What is to be a service designer
Since service design still may sound exotic, this article will help you explain what it is in a simple language.
What’s behind the ongoing trend of mergers and acquisitions in the world of service design? And what does it mean for the way our discipline is being practiced?
Touchpoint Editor-in-Chief Jesse Grimes takes a deep dive into this issue, speaking to several people at the forefront of this trend, and offers his insights on what it means for service design.
Ten to fifteen years ago, when service design was still a young discipline, it was largely carried out by a handful of dedicated agencies, such as Livework and Engine in London. As the years progressed, new agencies sprung up, with the geographical focus of service design continuing to be northwest Europe, the UK and the Scandinavian and Nordic regions. Simultaneously, agencies whose specialisms made them natural candidates to adopt service design established internal practices of their own, such as Adaptive Path (UX) and IDEO (product design).
More recently, mirroring a trend that started much earlier within the world of UX, the establishment of in-house service design departments became more commonplace. Rather than relying on short-term, project-based engagements, large companies and public sector entities built teams of service designers that operated internally, day in and day out. (See the theme articles of Touchpoint Vol. 7 No. 2 on ‘In-house Service Design’, and ‘The Evolution of Innovation Labs’ in Touchpoint Vol. 8 No. 2 for more coverage of these trends.)
But starting over three years ago, a new trend started to ripple across the world of service design practice: acquisitions and mergers. Rather than relying on organic growth to establish service design capability, companies began to acquire entire agencies at once, and design agencies merged forces to rapidly expand their offerings. And the big players driving this trend have been the global management consulting firms.
Before diving into my observations on the implications of this trend for service design, it’s worthwhile pointing out that service design capabilities may not have always been the key attribute which triggered the acquisition in the first place; in some cases, it is the overall design expertise that was being sought, whether digital or product. With that being said, my focus indeed falls on what it means for service design.
London-based Fjord was founded in 2001, and by 2013 had grown to reach the top tier of service design agencies in terms of reach and size. It operated in fifteen cities around the world, and had a headcount of around 400 staff. But that year, a momentous shift took place. Fjord was acquired by Accenture, bringing it under the wing of Accenture Interactive, and giving its designers 260,000+ new colleagues, and the processes and systems of a global giant. Commenting on the reasons for the acquisition at the time, Brian Whipple, Global Managing Director of Accenture Interactive, said “In today’s environment of digital disruption and heightened consumer expectations, the battle is for consumer engagement, and Accenture and Fjord together will offer a deep blend of skills and expertise to help clients deliver innovative experiences that bridge marketing, commerce and service.”
Two years later, the acquisition had proven to be successful enough to significantly grow Fjord, which continues to maintain its brand identity. By mid-2015, the design team at Fjord had doubled, and the number of offices had expanded from nine to seventeen. By late 2015, Texas-based ‘creative technology’ studio Chaotic Moon, Hong Kong’s PacificLink Group of digital agencies, and Sweden’s content and commerce platform provider Brightstep had all been acquired by Accenture.
Shelley Evenson, Managing Director, Fjord Evolution, has been with Fjord since its pre-Accenture days. Looking back at what triggered the acquisition, Shelley said: ”What Accenture really saw in Fjord was Fjord’s design capabilities, and a different innovation perspective than what existed within other groups in Accenture. We were a consolidated force and were well known in the field, at a reasonably great scale, doing great work, and that’s what attracted them to us.”
And – citing a theme that comes up again and again when exploring this trend – Shelley said that the acquisition has meant that her work has taken on a scale that was not possible before: “[The acquisition] gave Fjord a pretty incredible set of capabilities for thinking about implementation. Instead of just conceiving what things could be, it was about bringing them all the way through.”
Breaking from the common convention where (service) designers carry out a project, yet depart and leave the implementation up to the client, Accenture has given Fjord the opportunity to stay engaged through to the end. And that’s thanks to the types of relationships Accenture typically has with its clients; ones that are long-term and deeply-embedded in organisations (rather than tactical or operational projects that end after weeks or months).
Those relationships have also opened doors within client organisations that are typically out-of-reach for designers operating externally. “We now have access to the highest parts of the largest organisations in the world,” said Shelley. “That’s pretty exciting when you think about what kind of impact it allows.”
How has it changed the day-to-day work of a Fjord service designer? While there are some potentiallyburdensome policies related to things such as IT and equipment, the shift has not been a difficult one. As Shelley described, “Predominantly, Fjord still works in the same way that we worked before. But we’re involved a lot longer, because we’re following through. It now goes from discovery and service design strategy, through to implementation. But fundamentally it’s made us smarter about all the work that we do.”
