Design Company Business Models

Beyond Design: Key Factors—Market, Scale, Structure, and Talent
A successful design company doesn’t require every employee to be a designer. Instead, it relies on a diverse team where each member plays a specialized role—including customer service, IT, business development, finance, and accounting. The key lies in building an effective organizational structure and scaling appropriately, aligning with market demands, systematically attracting talent and clients, and growing strategically.

The Starting Point

Hong Ko (高少康) and Javin Mo (毛灼然), two young designers, are both referred to by Professor Lui Tai Lok (呂大樂) as the “Fourth-Generation Hongkongers.” Together, they participated in the “7080 New Generation Designers Exhibition” (“7080新生代設計人展”), a cross-border initiative between Hong Kong and mainland China, curated by renowned Hong Kong designer Tommy Li (李永銓) in 2007. The purpose of this exhibition was to foster deeper exchanges between young designers from both regions, allowing them to learn from and observe each other. After this event, both designers experienced pivotal turning points in their lives.

Designer’s Profile
Javin Mo (毛灼然) graduated from the Hong Kong Baptist University’s School of Communication and works in graphic design. In 2004, he was invited to Benetton’s FABRICA communication research center in Italy, where he served as the art director for the in-house magazine “FAB”. After returning to Hong Kong in 2006, he founded the Milkxhake studio, specializing in graphic and interactive design. His work has been recognized in numerous local and international design competitions, including: ADC Young Guns Award (from the New York Art Directors Club) in 2006. Distinguished Communication Graduate Award from Hong Kong Baptist University in 2008. Since 2009, he has served as the creative and design director of “Design 360”, the only bilingual concept and design magazine in Mainland China.

Hong Ko (高少康) excels in typeface design, brand building, identity design, and graphic design. He graduated from the Department of Fine Arts at the Chinese University of Hong Kong in 2000, joining Kan & Lau Design the same year, where he later rose to the position of art director. In 2002, he was awarded a scholarship to pursue an MA in Art at the University of London. In 2007, he was appointed general manager of Kan & Lau Design (Shenzhen), where he focused on expanding the company’s mainland China operations.

7080 New Generation Designers Exhibition
“70/80 Hong Kong New Generation Designers Exhibition”(“70/80香港新生代設計人展”) brought together the works of major Hong Kong designers born in the 1970s and 1980s, presenting a nationwide salon tour. The exhibition encompassed a variety of formats, including graphic design, product design, street art, and visual media.

70/80 Planner and Convenor
Tommy Li (李永銓)
70/80 Curator
Wang Hao (王浩)、Bob Chen (陳飛波)
70/80 Regional Curator
He Ming (何明)（Chengdu）、Ma Degang (馬德崗)（Shangahi）、Pi Yanxiang (皮燕翔)（Changsha）

70/80 Hong Kong SAR Exhibiting Designer（English initials are in order）
Au Hoi Lam（區凱琳）、Benny Luk（陸國賢）、Carrie Chau（鄒蘊盈）、Choi Kim Hung（蔡劍虹） 、Victor Cheung（張仲材）、Hung Lam（林偉雄）、Javin Mo（毛灼然） 、Kong Kee（江康泉）、Hong Ko（高少康）、Les Suen（孫浚良）、Ng Chi Wai（吳志偉）、Pamela Low（羅珮恒）、Siu Hak（蔣子軒）、Thomas Siu（蕭劍英）、Toby Yeung（楊德賢）

70/80 Mainland China Exhibiting Designer（English initials are in order）
Bai zhiwei (柏志威)（Shenzhen）、Bei Bang (北邦)（Shanghai）、Chen Feibo (陳飛波)（Hangzhou）、Chen Man (陳曼)（Beijing）、Dai Fan (戴帆)（Beijing）、Gao Ming (高鳴)（Shenzhen）、He Ming (何明)（Chengdu）、He Jun (何君) + Guang Yu (廣煜) + Liu Zhizhi (劉治治)（Beijing）、Jiang Hua (蔣華)（Ningbo）、Jiang Jian (姜劍) + Xingyu Wei (魏星宇) + Zhu Yong (朱勇)（Beijing）、Liu Weihua  (劉煒樺)（Guangzhou）、LuLu Li (李心路)（Beijing）、Xiao Mage (小馬哥) + Cheng Zi (橙子)（Beijing)

