Mass Extinction: The Corporate Takeover
The startup market, along with the Apple marketing engine, played an essential role in solidifying the strategic value of design to corporate America in recent years.
TED-like product launches have become a right of passage for executive like Jeff Bezos and Satya Nadella, with Wall Street responding appropriately. Inevitably, big corporations began to see UX as a critical corporate asset, not something to outsource to a third party design firm, who could end up working for your competitors the following year.
Designers also learned that driving change deep into a product portfolio requires more than design thinking: it requires a seat at the table.
I saw this first-hand working on the UX strategy for GE from 2012-14 with Greg Petroff that led to the build out of a 70-person design team at GE’s software HQ. Fidelity has made a similar investment in design, building out a team of more than 200 including a major outpost in Jersey City to attract New York talent. Building an effective internal design culture to attract and retain creative talent is hard work. So a number of organizations have acquired entire firms as a short cut to corporate design capacity. In addition to the acquisition of AP by CapOne, the last few years have seen Facebook acquire HotStudio and Accenture acquire Fjord, a leading service design firm.
This corporate scale-up is not purely a US phenomenon. Rumor has it that Barclays is now the biggest employer of design talent in London, and Singtel has built out a massive floor for its design team in Singapore. But no one has been more aggressive in building design into their core capabilities than IBM, which is on track to grow their design team to 1,000 people, making them by most measures the largest design firm in the world.According to one friend they had 50 designers start the same week this summer. There are rumors that IBM offered a job to every single CMU grad this year in the interaction design program.
In-sourcing could have its upside: design firms have always struggled to capture the true ROI work from the outside, so hopefully corporate partners can do a better job from the inside. You better believe that they will have to, given the scale of investment at places like GE, IBM and CapOne. Budget planning cycles can be brutal in corporate America if you don’t come armed with hard numbers.
Rising from the Ashes: Big Design
The design industry is dynamic. In-sourcing is a new phenomenon that has left the remaining independent firms consistently competing with in-house teams for budgets and talent, putting significant pressure on margins. Financial services and enterprise IT have traditionally been some of the highest margin clients for design firms. So it is no surprise to see Smart Design’s departure from SF—as well as Jump’s recent departure from NYC. Only the biggest firms seem able to navigate this new world order effectively. Both Frog and IDEO have the scale to straddle all these models, recently launching venture arms.
So, why is an independent design business important to anyone who is not in the field? The first answer comes back to YOU: the user and consumer. Design has had an outsized impact on your life in recent years, because designers are deeply committed to advocating for user needs / wants / desires in the face of corporate inertia. This gets much harder to do when designers are on the inside.
More importantly, design is increasingly critical to addressing issues that sit outside a single corporate mandate or organizational footprint. In 2013 Clinton Global Initiative dedicated its annual meeting to showcase the role of design in social impact and international development. In the pages of Wired, Melinda Gates famously picked human-centered design as the single biggest driver of social change in the last few decades. If this seems surprising to you, then you might want to check out this illuminating report from the World Bank that profiles projects in which “The Bank” invested in human-centered design to improve the appeal and usage of mobile money services for the BOP. What can you say when the World Bank is tapping more outside design talent than Citibank?
As we look ahead to 2015 and beyond, who will explore these new frontiers for “Big Design”—as my friend Richard Tyson refers to it—without a thriving and independent design community. Large firms like Frog continue to dedicate significant efforts to this sort of work, but it will get harder for other firms to follow their lead if the pool of big clients in financial services and enterprise IT continues to shrink. More importantly, where can talent go to work on these sorts of Big Design problems as the focus of their design practice? That is why Ravi Chhatpar and I are building the Design Impact Group, a design and innovation team at Dalberg, an independent, mission-driven strategy firm in the social sector. Never has an independent design business been MORE important to both business competitiveness and social impact—or harder to sustain.
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