A new hope?

When it comes to outsourcing the strategy, design or development of your next digital innovation project, traditional vendor-client relationships are kind of limited. It doesn't even matter what side you're on to notice that. And given the choice, people would rather keep things in-house if they could anyway. But sometimes your team is faced with a lack of bandwidth, or a gap in knowledge or expertise they can't realistically bridge themselves. That begs the question, is there a middle ground? Is there a way to work with a third party, that feels like you're doing it in-house?

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The shift towards in-house teams

Whatever your stance may be, the fact of the matter is that people prefer to keep agency work in-house if they can, especially now. This trend has already become painfully obvious with marketing agencies. A 2020 Gartner survey of CMOs found that 32% of external agency work had shifted to in-house teams over the course of the past 12 months. And to be entirely honest, we've noticed a similar sentiment among some of our prospects as well.

Here are some of the biggest reasons for keeping digital innovation projects in-house:

1. Companies commonly find themselves in a phase of expansion the moment they feel the need to approach a digital product studio or agency. This means getting new projects out the door quickly is important to conserve their momentum, but it also implies that hiring and building internal (product) teams are a priority as well.
2. Companies realize how important their digital brand is, as it's become nearly inseparable from the user experience they offer to their customers. In a world where fierce digital competition continuously shrinks value, your brand has become a key differentiator for your business. Hence, brand ownership is something you wouldn't want to surrender to a third party unless co-creation is an option.
3. Companies are not blind to the fact that trends and markets change rapidly all the time. For that reason alone, it makes sense to keep digital projects in-house, as it would make it easier for you to respond to emerging trends or shifts in the market. Not so much so when you've signed a one-off contract with an agency for a fixed amount of time.

You’d think this sounds like terrible news for a business like ours. And you'd be right. All the more reason for us to rethink the relationships and collaboration process we engage in with our clients. And that we did. We've looked at the shortcomings of the traditional client-agency relationship, and created a more future-proof and beneficial way of working together.

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The limitations of outsourcing

Frail relationships

More traditional digital product agencies are what you'd call order-takers; their services are build-to-spec. Specifically, your specifications. This makes sense, because it's their job to appease you, the client. While there's nothing inherently wrong with that, there is a palpable lack of common interest in this relationship.

Reason being, these agencies care more about your feelings than whatever it is they're building. Whereas you do, quite a lot in fact. Does that result in a poorly performing product? Possibly. Because there's no common interest or goal, there's no real incentive for these agencies to build the best possible product in terms of business impact; agreements and contracts generally focus on output (features built) and not outcomes (bottom line impact). Think about it though, do you want a product that looks exactly like you had in mind, or a product that's proven to grow your business?

OUR SOLUTION: Instead of dreaming up feature requirements and timesheets to include in your briefing, both parties take the time to define how you will measure success together. Instead of constantly orbiting around a MoSCoW, focus on the outcomes first. Define the relevant KPIs, metrics, and goals for your project and use that as both a starting point for your collaboration, as well as a driver for further iterations. This not only creates a mindset that focuses on growth rather than pumping out features, it also inspires longevity and engagement between you and the agency or studio.

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Poor process

You may not realize this, but there's another issue with getting exactly what you ordered. The truth is, rarely do you know exactly what kind of new digital product, service, or feature your business needs to yield the ROI you're after. This is what makes innovation in general so scary and daunting; you need to commit to investing a lot of time and money into something you're not 100% sure about. In other words, at the end of the day, your guess is as good as anyone's. Regardless of how much you spent on that market study.

That said, it pays to be mindful of the development process your partner employs. The good news is, most "modern" agencies or studios adhere to some variant of lean or agile software development. This means instead of having the entire feature set move through planning, design, development, and QA stages before launch, digital products are released to the public in increments, like a couple features at a time. This allows you to be much more responsive to changes in the market or to the behavior of your users. It's a much more people-centric approach to building digital products and services.

However, this way of working is not without issues:

1. No early validation: Agile software development is a great way to involve your customers early on in the process. It gives you a much better shot at creating something that's truly impactful to your business. However, the road to learning whether your product or service is actually valuable to your customers, is usually still relatively long. Design takes a while, front and back end development way longer. Even when the feature set has been reduced to the absolute, viable minimum, you're still looking at 4-8 weeks until you're ready to launch for the first time. In other words, you still have to make a sizeable investment to know whether your solution will work in the first place. For many companies, that can be a tough sell.
2. Kid in a candy store: Because your roadmap is less predictable and features aren't always set in stone, it puts people in a certain mindset. The result is that people will be more tempted to go like: "Hey, this is cool, can we also add X and Y to make it even cooler?" You're like a kid in a candy store; you want it all. This phenomenon is called feature creep, a tendency for product or project requirements to increase during development beyond those originally foreseen. And that's not your fault, honestly. It's more like a symptom of poorly managed expectations and planning.
3. Lack of vision: The sense of freedom and independence you get from working in an agile fashion can feel very refreshing. However, the see-as-you-go nature of being agile also allows teams to get sidetracked more easily. When the direction becomes unclear, you need a strong, over-arching vision to keep your project on the rails. Which is another reason why both you and your partner must agree on how you will measure the success of the project. This is that common interest I was talking about earlier. Without it, feature creep seems almost inevitable.

