Colin Forbes on the Structure of Pentagram
On the occasion of the 90th birthday of Pentagram co-founder Colin Forbes, we reprint his classic 1992 essay “Transition” and share a portfolio of his work.
Pentagram began in 1972 when Colin Forbes joined with two fellow graphic designers, Alan Fletcher and Mervyn Kurlansky, along with architect Theo Crosby and product designer Kenneth Grange. The firm they created was organized to enable the five partners to work both independently and in collaboration, which is how Pentagram works to this very day. This unique structure was largely Colin's vision, and his interest in seeing it thrive and grow, over the course of his illustrious career and beyond his retirement, is evident in this piece he wrote in 1992, on the firm’s twentieth anniversary.
By Colin Forbes
Most design firms, whether graphic, product or architectural, have grown from the creative and entrepreneurial energy of an individual or two or three partners. Historically, only one or two out of thousands has ever continued into a second generation. The design-driven offices of George Nelson, Charles and Ray Eames and Eliot Noyes disappeared with the death of their founders. Practically the only design firms to survive beyond the first generation have been marketing-driven companies like Lippincott & Margulies and Walter Dorwin Teague. Yet if you consider dominant names in other service industries, Arthur Andersen or Peat Marwick in accounting, for example, or McKinsey or Deloitte in management consultancy, they have all reached their second or third generation. The size and success of these organizations makes it hard to relate their experience to relatively miniscule design firms, but I believe we still have something to learn from them. The challenge is to run what we believe to be an excellent design-driven firm into a second generation.
As the first generation of the Pentagram partners, including myself, start to think about retiring, there are critical transitional issues facing our firm. In my opinion they are our constitution, personalities and critical mass, and of these, by far the most important are constitution and personalities. There are two quotes, one from a management consultant and the other from a venture capitalist, which at first glance are contradictory but in fact support my view. The first is: “An above average person will fail in a poor structure where an average person can succeed in a good structure.” The second is: “I would rather back an A man with a B idea than a B man with an A idea.”
The Pentagram Constitution
Pentagram’s constitution is based on the equality of its partners. Although we are incorporated, we use the term “partners” because that conveys the spirit of the relationship. The idea of equality goes back to our first company, Fletcher/Forbes/Gill, where the three partners decided on equal equity and equal incomes. However, each partner’s profitability was openly declared, which contributed to a competitive element.
During these early years, the one of us who worried first about cash flow, the need for more studio space or what might happen in five years, got the job of planning the progress of the firm permanently. That happened to be me. We were fundamentally a “round table” organization, but I was the one who led efforts to develop the shareholder agreements and the constitution with lawyers, to refine the financial reporting with the accountants, and to map out a five-year plan.
Our London lawyer was instrumental in drafting the agreements between us. He said at one of our early meetings, “You must be generous toward an incoming partner. The talented 35-year-old that you need to help the business continue to thrive will not be able to buy in at ten times earnings.” Therefore, we agreed that incoming partners would buy shares at asset value only, with no allowance for good will, and that the firm would assist with financing over an extended period. The lawyer also said, “You must create adhesion—the advantage must go to the remaining partners and not to a leaving partner.” Therefore, a partner leaves with the auditor’s valuation of the current asset value only; retirement pension schemes are our individual responsibilities. We have always taken the attitude that partners should be financially self-reliant because the variety of ages means that the requirements vary too much.
My position was further entrenched when, with the addition of two more partners and the formation of Pentagram in 1972, I instituted our six-monthly partners’ retreats which eventually formalized into our policy meetings. It seemed natural that I would chair all of the partners’ meetings, and I continued to do so for eighteen years. Through these meetings we have learned to communicate with each other (although never enough) and to connect with the community outside. I believe the meetings are one of the major reasons the partners have stayed together. They have been part of our continuing education because they provide a forum where we can learn from one another and from our guests. They have taken place at remarkable venues such as Leeds Castle, the American Academy in Rome and the St. Francis Yacht Club in San Francisco.
By 1978 two more partners had joined in London and I moved to New York to establish the office there. In 1986 the San Francisco partners joined and introduced a new location. As we have continued to grow, our democratic philosophy stood us in good stead, but my role in all this had been concentrated for three major reasons. First, I was unique in having strong relationships with the U.K. partners; second, I had negotiated the entry of each one of the U.S. partners; and third, I had always chaired all of our meetings. I should credit the fact that I have been blessed with exceptional mentors and consultants, but maybe without undue modesty I could say that I have had the good sense to choose and to listen to them.
When I announced in 1991 that I wanted to resign my long-term chairmanship, a number of interesting observations immediately arose from my partners. The most important seemed to be that one learned through leadership and there were a number of partners who felt that they had been excluded from that experience. I had been advised that I should go on as chairman until the very last minute and that the issue would resolve itself when I left. But I didn’t accept that; I felt we needed a transition period during which we should agree on a Pentagram constitution to carry us through the next decade. I had also been advised that the chairman’s tasks had to remain in one hand and that rotation of leadership would be a disaster. Whereas that may be sound advice for a conventional corporation, in my opinion, it did not take into account the personalities and motivations of my partners, and indeed, designers in general.
The following describes the structure that I proposed after listening carefully to my partners and which has been accepted. The basis is the division of responsibility to allow the chairmanship of the meetings to rotate and to establish permanent elected committees to be responsible for the major functions.
