Equal opportunities

Pentagram has a unique partnership structure. Is this system, where each partner shares their work and financial performance, a recipe for sustainable design success?

Enterprise IG earns the most. Ideo is the biggest single company. Johnson Banks wins most awards. Imagination is master of the spectacular. CDT Design produces the best known cultural work…

You could be forgiven for thinking that Pentagram, the company often hailed as “the Rolls Royce of British design”, has been overtaken by some sportier models. And yet it is the consultancy held in highest regard by other designers and most often known by non-designers. It might not be the biggest, the most profitable or the coolest, but there is magic in its name.

How has this happened? While many design businesses have either adopted top-down management structures, been limited to one director-owner, or attempted half-baked stabs at sharing ownership, Pentagram has got on and finessed its approach to partnership. What’s more, it has done it across offices as far flung as New York, San Francisco and Austin, Texas.

It is not the group’s work, its publications, its multidisciplinary approach or its graduates, but Pentagram’s modus operandi that is the most valuable thing it has contributed to UK design.

What partnership achieves

So how does the Pentagram organisation work and what does it achieve? Partners share profits equally (although the longer you stay the higher your annual return), and they also share knowledge, contacts and critiques. Performance – both creative and financial – is out in the open. Everyone presents their work to the partners and everyone listens to the response.

The profitability of each partner is examined too, and each partner knows where they and the others sit in the league table of partners’ earnings. A sort of nudity is the objective. This system creates a virtuous circle where excellent work begets excellent clients who beget excellent work. Momentum is vital to the health of the consultancy, which is why it constantly exercises its critical faculties (which, in turn, is why it doesn’t need a new business department).

Consideration for structure and management started from the beginning in 1972. One of the founders, Colin Forbes, was fascinated by such matters and the company has spent the past 27 years developing his initial thoughts.

John McConnell, a partner since 1974, believes it’s a much more sophisticated structure than those employed by other design groups. He doesn’t just mean the way profits are shared and work discussed, he means the infrastructure of ownership. For example, the partners control the shares in a Swiss corporation, and that owns the various Pentagram offices.

The Swiss connection offsets the volatility of the dollar-pound exchange rate, so partners on both sides of the Atlantic enjoy the same value from their shares. Swiss trading laws restrict some aspects of the corporation’s investment activity, so Pentagram established a Swiss bank.

Therein lies the key to why Pentagram’s organisational method is important: it ensures that the partners enjoy the very best platform for creativity and profit sharing.

McConnell says one way of understanding the value of Pentagram is to consider the benefits and limitations of the early period in a designer’s life. “Probably the best time in anyone’s career is when they are at home working on the kitchen table,” he says. “It’s downhill from then on as you get bigger and bigger. You end up having breakfast meetings with your accountant every day. We see this as 16 kitchen tables, dotted around the world. Butä there is massive accumulated knowledge too.”

To accumulated knowledge you can also add analysis, opinion and discussion. Every piece of new work is presented at the half-yearly international partners meeting, but input also takes place on a day-to-day level. Rationality and intention are paramount, or, as one Pentagram partner put it, “In here you do not say ‘I did it like that because it looks pretty.'”

J Abbott Miller, who joined as a partner in the New York office on 1 June, agrees, but also emphasises the value of support. “When I worked on my own I was a bit of an island,” he says. “You may have colleagues in design to co-operate with, but I would never call up someone and ask ‘how would you charge for this job?’ or ‘how would you do this?’. Now I have colleagues who are accessible on that level.”

Partner of 15 months Angus Hyland notes that discussions at Pentagram are not about executional elements, such as the choice of a typeface, as about the logic behind the overall approach. “My aesthetic hasn’t really changed at all since coming here. It hasn’t affected the look of what I do, but it has really sharpened up my thinking. You have to be more rigorous.”

Lorenzo Apicella, a partner of nine months, recognises the value of sharing thoughts. “Being enclosed is dangerous,” he says. “You can end up talking to yourself in your own language. You can convince yourself of how right you are. I think needing to explain yourself more means you ask yourself harder questions before anyone else does. And listening to other people is vital – I think you become a much better designer by being inclusive.”

The pressure

The flip side of this analytical culture is an implicit demand for the individual to produce excellence, time after time. Add to this the capital-collectivism of shared profits and you can see that being a partner at Pentagram is not just a gondola ride to Easyville, particularly as the financial performance figures aren’t hidden away in the accountant’s Banham cabinet. A profitability league table is shown at every international partners’ meeting, so everyone knows who has contributed what.