In Professor  Lui Tai Lok ’s book Four Generations of Hong Kong People (四代香港人), he divides Hong Kong residents into four generations based on their birth years and analyzes them, thereby highlighting the phenomenon of stagnation in the generational turnover of Hong Kong society. The classification of the “Four Generations of Hong Kong People” is as follows:

• Generation One: Those born in 1945 or earlier, who experienced the second world war.
• Generation Two: Those born from 1946 to 1965, coinciding with the post‑war baby boom.
• Generation Three: Those born from 1966 to 1975.
• Generation Four: Those born from 1976 to 1990.

​”When we went out, only a small fraction of us were running our own businesses. But among our peers in mainland China, most already had their own companies and were doing quite well,” Hong Ko said, sharing his observation.

“I noticed that compared to young designers or students in mainland China, Hong Kong’s enthusiasm is far behind. That made me wary. I want to understand why they can develop so quickly,” Javin Mo said bluntly.

From then on, the two chose different paths. Hong returned to the design firm, Kan & Lau Design, where he had been away for several years, while Javin devoted himself entirely to expanding his cultural‑design and brand‑consulting services company in Hong Kong.

The driving force behind their respective decisions was that both believed the market for commercial brand consulting in Hong Kong was continually shrinking, and they needed to find a new battlefield as soon as possible.

“Tommy (Tommy Li) is right; Hong Kong’s SME clients don’t have many extra resources to invest in branding and design,” Javin said.

As for large brands, their development has become very mature, leaving less room for change, so he could only stay in the still relatively niche local cultural market, waiting for opportunities to arise.

Since Hong Ko had already realized that the market was shifting northward, when Freeman Lau of Kan & Lau Design beckoned him back to the nest, he seized the opportunity immediately, joining the Shenzhen branch of “Kan  & Lau” in 2007 and riding the train of China’s rapid development.

Everything Starts with Small Scale and High Quality

For students who have just graduated and young people who have been working for a while, a stable income and opportunities for promotion are the career aspirations they dream of. Only a small number of people disregard these concerns and instead seek satisfaction from their work, believing that the greatest fulfillment comes from doing what they want, without having to obey others, and having complete autonomy over their work.

Javin Mo was attracted to that kind of life from the beginning. He modeled his studio after small European design workshops, starting small. With limited resources, he carefully selected clients he could collaborate with and produced excellent work. As he says, “Small Studio, Quality Works!” He does not have a spacious office or a reception room. When clients visit, he tells them straight‑forwardly, “I don’t have a reception room, only a reception desk.”

When he first launched his career in early 2006, he took on business as a freelancer in a frenzy, and at the peak he handled almost thirty projects in a single year, all by himself. Later, he decided to move the studio from his home to the Hong Kong Jockey Club Creative Arts Centre (JCCAC) in Shek Kip Mei, and within three years he hired three designers to join his team. As creative director, he was involved in both creation and management; each designer handled two projects, for a total of six.

He believes that with the current organizational structure, handling six projects simultaneously is the production capacity limit for a studio of this size, so he is very careful about the connections between projects. Each project is run as an independent entity to highlight the brand’s visual impact.

In creative work, the media used to present the brand extends from traditional graphic design—logos, typefaces, color systems, posters, packaging—to interior and exterior spaces, and also follows trends by incorporating social networks, iPhone apps, and other new media. To meet clients’ demands for new media, he partners with professional new media design companies; with his understanding of brand philosophy and visual aesthetics, he delivers a comprehensive service level that ordinary web technology firms may not be able to achieve.

