Bull Session

Where to, UX Agencies?

August 27, 2015          

Episode Summary

Today, the field of UX is evolving faster than ever before. There’s never been a greater need for digital design — from mobile to desktop to every device in between. Add to that the tremendous need for design for emerging technologies — including the Internet of Things, wearables, genomics, and robotics — and you have all the right factors that should point to an industry on the rise. However, at the same time, the UX industry is maturing: There’s a strong trend to bring work in house at tech companies of all shapes and sizes, which has made the design landscape, at least for independent consulting agencies, tentative at best. Since the sale of Adaptive Path to Capital One almost a year ago, we’ve heard the rumors of the demise of the design firm. For our podcast topic this week, we’re going to explore the current state of affairs and the necessary re-invention of the UX design agency.

Resources:
Why Are Design Firms Stagnating?
The New Age of Innovation
Hey, UX Agencies: It’s Gonna Be Alright

Jon:
Welcome to Episode 118 of The Digital Life, a show about our adventures in the world of design and technology. I’m your host Jon Follett, and with me is founder and co-host, Dirk Knemeyer.

Dirk:
Hi Jon, what’s up?

Jon:
So this week I thought we could revisit the topic of the UX Design Firm, The UX Agency, and its health in the marketplace, as independent agencies have been through the ringer I think this year. It started about almost a year ago now, when Adaptive Path got sold to Capital One, and since then there are a number of high profile design firms that either had to close offices, or shut down, or got purchased by larger more affluent companies.

There was a huge question as to whether independent design firms could really make a go of it anymore, or if the in-house UX and Design Department was the wave of the future.

Over the past year, there’s really been a lot of hand ringing and discussion. I think you did a blog post Dirk, the title of which I think was telling, “UX Agencies, Everything Is Going To Be Alright.” Which you did probably 6 or 7 months ago now.

I think we’ve seen a really interesting shift in the landscape of this UX Agency, independent agency territory and I wanted to dig into that a little bit today.

Dirk:
Sure, so what are you seeing?

Jon:
I think there’s really never been a greater need for digital design. First the landscape, let’s take a look at that. Between just the amount of software that’s required to be designed from mobile software, to software for tablets, and any number of devices, still of course the laptops and PCs.
There’s really never been a greater need for digital design, and couple that with the growing need for design for software for the internet of things and wearable and up and coming emerging technologies like Genomics and Robotics. You really just have this environment where you would think that design would really be thriving and really in-demand.

I think the need for the work has never been greater, and the need for excellent designers has never been greater. I think some of the hand ringing or the tumult that we’ve seen over the past year, has been indicative not of design going away, but design and design agencies evolving into whatever the next phase is.

I can be a little bit more specific about that just based on some of my own experience in that, I’ve seen that design agencies, first off the ones that are covering certain types of industries, are really starting to hone in on those industries. If you’re particularity well suited for a type of design or innovation, for say the financial industry, maybe you’ll start focusing entirely on that industry.

Dirk:
I know we’ve done that, but I’m not aware of other UX firms doing that. Can you share some of those firms?

Jon:
Sure, and some of this has been happening already. I know for instance, that locally there’s a number of design firms that are focused more and more on the healthcare vertical and as you pointed out we’re actually aware of those because we’re in that space as well. I can think Medullan is doing that, Macadamian is doing that, our friends at a number of other agencies are doing that and honing in on healthcare. On the financial side of things, I was mostly thinking of Adaptive Path moving into that sphere where they’re not just working with Capital One, they’ve sort of become Capital One. That’s a slightly different scenario there. I think in particular, if you see that specialty honing in on a area where you have the greatest strengths, I think that’s a sign of maturity and evolution in the industry.

I think it’s worth asking as part of this dissection of what’s happening in the design agency world, what is “User experience” anyway? How do we draw the lines around that industry? I must say that when the web was first starting, I never really considered the design of websites and eCommerce sites, the term “User experience” was never really part of that equation. It came to the fore over the decade, which was the 2000s and really took off. Now we have “User experience” in design with such a broad mandate that also includes communication design, and digital design of all stripes whether it’s eCommerce or the aforementioned marketing.

I feel like that part of communication design is also competing for talent, is also competing for clients, so that when you’re talking about UX and design agencies there’s maybe this increased competition and then maybe some initial lack of differentiation from what communication firms can do. Some of that overlap, I think is creating some additional tension when it comes to UX design firms.