Good partnerships are also two-way value exchanges, and Accenture has benefited from the collective mindpower of hundreds of designers who specialise in tackling complex challenges. “Another exciting thing is that Accenture overall is curious and dedicated to getting ever better,” explained Shelley. “So they leverage aspects of Fjord to help Accenture reinvent itself.”
Also founded in 2001, San Francisco-based Adaptive Path has long been a leading player in terms of UX expertise – and latterly in design management and service design – as well as having a well-established events business. In 2014, headlines were made in both the design and financial communities, when the agency was fully acquired by financial services giant Capital One. In one fell swoop, a 44,000+ employee company had acquired 30+ design specialists - without even having had an agency-client relationship beforehand. What would this mean for the way Adaptive Path’s designers carried out their design work? And would the loss of independence as an agency be outweighed by the opportunities to operate with more impact, from the inside? As Touchpoint contributor and industry expert Kerry Bodine wrote at the time, “It’s not often I hear news that makes me scratch my head for hours on end.”
Two years down the road, I had a chance to speak to Jamin Hegeman, who transitioned to Capital One alongside his Adaptive Path colleagues, and then transitioned to a role as head of design for Capital One’s Financial Services division in 2016. As he sees it, the acquisition was triggered by a desire to quickly build up Capital One's nascent design capability.
But integrating mature design expertise which had heretofore operated externally and independently into a massive organisation came with its challenges. Not only did Capital One get a leading design agency, they also got a leading service design agency. "Integrating design into an organization is no small feat,” said Jamin. “Adding service design, which most organisations are still grappling to understand, is an even greater challenge.”
While the transition has had its challenges, Jamin sees it as positive. “We're making headway,” he said. But it has also presented some unique opportunities. “The scale of influence is the thing I find most interesting about being internal. I'm increasingly thinking that 'service design at scale' is my theme,” said Jamin. “I'm focused less on the details of the methods. It's really about how service design orients itself to the functions of the organisation. How it integrates into existing processes and systems and its practical application for a 5,000-person division, rather than a project-based design team.”
“Increasingly, businesses are seeing the benefits of having design as a strong internal capability, and they’re trying to bring it in-house. Acquisitions are a fast track to doing that; they’re jump-starting a lack in that capability. Whether it’s a management consultancy who sees the benefit of having a design capability in their offering, or a large organisation that’s been around a while that wasn’t built with a design capability at the start, they’re trying to fast-track design.” - Jamin Hegeman, Head of Design, Financial Services, Capital One
Operating at a smaller scale than Accenture, McKinsey is often considered among the best-of-the-best amongst management consultancies. And despite a tight-lipped policy on naming clients and engagements, it claims to work for around 90 of the world’s top 100 corporations. Their flavour of consultancy isn’t just advising restructurings or guiding strategy; McKinsey also claims to be the world’s number one ‘product development advisory firm’.
With that in mind, McKinsey’s own acquisitions make sense. No doubt triggered by Accenture’s rapid expansion into the digital arena, McKinsey (through the McKinsey Design group) took over California-based LUNAR in 2015, bringing the product design expertise of a 30+ year old agency into their global network.
One year later, in late 2016, McKinsey acquired Swedish agency Veryday, who in many ways resemble LUNAR, having been founded in 1969 and making their name as product design specialists. And mirroring the sentiment from the LUNAR acquisition, McKinsey’s Volker Grüntges, who led the acquisition from the McKinsey, noted: “Veryday is ahead of the curve because its work combines physical product design, service design, and an engaging experience. The convergence of physical and digital, of products and services, is a huge opportunity for a lot of our clients.”
While the Fjord/Accenture acquisition saw the acquiree (Fjord) benefit from being able to play an active role in the real implementation of service design, in these cases, the acquirer (McKinsey) saw their scope of impact broaden towards the implementation of products. Derrick Kiker, a McKinsey partner who led the LUNAR acquisition, explained at the time: “Until now we couldn't help clients with design execution. Bringing together top design, engineering, and business thinking in one holistic approach is going to be very powerful.”
So what has it meant – on the ground – at Veryday, and for their clients? Stefan Moritz, Vice President of Customer Experience, said, “If you go back before the acquisition, we were struggling to make the impact we wanted to make. We might have had deep insights and great ideas, but ultimately the heavy lifting of transformation would need to be done by the client, because service design agencies such as ourselves don’t really specialise in implementation. But now we are able to have that impact. Now, it’s not just good ideas and insights, but we can link it to the value of outcomes. And for a big client organisation, that’s when it really starts to take off.”
