Design Firms Are Thriving (Not Stagnating)

A Letter to the Editor of FastCo.Design, in response to “Why Are Design Firms Stagnating?


Dear Editor,

I have some thoughts on the recent Co.Design article “Why Are Design Firms Stagnating?”. I know how Fast Company is meticulous in providing a balanced outlook on design topics, and I thought who better to provide some opposite perspective to the state of design as a service than some of the best design agencies in the business. So I have outlined multiple reasons why the absolute conclusion that design firms are stagnating, is not entirely true.

There are many design agencies thriving and posting record years, including ourselves (Digital Telepathy). Our business is consistently at capacity (while growing in size and revenue) due to client demand for ongoing engagements as well as expanded services outside of the realm of the web and apps, such as experience design. Now, we are not your normal run-of-the-mill agency. We are constantly evolving by contributing to better design processes, offering influential direction to the design community and creating products of our own. Agencies that are waiting around to bid on an RFP for a corporate website and take a waterfall approach may very well die off or become insignificant.

However, most agencies acquired by large corporations have also been independently successful.

Take for instance our friends at Teehan+Lax, who were “hired” by Facebook earlier this year. In their farewell letter, Jon Lax outlined their reasoning behind joining Facebook, none of which was related to stagnation in growth. In fact, he stated that the business was very healthy, having had its strongest financial year ever just last year. It wasn’t a bail out, nor was the company experiencing a halt in business. Lax summed up the reason they chose to dismantle the agency and join the Facebook team: “Ultimately, the things we would get to do at Facebook, the people we would get to work with, the problems we get to solve were too compelling to say no to.”

Another prime example is Adaptive Path being absorbed by Capital One last year. Were they struggling to grow? Nope. Were they desperate for a buy-out? No again. In their own transition letter, Adaptive Path explained it had actually been approached by many companies in the past who wanted to buy the business, but the trouble was these companies weren’t interested in acquiring all the service offerings of the agency. Capital One, however, came along and “truly seemed to get it.” Chief Creative Director, Jesse James Garrett, explained that Capital One is, “A company with a great culture that shares and values our intellectual curiosity and design sensibilities, that wants us to continue doing great work inside their organization, but also continue helping others do great work too, by fostering dialogue and teaching what we have learned.”

Acquisitions like these do not paint design as an industry starving for growth and opportunity.

The story instead is one of corporations taking the opportunity to acquire invaluable skills and knowledge, along with the established design philosophy, process and culture of successful agencies.

Building a design organization is hard — it’s really hard. Corporations know that, and they are taking the opportunity to bring expertise in-house. They can’t just hire 1,000 UX people and become experts in design as a company. It takes leadership and a company-level emphasis on design to make things really work — and that’s what corporations are gaining by purchasing design firms. The fact that design firms are being acquired and brought in-house by large corporations is not a sign of a faltering industry; rather, it validates how incredibly difficult it is to foster design culture within a large organization.

That being said, the acquisition of a design firm is unlikely to be a silver bullet, and that’s why outside design agencies still come into play. Bryan Zmijewski of Zurb said,

“Silicon Valley wants to scoop up all the star design talent, but it’s not as easy as hiring design talent in-house. You need a way to scale and bring purpose to the work at hand.”

Bryan believes that design firms need to offer more collaborative engagements, where knowledge-sharing takes place at a high level, and we agree. “It might take a long time for this to completely shift an industry, but it’s going to happen.”

As for why design firms are selling, that’s a completely different topic all together. It’s not, as I hope we made clear, because design agencies are not growing, making money or finding new opportunities. In many cases, it has to do with a desire to focus on one project and make a targeted impact, to work on things that an agency wouldn’t have the capacity for while juggling multiple clients.

It’s irresponsible to draw the conclusion that design agencies are “selling-out” to save themselves — that’s simply not the case.

To the author’s credit, we do agree that every corporation should have someone internally who understands design at the level the organization wants to achieve. Not because agencies can’t do it, but because having a champion on the inside means companies can get the most out of their external design partners. It’s not necessarily about all-or-nothing. The ability to practice good design (not just aesthetically, but functionally) is an incredibly valuable asset to an organization. A powerful partnership for success is often the combination of an internal champion and a creative, experienced and skillful external team.

As agencies, we have a responsibility to adapt and continue to offer value to our clients. Jeff Gothelf of Neo said,

“The value agencies need to bring — and some already do — will involve design in its most complex form — customer empathy, research, learning, strategy and delivery of holistic ideas that are not just fun to look at, but work well, are technically refined and solve real business problems for their clients. It’s these full service shops that will thrive in our increasingly design-obsessed world.”

Adaptation and evolution are normal processes in the ebb and flow of industries. All companies, agency or not, need to work on self-betterment in order to flourish. Both corporate design departments and independent agencies that embrace the future will be poised to succeed.

Signed,

Chuck Longanecker, CEO of Digital Telepathy