Another One Joins the Kyu
In January 2014, I wrote an application essay for my Masters degree at Parsons. I wrote about my near decade of experience working in advertising, independent vs. owned agencies, and, ultimately, my desire to study in the SDM program so as to elucidate a cloudy vision I had of the future model of creative agencies which, in a nutshell, was a proposal to decentralize powerhouse agency group resources and deploy them as nimble, curated teams to collaborate with clients, since these massive holding companies were becoming the antithesis of their creative subsidiaries’ roots: flexible, quick, innovative.
At the time, I was also very interested in this topic because I had recently resigned from a two-year stint at a hotshot Canadian agency — let’s call it “YUL” — choosing difficult-but-meaningful unemployment over a steady-but-conflicting paycheck. It all started with the replacement of our empathetic leader with a cold, polarizing general manager, which led to an annihilation of a family-like culture. Teams were dismantled and tossed around as our new GM poached his favorite employees from his previous agency and blindly threw them into the mix. Clients were assigned new agency staff with little knowledge of their business or unique personalities. WPP’s acquisition of our edgy, independent shop shortly thereafter simply added a force-fit of new processes, tasks and partner agencies. Statements released by our company founders cited “tapping into wider networks” and “more exciting collaborations” as opportunities; little was said about the financial, client, and employee losses behind the scenes. I began to suspect that YUL had abandoned many of the values that made it my dream agency years before I was hired — values of unconventional authenticity, creative rebellion and intrinsic badassness. In short, the new GM was hired to clean up house and bring in new business; instead, he attempted a complete renovation without first studying a blueprint, then invited prospective clients to dinner in an unfinished kitchen. YUL continued to stagnate and the GM lost his job about a year after my departure.
So it goes without saying that when Tim Brown announced kyu’s acquisition of IDEO last month, I was apprehensive: the iconic and fiercely independent company for which I hope to work after graduation — my new dream job, my new YUL — has sold out and joined a creative collective. Brown cites two important design culture shifts that IDEO is actively attempting:
1. “We need to bust out of siloed design practices.”
2. “We need to develop ever-broader capacities, taking an interdisciplinary, deeply collaborative approach.”
Despite Brown’s promise that the acquisition had nothing to do with the “much ballyhooed death spiral of the independent design firm,” my worry grew when I realized those two initiatives sound oddly similar to the excuses that YUL’s public relations manager once touted. If IDEO isn’t struggling, why has the successful independent company decided to join a creative collective owned by Hakuhodo DY Holdings (i.e. one of the largest advertising holding companies in Japan)?
According to Brown: alongside SYPartners, Sid Lee, C2, Digital Kitchen, and Red Peak Group, IDEO is now able to tap into its sister creative agencies to “bring a broader set of creative perspectives” to designing solutions at a macro, system-wide level. He points to global poverty, education, healthcare, food systems and citizen-centered government services as examples of major challenges IDEO will seek to tackle with the extended resources of the kyu family. In fact, IDEO has already begun to play with its sisters: The Powerful Now, an initiative that aims to redefine the aging experience, was created in collaboration with SYPartners.
Not much more information is publicly available on the topic, but after some consideration, I am starting to see that IDEO’s intentions and reasoning are sincere, and that the way kyu has structured its group is highly strategic and thoughtful — even user-centric, since no humans were harmed in the making of this powerhouse.
What does that mean? Let’s look at the various players affected:
1. CONSUMERS & GENERAL PUBLIC
This one is a no-brainer. With an exclusive A-team of agencies collaborating and tackling large, societal-wide issues, there is a high probability of innovative solutions that will ultimately benefit the greater good of the world.
