How to Invest in Design: the In-House vs. Agency Conundrum

Unless you've been stranded on an island for the last few decades, you're well-versed in the arguments detailing the business value of design. It powers innovation, deepens customer engagement, and builds brand loyalty by delivering meaningful experiences. But like any other capability, there remains a conundrum around the best way to invest in design.

Start, Scale, and Sustain

On the path from starting up to growing to blossoming as a mature company, each step in a company's evolution requires a different approach to design. Do you build an internal team, lean on an agency, or develop a hybrid model with a little of each? Each has implications regarding costs, your design ethos, and how to fuel ongoing growth. And while there's no right or wrong answer, there are best practices to consider based on your company's trajectory.

Start with an Agency

When companies are spinning up as startups, budgets are tight, focus is paramount, and agility is essential for finding a foothold in the competitive landscape. Most companies are still defining their product roadmap and experimenting with product-market fit. At this point, committing headcount to an internal design team is risky without reliable revenue and a long-term vision for how you'll go to market.

When you're in startup mode, engage an agency that knows your category and how to deliver the right balance of design strategy and execution. Working with an agency allows you to contract for just what you need—no more and no less. Agencies can quickly scale up or down depending on your changing needs. And as you grow, you can bring on different agencies with different areas of expertise.

When looking for an agency, find a design team that's led start-ups in growth mode. These agencies become the company's overall creative partner and bring consistency and rigor to how the brand comes to life across multiple customer-facing touchpoints—from logo and visual identity to website, brand language, product line, and marketing materials.

Agencies with start-up experience also understand that budgets are typically tied to investment rounds and know how to support the company's product development process and growth. The best agencies for start-ups know how to deliver results with a lean and agile approach. They understand the company's need to invest in design incrementally and develop budgets that scale with investment rounds. Some design studios will offer reduced fees for some form of equity or the rights to publish the work on their website. If cash flow is tight and you'd benefit from a non-traditional fee structure, go ahead and ask. Agencies that work with start-ups are used to exploring different types of agreements that include some element of risk.

Scale with an Internal Team

When a company begins to scale its operations, it reaches a point where it can contemplate building a dedicated in-house design team. This is an expensive proposition, but an internal team offers more control over the design process, creates a more unified brand identity, and is more invested in driving innovation throughout the company.

The first and most important hire for your internal team is a senior-level designer who can tap into their network to build out the department. How this person hires up is critical: the team must be aligned with the company's mission, vision, and culture and bring the skills required to execute its strategies and product roadmap over the long term. A senior-level designer must make these hires as opposed to an engineering or marketing lead, as no one knows designers better than a designer. The first design hire must know how to create a culture where other designers thrive in the context of the larger organization. This prevents the design team from being put on an island rather than seen as a core part of the business.

Sustain with a Hybrid Approach‍

When companies reach the stage of sustaining their growth, they need both an internal team and outside partners to push their thinking forward. An in-house team that provides continuity as the design practice evolves and steps up to meet urgent needs in the most cost-effective way. It may sound simple, but one of the main reasons Apple has been so successful is that it appreciates and embraces the importance of design. But Apple also knew they couldn't do everything, so they brought in agencies with specific expertise (e.g., advertising) as partners who could add dimension to how design comes to life.

The benefits of augmenting your team's capabilities through an agency are many. They become a sounding board that provides feedback on ideas and options devoid of internal politics. They give you access to research, insights, and best practices from their previous work in other product categories. They provide the resources to accelerate your timelines and create new efficiencies. And they can bring fresh ideas and expertise to your in-house team that can lift them out of the day-to-day.

Leaders who grasp design's role in fueling business success will look to invest in both internal and external teams. An empowered design leader knows how to engage diverse teams to elevate the ethos of design across an organization. This raises the bar for how people approach all human-facing experiences. This unlocks new ways of thinking that accelerate innovation and the organization's connection to a higher purpose. The design ethos lives above a single product, KPIs, or annual business goals—it inspires the entire organization to deliver high-quality, consistent experiences year after year.

Choosing the Right Model‍

What does your company need most? A quick injection of smart design thinking? A design team fully invested in the company's growth? Or specialized skills you don't want to hire for? By identifying your short and long-term needs and comparing the costs of building a team versus using an agency, you can discern the best path for now.

If you choose to hire an agency, you may have to sort through an unruly collection of firms. Some agencies are intentionally broad and offer multiple design experts in every design discipline. Like the buffet line, they have something for everyone, but it takes work to understand the quality behind the offering. The smaller boutique firms with highly specialized capabilities can provide exceptional results—with the caveat that you might outgrow the partnership. While larger firms offer a breadth of services, they invariably cost more as they carry higher overheads. Smaller agencies with a lower cost of doing business help you save on design fees and often allow you to work directly with the designer who wrote your project plan. Make sure you understand the business and service models of the agencies you are considering, as they will impact every part of your experience working with them.

As the economy goes up and down and a company's outlook changes, there will always be a debate over whether an in-house team or an agency will suit the needs of the business best. Instead of following the herd in your category, look at your company's specific needs, your current position in the growth curve, and the opportunity ahead. Design that drives meaningful differentiation can give you a true competitive advantage.