Turning Idealism into Good Business

Having the skills, the enthusiasm and the right drive is necessary in order to succeed. But as Bjarke Ingels Group experienced, it takes more than that. Without a good business minded CEO, the company will be closer to bankruptcy than success.

 

Sheela Soegaard, CEO at BIG – Photo credit Flemming Leitorp


Having the skills, the enthusiasm and the right drive is necessary in order to succeed. But as Bjarke Ingels Group experienced, it takes more than that. Without a good business minded CEO, the company will be closer to bankruptcy than success.

The Danish architectural firm Bjarke Ingels Group (BIG) has been drawing headlines around the world with their impressive projects like the Manhattan Courtscraper and the Waste-to-Energy/ski-resort. Bjarke Ingels, the founder, is being hailed as one of the most innovative and creative minds around and has received numerous prizes for his architecture. Their success is, however, not only based on Bjarke Ingels’ creative mind. Working behind the lines CEO Sheela Søgaard has managed to turn a company on the verge of bankruptcy into a prime example of an architectural firm. But how did she succeed in making this transition and what lessons has she learned from the process? We visited Sheela Søgaard at BIG’s office in Copenhagen to find out.

Avoiding bankruptcy

Bjarke Ingels started BIG in 2006, after co-founding PLOT architects in 2001. Building on the success from PLOT, they did a lot of interesting projects, and from an architectural point of view they were doing great. However, the financial side of the business was not nearly as healthy. In 2008 the lack of financial results forced Bjarke Ingels to pawn his own apartment in order to keep BIG from bankruptcy. It was obvious to all that they needed someone who knew how to run a healthy business to relieve them from the financial chores, so they could stay focussed on developing amazing architecture.

They decided to bring in Sheela Søgaard as CFO, a former McKinsey consultant, with experience from GN ReSound and Meyer Aps, to address the situation. In her own words, it was a fairly simple task: “The first processes were very basic. It was down to the level of sending out invoices, and making sure that the customers paid those. Then I needed to find out what people were actually doing. They came to work, but what were they doing. Was it debitable? And if not, why were they doing it, and who had “allowed” them to do that? It was all about establishing some simple structures and getting an overview of the company.”

But for Sheela Søgaard it was also a fascinating space to enter. Bjarke Ingels had started the company, hired some friends, colleagues, and former students, and somehow they had managed to establish an unspoken agreement of how to do things: They were actually doing all right. It was working for them. Right up to a point where it suddenly did not work anymore. But the problem was clear to all: They needed money.” The unique work culture brought an extra dimension to the task Sheela Søgaard was facing. She needed to sort out the finances, while being careful not to make too big of an impact on the BIG culture.

One of her first initiatives was establishing a Business Development team which was basically a sales team, but “people like the term Business Development better”, as she puts it. This approach was also a testimony to her non-architectural background. Sales teams in architectural firms wwere not a common sight and are still rare today, but from her experience it was a natural thing to do. And it proved to be the right decision, bringing in new projects without tampering with the work culture. 

Miniature model of the Manhattan Courtscraper project – Photo by Sofie Kirkeby

“We are not here to make loads of money” 

After only seven months Sheela Søgaard was promoted CEO, putting her in charge of the operational and strategic elements of the business and thereby giving Bjarke Ingels a more free-floating role. It was not as big a change as it might sound. It was more a case of aligning the organizational structure with how they were actually working. However, there were some new responsibilities accompanying the new title. Amongst those a project management role. But being CEO of an architectural firm without an architectural background does create some limitations: “I can in no way take credit for the final product. I am not an architect, and therefore, for obvious reasons, I cannot sit down and draw or do quality control. I can only evaluate the projects on predefined standards on economy, deadlines, customer expectations and the like. So I do not in any way get involved in that part of the process.” Sheela Søgaard’s involvement is limited to the strategic and operational areas of the projects, eg. finding the right projects and customers, making sure the right people are assigned to the right projects and negotiating contracts. She then trusts her team to create amazing architecture that lives up to what the customers want.

Even though this might be an untraditional role for a CEO it seems like the right division of labor for BIG. They do not need a CEO that tries to cost optimize everything, as Sheela Søgaard tells us: “We are here to make really cool architecture, not to make loads of money. [...] My job is then to make sure that we do this as profitable as possible. In that respect we might operate differently than other architectural firms. I have not yet found a way to measure it, but our bottom line primarily reflects the value of the architecture we make.”

While Sheela Søgaard explains that they potentially could make more money, but that they constantly have to balance it, and that they furthermore spend a lot of money on design development - processes that they are not necessarily being paid for - one cannot help but wonder whether they would actually be willing to put their money where their mouth is. But before we get to address this Sheela Søgaard backs her statement up with an example, eliminating any initial doubts: “Recently, on a project in Elsinore where we are building the Danish Maritime Museum, we have put some of our own money into buying some aluminium that was otherwise going to be left out due to budget cuts. We have been working on this project for five years and it simply cannot be that we right at the finish line would cut something that is of such great importance for the value of the architecture. It is a bit crazy, [...] but we do it because this is what we are here to do.” 

