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5 things I learned in 5 years building a design agency

Today we are celebrating five years of Goodpatch GmbH. Those who follow our company might already be familiar with our annual recap blogs. Exactly one year ago Matthias did a great write-up on the first four years which you can find here. Today’s post will offer a more personal view of the management lessons I’ve learned. As a first-time-manager, I believe many of you can relate who are new to management roles yourselves. For the more seasoned business leaders, it might be interesting from the perspective of leading millennial teams with a pure digital native and purpose-driven culture.

Goodpatch is an independent design company with 200 employees spread across studios in Tokyo (our HQ), Berlin, and Munich. Driven by the mission to prove the power of design, we create sustainable value for people, organizations, and the planet. 

In tandem with this milestone birthday, we launched our new corporate website today. I encourage you to explore the global website for more background on the company itself: https://global.goodpatch.com/

While some of the below points can be attributed to my entire experience at Goodpatch, this post really encapsulates my learnings from the past five years as I built the Berlin team of 30 from scratch. This post comes during an unprecedented pandemic that has created a crisis that affects all businesses. I believe that these 5 principles will help us weather this storm.

1. Put employees first

Create an incredible employee experience and business will follow
Great creative talent is our most important asset and our clients pay a very high daily rate to work with the best. There are so many opportunities for young creatives to find work in great companies. Corporates that would have never hired UX/UI designers in the past are now hiring huge teams and offering high salaries. Still, many talented people have decided to work for our team, leaving better offers and successful freelance careers behind. Why?

I’ve realized that many people are looking for a place to belong. Especially now during the lockdown, it is great to be connected and have the feeling that we are in this together. We don’t leave anyone behind now.

I also think that many people were searching for an environment that simulated school and where they could learn from their teammates and peers. To be surrounded by other designers and engineers definitely allows you to grow. If you join a company where you are the only designer, you can’t learn that much from your peers, at least not in your direct profession. In 2020, finding the best place to work is really about finding a great learning environment.

In 2020, finding the best place to work is really about finding a great learning environment.

Culture is only great as long as your business is great.
If you have a bad business and the company goes belly up, the best culture won’t save you. With the European team, we’ve built a multi-million euro design business from scratch and have won clients such as Daimler, R+V Versicherung, HERE , tado°, emmy, Deutsche Börse, the Renault–Nissan–Mitsubishi Alliance, and many more. Nothing is more motivating for a designer than to be asked to solve a significant real-world problem. People excel in a setting when they feel they can provide their expertise and help a client.

Drawing the perfect balance when it comes to workload has always been hard. You don’t want anyone on the bench, and at the same time, you don’t want anyone to be overworked and overbooked either. Generally speaking, if everyone is busy and fulfilled with great projects, you don’t have to worry about the team culture. Praise and appreciation that come directly from the client provides the most genuine form of motivation for an employee. And it feels great too. For this reason, our main 2020 OKR: “Great projects for great people”.

Our main 2020 OKR: “Great projects for great people”.

Put employees first — does that mean clients come second?
I firmly believe we should have the mindset to fully commit to the client’s success. We brought a certain “Client is god” mentality over from Japan, but not all clients are perfect, and relationships need to be on eye level. We have everyone on the front-lines, and even our interns are communicating directly with clients.

Most client relationships have been amazing, but employees need to know that you will support them even when things get complicated…or worse. One difficult matter I have observed is that even if your agency culture is wonderful and inclusive, people still spend a lot of time in the client’s organization, which may lack diversity, or where mindsets are less advanced. Employees have come back from workshops exhausted and even in tears. Discrimination due to gender, sex, age, and nationality sadly, still is an everyday thing. Your employees need to know that you have their back, and that they can speak out, even if it takes a toll on the client relationship. We are planning to invest in training for employees, so they don’t have to grin and bear it and know how to react in such difficult situations.

2. Self-organization as the only way

Freedom and responsibility
Employees thrive when they are given freedom and responsibility. I guess everyone has seen the Netflix culture deck by now. From my experience, however, self-organization requires constant reminders and realignment. With freedom comes more rules (for all) and also more meetings. For us, it was beneficial to create our own organizational operating system — the so-called Goodpatch OS. Next to our purpose (“Prove the power of design”) and five values, it consists of four pillars: Self-organization, learning & feedback, diversity, and mindfulness. Our OS has evolved over the years and will never be finished. In fact, it is designed to change. For us, it provides a sort of a canvas for all things culture.

The last thing you want to see is a pseudo-self-organization where people cherry-pick elements, and the more unpleasant bits get passed around like hot potatoes. What we took from studying original self-organization concepts like Holacracy was mostly terminology - roles, circles, domains, responsibilities, accountabilities, and tensions. I never intended to become a hardcore Holacracy organization, but we definitely strive to be a self-organized team. If you want to formalize your culture, I recommend you research a few established approaches to then create your own OS as a team.

Trust by default
Personally, this is a hard one for me. Over the years, I’ve had to learn to live with my inner “Wachhund” (German for watchdog) and control it. Occasionally I face situations where I imagine the worst possibility and suspect someone might try to damage or cheat our business. I now understand that my assumptions may not be true. Sometimes people really have no bad intentions but simply miss the crucial information needed to make a better decision. When you put trust in people, you may open yourself up to the occasional injury. But that small hurt cannot compare to the influx of positive effects you get from giving that trust.

Employees choose to be employees
As cool as it sounds to have a lot of ownership in your work, it is important to remember that employees still choose to be employees. Even if they’re theoretically working like “Mini-CEOs” they participate in neither the returns nor the risk. It becomes especially hard when difficult decisions need to be made in the group. I think Sam, who leads our client services, once told me that easy decisions aren’t actually decisions. What works as a helpful guideline and what I often say to my employees is: “How would you decide if it was your own money/company?”. They usually know how to move forward from there.

