These days, more and more companies are recognizing that design and innovation are essential to their strategy and bottom line: effective design sells products and services, improves your position in the marketplace, and turns customers into loyal advocates for your brand. If you've gotten your organization to this point, take a moment to enjoy your success! Creating demand for design is no small achievement. Unfortunately, to reap the full benefits of design, you probably still have a lot of work to do on your organization's structure, processes, and culture.
One of the first things you need to do is determine where in your organization design belongs. There are a variety of models, from outsourced design to an in-house consultancy to designers permanently embedded in individual product teams. No single structure is the right answer for every situation; you have to assess what's the best fit for the number and type of design needs you have, as well as for your organization's culture.
In-house vs. outsourced
The first decision to make is whether you should outsource most of your design needs or build an in-house design team. For most companies, this is not a black-and-white decision; many elect to build a team but outsource certain kinds of design problems. Companies that have a strong capability in one sort of design might elect to outsource another type of design. Some of our clients, for example, have large visual design groups but tend to outsource interaction design changes to their Web sites, while others have interaction designers but need help developing visual systems.
Companies that don't ship a lot of products or continually revamp their Web sites may benefit from outsourcing most design. This is common practice when it comes to industrial design, and many companies leave nearly all of their Web site design to an agency.
If you build interactive products or do most of your business online, though, you probably have a constant need for design. In-house designers can become expert in your particular industry, processes, tools, and constraints, which makes them very efficient for ongoing work on known products. By virtue of being around all the time, an in-house team can find countless small opportunities to educate others about the value of design and user-centered thinking. For companies with a lot of design needs, having designers on the payroll can be less expensive than using consultants.
Many companies with considerable design capabilities still hire consultants, however. Most use consultants to good effect when they're developing something new or need to make a significant shift from the status quo. Consultants provide several advantages for this sort of work. The first is that they're not mired in "how things are done today." Working on a wide variety of problems means a consultant may have learned something designing a cell phone that leads to a great idea for your supply chain management application. Consultants can also look at your organization from a fresh perspective and point out issues that an internal team either doesn't see or isn't empowered to address. Consulting engagements often get executive attention, as well, thereby raising the overall profile of design.
Some large companies known for innovative design use an internal consultancy model, in which their in-house designers are organized in a central group. These groups then work with product teams as needed. These projects may be informal or may be treated almost like an outside consulting engagement, complete with a statement of work and internal "billing" that allocates a specific budget from the product team to the design group. I've even proposed consulting engagements where we were competing with an internal design group.
Internal consultancies can offer cost savings in comparison to an agency, and they keep knowledge and intellectual property close to home. Like external consultants, designers get to work on a range of problems, so they have a fresher perspective. They can often "work the system" effectively because they know how the company ticks. However, an internal consulting group may still become bogged down in a company's culture and processes. Their involvement may feel optional to stakeholders, and they may get shut out of decisions and processes.
Internal groups that get stretched thin across too many projects are no longer in a position to have much effect on any project. These groups usually wind up turning into the "design police" who can't do much more than tell engineers what they've done wrong. They come to be seen as an obstacle, which can make the organization resistant to doing design at all. If you're going to build an internal group, it's important to commit to staffing it appropriately, or at least to limit how many projects the group works on.
Another puzzle with centralized design groups is where they belong in the organizational chart. On one hand, the engineering team seems like a logical place, since engineers are the immediate consumers of design specifications. On the other, design is at least partly about making people want to buy the product, which seems more like a marketing or product management concern. The ideal solution in many cases is for design to be a peer to product marketing/product management and engineering, since these three groups balance the qualities a product or service needs to be successful: business viability, technical feasibility, and desirability.
Having design report to a top executive feels like too radical a move for many companies, so design winds up in one camp or the other. One company I advised on organizational issues landed on a compromise: the head of design would have a dual reporting line to the marketing VP and the engineering VP. There's a certain amount of thrash inherent in this, but it seems to be working well for them. If you must put design in either marketing/product management or engineering, which is the better choice depends on your culture and the personalities of the people leading each group. Putting design in engineering encourages a close working relationship between designers and engineers, but if the engineering group is used to constrained thinking, it can result in good design ideas getting squashed before the marketing people have a chance to say, "Hey, that's such a great idea, it might be worth slipping the ship date for." Putting design in marketing, on the other hand, can lead engineers to view designers as aliens and shut them out. Neither is a problem if both groups have a good working relationship and healthy respect for one another, but every change in leadership can shift this dynamic.
Design teams assigned to products long-term
Companies with many products (or with complex products that use sub-teams) sometimes embed designers within individual product teams. As with the larger scale design group, the reporting line might be to the engineering lead, the marketing or product management lead, or a higher-level individual; all of the same pros and cons apply.
The benefit to having designers dedicated to a single product for a year or more is that they develop considerable expertise. They can build trust with the engineers over a long period and are generally seen as integral parts of the team. They have plenty of opportunities for education, and are less likely to be excluded from decisions about important details.
However, dedicated designers can develop tunnel vision fairly quickly; at Cooper, we find it only takes six to 12 months for a designer to get too close to a problem and start losing objectivity. One way to alleviate this problem is to supplement the in-house team with consultants from time to time to get a dose of fresh perspective. Isolated designers can also suffer from lack of interaction with other designers; their skills may not develop as quickly, and they may become demoralized without like-minded individuals nearby. This is a good argument for letting in-house designers recharge at the occasional conference.
Beyond the challenges related to individual projects, not having a design advocate at a high level in the company also makes it more difficult to disseminate design thinking. Designers who are split among multiple groups have less potential to affect the organization's strategy. The practice of design and the skill levels of designers may vary widely from group to group.
A blended approach
It's possible to blend the in-house consultancy model with the long-term assignment model using a matrix management approach. Designers are assigned to a product team for a considerable chunk of time, but ultimately report to a central design group. They have a design manager who reviews their work to ensure some consistency of process and work product and help designers develop their skills. Centralized design leadership can also identify useful new practices developed in one product group and promulgate them across the organization. When designers start to go stale from working on the same problem for too long, they can be rotated to another group.
Although this approach minimizes some of the negative effects of other structures, it's unlikely to eliminate them completely. Matrix management also introduces its own challenges, foremost of which is additional overhead.
What's right for your organization
Determining what's right for your organization involves assessing your culture, the personalities of individuals in key leadership positions, and the quantity and nature of your design needs. For most companies, the right answer combines each of these approaches to some degree. Of course, identifying the right structure is just one step on the way to aligning your organization and delighting your customers through design; developing, acting on, and sticking to a plan to make it happen will require patience and willpower, plus resources and support from others in your organization. It may take a while, but nothing that's worth doing is easy.