At the same time, she makes it crystal clear that they are not naive or philanthropic. They know that they need money in order to do what they do. After all, it was exactly the overly idealistic focus on architecture that lead to BIG’s threatening bankruptcy in 2008. So they are very focussed on running a healthy business, and despite not wanting to reveal their financial results, she is willing to reveal that “2012 has been a very good year”.

A LEGO miniature model at BIG – Photo by Sofie Kirkeby

Learning how to be a grown up

The question of how they have managed to turn a looming bankruptcy into a thriving business in just 4 years is, however, still partly left unanswered. And according to Sheela Søgaard there is a very good reason for that: “I could easily sit here and sound very clever, talking about how we did this and that. But in reality, five years ago, we launched something like 54 different initiatives. Some died because they did not work or because no one was feeling passionate about them. Some we had to close down because they were only costing us money. And then there were maybe something like five of the things we did that turned out to be reasonable, and the right thing to do. It is extremely easy in hindsight to make it sound as if it was like pearls on a string. But it wasn’t. We just threw a lot of things out there and hoped that some turned out right.” So in the words of Sheela Søgaard, the secret behind the success is actually quite simple: “I think the secret is just to throw enough things out there, launch enough ships, and then follow up on them. Having the courage to shut them down or simply let them sink.”

This approach might not be textbook material, but it has worked for BIG. They are a company in constant development and on a steep learning curve. They do not launch as many ships anymore. They have gotten wiser, Sheela Søgaard tells us. But that does not mean that they are completely in control. In only five years they have grown from 40 employees and a single office in Copenhagen to 160 employees and three offices around the world. Their customers and projects have also changed significantly. So there is also a sense of trying to catch up: “We have probably grown faster than we have matured. There are things where we try to catch up and be more like an “adult”. It is kind of like moving away from home at the age of 12 and then having to learn how to be a grown up.”

Creating a scalable business is not about growth

With the financial part of BIG running more or less on tracks, Sheela Søgaard’s main task is now to create a scalable business that does not depend on specific people and in her own words: “That is much more difficult than making the company financially sound.” But scalable does not necessarily entail growth: “The most unintelligent solution is growth. That is not what we are here for. So if it makes sense to be smaller, then we will be smaller. We just need to be able to scale the business to match what we need to do.”

A big part of that is making the company less dependent on specific people. Up until now, BIG has relied on some key people to keep the company going, making it extremely volatile to any of these people leaving. To make it scalable BIG needs to install some structures and practices that enables other people to take over in the situation where a key employee decides to leave. However, it is important that it does not become instrumentalized: “I do not want to lead a company that is not interested in the specific person. Obviously, it makes a difference if it is ‘Nicole’ or if it is you who holds the position. And there needs to be room for that. You need to be able to be yourself when you are at work, at least here at BIG. But we also need to make sure that everything does not fall apart if ‘Nicole’ leaves. And that is what it is all about: Creating a scalable business that can both be scaled up and down and that does not fall apart if one person decides to leave.”

By pursuing this goal Sheela Søgaard has also had to come to terms with having a less hands-on approach than usual. A challenge that has been bigger than expected: “What has surprised me the most over the last six months is how much time I have to spend assigning the right people to projects and making sure that people know what they need to do. [...] It was so much easier when I did it all myself. Back then I did not have to talk to everyone to check up on things. But that is my role now. I find myself making less and less results on my own and instead creating the results through others.”

BIG’s headquarters in Copenhagen – Photo by Sofie Kirkeby

Maintaining the enthusiasm

All this points to BIG establishing itself as a larger company. Even though Sheela Søgaard holds firm on growth not being the answer to everything, growth is what they are experiencing right now. So how is the original BIG culture that Sheela Søgaard met in 2008 holding up? Maintaining it can only have become more difficult as the company has expanded. She is not afraid of highlighting this dilemma as a constant challenge: “This is what makes it so difficult. Having to find the balance. To maintain the entrepreneurial spirit and not become too corporate. To control the growth so that the employees are still able to recognize themselves in their work. [...] We just have to address it one step at a time.”

The head on approach shines through in the cultural aspect as well. They have not made a clear plan of how to maintain the BIG culture. Having such an approach would probably not be of very much help, anyway. But according to Sheela Søgaard they have managed to maintain the culture so far: “We still have some sort of entrepreneurial spirit. We address the problems that arise”. But it is not neccesarily the entrepreneurial spirit that needs to be maintained. “I don’t know if it’s ‘the entrepreneurial spirit’? It’s just words. What is important is to maintain the enthusiasm for the architecture. And that is done on the specific project. It is achieved by creating a company that is present and involved in each single project.”

This article was originally published in GRASP magazine. 

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