Our work for kaffeewerk espressionist was just published in "BranD" magazine.
Nice!

Stylepark, a german platform for architecture and design, host a debate about the future of design – particularly the future of design education. The discussion unfolds quiet spectacular with every author and article. The über-academic tone of some authors doesn't make the whole story less interesting to follow.
Actually, this is a very rare something in a german-speaking design world.

How does this process look at a design bureau? A client comes in with a problem, the designer helps his client to work out a briefing, then makes his analysis and research and offers a solution, possibly with two or three options, which the client either accepts or denies. Looks pretty similar to a doctor, doesn't it? Apart from the fact, that the doctor went through the whole cycle in 40 minutes whereas a design consultancy works out a possible solution within days if not weeks. And what's more, this job is not being done from 9 to 5 – the process is incepted from the first meeting and lives in the head for as long as the client relationship exists. It is basically a 24-hour job which is being constantly interrupted with other activities. The solution may come up in the shower or in sleep or while playing with a child – how far can one control the mind solving a problem which doesn't have a standard guided step-by-step correct answer?

To make it clear again: while doctors serve their clients within a definite (and mostly tight) timeframe and prescribed guidelines, a designer seeds a client's problem into his own mind trying to find a definite solution within days or weeks (or even months) without any guidelines or cribs with correct answers.

Should someone let a stranger with his problems into his own mind just because a stranger asked to do so?

I guess not.
And this is why I support the idea of being picky with clients.

This seed theory can actually help find answers to some other questions, like the willingness to compromise or the concepts of business model (billing per hour anyone?). However, we have to come up with some solutions today, so talk to you later then.

The regular & gloomy part

Unfortunately there is not much out there about the subject in pure figures, accounting or other raw data to help understand the theory. I'd recommend "Corporate Design: Kosten und Nutzung" for the german-speaking audience here. Also, we might act on the premise, that an hourly rate normally swerves between 80 to 150 Euros an hour or 640 to 1200 Euros a day.

Project based involvement

Basics. Hard earned basics. Every young designer or an agency is doomed to go and get individual projects: get things done, get paid, move on. Last year we have done 6 projects like that which stood for about 30% of our net revenue. One of them will bring us publicity when published in two books later this year, and most of them are one-time shot and until now have brought us no additional business. Obviously enough this model of operation can not be seen as sustainable (excuse my french), although it may have side positive side effects. Certainly, no agency will turn down an offer to work on a project or two, but everyone just wishes those projects come on their own and do not need extensive acquisition efforts. Those, who figure out how to have this model work on its own are quite bright entrepreneurs, I should say.

Retainer contracts

Big client. Structured workflow. Steady cash flow. Blue skies... While it is clear that a retainer contract is one very lucrative earning method (with its pros & cons, certainly), it is also the most difficult thing to acquire. My feeling is that no agency starts without one big client on a retainer (the other option would be a big chunk of cash) - and that client is normally a long-time partner or friend. This very agency, the Bureau, has got two such retainer contracts signed last year. Both agreements were thought of as a solid ground for developing client projects... with both of them being canceled within less than a year. The first retainer has been cancelled after two months running. The second one – after 9 months of bringing steady cash flow. Basically, if both agreements were still running, the Bureau's business would be a nice and easy way of living. With 30 and 25 hours pro month respectively, it was enough to pay the overhead costs and have some cash set back for gloomy times or future investments. Unfortunately, both agreements were cancelled – and done so without any financial disadvantages for the client. Good for the client, bad for the agency.

Certainly, we've learned this lesson well now. The question which still hangs in the air is: was this kind of cooperation beneficial for the client? Was it beneficial for the agency? As we are talking about business (and not personal, intimate relationships), it is about money first and foremost, and yet was it the money what made those both contracts feel so uncomfortable in the end?

Another question to ask is why those retainers have not incorporated any security features to stop the client from abruptly canceling the agreement without losing a penny?...

The answer is on the surface and has been articulated by virtually everyone already: a good client-agency relationship is based on mutual trust. This is it. An agency believes that the client's business will flourish and so will its business, too. For a client "trust" is another word for "relevance", "fresh insights" and other standard "bullshit bingo" phrases which managers use to describe their preference for one partner over the other. They cannot use the word "trust" (it is not quantifiable), but this is really what they have in mind (managers are people, too). Trust, that these agency people have enough tools, skills (and drugs) to solve the problems. Trust, that their account directors have a reach vocabulary to present their work to the next level executives. Trust, that this will fly.

The other part

So to find a business model for a design/ad agency I am asking a simple question: how to gain client's trust?

Deep involvement with the client's business

Yes, risk your reputation, your resources, your cash and get paid for the ultimate results – not the hits and clicks that may prove a lot (or nothing). This model is said to be applied by Anomaly but, as I said, it is hard to prove the theory with raw data.

Barriers: you have to have enough cash to invest into your business and client's business. And you have to have enough patience to wait for the actual results in terms of cash flow.
Prospects: as this model implies self-confidence in your skills and trust in client's business, the latter will most probably be more open for cooperation and, well, trust.

This is actually a very welcomed scheme among industry professionals – no manager would initially turn down an offer like that. However, there are not so many agencies to offer such method out there, too? Why?

Freelancers pool sold as controlled crowd-sourcing

Actually, it sounds very reasonable at first. And when reading an article by the founder of Victors & Spoils, it seems reasonable even more. Why rent a huge office, bare huge monthly overhead costs and care for social benefits, if one could use the internet and Skype and whatnot to hire someone from anywhere in the world on a project basis?