The access to specialised expertise within the new parent company, enabling designers to stay involved and influence projects through implementation, has proved to be a common benefit cited both by Fjord’s Shelley and Veryday’s Stefan. As Stefan said, “We’ve always been excited about small projects but most of them didn’t actually scale. We were missing the analytics and structures to support a holistic follow-through. But going back to the [Service Design Network 2012] Paris conference, where Livework described that they were hiring analysts, was a milestone for change. It’s now happening at a different scale. At Veryday today it means we can have access to different topics and different people. Putting quantitative analytics together with our deep empathic research is obviously a really good fit, to quantify our hunches.”
Again, however, tradeoffs are made when scaling up and becoming enmeshed in a huge organisation that was never built with the mindsets and working practices of designers in mind. “Of course mergers or acquisitions come with a price,” said Stefan. “Being a well-functioning independent agency is a great thing. And it’s generally a bit sad in the world of globalisation that everything gets bought up. But to really make an impact, there are limits to what you can achieve as 30 people.”
Despite the trend towards mature service design agencies being snapped up by behemoth consultancies, that’s not always the way it happens. As it turns out, there are different ways to grow in terms of scale and offering. As Stefan put it, “Is buying a group of people really a modern way to absorb competence? It’s a two way street and it really depends on what each of the two partners wants out of it.” So it’s time to look at a different breed of merger: That of Livework and Zilver Innovation.
As one of the longest-established service design specialists, Livework has been carrying out service design projects since 2001. And - as co-founder Ben Reason alluded to on stage in Paris in 2012 – they were amongst the first to recognise that the effective implementation of service design (whether selling it, embedding it, or proving its ROI) relied on it being harmoniously applied in tandem with business consulting. One thing that was less-represented within Livework’s skillset was expertise in the areas of brand development and brand experience. And that is where Zilver came in.
“This trend exposes for me the goals of service design. I’m amazed what the tools and the people can do if you put them in the right context. They can create fantastic new insights, new products, reshape governments, change an app … All of these can happen if [service design] is positioned in the right context. I think others are recognising the potential of service design and service designers, and seeing how service design can be used to achieve bigger goals. It’s a great recognition and opportunity for us.” - Melvin Brand Flu, Director of Strategy and Business Design, Livework
Based in Rotterdam, and near neighbours of one of Livework’s satellite offices, Zilver was launched by Erik Roscam Abbing. They had grown steadily over many years to become well-established, but with a strong focus on the Western European market. However a chance meeting between Erik and Melvin Brand Flu (Director of Strategy and Business Design at Livework) at the University of Applied Technology in Delft, triggered discussion of a merger that was formalised in mid- 2016. Rather than a case of a vastly-larger organisation acquiring design skills which were not yet a part of their existing offering, this represented a different breed of merger: One in which two dedicated design agencies - each with a focus on service design - teamed forces to become something larger.
Looking back on the early discussions with Livework, Erik said that the eventual decision to merge was driven by the desire to mutually expand their capabilities. “I had been running Zilver for ten years and we were successful,” explained Erik. “We were doing good projects, people wanted to work with us, and the service design market was developing. From a distance there was no reason to change - there was no real urgency. What I did see, however, with the development of the field and the coming-of-age of service design as a discipline, was that the market was getting more and more crowded from the offering side. And on the demand side I saw the need growing for a more professional practice, solidlyrooted in business thinking. As Zilver, we were too small to handle big service design transition programmes, those kinds of jobs went to bigger consultancies. But I had the feeling they weren’t actually better suited. I saw a huge possibility for scaling up and becoming a real international player.”
So what has it meant for the smaller-sized Zilver to join Livework? “What Livework has really brought in is the large scale transformation processes and change management,” said Erik. “Our typical project was quite a bit smaller in terms of scale, compared with what Livework do. And they also bring in a very professional organisation – a solid structure.”
Similarly, the ten new designers that joined the Livework family improved it by bringing new skillsets with them. “What we [at Zilver] bring in is a lot of experience in the brand side of things,” explained Erik. “We were quite good at taking the internal brand and corporate culture as a stepping stone for service design, and integrating it with brand experience, for holistic, multi-disciplinary experience design. Traditionally we’ve been very good at deep contextual research with lots of tooling, and we’ve brought that into Livework as well. And most importantly, our academic thinking on what is service design and what is design thinking.” Unlike the consultancy acquisition cases, there has been very little friction in terms of adapting to the new merger. “It all taps into a way of working that is quite familiar. The processes are quite similar,” said Erik.
