Re: Building creative business

aisoon — Tue, 07 Apr 2009 23:33:19 -0000

Hello Rik, I'm currently at a design and innovation consultancy called Cerebrum Design in Bangkok, Thailand. I'm also a TUdelft SPD alumni and a friend of Erik from Zilver. Actually, what I’ve discussed in my previous lengthy comment is only from my initial experiences and learning from working within this new entrepreneurial model, I don’t claim that I am an expert in this area yet : P

However, what I've begun to better understand about this area - which will benefit eager design consultancies/designers with an entrepreneurial spirit - is that the challenge that all (or a majority of) new start-ups SMES face is capital and funding for ventures.

With respect to design consultancies becoming more entrepreneurial, like a newly start-up business ventures, they many may have the networks, resources and processes to undertake their own innovation projects from idea to market. But the challenge of capital/funding for these projects are still pertinent, especially if the sources for them come from the usual 'hired-gun model'....I still don't know how the nature of this cash-flow model can feed (or sustain) into that of an innovation investment yet....if you have any information from research or practice please do share with us!

But of course this depends on the funding opportunities the design consultancies can get....I am not sure how it is in NL or Europe, but my question to Rik is what are the usual sources of funding for innovation venture over there and what is their strategy (i.e. joint venture, angel, VC, etc)? And also how do most design consultancies transforming into entrepreneurial model fund their ventures?

For us, we’ve found that if innovation ventures have firm access to a reliable pool of capital and investors then it will see the light of day! This is not so possible in today’s economic crisis as banks and state agencies (especially here in Thailand) are not open to credits and funding to SMEs due to the high perceived risk for that of innovations. And even if they do, it is a small amount in relation to the entire venture plus there are high interest rates - along with demands for high returns and IPO requirements later too.

Hence, what we have done is approach those with the 'cash' and are keen to new development projects that have design element. In Thailand, these are the real estate and property developers as they are the few that inclusively deal with ventures that involve architecture, interior design, lifestyle products, digital home systems, etc. Joining up with these developers have enabled many of our ideas to be realized and marketed within these real estate projects! If design consultancies can hook up to similar kinds of partnership, like we did, and make it sustainable throughout the venture, I am sure they can successfully accomplish in bringing their new ideas into the world.

Re: Building creative business

aisoon — Tue, 24 Mar 2009 04:18:16 -0000

Indeed I agree with Rik that creative agencies should move towards an entrepreneurial business model. However as Erik pointed out, there may be apparent differences and set of focus between the ‘hired gun model’, which is analogous to the traditional design service fee structure. It seems like there will be a compromise made between a focus on yourself versus that of clients.

Actually, I'm myself in a company in Asia that was formerly a product design consultancy, but now is changing into an ‘innovation venture and incubation’ business. It is a transformation that is being made as a response to the economic downturn, which had greatly reduced the number of our clients’ projects, and secondly, a means to leverage our strategic design unit’s ability to deliver innovation to the market.

If we look at many businesses around the world - despite the ongoing challenges - they are fast recognizing innovation through design-thinking/methods and are using greater levels of creativity to enhancing their businesses performance on the market. And many creative agencies are biting into this ‘pie’ by extending their service offers to more business-oriented and strategic solutions rather than purely product solutions. Our company has taken a bite into this pie which resulted in the birth of our new unit, called the business concept unit. Its existence is especially catered for clients that need upstream innovation (research and strategy) and backend marketing, production and distribution support. However, we have bitten into this lucrative pie, not only as a reaction to the hype in design and innovation, but as a necessary step to our business.

Like many business worldwide affected by the epidemic economic downturn, our design services for both products and even business concept has been greatly hindered....so what is the way out then? We turned the economic crisis into an opportunity for us to utilize the business concept unit to generate various self driven entrepreneurial ventures to be launched this year......we've found it to be an effective and fruitful way to collaborate between the production side - which are the in-house design service unit and the business side. It’s also very efficient since we get to leverage upon existing network, suppliers, etc, and thus the design service expertise that we originally came from has provided us with a good stepping stone into this new model. The transition was manageable for us, and one that required us to take a different mindset. For example, the innovative ventures recovery rates are longer term, and thus we still have yet to see its full contributions (and returns) to our business.

One further point, creative agencies might be aware that they SHOULD become more entrepreneurial. However the key question is CAN they? My experience is that creative agencies SHOULD if they wish to not just survive in this crisis, but also to better realize many of their own ideas onto the market since many clients may not do what they are told. They also SHOULD because it might just be the next biggest thing since innovation and design came together…I am pretty sure we will see a rise in creative entrepreneurship (it is growing in Asia).
However, only some agencies CAN if they have the relevant existing capacities, readiness and eagerness to venture into this direction. It takes creative vigor, sharp decision and big guts by the creative agencies to make the right move which will not compromise between the traditional and that of the new.

Lastly, remember that creative entrepreneurship is only a necessary step if it helps you in the end.

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