Tuesday night I got a call from Michelle Kaufmann, AIA, LEED AP, with the "sad news," as she called it, that her company was closing up shop. Sad news, indeed. Michelle Kaufmann Designs was residential architect magazine's Top Firm for 2008. How quickly businesses can unravel in this economy. The very attributes that set Michelle's company apart from so many residential design firms—big dreams, big talent, big moves, big risk taking—are what also made it vulnerable when big problems occurred in the banking and home building industries.

"We were very busy," she told me. "I know it sounds crazy to say, but we didn't see this coming. If one problem had happened, we could have dealt with it, but all of them hit at the same time." Clients' financing fell through; a factory partner went under. For a small company just five years old and working at the bleeding edge of innovation, the setbacks proved too much to bear. "My main concern is that we see our current clients through the building of their houses. I don't have flesh-and-blood children; our houses were my children," she said.

When we named Michelle's company Top Firm last year, we did so because we admired her bravery in embracing so much of the responsibility and risk in designing, developing, and building her houses. Most of her prefab peers took on only part of this three-pronged approach, which likely still remains the best way to get the job done right. We were also impressed by Michelle's media savvy. Her company website was light-years ahead of other architects', with video, white papers, product information and suggestions, a blog, and, of course, thorough details about her prefab house collection. Essentially, she created her own de facto home design broadcast network, spreading information about sustainable living to a wider public. She was on Twitter before Oprah. And, I'm going to guess, she's had nearly as many idea houses installed in public places as Frank Lloyd Wright, an early proponent and innovator of modular houses.

Idea houses were a linchpin in Kaufmann's goal to inform the public firsthand about what good, sustainable design looks like and feels like. There's no substitute for walking through a house and discerning for oneself the quality of the space, the size and functionality of the rooms, and the overall impact of thoughtful design on one's sense of well-being. Big production builders have understood this for years—models sell houses.

Because you can't please everyone with just one plan, Kaufmann made sure she developed several different house types for a variety of building sites—urban infill, single-family suburban, multifamily. Her houses were available in small square footage versions and in expanded or expandable iterations. Although a modernist, she even had a prototype with a pitched roof, reflecting her Iowa farm girl roots and the prevailing public taste for more traditional architectural forms.

Yes, she had it all. With nearly 40 houses finished in just five years, she was clearly onto something important. The world did seem ready for her message of more affordable, sustainable, sensible design. But the world as we know it shifted on its axis, and many of us are stumbling because of it. "I think we had the right idea, that the country's ready for what we do, but we need to find another way to get there," she said the other night. Prefab, she explained, can't realize its promise until it reaches "scale," as she calls it, or a substantial number of multiples. That's when it truly becomes more affordable than custom, not to mention faster and better built, with less waste of resources and materials. Currently, she's exploring the option of working with an established big builder to deliver her designs to market: "They're in trouble too, and they need new ideas like ours."

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