The Rapidly Disappearing Business of Design

Robert Fabricant writing for Wired:

Adaptive Path, a bay area pioneer in User Experience Design (UX), recently exited the business, finding greener pastures as the in-house design agency for Capital One. Smart Design, a pioneer in design entrepreneurship through its groundbreaking work with OXO in the ’90s, recently closed its SF office.
Consolidation is nothing new for creative industries like advertising, which is dominated by a few large holding companies. But for the first time, in 2014 we saw Fortune 500 companies—primarily big banks and IT firms—grabbing the biggest share of the design talent pool.

This was bound to happen. Design is now becoming one of the important part of the so cold SDLC. A lot of credit goes to the rise of smart phones and gadgets. The Hardware era that we all though died is back and with a new gadget coming out every day, main stream smartphones, tablets and maybe (smart) watches releasing every year; design has become an integral part. 
There are so many choices from different vendor for every single gadget you can think of and today the consumer has become conscious about ease of use, integrating with their workflows and how a new piece of technology will fit their digital eco-system. User Experience is at its core.

IDEO took the lead in embracing a broader application of design “thinking” that is divorced from the shiny outputs of websites, consumer products or digital gadgetry. Working closely with A.G. Lafley of P&G, IDEO legitimized this broader notion of human centered design (HCD) as a powerful (and scalable) approach to innovation in large organizations.

Who can forget the simple ergonomics of the first Apple mouse by Jim Yurchenco.

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.

Thinking design is not part of a small team in an organization or something that you outsource it. Design should be an integral part of the organiation and should involve every single employee.

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.

I need not speak much about the Lotus Notes. But take a look at some of their new products, espeically the ones in partnership with Apple. These products are simple and have great design.

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.

I remember my initial days as a UX designer and one of the most commonly asked questions was ROI. Design can be measured when one is given enough time. ROI numbers will speak for themselves, but its a slow proces - design evolves. 

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 I said earlier, design evolves and everyday there will be a new challenge.  I see more design firms join corporates and established design firm like Frog and IDEO get into products where they can leverage years of design experience to their advantage.