“The personal pressure not to be at the bottom of that list more than three years in a row is immense,” says McConnell. “If you pick the right people, with the right energy, they will make sure they don’t come last for three years…but it’s difficult…Angus and Lorenzo will be looking at that very carefully.

“The pressure is individual personal pressure,” continues McConnell. “‘Can I keep up? Will I be able to hold my head up in this group?’ That’s a terrible burden to come to terms with. Especially when you’re working with people you admire – your stars. My wife told me that for the first few years I was white in the face. I was shit scared. I couldn’t work out what I was, who I should behave like. I had already run a successful business for 12 years, but suddenly I was in this group. That is a massive pressure.”

Miller acknowledges the importance of his own financial performance, but believes that it’s not just about bringing cash through the door. “I appreciate the fact that economic success is relative to the success of a partner’s work, but if you do something incredibly brilliant no one’s going to mind that you might have dipped below a certain profitability on a project,” he says. “There are many occasions where the partnership has gained as a result of a project, aesthetically and in terms of press coverage – even if it wasn’t profitable. It’s a very liberal environment in that regard, and that’s a clear indication that it is a design-driven consultancy, it’s not a financial company first that just happens to do design.”

Apicella notes that “I could make more money at the head of a consultancy, but then what? There are lots of ways you can make money, but we do this because we believe in what we do. It’s important to be rewarded properly because design is valuable and should have respect accorded to it, but really it’s about the quality of the work. And that [excellent work] makes both good business sense and is the reason why we started out doing this in the first place.”

Clearly, the international partners’ meeting – where they show their work, look at the dosh league table and debate and set the direction of the consultancy – is an extraordinary event. In my experience, it’s difficult enough to get two designers to agree on whether we should be drinking white or red, so the hubbub between 16 multi-award-winning individuals must be interesting. “It ain’t a holiday,” says Hyland, with a half-smile. Miller says of his first meeting, in Lisbon: “It was a zoo. It was like getting to meet the whole family. But there’s a real commitment to democracy – there’s no overriding of an individual’s views.” McConnell reckons it’s a tough gig. “Presenting is pretty gruelling because you can’t bullshit. They’ll see through your argument,” he says.

Like any family, there are times when it doesn’t work. Partnership and Pentagram are not for everyone. Part of the problem with new partners has been the financial demands made upon them, both to perform and to be in a position to buy shares quickly – problems ironed out by the ten-year buy-in timescale. Another issue is chemistry. There’s a lot of genuine friendship within the group, but it would be naive to assume that there is no friction. Yet that’s the beauty of collectivism, shared responsibility and rational debate – no one individual exerts power over another. Or as New York partner Paula Scher once phrased it, “We grow by fight.”

Peter Saville is probably the best known case of it going wrong. It seemed a strange fit at the time, although it’s exactly that sort of surprise that keeps Pentagram fresh. In this case, he went before his two-year trial period was up, “a difference in attitude between him and the partners” was the most diplomatic explanation I could elicit from anyone at Pentagram. McConnell, who gives me his side of the story off-the-record, smiles at the end and says, “Well, that’s what a two-year trial period is there for.”

Oligarchy, not democracy

I think the Saville episode is a positive one for Pentagram – the partners tried something brave, but it didn’t work out. Where the consultancy’s organisational culture is less impressive is with non-partners. There is much talk of democracy, but the London office can have an unsavoury whiff of elitism about it.

Each partner mentioned how important their team is, but how much input they have on Pentagram as a whole isn’t mentioned. Perhaps getting 16 partners to reach consensus is hard enough without complicating it with the views of staff. Perhaps the views of staff have to be limited to the workings of each “kitchen table” if Pentagram is to be manageable. Or maybe it is just elitist.

By extension, I wouldn’t be surprised if some graduates of Pentagram have felt undervalued. Read through the consultancy’s own histories and there are only occasional references to the contributions of senior designers. You get a sense that the partners are the thespians and the others paint the scenery. Democracy it isn’t, but it’s not a sweatshop either. Whenever an ex-Pentagram person gives me a negative comment about the consultancy it’s always counterbalanced with something positive.

What’s surprising is how little the rest of the industry has learnt from Pentagram. Many design consultancies struggle to define their existence and resolve what they see as two discordant notes – commerce and creativity – but few of them have tried to learn from Pentagram.

