Cool Running

Jeremy Myerson senses a revival for the design industry in 1997 but asks if we’re at risk of forgetting the events of a decade ago and overheating with enthusiasm>

In recent years the slogan for the design industry in early January has been: “New Year, hard labour”. But as UK design consultants stream back to work after the long Christmas break, there is growing optimism that 1997 will bring fresh success and not just a continuation of the struggle to survive.

1996 was the year when the tide finally turned and the design industry recovered some of the self-confident swagger not seen since the late Eighties. The recession mentality that took deep root in the fight to stay afloat has begun to lift as many design businesses – frustrated by years of caution – seek to recapture the industry’s once-familiar buccaneer spirit.

Many of the key signs of revival are there: more work from clients, more vacancies in consultancies, more merger activity between design groups, more paying guests at design award dinners, and even – shock, horror – more enquiries to estate agents to find larger studios. The scene is set for the triumphant comeback. But before revival turns rampant, those who witnessed the last big design bubble are asking anxiously: is the design industry in danger of overheating in 1997, just as it did a decade ago?

The parallels between the micro-economy of the design industry and the macro economy governed by Kenneth Clarke are hard to miss. Just as the Chancellor has been cautiously playing down talk of a run on the housing market and a high street spending boom for fear of inflation spiralling out of control, so wise heads in the design industry are keen to stress how much more grown-up design businesses are today and how they plan to keep a close eye on overheads and fixed costs.

But as house prices are set to soar by 20 per cent over the next two years despite the best efforts of the Treasury to dampen the mood and derail the bandwagon, so there is now a premium on design industry prospects. The optimism enshrined in Design Week’s 1995 and 1996 design consultancy surveys, which revealed the 100 largest consultancies in the sector anticipating growth of around 16 per cent, has turned out to be more than just bullish talk.

Takeovers or mergers which create larger pay rolls, and property developments which significantly add to the burden of heavier overheads, inevitably recall the days when Fitch all but collapsed under the weight of its London headquarters at King’s Cross.

When Wolff Olins signed the contract to move to its vast Regents Wharf site on the eve of recession, Wally Olins was able to raise a smile, saying: “So we got the property market wrong, but then so did the Reichmann brothers!” But this time around, it’s no laughing matter: designers aren’t chasing grandiose dreams that go bust – they want growth that can be sustained.

Design Council chairman John Sorrell, whose consultancy Newell and Sorrell has grown steadily but cautiously over the past couple of years, believes that vivid memories of how business dried up for designers at the end of the Eighties will ease fears of overheating in 1997. “Design groups are small groups,” says Sorrell. “We’ve got to invest in people to grow but that means investing in fixed costs. There’s the conundrum. The trick is how soundly you manage that process.”

Sorrell suggests that the feelgood factor has, in fact, been around for 18 months, but once bitten British designers aren’t rushing to expand as they did in the crazy Eighties. “Mature design companies know they’ve got to be rigorous. It’s good when it’s good in design, but we all operate in a fragile environment,” he says.

That sense of fragility is borne out by Ian Rowland-Hill, chief executive of the Design Business Association, who observes that improvement remains patchy, with some member consultancies really motoring while others slip back. Rowland-Hill doesn’t believe that history is about to repeat itself: “The term ‘overheating’ is an emotive word – just because design groups are now more successful doesn’t mean they will make exactly the same mistakes,” he says. “A lot of consultancies did the right thing in recession: they slimmed down and did work that met needs and pleased clients. But the problem now is that client companies are under such pressure. If clients suffer, their service-providers will suffer too.”

This point about the fallibility of client prospects is one that many have overlooked in enthusing about the design industry’s return to favour. Organisations are under unprecedented strain to introduce new technologies, new ways of working and new marketing strategies.

Rowland-Hill sums it up in three vital imperatives: “Companies have got to deliver quality, deliver it cheaply and deliver it quickly. Often they can deliver quality quickly, but not cheaply. Or be quick and cheap but not produce the required quality. You only squeeze that particular lemon so far before you run out of juice!”