With the context of those four cases, it’s time to take a step back and see what the learnings and impacts are for the field of service design.
“What’s interesting for me is that for most of my career, what I’ve been really focused on is thinking how you integrate business, design and technology from the beginning. I feel like joining Accenture has really made that a huge possibility - it made that come through. I think that’s just harder to do when it’s a pure design firm.” - Shelley Evenson, Managing Director, Fjord Evolution
To paraphrase an editor of this issue, Joel Bailey, who spoke at the 2013 SDN Global Conference on the urgent necessity for service designers to scale their work beyond design in order to succeed: has the service design discipline reached a state of ‘Go Big or Go Home’? In other words, does the practical application of service design now demand that service design get wrapped up into business consulting, and be carried out under the aegis of giant business consultancies?
Considering the question from all angles, and with the insights I’ve gained through delving deeply into this trend, it seems that scope matters more than size. Sure, the foot-in-the-door that is afforded to agencies that now operate within global consultancies is a great opportunity. But what’s driving successful service design nowadays - and where the future of our practice lies - is broadening the scale, reach and impact. And that does mean being able to apply the business consulting expertise that the likes of Accenture and McKinsey have been doing for decades. But it doesn’t necessarily mean operating within a huge firm such as themselves.
Joel’s presentation, ‘Go Deep or Go Home’, pushed service designers to go beyond typical design considerations, and address the business implications of their work. He called for us to delve into organisational change, and be able to turn customer experience into numbers. It hearkened back to what Ben had said two years earlier, and which forcefully struck myself and Stefan at the time: Good service design requires business acumen too. But as the Livework and Zilver merger demonstrates, that doesn’t mean that the service design of the future is only carried out from within business consultancies. But it does mean that we need to skill and equip ourselves to mimic them in some ways.
As Livework’s Melvin Brand Flu told me, “We have to be better skilled when working with businesses and organisations - our set of skills needs to be more than just design. Livework is still a design company, but we’re broader-skilled in how we do things. We use design to achieve business objectives.”
Despite the cultural changes that come along with acquisition - Fjord and Adaptive Path have both seen some attrition due to designers feeling alienated by their new surroundings - the benefits of operating as part of a greater concern do seem clear. Service designers suddenly find that rather than having a limited set of design skillsets available amongst their colleagues, they have access to an immense range of talent, techniques and capabilities of the larger company. “If you’re external, it’s pretty localised and there’s a difference in how plugged-in you really are,” said Jamin, of his new position within Capital One. “The speed and scale and influence I have now is way greater than what I was able to do as an outside consultant.”
Stefan at Veryday echoed those thoughts: “I see a tremendous increase in terms of impact. We are doing our work on a different scale, with more impact and different methodologies that we didn’t have before.”
Compared to the acquisitions of design agencies by consultancies or corporate giants, the merger of Livework and Zilver stands out as unique. Here, the addition of complementary - and partially-overlapping - skillsets make Livework’s market proposition even stronger than it was before, whilst remaining a design-led agency at its core. And by remaining an external operator, with traditional client engagements, it can operate differently.
Discussing this approach, Jamin said, “I think there’s a benefit of having an outsider’s perspective, of not knowing the answers to all the business problems as an insider. You’re asking the questions that other people won’t ask. Being external lets you have greater focus, and you can get things done faster.”
Erik shares this sentiment, saying that Livework now offers more than what could be delivered through a business consulting firm: “I think the world is looking for really fresh new solutions, and when [clients] hire someone like McKinsey and get a little bit of design. It’s a different type of work than when they would have gone to a specialised design agency.”
But Stefan sees the issue differently, noting that Veryday’s position allows it to behave fundamentally differently to firm such as Livework: “In the Livework approach, you are adding a bunch of MBA’s into a design company; three or four people that want to wear a suit. And of course this means that with a big client corporation, it helps you speak their language. But if you put a bunch of turtlenecks into a management consultancy, you have more people that ‘get’ the business side. You have more people that fit in at the client, and can really leverage the designers. A consultancy like McKinsey is more compatible at scale with a large client because many of the big [client] companies are still run in a management-consultancy friendly way.”
So can an independent agency such as Livework still rise up – at least partially – to meet that challenge? Erik thinks so: “There is real room for the professionality of McKinsey, but the specialisation of a design agency. That’s the sweet spot where we want to be: Being an independent design agency, but very strategic and very professional.”
