Planning the China Future of Your Consultancy Industrial Design consultants are acutely aware of the changing relevance of the service they offer. Industrial design has progressed from a new product idea to a mature product in the space of the last ninety years, and in particular the last sixty since the end of the Second World War.

Industrial design is now broadly known in the commercial world and referred to frequently in books about business and manufacturing. Australia’s statistical records on employment and industry now recognise it as a distinct activity area with sufficient volume to warrant data collection. The issue of its benefit and commercial value to industry is now a given.

Adjusting to a new balance

Industrial design consultancy provides a useful interface to a range of services that enable both existing manufacturers to extend their internal product generation capability, start-ups and inventors to find expertise to further their plans, and product marketers to access design and production help for three dimensional marketing needs.

Just as the growth of industrial design services in Australia altered the dynamic of the way product development occurred, the advent of China as the world’s manufacturing resource, coupled with the vastly changed communication environment of email and web, is bringing about a new equilibrium.

Business formation in industrial design was strongest in the 1980s and those businesses have had twenty years to develop. After modest recent growth in industrial design business numbers the level has stalled again at around 390 businesses. The early players of the sixties and seventies are, to most of the market, indistinguishable now from the successful start-ups of the eighties and nineties. Length of time in the industry is not, of itself, sufficient to ensure business dominance and survival.

The saturated market and the experience of the established players along with deficiencies in the education of current graduates makes it hard for new-comers to form viable businesses in the core discipline area of new product development. Many graduates have found niches in associated areas that take advantage of software literacy and design skills such as web design, e-commerce, games development and animation.

Time to rationalise

Sixteen years of economic growth have meant no catastrophic rationalisation of the industrial design consulting industry such as occurred in various sectors during the recession of the early 1990s. But rationalisation is inevitable and underway. While economic conditions are good, and the shift to other sources of supply for design is happening at a relatively leisurely pace, there is time for designers to plan a business survival strategy.

We all watched as suppliers’ businesses became unviable during the introduction of computerisation. Businesses such as the printing pre-press firms and typesetters were obvious and rapid casualties. Many of us are currently confronted with the closure of businesses in the manufacturing chain – the toolmakers, the component manufacturers and their process supply chains. Until recently industry stories centred on the sourcing of tooling and parts from overseas, then expanded to the selection and customisation of already designed products from overseas suppliers. Inevitably stories about the outsourcing of design from overseas manufacturers are now gaining strength.

It’s not hard to understand why. It comes as the direct consequence of a growing pool of people in the Australian manufacturing and product marketing sectors (including consulting designers) becoming increasingly comfortable with the outsourcing of product needs to remote providers. The downsizing of the product development industry in Australia is a certainty. Industrial design won’t disappear as a skill in Australia (just as textile design hasn’t) but the number of people involved in it will decline.

Applying strategic vision

If you’re an industrial design consultant or consultancy owner how should you respond to this? Designers like to be seen as strategic innovators. There is no doubt that, in the application of their services, they produce outcomes that customers could not necessarily visualise themselves, outcomes that form new strategic directions for their clients’ businesses. But they do this by the application of business knowledge that is technical and cultural rather than financial and entrepreneurial.

Any consultant that has been in business for several years must have a modicum of business skills and therefore some ability to redirect their business activities into alternate areas. Indeed many of us have made progressive changes to services and processes as the imposed changes of computerisation have taken hold. It is important to understand the degree to which your business relies on the accumulated contacts of your years in business and their perception of the services and skills they can approach you for. Any change of business direction cannot rely on this accumulated client base.

So design consultants need to spend time considering their own businesses and the direction they should take for survival. They need to consider the options as dispassionately as they would with a business model brought to them by one of their clients. What sort of a product will the client need to prosper in the proposed business environment? At the moment there is time to make choices and set self-selected directions before the market forcibly imposes changes.

