Ray and Charles Eames with clients in the studio

It’s never been more important for design firms to think differently

It’s been a turbulent couple of years for design agencies. Friday’s announcement by Toronto’s Teehan + Lax makes them the latest addition to a growing list of high profile digital design firms that have closed their doors, cashed out, or turned away from consulting in the last few years. Since 2012, San Francisco’s Hot Studio, Bolt/Peters and European studio Sofa have all joined the Facebook design mothership. In 2013, Toronto’s Jet Cooper became part of part of hot Canadian startup Shopify. UK consulting firm BERG became a product firm and then decided to shutter its doors all within two years. This past fall, high profile industry shop Adaptive Path shocked everyone by becoming part of Capital One. The digital design community had been reeling well before the Teehan + Lax announcement. Now the backchannel conversation about the future of design consulting has come front and centre. If you take the press seriously, the design industry is no longer at a crossroads…it’s on the edge of cliff.

Design consulting has arrived at an uncertain place

The failure here lies firmly at the feet of external design firms. They’ve worked on improving their processes and polish, but they haven’t changed how they think in over a decade. This isn’t completely true of course, but design consulting has definitely arrived at an uncertain place. While agencies question whether they’re still relevant, the narrative in the design industry has swung towards the story that design has finally found it’s seat at the table; in-house at the world’s largest and most influential firms. Leading organizations are now taking a more holistic view of design, both product and service, and rightly conclude that they should have a robust in-house design function.

Facebook isn’t the only firm building a design army. Google has invested too, buying companies like Nest and Milk. GE and IBM are both building massive in-house design teams with C-level access and connections. Apple has put design at the centre of its business for over 30 years. With internal design teams finally getting the recognition and resources they’ve been demanding for years, designers are asking whether the cycle of design leadership has finally stopped shifting back and forth between consultancies and large corporations. Is the industry ready to declare a victory for in-house talent and teams?

The shortage of design leadership talent is driving the corporate acquisition spree

It’s important to note that most of the discussion on this topic is heavily slanted towards the world of younger design fields like web design, user experience design and service design. This makes sense. There’s a huge shortage of digital design talent on the market both in North America and globally, and buying talent by acquisition and “acquihires” is one of the fastest ways for large companies to grow their design teams. It’s also what makes the Teehan + Lax deal with Facebook seem a bit odd at first. It appears that the focus of the deal was for the three partners, not the entire team.

When you look closer at the talent gap in the digital design industry, you see a lot of people entering the field, but very few practitioners have the deep level of expertise and experience that companies are looking for. The level of design maturity just isn’t there because the field is still very young; the industry has very few truly senior leaders. Those of us who have been leading design teams for more than ten years are edge cases. It’s common for my firm to get resumes from designers with two or three years experience who are applying for director-level positions. I’ve had individuals applying for summer internships tell me that they have extensive design management experience. In this world, Facebook’s move on Friday looks brilliant. They landed some of the most experienced and talented design directors in the business. I expect that Facebook got exactly what they were looking for; seasoned design leaders.

Design firms shouldn’t try to compete with their in-house peers

So how do external design firms stay relevant in a world where large, well resourced corporations have the cash and cachet to pick and purchase the best talent from the pool? They need to think differently. External design teams have one clear advantage over their counterparts in the corporate world. They work in an environment where design is their core value proposition. Outside of a few examples like Apple, design can be a part of the organization’s capability, but it’s not likely to be the core of their business. This is where agencies have always had an advantage. Their business is design. It’s where they get to innovate.

The future of design agencies lies not in their ability to become more like their in-house counterparts, but their ability to become more unique. They need to see, speak, and act differently. Their value lies in their ability to describe the changes they see in the world with new language. This, in turn, makes it possible for people to imagine the future differently from the present.

A design agency like Pentagram or IDEO has a single product; its design capability. This is what it hones, refines and sells. Pentagram’s capability is a combination of their unique mindset, which is how they see the world, and their approach, which is how they do their work. In great agencies, these two things are tightly intertwined and can’t be broken apart and copied. This means that only Pentagram can be like Pentagram.

