Ideo Sold Part of Itself and Joined a Collective. But Why?
News that Ideo, one of the world’s largest and most distinguished design firms, had sold a chunk of its business and joined a creative collective caught many in the design world by surprise. “Wow, is what I first thought,” says Mark Gauger, founder of Argo Design and former chief development officer of Frog. “When the big firm goes off and makes a move like this, that’s news.” That’s because such announcements typically raise questions about the state of an independent firms. Joining forces with another company, or selling a chunk of your own, often is seen as a sign of trouble.
Ask Ideo CEO Tim Brown if there’s cause for concern, though, and he laughs. He says the company is doing the best and most important work of its career. Over the years, the company has strategically expanded; it now has a venture arm, a humanitarian-focused non-profit, and teaches online “design thinking” courses through its Ideo U platform. The move, he says, isn’t a financial life raft. Ideo isn’t interested in hyper-growth. It’s interested in impact. And that, he explains, is why his company joined Kyu—the Japanese creative collective to which it also sold a minority stake of its business.
Kyu (pronounced “Q”) is part of Hakuhodo DY Holdings, one of Japan’s largest advertising holding companies. That Kyu invested an undisclosed sum in Ideo isn’t exactly shocking. Nor is it unprecedented. In many ways, Ideo is doing what an increasing number of independent design firms have done before it: Offering up a stake of its business in hopes that, at some point down the road, it will allow its business to expand not just in size, but, more importantly, in ambition.
Ideo is of course vague on the details of the deal. But Ideo joins Red Peak, SyPartners, Sid Lee, Digital Kitchen and C2 International in the Kyu collective. These design and creative agencies specialize largely in branding and marketing. Kyu holds various interests in them, but Ideo will remain an independent entity run by its founders and it will continue taking on its own clients. And it will tap others in the collective for additional expertise when needed (and vice versa). Just where the company goes from here remains to be seen; Brown rattled off a list of buzzwords that hint at where he wants to go. Artificial intelligence. Genomics. Robotics. Data science. And he sees Kyu helping achieve that.
A business move predicated on something not-entirely about business sounds like idealistic PR-speak—especially coming from Ideo’s CEO. Then again, we’re talking about a company of designers. And Gauger, of Argo, backs Brown up. “A lot of these moves that people think are because their business isn’t going well are actually the opposite,” he says. “I think they see an opportunity, and are figuring out ways to capture that opportunity.” It’s possible that Ideo is feeling the effects of its own success. The design thinking ideals it popularized are now an everyday part of big business. Plenty of companies have shifted from hiring outside design firms to building their own in-house teams. Regardless of the impact this has had on the bottom line, Ideo is making the conscious decision to focus its efforts beyond its everyday innovation business. How the talents of the collective will come together to produce the big ideas Brown outlined isn’t entirely clear yet. All of the companies, including Ideo, possess the same general skill set—creative consulting—albeit each comes at it from a slightly different approach and with a different client base. One can imagine that Ideo and its “human centered” design thinking was an attractive addition to a stable of digital marketing-focused companies.
Jeff Salazar—vice president of design at Lunar, which consulting giant McKinsey bought last year, echoes Gauger’s sentiment. For a long time, he says, designers played a supporting role in industry. Companies would come to Lunar with a request for proposals and Lunar’s designers would act on it. Today, designers don’t want to respond to the RFP—they want to create it. “It becomes pretty clear, when you’re having a conversation with potential partners like McKinsey, that your aperture opens up quite a bit,” Salazar says. “As a designer, you might think you think big—they think really big.” Joining forces with a corporation, “having a seat at the table” as Salazar puts it, is a way to expand both business and impact.
The role of the design firm is indeed evolving and has been over its entire existence, as Robert Fabricant wrote for WIRED. To succeed, a studio can no longer simply provide ideas with a shiny presentation tied on top like a bow. As one head of digital at a major consulting firm told me, “Our clients want the trifecta.” By trifecta he means ideas, creative know-how, and the business strategy to execute it. Design firms are being asked to get involved at the inception of a project and follow it through its lifespan all the way to market. That takes an entirely different skill set.
Ideo’s situation reads a little differently than most other partnerships forged in recent memory. The company isn’t joining an established consultancy firm, though it has been approached by many. It’s not the design-thinking sauce on top of a heaping pile of business. Brow says in typical partnerships, in-sourcing design talent is an attempt to extend existing capabilities. “We greatly value this but it is not what our collaboration is about,” he says. “Kyu is set up to be a place where the best creative companies in the world can come together and tackle some of the edgiest, most complex problems– both on their own and together.” In that way, Ideo seems to be going all in on its belief that creativity, not traditional business, is the thing that will enact social change.
In his Medium post, Brown states that design is no longer about innovating on products and solving small problems; they’ve already done that. Let the IBMs, GEs, and SAPs of the world figure out how to apply design thinking to their corporate structure —Ideo is past that. Now, it’s about tackling more systemic issues. To start, Ideo is working with SyPartners to redesign the aging process, but it’s likely the company has even bigger goals that will extend to cities and governments, which are typically the purview of more traditional consulting firms. “That’s a very complex problem,” Brown says. A complex problem that Ideo is admitting it needs help solving. So no, maybe the independent design firm can’t do everything on its own. But with the right partnerships, maybe that’s ok.
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