Joining forces with a competitor can greatly benefit a consultancy in the present market – as long as you choose a partner carefully, says Paul Foulkes-Arellano
The business of design is changing rapidly. Harsh economic conditions only compound the difficulties produced by falling margins and an overabundance of project-hungry groups. The perilous state of many consultancies suggests that a good number will ‘go to the wall’ or, at best, re-emerge as two-man bands working from home. Clients are forcing new working practices on designers, compelling consultancies to re-examine the way they do business and how they make profit.
How do smaller groups survive or larger ones halt their decline in turnover and profit? Organic growth appears to be unachievable for many, especially when organic decline has become the norm. Most groups shy away from merger – those that do merge, rarely prosper.
The usual scenario is as follows: The larger group absorbs the smaller one, sucks out the creativity and then drops the small consultancy name previously tagged on; turnover remains static.
Another solution is to join forces with a company from a related field. Corporate consultants and PR agencies have traditionally been a good fit. The Sandom Partnership/ Graphique merger within the Sandom Group to form Vibrandt has been commercially successful, with the group now offering design, reprographics and research.
Back in 1992, Tutssel St John Lambie Nairn offered the prospect of a merger of great creative minds. By 1997, as The Brand Union, it offered services including television branding, corporate identity, brand packaging design, mnemonics and new media. However, WPP Group bought The Brand Union in 1999, creating Tutssels Enterprise IG in 2001 before dropping the name Tutssels from the business.
Testing the water
Out and out merger is a big step to take. In the current climate, it’s better to put a toe in the water with a potential partner. Strategic alliances and casual relationships are a sounder way to begin a long-term relationship. However, the key is that both parties get something from the relationship. What then is the best way to choose your bedfellow?
In my view, alliances between designers from the same discipline are rarely a good idea, especially when trying to ‘carve up the work’ equitably on a daily basis. It makes more sense to partner with a company from a distinct, but related area.
Design consultancies can have successful alliances with consumer insight companies, architects, reprographic suppliers and even software houses. Wren & Rowe’s relationship with [repro house] The Boxroom allows us to provide a seamless service – from pre-design through to print consultancy – without having to staff and run an artwork department. In general, relationships must make the total offer more attractive to clients – this is one of the key criteria in choosing a partner.
Partners should share market knowledge, technical expertise and, ideally, marketing costs. If the potential partner offers none of these, then it is unlikely to be a worthwhile associate.
However, above all else the hardest task in choosing a bedfellow is trying to ascertain whether there is a ‘people fit’. If the people fit is first class, then there is a good chance the alliance will work.
Creating a successful alliance
The advantages of alliances, partnerships, joint ventures and ultimately mergers are numerous, but there are key elements to making them successful:
• The relationship must be a meeting of minds. Financial concerns alone are not the best basis to begin an alliance. All the owners of each company must be totally committed to the alliance, and, ideally, everyone must ‘get a kick’ from the relationship. It must be a blast working together, not a drag.
• Every alliance needs time to mature. Some alliances produce immediate benefits, and others might take several years. It takes a fair amount of courage to keep plugging away when nothing concrete happens after two years. Goodwill alone does not make for a happy partnership.
• The whole of each company has to work successfully together, not just the principals. Once joint projects are underway, the interface between the two or more companies has to be first class. Any cracks in the faÃ§ade are immediately obvious. For the partnership to be a long-term success, the project results must be excellent and saleable to the next client.
• Sometimes the status of the alliance or the joint offer has to be completely re-jigged only months into the relationship. Sometimes there is overlap – each partner has to be crystal clear as to which area is his or her responsibility.
• Don’t partner left, right and centre. Some industrial design groups have appeared as everyone’s partner. Serious design buyers have a dim view of ‘mayfly’ partnerships; here today and gone tomorrow.
In summary, an alliance is just one response to the new design business environment, but one that can ultimately bring substantial emotional and financial rewards. To be successful, the whole must be greater than the sum of its parts. Above all, it should bring some excitement and fun into your working life.
Selecting the right partners and ultimately making that partnership work may be one of the most challenging business activities a company undertakes. I’m convinced careful selection and constant nurturing can bring significant results.