Not every company is going to get value from Pentagram’s unique mindset, but most will benefit from some unique design-based viewpoint that can challenge their assumptions from an outsider’s perspective. Placing their capability into a large company would change what makes them unique. That’s not to say that a company like Google wouldn’t benefit from acquiring a company like Pentagram, but they’d have to be comfortable with getting the parts, not the whole. Pentagram’s external perspective wouldn’t survive the transition. The fact that the agency sits outside of the organization’s world is its greatest value.

The sweet spot for external design firms: seeing things differently

Being exposed to novel perspectives with new language makes people and organizations think differently. Strong business leaders have understood this for years. Design really delivers when it has the ear of an organization’s leadership, as well as a seat at the table. At Normative, the design agency I co-founded, we’ve been asking our clients what they value most about working with us. The answer that leaders give us is always the same. They value our ability to challenge their assumptions and help them see their problems differently. They’re not looking for someone to solve their problems for them, but they absolutely want a partner that can push their boundaries with a different viewpoint. Internal teams absolutely need to sit at the table. External design has a different responsibility. Our external perspective can help them notice and think about the problems they can’t see.

This has always been the sweet spot for design consulting. Ray and Charles Eames worked this way with Herman Miller and IBM in the 1950’s and 1960’s, bringing their unique perspective of design to bear on everything from furniture to film. Frog Design’s Hartmut Esslinger worked with a young Steve Jobs in the early 1980’s helping Steve and Apple understand the language and practice of great industrial design, sowing the seeds of Apple’s incredible contemporary design capability. In both examples the language and perspective that these external firms used literally reshaped the businesses they worked with.

Ray and Charles Eames spent a lifetime working on their unique perspective. Frog’s mindset had been refined for over a decade by the time they started working with Apple. Their innovation was literally how they saw the world. The digital design field is young, and few agencies have had the time to really develop a unique mindset. Fewer still have tried.

A dozen years ago, companies like Teehan + Lax and Adaptive Path were unique. They thought differently and communicated the value of their perspective through great work and compelling language. Firms like these created and popularized the language of user experience design. They made it possible for their clients and the digital industry at large to think differently. Hundreds of firms followed their lead over the last decade, but they copied the mindset of these formative companies. They didn’t create new language and ideas to challenge what they saw in the digital world. When an entire design industry follows a single mindset, commoditization quickly sets in. This is good when you want to buy more of the same, but not when you want something different. It’s no surprise that in-house design is so strong today. Agencies have fallen into the trap of competing with them, instead of providing a valuable contrast.

The artifact of an agency is its mindset

The most interesting evolutionary consulting firms like Undercurrent and NOBL seem to understand this. Even though they don’t explicitly align themselves with the design field, they do everything that great design firms should be doing: they create new ways of looking at the world and use words and actions to get these valuable perspectives into the hearts and minds of the leaders they work with. External design firms can take advantage of this massive opportunity, but it’s almost beyond our grasp now. Developing a unique perspective takes time. It’s not something that you can just dream up and deploy. You need to design a mindset, and that’s not something that you can do overnight.

In Jon Lax’s post about joining Facebook he shared his perspective that the future was bright for design services firms. I agree with him, but with a very specific caveat. The next generation of digital design firms can’t use the same mindset we’ve all shared in the past. If we don’t think differently and speak differently, our clients will have no reason to listen to us. If we can’t offer them unique perspectives through our work, we can’t challenge them to think differently themselves.

The next generation of great design firms will compete on mindset

We aren’t supposed to be at our client’s table, we’re supposed to be by their side. Getting a new generation of firms there will take time, but having the patience to develop a unique design perspective is both part of our heritage and our future. Mindset matters, especially for design firms. It’s our most desirable product, and our greatest value.

I’m Matthew Milan, the cofounder and CEO of Normative, a software design firm headquartered in Toronto. I’ve spent the last 15 years designing products and leading teams on the fuzzy front end of emerging technologies and networks, specializing in software design, innovation and product development.

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