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Waking Up to the Business of Design
By Jim Toy
Lingering recessionary times have forced many of us to adjust how we conduct our personal and business lives. In recognizing and dealing with the consequences of the downturn, companies have embarked on ways to mitigate the bottom line by seeking solutions to be more resourceful and less wasteful within our work environments.
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This age of uncertainty has spawned social, economic, environmental and political change and by default, created new demands on design companies and how we do business. Of late, cracks have appeared in the recovery process, and the anticipation of a slower recovery has many design company owners wondering what lies ahead.
Some firms have taken steps to reduce expenses and to cut costs by implementing staff layoffs, reducing salaries and introducing shared work programs, all in an effort to address the effects of the economic slow down. At the same time, there has been a tendency to react in knee jerk fashion, cutting professional fees in an attempt to compete against those who unknowingly (or otherwise) undervalue their services.
However, maintaining a more fiscally responsible approach to the business of design begins with understanding that what we offer as design professionals cannot be undermined to the point where creativity takes a back seat to cash flow.
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We continually promote good design as an effective business tool – why then are we not attaching the values we deserve in the form of appropriate fees? It’s no secret that many would rather focus on the design side of running a business, but this approach lacks the acumen needed to properly draft smarter business strategies. Showcasing talent needs to run concurrent with establishing an equitable price for design brilliance. In this market, it seems that many of us have yet to come up with a quantitative measure of our worth that could be collectively calibrated, endorsed and used as an industry pricing benchmark.
How is it that other professionals dealing with intangibles are able to command seemingly worthier fees for their services? Clearly, the design industry could do better by looking to other commerce groups for counsel on how to set and maintain better business rates. If we cannot justify among our own community what our worth is perhaps we need to seek answers outside of our comfort zone. We need to consolidate our efforts in getting the message across to the public and to our practitioners that what we offer as consultants has lasting and credible value.
Have we unwittingly adopted a speculative manner to setting our fee structure, much like any other trade commodity? Based on supply and demand scenarios, this business formula works favourably in good times, but when negative growth occurs, all bets are off.
Should we expand our market boundaries? In taking on a broader outlook, we should be aware that great opportunities to do business exist elsewhere. Most of us are hesitant to offer our skills outside of our own backyards, but a portable model for doing business can be rewarding in certain situations. Local companies are now landing work in places that a few years ago seemed far out of reach. Design service is a very marketable export commodity.
But many of us continue to overlook an important element in quantifying our work. In defining business valuations, principals and owners need to better recognize and rate the most obvious and vital commodity – designers themselves.
The highest cost, and greatest asset to any business is people, followed by real estate, technology, furniture and energy. As design professionals, we can provide to clients better solutions that use less space and energy, and produce a sense of well being and improved productivity – for others. We can measure overall outcomes using key performance indicators to track improvement – for others. But our inability to properly price our most valuable resource within a design workplace is troublesome. It is in fact challenging to drive change in our approach to business due to economies of scale – most design firms are small businesses, and lack the resources that larger companies have for business research and development. Still, we should all look to how we can more readily evaluate our scope of work and charge accordingly.
So what can we do as a professional body? Our community stands to benefit by conducting self-examination and establishing common rates that are accepted industry wide. Without an effective means to set standards we cannot sustain a competitive edge needed to address future economic change. If we can justify efficiency, effectiveness, and worth for others, we can do the same for ourselves.
We must collectively acknowledge and support goals, objectives and an agile approach based on fair trade and benchmarking to realistic levels in order to facilitate a healthier business development model. If our aim is to find synergies that help achieve cost parity relative to other professions, then we must first take an assertive stance in rationalizing what we do as industry professionals.
We need to do this now, in a bid to preserve our industry and to set the course for emerging realities in the new business of design.
Jim Toy is principal and founder of of False Creek Design Group. He is the past president of IDIBC. |
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