20:52]:
The thought that it was immediately followed up with, we have no leads.
Kyle Peterson [00:20:57]:
Mhmm.
Katie [00:20:58]:
We have no pipeline. Like, oh my gosh. Like, how do you get in this position? And then we had this whole conversation about your business leaders needing to understand having financial literacy of running their practice and running their business units and down to the project level and this whole idea of watching a project budget. And I think that someone made a comment about, yeah, you gotta watch your money. If you don’t, she’s a tricky lady. She’s gonna leave you for someone else if you’re not watching your money kinda deal. Yeah. So I’d love for you to maybe share a little bit about I don’t know if there’s particular tools or training or references that you all have created at Nelson that have been successful at bridging that gap with your technical subject matter experts internally to help them get up to snuff on business without them going to get an MBA, obviously.
Kyle Peterson [00:21:50]:
Yeah. Absolutely. Every company has their KPIs, the billability or utilization or net revenue multiplier or effective multiplier. I mean, they’re all called different things. And we measure all of those. And there’s all kinds of levers you can pull that impact those, and sometimes you pull a lever over here and it impacts something negatively over there. And that’s the thing that I always like to say is business is easy. People are difficult.
Kyle Peterson [00:22:16]:
And I don’t mean that in a negative way, but people are predictably unpredictable in the sense that people are going to be unpredictable, which makes that predictable. So what we try to do at Nelson is try to control that of which we have no control. We can’t control whether a client is able to secure funding or not for a project. We might be able to help with some of that deal making, but, ultimately, that’s not our lane. That’s not where we focus. We can’t control if a project goes on hold, which causes all kinds of operational ramifications that I’m sure every principal in this industry is aware of. Right? Now I’ve got a team that I have to staff somewhere else. How do I do that? How do I make sure that they’re staffed but yet fully available when this project goes back online? Right.
Kyle Peterson [00:23:04]:
And then you multiply that by Nelson where we have 500 teammates across the nation working on over 2,000 active projects every day. But you can see where these variables run out of control really quickly if you’re not monitoring them on a regular basis. So what we really try to do is, at the lowest levels of the organization, those entry level teammates is really upon entering into the firm, helping them understand their time is valuable. Not just because it helps them grow individually, but because it matters to the project’s financials. We work so the business leaders, myself and my counterparts, we work daily, weekly with our project managers. I know I work with them and help them understand you are a business owner without investing the personal capital. You, as a project manager, are in charge of scope, schedule, fee, people, everything that goes into it. The consultants managing the relationship with the client, trying to secure that next job by making sure we do all of those things right, by making sure your team is utilized while at the same time you’re meeting your budget.
Kyle Peterson [00:24:13]:
That’s a business manager, and it’s fundamental. So really working closely with those PMs is what I do every day to help them understand that as they grow and excel in their careers to be studio leaders, to be practice leaders, they’re gonna have to be able to manage more in the business by not managing more projects, but by looking at the business through a different lens. So it’s less so about every company has their tools. And every company creates some sort of platform to a university or so to speak to continuously learn and whatnot. But it’s more so about empowering teammates to make those decisions to know that they’re backed by their leadership to be business owners, but without the risk of putting up their personal capital.
Katie [00:25:02]:
I like that. So, Kyle, this has been great. Before we wrap up, I don’t wanna miss the opportunity to talk about PSMJ’s Market Pro event that’s happening later in September out in Austin. I know you’re speaking, Smartergies. We’re gonna be there too. So any of our listeners that might be on the fence on whether or not they wanna go to PSMJ’s MarketPro or Thrive, we want to give you a little coupon and incentivize you to join us out in Austin. You can save $200 on your registration if you use code smart g’s, and that is s m a r t e g I e s. Kyle, why don’t you tell our listeners what they can expect to hear from you and learn from you out in Austin should they make the smart decision to join us?
Kyle Peterson [00:25:52]:
Yeah. I’m really excited about this. It’s been a while since I’ve done a speaking engagement. We didn’t talk too much about the personal side, but in the last so many years, in addition to the pandemic, my wife and I have parented 3 small children, and it’s taken a great deal of my personal time, which I absolutely love. And it’s the reason why I do everything I do is to provide for my family. But I used to love going out to these types of events and continually learning. I’m a consummate learner. But it’s interesting now being on the opposite side and being able to, a consummate learner, but it’s interesting now being on the opposite side and being able to be I had to think long and hard of what I wanted to speak about.
Kyle Peterson [00:26:27]:
And, really, it’s a lot of what we’ve been talking about here today with the added focus area of how do we, as architects and designers and even engineers and contractors and whatnot, move beyond the commodity part portion of our contracts and provide true value to our clients. And I’ll talk a little bit about my journey and then that left brain, right brain, and the struggles I had in grad school of really shifting off that creative and really thinking business, which was monumentous. Glad I did it before I had children kind of thing, and then really focusing more on how do we really change our delivery to our clients to help them understand our value. Because the value is what allows us to have healthy fees and reward our fellow architects and designers in this industry and really take back what we believe is ours is in in the fee basis of our construction budget.
Katie [00:27:30]:
I love the idea of aligning value offering more so than a service offering. I think that’s great. And firms that do it really fortify their relationships with their clients, and I think that helps the business side too.
Kyle Peterson [00:27:45]:
Yep. At Nelson, we say it’s being a trusted partner. As a partner is somebody you can depend on. It’s one of our core value pillars at Nelson, and it’s one that I lean into on the operation side very, very heavily because without that partnership, value can’t possibly flourish.
Katie [00:28:02]:
Rapid fire, real quick before we wrap up. What is one piece of advice you would give our listeners today to be able to think a little bit more strategically about their business of professional services?
Kyle Peterson [00:28:15]:
Ask the client what they need to succeed. What is it truly in their business that they are trying to achieve? Really, it’s by listening to our clients more. Do we really learn where our true value can come from?
Katie [00:28:30]:
I can. Alright. Well, that’s it for today. Everyone, thank you for listening. I hope you enjoyed hearing from Kyle. I hope you will also consider joining us out at the PSMJ Market Pro and Thrive Conference in Austin later in September. But until next time, stay smart with your marketing, and we’ll catch you next episode. AEC Marketing for Principles is presented by SmartEgies, the AEC growth consulting firm that has been developing smart business strategies for design and construction firms since 2008.
Katie [00:29:06]:
The show is hosted by me, Katie Cash, senior VP at Smartages. I would love to hear from you. If you have a question, a guest request, or a topic request for a future episode, send an email or a voice memo to podcast at smartages.com. And if you’re looking for past episodes, be sure to visit our podcast page at smartergies.com/podcast. We hope you’ll tell your friends and colleagues about our show, and be sure to subscribe so you don’t miss out on future episodes. Thanks for listening.