What Business Do You Want to Be In?

Agencies are almost always in the deliverables business. They get paid to deliver a design, a prototype, some research, or a working piece of software. This business model conflicts with Lean UX and its focus on outcomes.

The traditional agency business model is simple: clients pay for deliverables—designs, specs, code, PowerPoint decks—not outcomes. The other part of an agency’s business model is utilization: you need to keep your people billing. The need to keep utilization high can lead to processes that encourage functional silos. These, in turn, lead to “project phases” that encourage deliverable-centric work. Selling cross-functional teams is great as long as everyone on the team is billable at all times.

If you’re going to transition your agency’s ways of working to Lean UX, you have to consider both of these challenges. First and foremost, you can no longer exclusively be in the deliverables business. Will you deliver wireframes, prototypes, research, and working software? Of course you will. But these cannot be the measures of your success. They cannot be the criteria that determine whether or not you get paid. Instead, consider transforming the business into a time-and-materials model. You are not selling “an app” or “a design,” but instead you are collaborating with your client to find a solution to a customer and business problem the client is having. What is that solution? The truthful answer is, you don’t know. Instead, you’re going to work together with the client to discover what that solution should be. Lean UX is the perfect process for this discovery and continuous delivery of a solution for your clients.

In order to ensure utilization stays high, sell small teams for finite periods of time with clear renewal clauses. At the agency we ran for four years together, we would propose a four-person team made up of a product manager, a designer, and two developers as an initial team for nearly every project. That team had a fixed cost per week, and we would normally sell a three-month engagement renewable in three-month blocks. This helped us reinforce the mantra of short cycles because the client had an out or a renewal option every quarter. It reduced our risk as well by giving us the option to fire a client who ended up being a bad fit for the way we wanted to work. Also, having a fixed rate for “the team” rather than each individual on that team allowed us to adjust the staffing on that team as the project warranted without having to go to the client for approval.

Determining your business model in advance of an all-in shift to a Lean UX style of working is important because it will also affect your current staff as well as prospective hires. The only asset an agency has is its people. Designers, product managers, software developers, etc., come to work for you because you promise a certain way of working for specific types of clients. If you promise a Lean UX way of working and end up signing clients who won’t work this way, your staff will eventually walk away.

Selling Lean UX to Clients Is All About Setting Expectations

Your clients have been hiring agencies for years. Many clients expect to “throw it over the wall” to the agency and then see the results when they’re ready. Collaboration between client and agency in this case can be limited to uninformed and unproductive critique that is based on personal bias, politics, and ass-covering. Given the highly collaborative nature of Lean UX, this is obviously not an acceptable relationship. What can you do to get around this?

Every touchpoint you have with existing and prospective clients is an opportunity to set expectations about how working with you is different. It starts with your brand, your marketing, your positioning, and, most tangibly, your website. Design and write it in such a way that there can be no doubt that you work in a way that sets you apart from traditional agencies. Compound those expectations with a consistent output of content on blogs, in publications, and on social media. Ensure people know your agency as “the Lean UX folks.” The first time you speak with your client in person, go over how you work with them. If you get lucky enough to pitch them, your ways of working should be clear and up front in the pitch deck.

If you progress into planning engagements, be clear about how you’ll work together and why that’s so critical to building a customer-centered way of working. If questions come up from the client that indicate they haven’t fully digested that your agency isn’t going to be an outsourcing partner for them, pause the process and go over your process again. It’s so critical to get this across early and often, because once the contract is signed, any radical shift of expectations could come across poorly to your client.

Nobody Wants to Buy Experiments

As you set expectations about what it will be like to work with you, remember this important statement: nobody wants to buy experiments. Your clients want apps. They want software. They want design. What they definitely don’t want to buy from you is an experiment. Experiments are risky and tend to fail. They’re certainly not the market-grade production software that will help your client increase market share or their profitability. At least that’s how they see it.

When we first launched our agency, we led with the idea of experiments in our sales process. A client would say, “I have $100,000 for you to build a mobile app for my business.” And we’d respond, “Great! We’re going to take $10,000 of that and run experiments to figure out exactly how to spend the other $90,000.” Without fail, each client who got this pitch would say, “No. Just use the whole budget to build the app. I know my business and my customers. We don’t need to experiment.”

This was a clear sign that we hadn’t properly differentiated ourselves in the market, hadn’t set the right expectations with prospects, and were leading with a tactic rather than desired end result.

Experiments are a part of Lean UX, but they’re just a tactic. They’re part of a process that’s designed to create learning, good decision making, and positive outcomes. Leading our sales pitch with the outcome (e.g., “Our process ensures we make the best decisions to help solve your mobile commerce challenge”) proved to be a far more successful way of working.

You Made the Sale! Now Navigate Procurement

Sometimes you’ll do all the right things. Your website will tell your story. Your sales pitch will resonate. The client will nod their head. We have ourselves a deal! You pat yourself on the back and start dealing with closing the contract, only to hear that phrase that all service providers dread: “OK, let me get our procurement folks on to this.”