The real authority for policy decisions remains the full assembly of the partner-shareholders, however, we have had to establish executive committees to get things done. One partner is elected to be Policy Committee Chairman to organize and lead the six monthly policy meetings and to deal with any matters affecting the whole group that are not included in the roles of other committees. This position rotates after three meetings (eighteen months) by tenure such that each partner shall, in turn, serve as Policy Chairman. Therefore, by definition the Policy Chairman will always be a senior member who has fully become part of Pentagram’s culture.
Through our experience we had learned to divide non-professional work into three distinct areas: accounting, communication and administration. The first two have impact on the offices internationally, but the third is primarily local. We therefore established two international sub-committees, a Finance Committee and a Communications Committee, each comprised of one representative from each of the three offices. In order to channel information and simplify meetings with outside advisers, we have also elected a chairman for each of these committees.
The committee members are nominated locally by each office and then approved by the group. In order to minimize rotation, there is no limitation on the term of membership, so unless someone is patently incompetent or uninterested, the committee appointments are virtually permanent.
The Finance Committee has the task of coordinating the financial affairs of the group with our financial advisers and lawyers. They discuss the details of matters like profitability by each partner and office, the distribution of our income and major capital investment, and then report to the full partnership when decisions need to be made. Likewise, the Communications Committee coordinates our substantial publishing program including the books, Pentagram Papers, Pentaspeak and other initiatives pertaining to public relations and business development.
After the first six months with this structure in place, some partners still had concerns about leadership of the group as a whole; it seemed increasingly difficult to get the partners internationally to develop both working and social relationships. A group of partners met on an ad hoc basis to address this problem and they proposed that there should be an elected Steering Committee to be responsible for long-term strategic planning for Pentagram as a whole and for finding solutions to internal conflicts. Like the others, the Steering Committee has one elected member from each of the three offices, and they elect a chairman for that group.
Although the structure appears to be complicated, it provides a necessary balance of involvement in leading the firm and yet ensures that the specialized jobs are done by the right person. The transition has not been simple. With changes, one is bound to make mistakes; things have fallen between the cracks and we have had to arrive at new definitions of responsibility. Even though the policy committee—the full partnership—has ultimate power and can change or decide anything, it is very difficult to keep each partner at the same level of understanding of complicated legal and financial issues. Therefore it is perceived (and may be in reality) that the executive committee members have more power than the other partners.
It is an understatement to say that most designers are not naturally good managers and there is a necessary learning curve. Designers must learn to be managers and to take executive responsibility or their company policy will be set by administrators.
The next big issue is personalities: who we will choose to elect as Pentagram partners and how they fit with and use the organization. Seventeen people cannot be the same or even truly equal, however there are four criteria that are important in my view.
1 A partner must be able to generate business. Other partners do not want to become salesmen. Help is available on a collaborative basis and the advantages include an expanded depth of work to draw from, the knowledge and expertise of other partners, and shared central support, but there should be no doubt as to where the ultimate responsibility lies.
2 A partner must have a national reputation as an outstanding professional in the chosen discipline. This is a subjective decision, but the partners have a sense of their standing in the field and the quality of work with which they wish to be associated. It is too easy to “water the wine.”
3 A partner must be able to control projects and contribute to the profits of the firm. There is considerable generosity about difference of earning because of different contributions in other areas. However, one cannot share income with a person who does not have similar potential and, probably more important, a similar attitude towards desired income. Nor can one share with a person who cannot manage a project or a team.
4 The last, and certainly not the least, is that a partner must be a pro-active member of the group and care about Pentagram and the partners. We spend our working lives together; we should like each other.
It sometimes helps to mix metaphors to make a point: I often say that this is not a shopping list; it is necessary to fire on all four cylinders. As stated by the venture capitalist, you need A people.
Our traditional source for new partners remains successful independent designers with small practices. However, we have established a precedent of developing new partners through an associate program. This additional route provides training in a way that is not available elsewhere and may suit the needs of a larger organization. Maybe Pentagram will also need partners in disciplines other than design. I do not know the answers, but I do know there will be change.
The last factor which I believe helps an organization survive is critical mass. We have grown to a count of seventeen partners with more than twenty years’ history. There comes a point when a sufficiency has been invested in building an international reputation, developing management skills and a fund of case histories so that the organization has a value beyond the individuals. Growth will enable Pentagram to reinforce its traditional way of doing business: maintaining the balance between commercial and cultural and our aspiration to be the “thinking designers.”
A larger firm has greater prominence in a crowded marketplace of hundreds of small design firms. This is evident when projects are on a national or international scale. For example, even a design enthusiast in Japan probably only knows of the six largest or most prominent western firms. A firm the size of Pentagram also has the resources to support a sophisticated and varied communication and publication program. The collective financial resources of a large group make it possible to invest in better facilities and resources or enter into new ventures.
These are the same reasons that bring us back to the generational success of the international service firms like McKinsey & Co. or Price Waterhouse. I believe that Pentagram’s new structure will provide an opportunity for us to adapt to our larger size. Ultimately, if Pentagram is to fulfill its potential, there is a need for the members of the group to have a vision of what the organization should be—not only within the design industry, but also in the larger international business community.
Napoleon was once asked to comment on what quality he most valued in his general. “I want them to be lucky,” he said. There are changes to be made, risks to be taken and conflicts to be resolved, and Pentagram needs to be lucky.
Editor’s note: Colin begs the indulgence of his partners for this article which he says is very personal and was difficult to write.
This essay originally appeared in the November 1992 issue of Communication Arts.