The last thing that I think is really worth talking about a little bit farther, is this move in-house from outside design firms. If you were IBM a year and a half ago, you weren’t really embarking yet on this design initiative that they’ve now started a new design center, they’re hiring 1,000 UX people to come in and enhance all of their enterprise software and it’s really creating an additional draw on industry talent.

Over the past year, I’ve seen endless recruiting adds on LinkedIn, precisely for those kinds of jobs and it really makes you realize that Enterprise UX, which maybe wasn’t quite as dominant of force in previous years, has now started to become something that people are really paying attention to.

On the show we’ve had a couple of different episodes where we’ve discussed the “Bring Your Own Device” movement and Enterprise UX in general. Fundamentally the shift that is happening in Enterprise software, is also causing some pull on the independent UX Agency.

If you look at all those trends together, I think you can see that the need for change, for independent agencies, and the need really for specialization has never been greater. I think there’s light at the end of the tunnel, or I would like to believe that. There’s this sense that we’re still waiting and seeing for what’s going to happen next.

Dirk, what’s your impression of all of that?

Dirk:
Yeah, just another market cycle. Go back 50 years, go back to the time of “Mad Men” and the agency business waxes and wanes in different ways and the thing that’s most noticeable about it, is that while agencies work, outside services work continues to be required and there continue to be a lot of firms, they are changing over time. What services they’re offering, how they position themselves. Certainly agencies that are staying in place and not changing, adapting to the market and the needs of customers, they might be in trouble.

For a large segment of us who are intelligently and appropriately adjusting with the times, and with where things are headed, it’s going to be fine. It’s going to be all right. Sometimes these adaptation periods are hot, sometimes they’re not necessary. Sometimes the consolidation is hot, and other times it really isn’t, and we just happen to be in a moment where the consolidation, the in-housing of services, the attempt to pivot away from as much reliance on outside providers, is really at a high point.

It’s during a period of real innovation and change in technology, and in culture, so that is going to really force us as service providers, to be highly adaptive and potentially have a very different market strategy and positioning that we did even just a few years ago.

That’s healthy. That’s the good part of free markets that work. Those who don’t adapt, are going to be left behind. Even some who do adapt will be left behind but in the long now, a decode from now, there’ll be approximately the same amount of outside providers as there are now, as there are always. It’s just a moment.

In the U.S. we look at things so short term. Financials are always quarterly. Other cultures primarily, and particularly eastern cultures, have a much longer time horizon. It’s much healthier, it’s much more correct and as usual we’re just panicking here as relates to short term stuff.

In the long now, things from the stand point of outside, service providers being an augmentation to businesses and corporations, we’re going to be here. External creatives doing our thing as well as ever, just in different ways perhaps.

Jon:
Yeah, that’s a really healthy outlook Dirk. I think you in your blog post a few months ago, you had a similar kind of view. From my stand point, I definitely get drawn into the idea that the problems that we’re encountering as an industry are unique or special because they’re also coupled to all this technological change, which seems at times to be very unique and special as well.

It is worth remembering that longer term view, especially when it come to dealing with the kinds of alterations that we need to make in order to survive. As you pointed out, the emerging tech industries of the 50’s and 60’s, were all around television and advertising and “Mad Men.” I’m sure that the guys who were writing the radio adds, felt the same way I do now, which is that everything’s changing. The market cycle analysis I think is a pretty good one, and one that I’ll try to keep in mind day to day.

Listeners remember that while you’re listening to the show, you can follow along with the things that we’re mentioning here in real time. Just head over to thedigitalife.com, that’s just one L in the Digital Life, and go to the page for this Episode.

We’ve include links to pretty much everything mentioned by everybody, so it’s a rich information resource to take advantage of while you’re listening or afterward if you’re trying to remember something that you liked.

If you want to follow us outside of the show, you can follow us on Twitter. I’m @jonfollett, J-O-N-F-O-L-L-E-T-T. Of coarse the whole show is brought to you by Involution Studios, which you can check out at goinvo.com, that’s G-O-I-N-V-O.com. Dirk?

Dirk:
You can follow me on Twitter @dknemeyer, that’s D-K-N-E-M-E-Y-E-R or email me at dirk@goinvo.com.

Jon:
That’s it for Episode 118 of the Digital Life. For Dirk Knemeyer, I’m Jon Follett, and we’ll see you next time.

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