2. CLIENTS
Existing clients of IDEO (and those of its sisters) can now tap into kyu’s other resources, and can thus count on thorough strategic thinking and high caliber creative execution from every angle (as well as operational synergies). They are also unburdened of some of responsibility: no longer are clients required to write extensive briefs/RFPs for individual agencies to pitch; today, they can state the problem (or what they think is the problem) and leave the rest up to the consultancies, which brings us to…
3. AGENCIES
IDEO’s leaders gain more flexibility and control in reassessing a client’s envisioned problem, and can thus take more ownership of the process, design solution and execution. From my experience, the most successful projects I’ve worked on have come from collaborations with trusting clients who shared high-level business concerns, a budget and timeline, but otherwise allowed my team to research and propose our own strategic and creative strategies. This is because clients are deeply entrenched in the day-to-day grind of their businesses. As ambassadors of their brand, clients’ perceptions of their businesses, industries and consumers are biased and even unrealistic. The more room in which a design consultancy may experiment, the more customer-focused the finished product or service.
In addition to creating better work, how kyu has organized its subsidiaries also takes employees and culture into consideration. First, kyu, meaning “nine” in Japanese, has stated their intention to limit the number of participants in its group. As kyu’s CEO Michael Birkin stated: “It doesn’t have to be nine exactly, but it won’t be twenty.” By keeping its number of agencies small, and being brand new (i.e. no history and therefore no obligatory cultural pattern to follow), kyu avoids major logistical and cultural conflicts (which make or break mergers and acquisitions) and allows each player to retain its independent identity. This is especially true for IDEO due to kyu’s undisclosed minority investment: IDEO’s leaders aren’t going anywhere, and so neither is its culture. Secondly, kyu is a holding company made entirely of creative companies — design and innovative thinking are at the core of the business and its subsidiary agencies. This differentiates kyu from the Deloitte’s and Accenture’s of the world that have in recent years been gobbling up creative agencies in a desperate effort to integrate design with business, but that are ultimately analytical, old-school business consultancies. The point is: employee retention and attraction of talent is a lot easier for holding companies when creative types do not suddenly feel like they are being bound inside a corporate box.
This must be partly why kyu was created — as opposed to Hakuhodo’s direct adoption of IDEO and its sister agencies — to avoid following the typical acquisition nightmare of culture clashes and feelings of being chess pieces to heartless, corporate investors. But what about the financial reasons? The answer is simple: excluding IDEO, none of the other creative consultancies have a presence in Asia. Now owned by a Japanese holding company, Sid Lee, SYPartners, Red Peak, Digital Kitchen and C2 can actively expand into new markets. And the expansion is mutualistic: Hakuhodo DY Holdings can now diversify its revenue stream outside of Asia.
Now seeing how kyu used design thinking to build its portfolio, I am much more at ease with the idea of IDEO being partially controlled by a parent company. Still, that is not to say that there won’t be challenges in the future. I foresee two hurdles:
1. Having worked in the design field for some time, I know that each agency was born from a core competence, i.e.: IDEO (design), SYPartners (management consulting), Sid Lee (advertising and branded content), Digital Kitchen (digital and entertainment), C2 International (business consulting events), and Red Peak Group (branding). However, if you were to visit each agency’s website, they all boast a breadth of creative services which can become very confusing to the untrained prospecting client. The truth is, while each agency has a specialty, they are absolutely capable of performing outside their core competencies — Sid Lee and IDEO, for example, have both yielded award-winning branding projects despite advertising and product design being their primary sources of revenue, respectively. As they say: “when you’re doing everything, you aren’t doing anything” — there is an opportunity here for each agency to evolve its strengths (and the communications of its strengths) to allow for differentiation. There is also an opportunity for kyu to expand the collective with other partners outside of the design/marketing fields, i.e. engineering, science, maker studios, media, architecture, etc.
2. Given that each of kyu’s agencies comes with its own set of clients, I am curious to see how the company will handle conflicts of interest. It is idealistic to think that clients will be happy to leave longstanding agency relationships in order to collaborate within kyu’s collective. A hypothetical scenario: a client hires IDEO to redesign its product, but has another agency-of-record for its branding. IDEO might create a project framework wherein Sid Lee does the rebrand, but this will cost the client more budget, not to mention violate its contract with its AOR. How will these discussions unfold?
Still, these hurdles are not new to businesses of design, so it’s just a matter of time before we’ll see how the collective manages them. In the meantime, when Brown says this move “signals the increasingly important role of design in society,” I don’t hear whispers of financial strain or sold souls in the background. I believe him.
