If you are a designer with even the slightest ambition of becoming a “design entrepreneur,” you need to read this.
Below is an excerpt from an enlightening conversation I had recently with Doug Powell, past national president of AIGA and recently named one of three “Distinguished Designers” at what is essentially the new IBM—new because they are in the midst of a radical design-driven transformation of the entire company built on a foundation of “IBM Design Thinking.”
The essence of Doug’s message is this:
Designers running small to mid size practices have become addicted to the client service model, as if that’s the only way to generate revenue. Doug’s idea is that a design business of the future will have a combination of traditional client service revenue AND revenue generated from product or business ventures launched from the design business.
Classic IBM design assets—“IBM Design Guide, House Style” from May 1972
This idea also came up in my podcast interview with designer-turned-venture capitalist, Kristian Andersen, and in The Future of Creativity: Understanding Value, from the series of articles by creative nomads, Neil and Jen Baker Brown.
This is the future – don’t let it pass you by!
Ilise Benun: In a previous conversation you talked about the fact that you see designers locked into a business model where they’re addicted to this client service model and you said that there are other ways to generate revenue. So I’m wondering if you can share a few—as specific as you can be—ideas of what you envision.
Doug Powell: You’ve laid out my thesis very clearly. I think that many designers especially small studio owners and independent designers, paint ourselves into a corner, with a fairly flat and one-dimensional approach to our business that is largely dependent on revenue from client fees. That seems the biggest no-brainer. “To start a design business I need to get clients and I need to get my clients to pay me an hourly rate or per-project rate or retainer rate of some sort,” but in any of those scenarios you’re doing work for a fee.
It’s a client service. There is one way that you are going to grow your business on that model and that is to get more clients who can pay you more. But you are still locked into that model and there are very few ways to get out of that once you get into it, unless you see the opportunity for being more… truly entrepreneurial.
What I mean by that is, as designers, we are naturally creative people and I think we are naturally entrepreneurial people; we see the problems in the world and we have ideas for fixing them and many of those ideas can be turned into products or turned into businesses that can be revenue generating.
My idea is that a design business of the future will have a combination of traditional client service revenue and revenue that is generated from product or business ventures that are launched from the design business.
You can’t go “all in” to that because that would be equally risky…and that means those entrepreneurial ventures need some time; they don’t happen overnight. But think of them as almost analogous to landing a big new client. It takes time to land a big new client, it might take a year or more of nurturing that relationship and that conversation before you get that first check in from that new client.
That’s the same arc that it might take for a new product to be launched. I really see an opportunity for designers to rethink their business model, to dedicate some of the resources that you take for a new business activity every year – and say, “Hey, I’m going to take half or a third of my new business budget for 2016 and I’m going to dedicate it to developing and launching a new product idea.”
It’s going to take months, if not a year or more, but that’s reasonable risk, and if it hits, then essentially we’ve invented or created our own new client, rather than going out and finding one.
That changes the whole dynamic of the design business; it changes us from executing the ideas or the strategy of somebody else to executing our own ideas and our own strategies.
It puts designers in a much more powerful space, and if you think ahead on this then you can see that, into the future, we’d start to get more and more design-driven businesses, which of course, that’s the future world that I want to live in and I want to work in.
Ilise Benun: Essentially it sounds like you’re talking about starting these ideas as side projects within the context of a traditional design firm, but devoting the time, carving out the time and the resources for it.
So then my question is: aren’t there business skills that one needs to know that are part of this newer model that have to be learned and/or do you see people partnering with other entities to pull this off?
Doug Powell: You’re absolutely right. There are new skills and we can’t assume that we can either fake our way through that or that we know everything that needs to be known about that new path already; we certainly don’t. I absolutely believe in growing a new type of network. We need to be partnering and aligning ourselves with entrepreneurs, with people with expertise in the legal side and the financial side of growing new businesses. How do we get funding for these? We need to get more sophisticated about that, finding the channels for funding.
I think there’s a whole set of new friends that we need to make. We tend to isolate ourselves as designers and I think that there is a whole set of experts out there that we don’t typically hang out with and we need to make friends with them.
There is a lot more to this conversation and you can, of course, listen to the podcast/interview. in which Doug Powell also shares ideas about the new opportunities he sees for designers in the healthcare world, which is vast and only growing.