Design Firms in Transition: Market Trends from 2017-2020

The design world experienced a significant evolution between 2017 and 2020, driven by a growing understanding of the critical role design plays in innovation, differentiation, and user engagement. However, this period also witnessed a shift in the dynamics of the market, posing both challenges and opportunities for design firms. This article explores the trends that shaped the design industry during this period.

The Rise of In-House Design

One of the most notable trends during this period was the increasing inclination of companies to bring design in-house. This was partly driven by the acquisition of design studios by larger corporations and collaborations with startups. By integrating design teams, companies aimed to foster a closer alignment between innovation and business strategy, enhancing their ability to create products and services that resonate with users.

Market Challenges for Outsourced Design Firms

As more companies opted for in-house design, the market for firms that outsourced their design needs faced significant challenges. This shift was particularly pronounced for established legacy firms such as Frog, IDEO, and Smart Design. These firms were confronted with increased competition from a new wave of design studios that were more agile and innovative. Many of these up-and-coming firms melded design with development or integrated design with business strategy, offering a more holistic approach.

The Case of Smart Design and Other Consolidations

Smart Design, a prominent player in the industry, exemplifies the challenges faced by some design firms during this period. In 2019, Smart Design closed its San Francisco office, a move that was interpreted as a strategic response to market conditions. This decision came after similar consolidations in the industry, such as the acquisition of Gravity Tank, Adaptive Path, and Spring Studio by larger firms. These acquisitions often signaled a broader shift in the market dynamics, where established design firms were being absorbed into larger conglomerates or tech giants.

Innovation and Growth for Frog IDEO

Notable exceptions to this trend emerged from firms like Frog and IDEO. Frog, for instance, realized the importance of aligning with large engineering and development firms. Frog's acquisition by Aricent in 2018 underscores the growing integration of design with technology and development. This move not only preserved the firm's innovative culture but also expanded its market reach. IDEO, on the other hand, maintained a strong position by fostering strategic partnerships and adapting to the changing market demands.

Strategies for Success in the Evolving Market

To thrive in this evolving market, design firms must focus on several key strategies:

Adaptability: Successful design firms will need to be flexible and responsive to new market trends and customer needs. Integration: Merging design with development and business strategy can provide a more comprehensive and seamless solution for clients. Innovation: Continuous innovation and development of new services and tools will help firms stay ahead of the curve.

Overall, the period from 2017 to 2020 witnessed significant changes in the design industry, characterized by a shift towards in-house design and increased competition among firms. While it presented challenges for some, it also offered opportunities for adaptation and growth. As we move forward, the evolving landscape of design will continue to demand innovation and strategic adaptation.