Does moving to a design-infused culture mean that outside agency support is no longer valuable? What need does an outside viewpoint fill for design-led organizations? Or are agencies shifting to being an acqui-hire talent pool?
Those are just a few of the questions being addressed at the UX Advantage conference. Jared Spool and Karen McGrane will be your hosts of this unique interview style format where they delve into a series of topics with top design executives. In this podcast, Jared tackles one of those topics, the Role of Outsiders.
Join us in Baltimore August 18-19 for UX Advantage. For more information, visit uxadvantage.com.
Recorded: May, 2015
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Full Transcript.
Sean Quinn: Hi, everybody. I’m Sean Quinn. Once again, I’m joined by the Co-Executive Producer of the UX Advantage Conference, Jared Spool, who, along with Karen McGrane, has been working on putting together an amazing conference focusing on UX strategy issues no one else is talking about.
In this podcast, we’re going to dive headlong into one of the UX Advantage topics, the role of outsiders. How are you, Jared?
Jared Spool: I’m fine. Co-Executive Producer?
Sean: Yes, indeed. You have a Co-Executive title slide on this one.
Jared: [laughs] That’s awesome.
Sean: Let’s get started talking about this very interesting topic of the role of outsiders. Outsiders can certainly contribute to the successful output of the in-house team, but what happens when the organization becomes a design-infused culture? Are these so-called outsiders no longer needed?
Jared: I think the way to talk about this is to talk about a little bit of history. User experience came into many organizations. If you think about companies like in the hotel industry, or the airline industry, or insurance, user experience came in in two different ways.
One was through internal systems, making sure that data entry clerks were working optimally. Then, in recent years, everybody needed a website. Of course, these businesses that were in industries that weren’t technology industries didn’t know how to build websites, so they naturally turned to outside organizations to build their websites for them.
This started this long tradition of having outside agencies build websites, and applications, and move to phone apps. When everybody started doing mobile, nobody knew how to do mobile. When an insurance company needed a mobile app, they would hire an agency that knew about mobile to do this.
A lot of the agencies that did this, because the website was a marketing function and the marketing function was connected to the advertising function, a lot of the agencies that were doing the work were connected to advertising agencies. Ogilvy, and McCann, and all these big advertising agencies were providing website design services.
Almost always, they subbed it out to some smaller agency who collaborated with them. There was this ecosystem of clients and agencies all doing this work.
The shift that’s happened in the last, say, five years almost, six, seven years, maybe, tops, if you go back and look at some of the behaviors, is that organizations began to realize that their website, which contained their registration system, or their account management system, or their reservation system was no longer this thing that they should pay outside agencies to build and maintain, because these things were becoming internal assets.
As people stopped booking airline tickets through travel agents, they shifted to online. Now, the customer service was being managed through this online website. The airline industry, and the hotel industry, and the insurance industry, and all these industries realized they need to own this.
They need to be the ones who make this the best possible experience. It’s cheaper to do it that way. It’s more efficient. The RFP process doesn’t produce very good results. There’s all sorts of flaws in using agencies. The shift was people started bringing this stuff in-house. Of course, as soon as they started bringing it in-house, they realized they needed design expertise.
At first, they went out to agencies to get designers. Now, they’re realizing that those things are core. Those are key. A great example of this is what’s happening at Capital One. Capital One is realizing that they have to reinvent banking.
The number of people who show up in bank branches is dropping tremendously. People don’t want to do banking from 9:00 AM to 5:00 PM Monday through Friday and 10:00 to noon on Saturdays. They want to be able to bank whenever they are able to, whenever they’re around a machine. They want to do it on apps. They want to do it on websites. They want to have all those things key.
Capital One realized, like every other big financial institution and many of the small ones, that they can’t use outside people anymore. They decided they were going to hire designers. When they figured out how many designers that they needed to hire to make the best experiences, the number was in the hundreds.
They thought really hard about this and went looking around for an agency that already knew how to do this, but instead of hiring the agency, they decided they were going to buy the agency. It turns out they weren’t the first ones to buy an agency. Facebook, and Google, and Yahoo had been doing this for a few years.
They were the first non-tech company to buy an agency, primarily a UX agency, which was Adaptive Path. A few years earlier, IBM had bought an agency whose name, for the life of me, I can’t remember. It was an agency in Austin. It was a small agency. It was run by a guy named Phil Gilbert.
IBM turned around and made Phil the General Manager of Design corporate-wide and took the Austin agency and made them into a training and studio operation to oversee design all the way through IBM. There’s been other organizations, Facebook hired the designers of Teehan+Lax. They also bought the 70-person studio Hot Studio.
Most recently, McKenzie bought an agency in Silicon Valley, one of the oldest ones there. This trend is continuing. What we’re seeing is organizations are finding the easiest way to staff is to start with a team that already knows how to work together, and bring them in, and give them challenging projects.