Making choices in your own time

There will not be room in the market for every industrial design business to remain exactly as they are today, with the same mix of services and client volumes. So what are some of the other choices?
· Move to a more viable market
· Export your services into a more viable market
· Change the range of services offered
· Change the scale of business to fit to the available work
· Change the type of business you run
· Sell the business
· Close the business

Completely changing direction by changing the business you are in is not easy – for example it is unlikely that a design consultancy will reinvent itself as a real estate agency or as a pharmacy. When we start out, so the pop-mantra goes, we can be anything we want to be. The reality is that what we want to be (and can be) is limited by the community we are born into and coloured by years of exposure to particular knowledge sets and life experiences. The sum of these predisposes us for a particular occupation.

For designers, contemplating alternative business or work activities such as importing, distribution or retailing, (activities with little scope for primary creativity), goes against long cherished life choices. Designers don’t necessarily subscribe to the business theory that the purpose of work is to make money or to the notion of adjusting your work activity to maximise income.

Play safe by limiting change

In contemplating change it’s worth taking a leaf out of the manufacturing handbook and heed the advice not to alter too much of a successful formula each time you introduce a new product. The wisdom is that you only change one of three essential parameters at a time – either the target market, the product, or the manufacturing process.

So for a consultancy selling the same design services to a new market using their experienced team makes sense. Or selling a new design service in the same market. The easy shifts for design consultancies are to related design disciplines that have client pools outside the manufacturing industry, such as commercial interior design or exhibition design. Converting from a design consultancy to a manufacturer, where both the process and the market changes, is a more difficult task – there are so many new expertise areas to grasp, especially in the areas of finance, sales and distribution.

What is certain is that many others in the sector will be trying to shift in similar directions, and that the new services they offer and markets they tackle will already be occupied by existing, experienced businesses.

Exporting services

In my last article I introduced the topic of exporting services. The time, potential expense and uncertainty of this as a direction will put this beyond the scope of many consultancies. There will be success stories both fortuitous (built on the fortune of personal contacts and good timing), and planned (substantive marketing efforts and in-country staff and offices). Achieving sustained and meaningful income from places such as China (GDP per head $2280) or India (GDP per head $830) using Australian staff based in Australia (GDP per head $35,900) will not be easy. There is one obvious caveat - as the internal design capability of a possible market like China develops the need for imported services will diminish. How much is heard from the international design brands of the 80s in Australia now our own internal capability is so developed?

Industrial design, like the manufacturing engineering disciplines, tends to be an internal competency of manufacturing companies. Industrial design thrives in manufacturing intensive communities. For the unencumbered, moving to follow work availability is a viable choice. This option wont suit many of the older consultants and isn’t really an option for a small business. The hurdles of money, language and the time to establish a client base rule this out for most.

Boomer retirement and boom sectors

For some consultants the timing of the contraction of the industrial design market in Australia will fit nicely with their retirement plans. The gradual scaling back of their businesses to suit the market will take some of the pressure off those who have no choice but to continue. Similar examples were seen in the industries’ change to CAD in the late 80s with some older consultants choosing never to re-skill and confining their services to clients who were comfortable with the traditional approach.

For many industrial designers the adaptation to the realities of the Australian market has been happening for years. Many industrial designers have found themselves in trade and exhibition display businesses, retail display, retail shop design services, web and e-commerce consultancies, multimedia and games development. There simply weren’t sufficient ‘traditional’ industrial design jobs available (even twenty years ago) to cope with the quantity of people attracted to the occupation. For all the sense of frustration and failure experienced by these designers as they did the round of consultancies and design-literate manufacturers they may end up being the lucky ones, with careers firmly grounded in growth areas of the economy.

What of the current boom sectors? The high profile growth areas of mining and defence provide only limited opportunities for industrial designers. Mining provides management and specification work for engineers but much of the equipment required is imported. Perhaps some industrial designers can shift to management and supervision roles with the current shortage of engineers? Defence has a great deal of scope for specialised technical input but only limited requirements for the humanising input of industrial design.

The contribution of these industries to Australia’s wealth will continue to provide the cushion that slows the immediacy of change for industrial designers.


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