OUR SOLUTION: How can we make the road from idea to testable product as short as humanly possible? Simply put, what's the fastest way to learn whether my digital product, service, or feature will work the way I want it? The answer for us ended up being the design sprint, for a myriad of reasons. Essentially, you spend four days designing a realistic-looking prototype of your project, and showing that to a handful of your own customers to collect feedback. Just the design, not a single line of code is involved. That's the power of design-first prototyping tools like Figma; a designer can create entire flows of pages and screens that behave and interact like they would in real life. Once that's done, only then do we start thinking about development.

To tackle the second and third issue mentioned above, the design sprint process also gives teams the time to really think about what they want to achieve. Short-term and long-term goals are set, metrics have been selected, and your product strategy has been refined. This helps shape a vision, and creates a common goal for both teams. To avoid feature creep in the near future, the prototype also helps you validate a sizeable chunk of the feature set you had in mind previously. Great news if you're looking to create buy-in from stakeholders.

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Unfulfilled expectations

Regardless of how the end product ends up performing business-wise, if the overall experience of working with an external agency ends up being lackluster, you're not going to bother. That said, your expectations will always play a central role throughout the entire collaboration process. It pertains to what to expect, and when to expect it. If either one is poorly managed by your vendor, it won't be long until you start feeling suspicious, worried, frustrated, or all of the above. And those are incredibly toxic emotions. In general, you could list three major factors that are detrimental to properly managing expectations:

1. Poor communication: You don't want to sit around for three days to get a reply back. You don't want your own team pulling their hair out trying to decipher codebases without any documentation or navigate through chaotic design files. You also don't want some account manager to make excuses when deadlines are past due. Come to think of it, you probably don't want to be talking to the guy who manages some other guy who manages the product team in the first place anyway. The more links in the chain, the sloppier communication gets; you'd rather be talking directly to the people who are actually creating something.
2. Loss of control: To people who are very passionate about their innovation project, shipping it off to an external agency will always feel uncomfortable. Intrapreneurs like that have to put a lot of faith in the agency and let them work their magic. On the other hand, there are people who are in desperate need of some breathing room, and would want nothing more than letting an external team take care of a project, start to finish. Both, however, don't like a bunch of yes-men. You want your ideas challenged, you want to lean on their expertise. At the same time, you want your voice heard and still feel like you're leading the charge. This can be a hard balance to strike when working with third parties.
3. Invisible progress: Regardless of which type of person you are, you don't want to be left in the dark. You don't want weeks or months to go by without being able to see and feel the progress that's (hopefully) been made. Especially when creating and nurturing executive buy-in is still a challenge for you, all you want to do is show off the progress your project has made to your friends and colleagues every week. Even in the most agile of environments, you need to explicitly make time to sit down for a show and tell.

OUR SOLUTION: We need to keep your involvement high, overhead low, and communicate clearly and often. The way forward is by running a tight ship and keeping things simple. You talk directly to the person who's running the project on the other end, and your team can work alongside our developers and designers during pre-determined focus weeks or sprints. Our teams are multi-disciplinary, self-organizing, and no bigger than 5 people in total. To zoom out and give less-involved stakeholders the opportunity to learn about the progress of a project, weekly demo sessions are hosted by our product teams for all to see, along with written reports, high-fidelity prototypes, and other product ideas and inspiration.

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The embedded external team

So what do you get when you combine all of these solutions? In simple terms, what you get is an extension of your own team, that works like a start-up. It's as if you were to buy the entrepreneurial function as a service. And unlike mercenaries or guns for hire, we can also teach you how to tackle the dirty work yourself down the road. Here's how we try to fill the gaps left by more traditional client-agency relationships:

1. Inclusion: Customer or company experts are invited to share their view and knowledge on the business challenge at hand. Actual customers are also repeatedly called on for feedback on prototypes and product iterations.
2. Guidance: Your team, in conjunction with an executive decision-maker are guided to reach an initial consensus; from the definition of the business challenge, to agreeing on the relevant measurements of success as well as the general scope of the project.
3. Collaboration: your team gets to work directly alongside a specialized, multi-disciplinary team. An often unspoken benefit here is the transfer of knowledge. How to work in sprints, how to manage a product backlog, how to give feedback, how to cut down on meetings etc.
4. Agility: By collectively focusing on KPIs and business goals, combined with an agile approach to digital product development, you can be as nimble as an in-house team. It also strengthens the longevity of the collaboration, and reduces risk.
5. Validation: Being able to learn so much about your digital product or service in the span of a single week feels good. It creates direction for teams, and it helps to move investment projects forward thanks to the sheer amount of progress that's been made. Thank you, design sprints.
6. Mindset: Shared goals create a solution-driven mentality. What that means is both parties are engaged to deliver tangible results by solving the business challenge at hand, compared to one party ordering the other to just make stuff. Expect your ideas to be challenged as well.
7. Involvement: Every week, our designers and developers present their work to you and any other stakeholders that are interested. Like, actually taking out their phones and showing everyone how the application or website is currently working.

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Closing thoughts

At its core we've developed this way of working to deliver more value to clients. While we've adopted an agile way of working from the beginning, there are a ton of less visible aspects to collaborating with clients that were in dire need of some TLC. We want clients to walk in, thinking they just need to build a certain something to address an issue, and we want them to walk out with an effective and scalable solution, along with a set of tools and processes to help them self-organize and drive intrapreneurship at their own company.

If you were to imagine a podium, building cool products would get third place. Second place would be empowering teams and driving innovation. And first place would go to creating a real, positive impact on our clients' businesses.