Corporate uncertainty and job insecurity at every level of the client organisation – especially among those who commission design – inevitably has a knock-on effect to the design consultancy. It explains why one of the classic symptoms of overheating – compliance with exorbitant salary demands – is conspicuously absent as design heads into 1997.

DW’s last salary survey (DW 25 October 1996) caught a mood of progress after the stagnation of recent years: it reported that design groups anticipate expanding their design teams by 28 per cent over the next two years. But any such expansion is likely to be managed much more cannily than in the past, says management consultant David Jebb, whose consultancy David Jebb & Associates works closely with design groups.

Jebb compiles quarterly commercial performance ratios for the DBA and has observed employment practices in the industry which are either realistic or ruthless, depending on where you sit: “The lessons of the past have been absorbed in as much that remuneration is being linked more closely to performance. Heavyweight senior staff are being replaced by Mac-literate juniors, and there is more reliance on using freelancers rather than hiring permanent staff,” says Jebb.

The result is that there is currently no great pressure on salaries and no great surge in hiring lots of new permanent staff. Some substantial salary hikes have been recorded, mainly paid in bonuses; but the overall pay rise across the board is more like 5 per cent, says Jebb.

This, he says, is nothing to get alarmed about. But the tendency to replace senior designers with juniors armed with new technology is more frightening. “The industry has got to get its pricing right. Many design groups don’t realise that the IT available to them is also available to their clients,” explains Jebb. “Currently, many designers give away the valuable first stage – design concepts and ideas – for nothing because they hope to claw back the money in implementation. That may change.”

Widespread use of new Mac technology explains why the design industry’s recovery in fee-income has far outstripped recovery in employment levels. But, worryingly, if demand for design services did crank up sufficiently to warrant heavier recruitment of designers in 1997, there is a question mark over the ability of the infrastructure to cope. The old mismatch between the design industry and design education – which was part of the boom-to-bust scenario of a decade ago – is still with us, despite the enormous expansion of design courses at higher education level.

A recent report issued by the Royal Society of Arts on the state of design education in the UK identified basic deficiencies in drawing, presentation and research skills. The report, entitled Signs of Strain and drawn from comments of 20 jury chairmen in the RSA Student Design Awards, highlights the marked discrepancies between different design disciplines and observes that studio activities requiring close supervision are among the most vulnerable.

The report concludes: “While the very best students remain as strong as ever, these pressures – notably focused on tutor support for greatly expanded student numbers – are leading in some cases to deteriorating standards in the middle ground of students.” But the report also has a barb for the design industry, saying: “The speed and intensity of recent changes in design education – especially with regard to course aims, numbers and modularity – are not sufficiently well recognised and understood by the design profession.”

For the design industry to grow in a sustainable way, it is clear that the relationship with design education and training still needs to be sorted out. Having more than 60 000 students in the UK art and design system may be one thing; having readily employable graduates is another. But the nature of the design businesses graduates will join is what most concerns David Jebb: “There is now a real divide between the sheep and the goats – the design providers who sell the art and craft of design to order, and the genuine design consultancies who solve client problems. In 1997, the design providers will be squeezed more and more on cost. Only the design consultancies will be able to command the fees that will generate real growth.”

Jebb’s message is a blunt one: selling design as a commodity, and not as a problem-solving process, will leave design consultancies between a rock and a hard place as pressurised client companies drive an increasingly hard bargain. That kind of scenario immediately takes the steam out of the overheating theory, but many in the design industry believe that cool heads are what are needed right now. “People are coming at the upturn with a different attitude,” says former Design Bridge managing director Richard Williams. “Having survived the recession, they are fitter, more focused on cost control, and far more profit-oriented.”

Nobody, it seems, is about to go overboard about the good times being back. “Designers are like farmers these day,” says John Sorrell, “they are congenital moaners, and I include myself in that!” So welcome back to work – the jug of cold water is on the plan chest!

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