Barriers: you have to find and make sure that your distant co-workers (not employees anymore, nope) are there and won't set you up. NDAs, deadlines, payments to Nigeria (sorry, Nigeria) – the amount of managing all this setup should not be underestimated.
Prospects: the costs of running this setup are small. And this is a dream come true for a lot of people involved.

At the core it is basically the old model – "trust me and I will deliver" – with the stuff costs cut to the minimum. Does it help to gain trust from the client's side? Would love to hear about that.

A strictly defined product for the masses

Why, a logo for 100 bucks is a proven business model. Do you need more examples? It all works just fine. Want to have better executed examples? A logo, a website, an online shop? Well, all of them aim at some kind of creative business. Some of them offer more superior product than the competitors, but they all abandon the principle of "upper premium" pricing for design services, which lies at the heart of the traditional model. Focused on the tools, cost efficient and transparent, this kind of business may prosper quiet well, too.

Barriers: you have to build the tool first. And constantly improve it. It is mostly a service for creatives and less a creative service. Well, except for the logos silo.
Prospects: keeps your cash flow steady and dramatically reduces the consequences of losing one client. Or two.

This is a business model aimed at very different group of buyers. It is ultimately not "elitist". And it is a mammoth undertaking for a single designer (even if it is about selling T-shirts or silkscreen prints). Trust? I am sure there are a lot of people who will pay 20 bucks and not think a lot about trusting a business. Maybe 50, too. If done right, maybe even as high as 200. For now it looks a bit "dead-end-ly" for me, though.

[to be continued]

To answer the polarizing article on the design as "horseshit": design is not decoration. Decoration is decoration. Design's primary goal always was (and today even more increasingly is so) to add and maintain the value. Certainly, for any business, be it a start-up or a traditional family business, it is absolutely critical to offer core value for the customer. When talking about a geschäft, a customer will not describe design in first place, but the core offering: "they sell bikes, and their selection is huge" or "they do office cleaning and do it very thoroughly". And as no new customer will let his or her friend to sign them up without their consent, it means that he or she will have to get convinced on their own. The first meeting point might be a website that they will google or a local strore with a street address, which they will visit in person. Winning new customers with design starts already there. Easy, well-arranged sign up forms, clear product description, logically built workflows, structured POS design, functional packaging, readable booklets (really!) – it is all built to win new customer and cater returning customers and add value to the core business offering.

I would even say, that a business may skip advertising and brand-building promotion, but should consider investing in the design of their products and services.

I am also very happy for the author of that article to have basic skills to be able to design a website without giving it much thought – a truly generalist way which always does wonders for any small business. Imagine throwing all those interface parts together without giving them a second thought – a business offer may never be discovered in the first place.
Lean startup theory and core values of design are the best friends!

"What start-up can afford a design service? It costs a ton and doesn't deliver any tangible result". For one, this is a question of business model a design shop follows. But I can add more oil into this fire and say that there are a lot of designers out there, who are egocentric and self-serving hippsters, considering themselves to have mad skills within an elitist trade. They are expensive, difficult to handle, fragile and spontaneous – and are mostly in business of decoration.

The designer of today has to be a generalist, a person with skills required to handle his tools and do most of the tasks required, but he also needs some profound business skills – listen, question, analyse, offer strategies.

A design shop should be a consultancy, too. This duality belongs to the core offering of any design business today.

Either that, or the industry will never change its vision of design as a-nice-to-have decoration accessory and tertiary priority on the list.

I don't think [...] a young Hitchcock, a young Scorsese – they wouldn't make it in this business. Slap up their early stuff on Facebook, on Youtube – it would get lost. It gets lost in the ocean of garbage. You are remembering 2007, "Time" magazine gave the award of best person of the year to you, myself. You and I. It's... it's global masturbation. Andrew Keen

The invention of the technology to record music defined the music of the 20th century. It all wanted to be recorded. It all wanted to be out there and sold. And that narrowed what music can be. We are entering a period where time, place and occasion are going to be far more important elements of how music is made and how we jointly experience it. Bill Drummond

I think, as an artist you have to accept the unexpected. I think that right now we are not in the world where we can determine or we can pre-determine what we think things are going to be. We are all operating in the dark. We have no clue of what's going to happen... Hank Shocklee

And here are some sites I was opening while watching the movie:
Ólafur Arnalds
The Cult of the Amateur: How Today's Internet is Killing Our Culture
Unlishing the ideavirus
shilo.tv
The Hype Machine
Ludvig Franzén – Live

The b+p type foundry is good. The typefaces look quite refreshing, they are legible and have their own signature. However something about them is even more exciting – every font can be acquired under "free license". Buy a typeface, try it in your layout and if everything is looking fine – buy it. It is hard to say how this strategy pays off, but for the designers this offer is absolutely unique.

Anybody to follow the lead?

Apart from being just a good video and some interesting piece of advice (or experience), it comes close to a subject matter we would like to start researching more as well. By designers for designers. Clients. Value. Partnerships. Colleagues. Business models. There are enough topics only experience can answer – not your tax adviser (who should be very good at his subject anyway). We plan to turn this research into a publication and bring it the public discussion, too.

But for the time being, breathe iiiiiiiiiiin..... exhale.

Here is our contribution to the subject of iPad and tablets in general, which at the same time is a Xmas gift to our partners and clients – an absolutely amazing new product, aPlate.
More here – www.aplate.de