McConnell, who in his role at Boots and Halfords experiences many design consultancies each year, shares my surprise. “I’m absolutely staggered that so few people have done it,” he says. “People say to me, ‘Oh, we’ve built our business on your basis,’ and I ask them a couple of questions and it’s clear that they haven’t even understood the first ground rules of genuine equality and democracy.

“Saul Bass and Herb Lubalin came over and saw us and went back to do the same thing in the US. Their egos were so big they could not give up what they thought was their independence. Lubalin called me and said, ‘I’ve done it now. I’ve changed the company [name] to Lubalin & Partners.’ He didn’t realise the irony.”

McConnell believes one reason why so few design consultancies create innovative and truly effective organisational structures is that they fail to engage with the business challenge. “I think they are too willing to hand over to an outsider the administration and the bits of the business that they think are boring. I think that’s silly old art school junk. It’s that ‘commerce and money is nasty and art and starving is fun’ attitude. I do wish most of them would wake up to the rot that is built into that concept.”

The next Pentagram partner

One ex-Pentagram designer commented to me that the consultancy has remained consistently excellent, but it has not yet replaced the drive of the founding partners. The arrival of three new partners has brought some new energy.

The addition of new people with strong ideas can destroy the culture of a company, but – according to McConnell – it seems the new trio are helping to bring Pentagram closer to its conceptual roots than it has ever been before. “Younger partners are more committed to the idea of equality and democracy,” says McConnell. “Bluntly, I think the collaboration between partners now is greater than it has ever been. Although Pentagram has always sold itself on being a collaborative operation, in actual fact it wasn’t quite as it was sold. It is genuinely now much more about working together, including across the Atlantic. The myth is now reality.”

Miller – whose joining caused a stir in the left field of the US design community – suggests that his appointment is indicative of a new willingness to broaden the range of partners. “I think we need to reach out a little more. I think that’s on the agenda.” He’s not naming names, but says: “I think that the partners who join in the next two or three years will further define the breadth of Pentagram.”

Of course, Pentagram’s structure is not perfect and it wouldn’t work for everyone, but it remains the best model I’ve seen for a design consultancy, and the latest appointments underline that. I’m amazed that the industry hasn’t learnt more from its success, but then a structure built on business nous, generosity, intellectual inquisitiveness and exceptional talent is, I suppose, bound to be rare. Ultimately, my surprise is that so many designers admire the consultancy’s design work, but so few of them have learnt from the way Pentagram designs itself.

How partnership works at Pentagram

A partnership structure such as Pentagram’s is still unusual in the design industry, but is common in other areas of business, particularly accountancy. The main difference is that the cost of buying-in to the partnership at Pentagram is effectively sponsored, so that the business always ensures it can attract and retain relatively young partners.

The process begins when an existing partner encounters an impressive individual (professionally or socially) that could be valuable to the partnership. Angus Hyland is an exception – he was identified by a headhunter. The partner makes an informal approach to the individual and a broad conversation takes place. If both parties are interested, the individual’s work is presented at an international partners’ meeting by the sponsoring partner. If the partners’ response is positive, the individual is asked to visit every partner for a mutual portfolio showing and discussion. This is as much about the individual deciding whether they want to join as whether the partners want them. If the individual wants to join, a 100 per cent consensus must be reached among the partners before an offer is made.

Acceptance of a formal offer is followed by a two-year trial period. During this time the new partner has the same voting rights and communal profit-share as existing partners. If the trial is successful, the partner is invited to join as a full equity shareholder director, and has ten years to buy their full allocation of shares. Ironically, for a consultancy whose expertise is in enhancing the goodwill value of clients, Pentagram suspends the goodwill value of its own shares when a partner buys in. This is the only way most individuals can afford to buy in to a consultancy with such a valuable reputation. It is an enormously generous way to bring in new partners.

A partner has a buy-out period of three years, during which time the partnership purchases their shares (goodwill remains suspended). However, many partners leave their shares in the consultancy as an investment. There is no limit on the number of new partners. The founding partners originally stipulated that it should be no more than five (hence the name), but soon changed their minds. The number of partners is key to the organisational workings of the business.

Founders: Theo Crosby [died, 1994], Alan Fletcher, Colin Forbes, Kenneth Grange, Mervyn Kurlansky

Some notable graduates: David Stuart – The Partners, Quentin Newark and John Powner – Atelier Works, Mette Heinz – Heinzight, Factory Design, NB: Studio, Vince Frost, Thomas Manss

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