If you’ve ever had to deal with the in-house (or, worse, third-party) procurement department of a large organization, then you know how this feels. All the convincing you did with the client doesn’t mean anything to the folks who have to approve the contract and the purchase. Without fail, the conversation flips back instantly to “OK, so we’re giving you $100,000. What are the specific deliverables we will get in return? And on what date?”

This is another part of the expectation-setting that needs to happen with clients ahead of time. As you start to close the contract, the goal is to move away from fixed-scope and deliverable-based contracts. Instead, create contracts for engagements that are based on simple time-and-materials agreements or, more radically, toward outcome-based contracts. Outcome-based contracts, or value-based pricing contracts, are rare. They list payment as variable based on how much of the outcome the agency can generate. This is often too much risk for a client (and agencies) to take on without an upper limit to the contract.

Whether you choose time-and-materials or outcomes-based contracts, the agency team will become freer to spend its time iterating toward a specific goal. Clients give up the illusion of certainty that a deliverables-based contract offers but gain a freedom to pursue meaningful and high-quality solutions that are defined in terms of outcomes, not feature lists, and that stand a better chance of making their customers more successful.

You’re Not an Outsourcing Partner Anymore

Building a Lean UX process with your clients means that you are not their outsourcing agency anymore. You are their collaboration partner, working toward solving a business problem. Your role is not to augment the client’s staff or take on a share of work that they cannot pursue in-house. Your role is to make the client an active partner of your team. Your client needs to understand this too. They will come to stand-ups. They will be involved in decision making on a regular basis. They will take part in product discovery efforts. In our agency, we made very few of the product backlog prioritization decisions. This was the client’s explicit responsibility. The only way they could do this effectively was to be present at daily stand-ups, participate with the team in their learning activities, and be present at status updates and decision-making meetings. We took it further and insisted that the client set up shop in our studio for the duration of the engagement. Why? To remove them from daily distractions, put them in a more creative space, and remind them that we’re working together as a team.

These relationship expectations need to be in your contract. Your client must commit to this high level of engagement if Lean UX is going to work. Remember that your goal is to build shared understanding. If the client isn’t present for the discovery work, the synthesis, and the decision making, then you have to start documenting everything for them, sending it over for approvals, and waiting for that feedback before moving forward. This would bring us back to the traditional agency style of working.

We once had a financial services client agree to all of our terms for working together. They signed the contract and promptly set up shop in our office. They brought in their Windows machines (hey, we were a Mac shop) and from the get-go attempted to re-create their culture inside our studio. They created every obstacle possible to keep us from meeting with their customers. They limited our access to deployment servers and essentially kept us from being able to do the work we’d agreed to in the contract. Eight weeks in, we raised our hands to pause the process. We met with the client and raised concerns that the ways of working we had agreed to were being met with stiff resistance. The client told us there was nothing they could do about it. We wrapped things up neatly in the next two weeks and fired that client. It wasn’t that we couldn’t continue working in the ways they wanted. It was just that if we did, we risked losing our team due to the client’s behavior. That was unacceptable to us.

A Quick Note About Development Partners and Third-Party Vendors

In agency relationships, software development teams (either at the agency, at the client, or working as a third party) are often treated as outsiders and often brought in at the end of a design phase. It’s imperative that you change this: development partners must participate through the life of the project—and not simply as passive observers. Instead, you should seek to have software development begin as early as possible. Again, you are looking to create a deep and meaningful collaboration with the entire project team—and to do that, you must actually be working side by side with the developers.

Third-party software development vendors pose a big challenge to Lean UX methods. If a portion of your work is outsourced to a third-party vendor—regardless of the location of the vendor—the Lean UX process is more likely to break down. This is because the contractual relationship with these vendors can make the flexibility that Lean UX requires difficult to achieve.

When working with third-party vendors, try to create projects based on time and materials. This will make it possible for you to create a flexible relationship with your development partner. You will need this in order to respond to the changes that are part of the Lean UX process. Remember, you are building software to learn, and that learning will cause your plans to change. Plan for that change and structure your vendor relationships around it.

When selecting partners, remember that many outsourced development shops are oriented toward production work and see rework as a problem rather than a learning opportunity. When seeking partners for Lean UX work, look for teams willing to embrace experimentation and iteration and who clearly understand the difference between prototyping-to-learn and developing-for-production.

Wrapping Up

Working as a service provider creates different challenges for implementing Lean UX. Remember that this is as much of a cultural shift for your agency as it is a business model shift. It will change not only how you sell but how and who you hire. It’s imperative to set expectations with your clients that your ways of working will challenge their notion of working with an agency. A little creativity and a dash of trust can make the contract and procurement process more successful. Finally, a bad client is a bad client regardless of how you’re working together. Ensuring the integrity of your team is your topmost priority.