The Apple iPhone, Spotify’s streaming service and the Tesla Roadster — all revolutionary pieces of technology that secured competitive advantages because of the quality of their design.
In the past decade, the importance of design within technology companies has risen dramatically as more digitally savvy consumers demand beauty alongside flawless functionality and great user experience.
This has translated into significant investment activity, as an increasing number of digital companies realize the value of design capabilities. In the last four years, tech firms have acquired more than 25 companies co-founded by designers, as well as 13 thirteen creative agencies. Evidence suggests customer-centric, design-led companies create substantial shareholder value and accelerated growth. They don’t just build things right, they build things right for their customers.
In the last three months, tech giants have stepped up the pace in recruiting designers to enhance user experience and improve product design, tailoring them to their customers. Facebook has enlisted Hot Studio, Bolt Peters and, most recently, Teehan+Lax, which are all design firms that specialize in user-experience. Meanwhile Google acquired Pixate in July to help develop new design and prototyping tools. And in May, management consultancy McKinsey joined the growing trend, acquiring the design agency Lunar, whose clients have included Apple and HP. This is an upward trend, with more established companies acquiring design studies and design-oriented tech companies.
So Where Did This Trend Originate?
From circa 1990-2010 we saw the Age of Information, a time when the proliferation of data was providing opportunities for tech firms. Connected PCs and supply chains meant that those companies controlling the information flow were dominating. We have since entered the Age of the Customer, where empowered buyers have endless choice but limited time and attention, and demand a higher level of user experience. Design is now of paramount importance in the age of the connected consumer, not only in the technology sector but across all major industries — such as cars, retail and healthcare — and firms globally have to adapt accordingly or face unprecedented competition.
Strategic, customer experience-led design has never been more important, and it will become essential. The key challenge is that the supply of such talent is currently limited.
Design capabilities will define growth in the most successful international digital businesses.
Two years ago, Accenture completed the landmark acquisition of Fjord, a London-based design consultancy, a deal which they expanded this July, opening more studios in the U.S. and abroad, starting a new recruitment program for design professionals and offering training for new and existing design employees. The acquisition expanded Accenture’s digital and marketing capabilities, allowing them to help clients create distinctive customer experiences and bring them to market with speed, in turn generating huge additional revenues for Accenture’s core systems integration business.
Also, Ernst & Young U.K. bought the international design consultants Seren, and Wipro Digital acquired global design firm Designit. Wipro acquired Designit for 85 million euros, the largest disclosed acquisition in the industry, which was driven by complementarity and strong synergies. The investment marks a further stage in Wipro’s move to evolve its digital offering.
What Can Entrepreneurs Take Away From This?
Design capabilities will define growth in the most successful international digital businesses. Design-led businesses are able to act on their insights quickly, thriving on failing early, testing and learning, iterating and prototyping their products and services into existence. This helps companies grow and aids profitability and scalability.
Our analysis of this trend predicts the relationship between design and technology is only going to get closer and closer. Increasingly, this will translate into investment activity, acquisitions and higher salaries for designers.
Entrepreneurs need to build design into the heart of their products and services. But they also need to ensure their design talent is being successfully communicated to the market. Every single interaction needs to be an enjoyable experience for the user, a chance for a company to make a statement about its commitment to delivering excellence.
If the last 10 years saw the rise of the CTO in the board room, the next five years will see the head of design taking their seat at the table. The large corporates are starting to understand this. Now is the time for startups and scale-ups to pivot their business to meet the requirements of the Age of the Consumer.