Become a New Player in the Mainland Market Backed by Exceptional Talents

When Javin Mo ran his design studio on a small scale, Hong Ko resolved to fully integrate into China’s rapidly developing market. For Ko, entering the mainland market presents two major challenges: design management and talent development.

“Design‑management standards and systems can be sorted out with enough time, but talent development cannot be solved in a short period,” he said.

Ko explained that to grow in the mainland, the company must recruit outstanding employees. As the saying goes, “the soil nurtures the people”; mainland staff who grew up there are more familiar with local culture and national conditions, so hiring and retaining mainland talent becomes crucial.

He admitted that, as a parent company from Hong Kong, he must demonstrate to mainland employees that opportunities are equal, whether they come from Hong Kong or the mainland. Therefore he strives to give colleagues chances to perform, fostering a sense of belonging to the company.

In fact, “Kan & Lau” had set up a studio in Shenzhen as early as 2003, originally intended only as a logistical support base for the Hong Kong headquarters. It never played a major role and suffered from talent leakage. In 2007, when Ko arrived in Shenzhen to take office, the company had only eight people.

By 2008, the global financial crisis swept the world, and at the same time the mainland market reversed course and began to focus on domestic demand. Falling overseas orders prompted many Chinese companies to re‑attack the local market, and with the support of the “Maintain 8 point GDP Rate” policy, they pushed hard on domestic sales, gradually making mainland consumers pay more attention to brands. The design business of “Kan & Lau” shrank in Hong Kong, but was compensated by local demand in the mainland, leading to a situation of mutual offsetting.

In the following years, the number of Hong Kong employees declined, while Shenzhen’s staff steadily rose to more than thirty today. Compared with other mainland companies, this is still a relatively small scale. Ko frankly says that accelerating expansion is very tempting, but he also knows that company size and organisational structure are inseparable.

Operate in the ‘Solar Structure’ Mode

The “Solar Structure” with the sun at the center that many Hong Kong designers once followed meant that the creative director— the boss—stood at the center and communicated directly with each employee, passing on his ideas for them to execute. It was an effective formula in Hong Kong.

Tommy Li demanded that employees report to him in exactly that way. “I am the sun, radiating from the center and shining on everyone. This is the best arrangement; they only need to report to me. With this method, some junior designers will grow faster.”

Designer’s Profile
Tommy Li (李永銓), born in 1960 in Hong Kong, graduated from the Design Department of Hong Kong Polytechnic University. He is a designer and brand consultant of Hong Kong’s new generation, known for his distinctive style that blends black humor with bold visuals. His work spans Hong Kong, China, Japan, and Italy. In 2005 he was inaugurated as a member of the AGI International Graphic Design Alliance. In 2008 he received the World Outstanding Chinese Award from the World Chinese Association.

Tommy Li  divided his creative team into three groups—A, B, and C—each with three people.
The members of group A and B are more senior; they have worked at the company for a long time and have come to understand its culture and processes deeply, with many of them having followed him for over four years. Those who have been with the company for more than eight years have become core members, primarily responsible for the large‑brand projects of group A.

The members of group C, while having less tenure and less experience handling brands, are full of fresh ideas, highly adaptable, and well suited to fun, experimental projects. Li  also adjusts the composition of the groups as needed, mixing people from different groups into one as circumstances dictate.

In short, the “Sun Structure” is best suited for small design firms of a few dozen people and requires a stable core staff to serve as the backbone.

The Importance of Building Company Culture

Speaking of stable employees, have you ever seen a once‑famous design firm suddenly disappear? The problem lies in the lack of talent continuity.

When Li first started his company, he was convinced that hiring designers from prestigious schools—such as the Hong Kong Polytechnic Institute and Central Saint Martins in the UK—was the key to success. Yet, after a few years, he found he could not retain staff.