Adaptive Path people are basically getting to do the work they’ve always been doing, but now they have this client. It’s a huge client. They have just as many projects as they had before. They are building designs for the reinvention of banking at Capital One.
Sean: In mentioning McKenzie, IBM, Capital One, are these agencies, then, becoming simply an acqui-hire talent pool?
Jared: They are to some extent. It’s a very nice thing. There are very few people who run agencies who aren’t thinking, “What’s my price? What would it mean for us to be part of this bigger organization and have these dedicated projects and dedicated clients?”
For the company that’s buying them, it’s basically you get a ready-made team, a team that already knows how to work together, that already has process, that already knows how to do the type of work. One of the interesting things was that Capital One did not test drive Adaptive Path, which surprised me.
If I were Capital One, if I were Scott Zimmer of Capital One, who orchestrated this hire, I might have actually tested it out. This’ll be one of the questions I’ll ask Scott when he’s doing the interview at UX Advantage. I would have test driven them. I would have hired them for a couple of projects, see how they work, see how they work with the team, and then brought them in.
I guess they were so sure. Adaptive Path’s work is stellar. They were so sure these were the right guys that they just went ahead and brought them in. To some extent, it is an acqui-hire thing, but it’s acqui-hire with benefits in that you get this ready-made team that already knows how to work together.
If you do it right, you are getting a team that knows how to do the things that you need done.
Sean: Does that mean that outside agency support is no longer valuable or no longer needed? It sounds like it doesn’t.
Jared: First, demand is outstripping supply, so I’m not sure everyone’s going to get everything built purely with internal folks. There’s also this ability that an agency has, and this is what David Baker is going to talk about at UX Advantage.
He’s the only consultant, actually, that we have on the program. He is a consultant who specializes in giving advice to agencies about how to market and position themselves. He has been doing this for decades. He’s been seeing this trend coming. He is absolutely convinced that the agencies are going to change. They have to change what they do.
They no longer are just going to be doing these very quick projects for big clients. They may do them for small clients. They’re not going to do them for very big clients. There’s always going to be a role for agencies.
Imagine you’re running a chain of cupcake bakeries, and you’ve got six locations. It’s everything you can do to just keep your physical operations, your bakeries, your storefronts, all those things staffed and running. You’re not going to get into the web design business, but you definitely need a website.
You might even need a phone app so people can order their cupcakes from their desk and then pop over and pick them up. There’s money to be made in all that. There are agencies out there who will charge you to do that and produce a great product.
Because, chances are, your cupcake bakery isn’t changing very much and it’s not shifting in any major way, it’s going to be a straightforward thing for them to build this app or this website for you and to maintain it over the years. You don’t need the staff to do that.
If you’re the size of Panera or Chipotle, now it makes sense for you to have a team and not to use agencies to build your app.
You’ve got thousands of locations worldwide, and the amortization of those apps and designs across those thousand locations and the upkeep you need for the changing menus, and the local varieties, and all the things that are happening there, those details are details that you want to have control over.
There’s this issue of scale. At some point, an organization gets big enough that they’re going to want to have that talent in-house.
Then there are the one-off projects. There’s the special things that you’re only going to do once. You’re doing a particular promotion for, let’s say, the Special Olympics, and you’re a hotel chain, and you’re sponsoring housing for the Special Olympics in LA. You want to put together a special website dedicated to that effort.
You probably don’t want to dedicate internal resources to that. You’ll hire that out because it’s a one-shot project. It’s not going to need a lot of long-term maintenance and upkeep. It’s not going to change. It’s not going to need to support a global venue worldwide. It’s not going to need to do any of those things.
I think agencies will always have a role, but I think they’re shifting. I think the types of clients they go after and the nature of the work with those clients is going to change dramatically.
I think we’re going to see a lot more what I would call ‘genius design’ where an agency specializes in something, like an agency specializes in applications for cupcake bakeries or an agency specializes in doing restaurants’ websites for celebrity chefs. There’s probably a lot of money to be made for having the right website there, and it needs to be a top-grade thing.
At the same time, the celebrity chef doesn’t need to become a web designer, too.
Sean: That seems to parallel the hyper-specialization that we see in medicine, as well. Very interesting topic, indeed, and we’ll be sure to be diving much deeper into that at the UX Advantage Conference. Once again, you’ve given us a lot to think about, Jared, and I want to thank you for your time today.
Jared: I’m very happy to give my time to such a noble cause.
Sean: Excellent. Watch for other podcasts covering more of the conference topics. Be sure to check out the conference speakers and all of the topics at uxadvantage.com. We hope to see you in Baltimore August 18th and 19th. Bye for now.