A clear risk to a design agency being acquired by a larger organisation is the potential damage done to the unique atmosphere that a creative agency offers. As Stefan reflected, “One risk is that you can drown in a big machine. The sheer ratio of design people versus business people means that we are the odd ones out. If you look at it ratio terms – Fjord vs. Accenture, or McKinsey vs. Veryday – it’s an important question.” It’s not a surprise then that in most instances, the acquired agency continues to maintain its own offices and brand identity.
In the case of Fjord, it was that light-touch approach that has contributed to the takeover being a continued success. “What made it work is [Accenture] kind of left us alone; they didn’t want to interfere with what they purchased,” said Shelley. “They let us keep the brand and our culture, and I think that was fundamental in why it has worked so well.”
No matter the form of the acquisition or merger, all the cases I’ve dived into here have revealed a common thread: They signify that service design has really come of age. And in doing so, it has found itself operating in new ways – and in new circumstances and environments – to accomplish its goals. As Stefan recalled thinking, upon learning about Fjord’s acquisition, “Wow, this is getting traction; it’s being taken seriously!”
Erik also thinks that this trend is ultimately positive: “I think it’s a really, really good sign. It means the whole profession is maturing, and we’re all getting better at what we do. From the demand side, the question also becomes more focused: Better projects, for instance. That’s because service design is no longer owned by the designers, and design thinking is becoming part of how businesses operate. It’s becoming easier to do our work and sell it and have a good conversation with the client. And another side of it: competition is increasing. As the [service design] offer commoditises, [service designers] have to develop new niches. There will be more agencies specialising in certain sectors, meaning you can’t sit still. You can’t expect to do basic customer research and journey mapping - the market is too saturated for that.”
“The fact that service design now plays at this level is going to help the whole field get more attention and give us all more opportunities and impact. I think there will be also a huge increase in demand for training and education.”- Stefan Moritz, Vice President of Customer Experience, Veryday
Providing context that her wealth of experience provides, Shelley said she and others have seen this change coming. “It’s inevitable that we would become part of these larger business/technology/human-centred design organisations, in order to be able to tackle these systems challenges,” said Shelley. “There will always be the opportunity to work in smaller scales, but if you want to have impact, this is the way to go.”
As Shelley recollected, the factors that contributed to this trend of mergers and acquisitions were observed back at the very beginnings of service design: “In 2006, Oliver King [of Engine] said ‘we have to take control of service design or the management consulting firms are going to take charge.’”
And one year earlier, writing his 2005 M.A. thesis on the still-young field of service design, Stefan had contemplated the possibility of a McKinsey buying a service design agency. That indeed came to pass, striking closer to home than he could have imagined at the time.
In whatever form – whether acquisitions by huge consultancies, the takeover of agencies by client-side organisations, or agencies joining forces – the trend of mergers and acquisitions seems certain to continue apace. And each form represents another positive facet of the evolution of service design as a discipline. Handwringing about the loss of small agency independence needs to be seen in the context of the greater impact that can now be achieved.
One interesting question still remains to be answered: Does the nature of service design mean that it can never really be performed independently, externally, and at scale? As Erik asks: “Where’s the IDEO of service design?’ When they get big, they’re eaten up.”
This article is part of Touchpoint Vol. 8 No. 3 - Business as Unusual. Discover the full list of articles of this issue or flip the preview to get a sneak peek at more fascinating insights on this topic! Touchpoint Vol. 8 No. 3 is available to purchase in print and PDF format. Become a SDN member, or upgrade your community membership to be able to read all articles online and download the full-issue PDF at no charge.
Since service design still may sound exotic, this article will help you explain what it is in a simple language.
A session was held during the 2016 Service Design Global Conference to reflect on the academic challenges that service design is currently facing and how they can be overcome by the SDN community.
Since 1995 Birgit Mager has held the first European professorship in service design at the University of Applied Sciences in Cologne, Germany, and since then has developed the field of service design constantly in theory, methodology and practice. Her numerous lectures, publications and projects have strongly supported the implementation of a new understanding of the economical, ecological and social function of the design in the domain of services.
At the 2016 Service Design Global Conference in Amsterdam, Muna Al Dhabbah (Director of Government Service Development, Prime Minister’s Office, UAE) was joined on stage by Simone Carrier (Head of Service Design at FutureGov) to share their experiences in applying service design to improve citizen-government interactions within the UAE.
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