Li later realized that solving the turnover problem required a focus on the company culture he had built. Employees must become part of the organization; at least two years are needed to integrate with the company’s culture and to understand its operating procedures. The following two years are when each employee can truly perform. In other words, Li hopes employees will find their place within the company in four years, and those who stay longer than eight years can become core members.

A successful design firm does not need everyone to be a designer; it needs talent in various roles—customer service, business development, accounting, finance, and so on. Many profitable design companies do not win by sheer size but by maintaining a self‑sufficient structure that, though small like a sparrow, has all the essential organs. Many of the internationally renowned design firms Li knows operate in this way.

Use the “Sub-contracting Chain” Model to Scale

However, once the company entered the mainland market and saw the number of clients continually rise and the scale of those clients grow larger, it had to consider alternative structures and business models. In particular, the brand‑consulting sector faces not only internal competition but also rivalry from other business‑consulting and advertising firms. Competitors offering brand and marketing advisory services are pouring into China from all directions, giving Chinese clients a wide array of choices.

Internationally renowned design firms headquartered in the United States—such as IDEO and Frog Design—have already set up offices in Shanghai, marking the first step in expanding their business into China. Business‑consulting giants like McKinsey & Company and Booz & Company have long been rooted in the mainland, establishing a Greater‑China network across cities such as Beijing, Shanghai, Taipei, and Hong Kong.

Brand experts such as InterBrand and Ogilvy & Mather have also built impressive portfolios in the mainland. Over the past decade, many Hong Kong designers have set up offices in the north.

To handle larger‑scale projects that involve multiple capabilities, Li adopts the “sub-contracting chain” model, bringing in specialized design units—such as interior and interactive design firms—and former employees who once worked for him but later started their own businesses to provide support.

Manage the team using the “Executive Chef Theory”

Architect and interior designer Steve Leung likes to liken himself to an executive chef, and he has been managing the staff of his companies in Hong Kong, Guangzhou, Shanghai, and Beijing with this “executive‑chef theory.”

“The most important thing in a restaurant is the product, and the product is controlled by the executive chef. He directs all the processes in the kitchen, establishes an effective system, and enables the restaurant to thrive. In business, I am like that executive chef.”

Designer’s Profile
Steve Leung（梁志天), holds a Bachelor of Architecture from the University of Hong Kong and a Master of Urban Planning. In 1997 he founded Steve Leung Architects Ltd. and Steve Leung Design Ltd., where he has been responsible for the interior design of numerous luxury residences. His work is renowned for its people‑centric, simple, and pure aesthetic, and he has received countless awards for his designs.

In 1997, Steve Leung pioneered the introduction of modern, minimalist style into luxury residential showcase units, breaking the prevailing notion among developers and the public that high‑end homes must be classically elegant. The move generated a great deal of buzz in the market and established his personal brand.

The success of the showcase units injected confidence into Leung and brought him a lot of business. Seizing the opportunity presented by Hong Kong’s return to China and the rapid economic growth in the mainland, he began taking on mainland projects. Starting in 2000, he gradually opened offices in Shanghai, Guangzhou, and Beijing. From the original showcase units, his work expanded to hotels, restaurants, shops, salons, and more, covering over twenty cities in mainland China as well as Singapore and Dubai. Leung also collaborated with other companies to design furniture and products.

Leung loves both design and management. From the outset of his company, he began establishing a management system. As the company grew, the staff increased from an initial forty to over three hundred, and he continually refined the system. He required employees to fill out lists, forms, and reports—such as project allocation sheets, progress reports, and employee work schedules—to help him understand project operations. To support the company’s development, he added a Design Control Team, a Design Research Team, and a Business Development Department. The Design Control Team is the company’s elite unit, dedicated to improving designs or providing feedback to the design team, and is directly commanded by Leung.

“My biggest pressure is maintaining the brand’s standards, so most of my time is spent on design quality control.”