3. Productize your service offering

Productized Service Offerings
I am a big advocate for the idea of productizing your service offerings. To apply this to your agency, one easy exercise is to think about a project your company has done in the past that left the client completely satisfied. Now ask yourself what process you followed and if you could repeat it. Can this process be formalized? And if you go even further: If you could only do one kind of a project as a company moving forward, what would that look like?

It’s useful to reflect early on how you can create a catalogue for your services instead of making tailor-made offerings for each of your customers. If you have a formula that works for your past clients, future clients might benefit too. Doing so allows you to be more cost-effective and to put your resources where they matter most.

An important step in this direction for us was to define our own design process, the Goodpatch DNA. An adaption of the double diamond process where we integrated a development phase following the problem and solution phase. We also defined the desired output as the MLP (Minimum Lovable Product®) and eventually registered the trademark for that.

Later on, we created a full “bentobox” with different project formats such as Product Hour®, Designathon®, concept, and product projects. These offers are all interconnected and show a path for how to continuously work with us as a partner. We train new employees with the “bentobox” and are continuously working to improve the offering. Now, we sell the process, not the people.

Now, we sell the process, not the people.

Platforms & Boilerplates
What fascinates me about our company is our ability to successfully build SaaS products as an agency. At the Japanese HQ, we have developed a strong second business arm next to client services with our design platforms (Prott, Strap, ReDesigner, ReDesigner for Student, Anywhere). In Berlin, we are also going down that road and started to build Athena cARVR® two years ago. Athena is a boilerplate and technology platform to speed-up development work for our XR projects with the automotive industry.

The combination of both
From many points of view, the product business is definitely the better business to be in: Higher profit margins, scalability, growth potential. But you need to put in the investment first. We came to realize the sweet spot for us is the combination of both. In the case of Athena, for instance, each XR project we fulfill using the product allows us to improve the platform further. What’s more, through the process of building our own products, we learn a lot. This is expertise that we can then share with our clients. We’ve benefited from having a well-diversified business with multiple revenue streams, especially in times like these.

4. Reimagine the company as a network

Become a catalyst
When we started in Berlin, we defined our purpose as: become a catalyst of Berlin’s creative energy. Then, around four years ago, we started to host our own meetup Product Crunch®. The community now has over 5000 members on Meetup, is the biggest tech meetup in Berlin. Last year we started to record all sessions and created a Youtube channel to extend the reach. Community building might not always have an immediate impact, but you will always benefit in the long-term. When I meet new people in the industry in Berlin, they might not know Goodpatch, but almost everyone knows and has a positive impression of Product Crunch®. Next to the broader Product Crunch® community, we have started to invite the speakers we had at those events to dinner parties. We regularly bring our clients together so that they get to know each other and hopefully start collaborating in some form.

Also, don’t neglect your alumni. Everyone will leave the company at some point. Anyone who leaves the company is still an important part of your network. Stay in touch and keep a good relationship going.

Turn your focus outwards
A turning point for me was when I stopped thinking about us as a company and turned my focus outwards. I started to think about what we put out there in this world and the value that we create for our clients and society. The fact is, we’re still not everyone’s pocket and haven’t changed anyone’s life with our products. That is simply unsatisfying. Under the current climate and with the COVID-19 crisis, I can't help but wonder what we as a design firm contribute to the world. The team agrees that we still have a long way to go and have to be more conscious about this fact. Here again, there is little that you can do alone, but by teaming up with the right partners who share that same values, everything becomes possible.

5. The agency model is broken — and we are in to fix it

Power of co-creation
As exciting as the last five years have been, I am looking forward to what will happen in the next five years. The agency model will continue to change. For digital product companies, as opposed to traditional marketing agencies, this change is already happening. Design is now better understood as a team sport, with less happening in isolation and behind closed doors. Deadlines and presentations shouldn’t be the only things that bring people together.

The development of products happens together with the client in an agile workflow. When referring to clients, I always call them partners, and the partnership we form is in service to the user. In this partnership, we advocate for the user and try to bring that user and their needs closer to the company that is building the product. In a way, we are facilitating this relationship. Put simply, our client is our partner, and the client of our partnership is the user. As a design partner, we are able to reach millions of insurance purchasers, car owners, and banking customers.

Venture Capital plus design
It has always been hard for design agencies to participate in the net value created for the client. After working with us, our clients have raised millions of euros in financing rounds. Some have had successful IPOs. Others have had huge exits. We, of course, did not participate in those as we had already been paid a project fee for our services. The actual return on the design investment often happens months (or years) after the project with us. An attractive new model that we at Goodpatch are applying more and more is a combination of Venture Capital and design services. The key here is to not only support in an early seed stage but also to be able to follow up in later financing rounds. We have successfully invested in a few of our Japanese clients and are currently preparing to bring that same model to Berlin. It is exciting to see other design firms trying to figure out how to fix the business model of design.

Closing thoughts

A former professor of mine recently asked me: 

“Boris, why is Goodpatch so successful? Is it really because you guys are good at design? Or is it something else?”

I still don’t have the exact answer, but will continue to try to figure it out. 

Thank you to the whole team who has made this journey worth it and who are doing an amazing job in these difficult times. Big thanks to Tsuchiya-san and the Tokyo team that has provided considerable support all along the way. Thanks to Maya and Elaine, who helped me write this post.

Finally, big thanks to our partners and clients; you are the main reason we exist and can actually celebrate this 5th birthday.

Stay healthy everyone and hopefully see you all soon in person. 🙇‍♂️

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Written by

Boris Jitsukata

Author

Boris Jitsukata

Topic

Tips & Tricks

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