Design is hotter than blazes, so why is it that traditional product design firms aren’t growing? In fact they seem to be, well, challenged. There are exceptions, but for the most part, substantial growth in design consulting firms has not coincided with the growth of design overall in business.

Yet design firms are clearly relevant. Why else did McKinsey just buy the industrial design firm Lunar Design? Why did Capital One recently buy the UX design firm Adaptive Path? Why did Monitor buy Doblin? And going back a few years, why did Flextronics buy, and then sell, Frog Design, and why did Steelcase buy, and then sell, Ideo?

The buyers want the capabilities of design firms, knowing that it’s easier to buy than to build.

Were design firms scooped up because of great growth, big numbers, and the buying firms wanted part of the growth? Or was it because the design firms weren’t growing and were a good buy? Or, maybe it was simply that the buyers want the capabilities of design firms, knowing that it can be easier to buy than to build.

But if design firms were thriving, why would parent companies sell? There is no single answer, but here four reasons why design firms might be stagnating.





Companies want to ‘own’ their design and design capabilities.

1. Design is too important to outsource and therefore is moving in-house.

No doubt, every company needs good design to compete. Good design is a baseline, and without good design you can’t even play. Good design has become core to good business. Since it’s a core asset, it’s too important to outsource. Companies want to “own” their design and design capabilities, and large and small are bringing design in-house by the thousands. For example, GE and IBM have each announced they are in the process of hiring 1,000 UX designers per company, and Apple is rumored to be hiring hundreds of car designers. If you want to see a company’s real strategic intent, just look at who it is hiring.

Building a great design organization requires know-how and can be a cultural challenge. It stems from hiring the right people, guiding and empowering them, and enabling the right context and corporate culture. Granted, it may be easier to establish design culture in a boutique design firm, but consider the long-term success of amazing internal design departments at companies like Lego, Intuit, Bose, BMW, Apple, Philips, Fossil, GE, Starbucks, Microsoft, 3M, Disney, IBM, Dyson, and Nike, to name just a few. Internal design departments are closer to other internal teams, closer to the customers, and have access to internal proprietary information.