Leung stipulates that all design projects undertaken by the company must go through four rounds of review: confirming the design direction, reviewing the design concept, detailed design, and implementation status. He acts as the final gatekeeper, assessing design quality, which accounts for 70 % of his overall workload.

In recent years, Leung has gradually stepped back from the front lines. He believes that after successfully establishing a brand, effective management is crucial. “The company is large; I cannot personally handle every project, but as long as I control the project process and design quality, that’s sufficient.”

Path to Success with Leadership Talent, Management Talent, and Execution Talent

Like top Hong Kong designers Steve Leung, Tommy Li, and others, Hong Ko’s firm “Kan & Lau” has already shifted most of its business to the mainland Chinese market. Ko says, “Hong Kong no longer has enough business to support companies like ours, so our stage must be set in mainland China. This is an opportunity of the times, because the mainland’s economy is still rising, domestic demand continues to expand, and there is a great space for creative companies to flourish.”

Mainland clients themselves are constantly improving, which forces the design firms that serve them to keep pace.

As clients’ companies grow, design firms must also keep up. Some clients have reached the scale of world‑class companies; they need consulting firms with a global perspective and international presence to meet their requirements.

When Li Ning Company needed to redesign its brand system, they first approached the internationally renowned Ziba as the chief consultant. From changing the entire product line and altering the national store model to a comprehensive redesign of visual identity, the professional knowledge and workflow involved are beyond the capability of any mainland or Hong Kong company. Only foreign firms with a background and scale like Ziba have the system and ability to take on the integration role.

Key Operational Focus of a Design Company：

1. Entrepreneurs have limited resources and must carefully choose a market entry point that works in their favor.
2. The positioning allows an entrepreneur to create unique value for customers that no one else can match.
3. Entrepreneurs must select an operating model that aligns with their market positioning, and the operating model is tied to the upper limit of growth.
4. Because there is a scale ceiling, not every operating model has room for expansion.
5. In general, operating models that can be standardized and institutionalized have more potential for scaling. However, not every product or service can be easily standardized or institutionalized.
6. Building standards and systems requires a substantial investment of time. For creativity‑driven entrepreneurs, the hardest trade‑off is deciding how to allocate time between design/creation and administrative management.
7. The time spent on creation versus administration affects team composition and the company’s future development.
8. The operating model determines how time is allocated and the structure of the team, ultimately influencing the upper limit of expansion.

Hong Ko, through his involvement in Ziba’s re‑branding project for the Li Ning brand, saw the future of “Kan and Lau” and came to deeply understand Steve Leung’s mindset: to become a top‑tier creative company, the key is talent.

He believes that for “Kan and Lau” to grow, it cannot rely on just one or two masters; instead, it must cultivate talent in three areas—leadership talent, management talent, and execution talent. This is no simple undertaking, because it takes at least four to five years for an employee to grasp the company’s philosophy and culture and to align clearly with its systems and processes. Replicating such a group of employees in another city and making them take root is even more difficult, and it cannot be rushed.

But Ko knows clearly that this will be his future focus. If he wants to take “Kan and Lau” to become a top-tier design firm, he must solve three major problems—attracting talent, developing talent, and retaining talent.

In the coming days, Ko plans to build an internal creative platform that will shift the company from its traditional departmental structure (Client, Strategy, Design, Finance) to a business unit model. This will streamline the previously bloated departments caused by increased manpower, gather the over-supplied specialists from each department into smaller business units, and give each unit greater autonomy and incentives to operate independently, like a small company. Senior management can then focus on quality control and oversight. In this way, the company can secure a stable leading position in the rapidly growing mainland market.

To become a top-tier creative company, the key is talent.
The client’s company is expanding, and the design firm’s size must keep pace. Otherwise, talent and business will drift away at any time.

Originally published in “Entrepreneurship is My Destiny: 8 Essential Lessons for Designers” (志在創業 : 設計師創業8堂必修課)
Published and distributed by ET Press
Publication date: December 2013