Many companies struggle with the question of whether to develop UX strategy, research, and design capabilities internally, or to engage external UX firms as-needed when projects arise. Companies must forecast their need for these services on a long-term basis, and weigh the comparative costs and benefits of each approach. But is it purely a question of economics? Does an external UX team offer value beyond the flexibility and overall cost savings of not maintaining an internal team?

When asked only in the context of individual projects, the answer to this question is probably “no.” For a single project, the rationale for engaging an external UX firm may remain purely financial. But it’s crucial to ask a broader question: how effective will each approach be at fostering ongoing UX innovation, beyond the limits or needs of existing projects?

The question of UX innovation—defined generally as the ability to identify novel or “breakthrough” interactions, experiences, or products—requires consideration of the optimal configuration of UX resources over time, not just within the confines of currently known problems. UX teams are, or at least should be, tasked, on an ongoing basis to think about new products and solutions that better achieve current business goals, or that extend a company’s business in a new direction. Innovations that emerge from UX activities, including both design research and interaction design, have the potential to make significant contributions to a company’s success.

So is an internal UX team preferable to an external UX vendor in the context of this longer term, more innovation-focused view?

On the surface, it may seem like internal teams would fare better for long term innovation because they are more familiar with a company’s history, strategies, successes, and failures, giving them deep and highly nuanced knowledge. But the embedded nature of internal teams may also create barriers to innovation or to their ability to act on innovative insights. One such barrier is a form of “trained incapacity” in which the the depth of knowledge accumulated by an internal team comes to dominate the frameworks of their thinking and prevent them from recognizing or exploring avenues outside those frameworks. Don Norman said it well in a recent blog post:

People within [an internal] group find it difficult to break out of the traditional paradigms, for usually these seem like givens, not to be questioned. Many of these beliefs have been around for so long that they are like air and gravity: taken for granted and never thought about. Outsiders bring a fresh perspective, particularly if they are willing to question everything, especially that which seems obvious to everyone else. It helps to be an outsider, where tradition and existing corporate policies do not apply, where it is ok to break with the standard way of doing things and where one's promotion or bonus is not in jeopardy.

This limitation of perspective can be difficult, but not impossible, for an internal team to overcome. And when internal teams do manage to think outside their narrow purview, they often encounter resistance from colleagues when they advocate their ideas more broadly within the organization. This is because some organizations that are generally aware of their own struggles with innovation tend to favor ideas that come from the outside on the assumption that they are better informed, more innovative, perhaps “sexier” and more likely to see the light of day.

There may be ways in which internal teams can never satisfy certain factors that are crucial to innovation precisely because they are internal. The range of focus of internal teams may structurally limit their ability to generate ideas beyond their immediate perspective. Some recent thinking regarding the conditions that are optimal for innovation may shed light on this question.

Patterns of Innovation

In his excellent book, Where Good Ideas Come From: The Natural History of Innovation, Steven Johnson identifies six patterns that correlate with enhanced innovation capabilities or outcomes. Each pattern, and Johnson’s book as a whole, relates generally to the notion that richer, more diverse, and massively interconnected atmospheres (such as large cities, or coral reefs) are more prone to generate innovations. This results from the sometimes random collisions of ideas and discoveries, inspiration from unrelated domains, reuse or adaptation of “spare parts” in novel contexts, and breakthroughs achieved through error or serendipity. Diverse, networked, and open environments encourage greater innovation.

As applied to UX innovation, Steven Johnson’s innovation patterns might suggest that internal UX teams working basically in isolation are less likely to stumble upon, or develop over time, the innovations that will most dramatically affect a business or product. Three such patterns are particularly applicable to this discussion.

The Adjacent Possible

Johnson maintains that many successful ideas are formed from “spare parts lying around”—in other words, elements of ideas that were originally intended for a different purpose that become essential foundations for new, unrelated ideas. Johnson’s term adjacent possible refers to the region of possible ideas that surround these various parts, a region that shifts and enlarges as new ideas are constructed from the available elements.

In the UX context, it’s easy to view the components of experiences (anything from discrete interactions or touchpoints to broader experience themes that underpin successful products) as spare parts, with adjacent possibles around them. A sustained familiarity with these components and their variety of potential applications would help a UX team to more effectively notice and take advantage of innovative possibilities. External UX teams, by virtue of their involvement with multiple client domains and product strategies, are best positioned to explore the adjacent possible in this way. Their offices are, metaphorically speaking, littered with the spare parts of other projects that can, often unexpectedly, spark an insight that unlocks a whole new framework for a client’s product or business.

Slow Hunches

In his discussion of the concept of slow hunches, Johnson takes issue with the common conception of the “Eureka!” moment as the basis for accelerated innovation. Johnson asserts that many such epiphanies, though they may appear to the inventor as sudden realizations, are more often the culmination of long-simmering thoughts that require a final piece of the puzzle in order to be completed as a coherent innovation. Slow hunches linger in the back of the mind, take time to bloom, and are often accelerated by virtue of exposure to ideas in radically different contexts (i.e., exposure to the adjacent possible).

While external UX vendors certainly don’t hold a monopoly on hunches, the diversity of their professional scope increases the frequency of these hunches and the likelihood that any particular hunch will find the last puzzle piece it needs to bloom into a full-blown innovation.


A third innovation pattern that should be very familiar to creative professionals is the notion of serendipity—stumbling accidentally on an idea, image, or connection that suddenly organizes your thinking or provides a useful framework with which to reorient an existing idea. In Johnson’s words:

[For a] hunch to blossom into something more substantial, it has to connect with other ideas. The hunch requires an environment where surprising new connections can be forged: the neurons and synapses of the brain itself, and the larger cultural environment that the brain occupies.

Connections are surprising when relevancies are revealed in places where none were expected. These surprises are more likely to happen for teams that regularly operate in diverse environments. Serendipity acts as an important ingredient in innovation along with the adjacent possible and the slow hunch. The three patterns together describe an environment in which diverse ideas and hunches circle around each other, colliding somewhat randomly until a productive combination is discovered.

Innovation Inside?

Many companies have tried to create internal innovation groups to explore the boundaries of the company’s current business and to investigate far-flung opportunities for growth. However, there are significant risks to this approach. These groups tend to be costly, and many years may pass before any marketable outcomes emerge from their efforts. More importantly, while an internal innovation group may produce some successful ideas, they are just as likely to produce a larger number of potentially costly failures. This is, some would argue, in the nature of the innovation process itself.

While PARC (probably the best-known internal innovation group), certainly produced some phenomenally successful innovations for Xerox, the group is more famous for giving up the mouse and GUI innovations to Steve Jobs and Apple. Malcolm Gladwell, in his account of the PARC / Apple story, asserts that “in the real, messy world of creativity, giving away the thing you don’t really understand for the thing that you do is an inevitable tradeoff.” In other words, it was fundamentally not possible for Xerox to understand or capitalize on some of the inventions coming out of PARC.

In a sense, external UX vendors insulate clients from the risks and discomfort of the “messy world of creativity” by spreading this uncertainly across a broader range of clients and projects. For many clients that are less ambitious (or risk-tolerant) than Xerox, this may be an optimal approach. It allows them to order innovation on demand from diverse vendors rather that committing to a perpetual expenditure for a single internal team.

Towards a New UX Engagement Structure

There’s a clear case to be made that external UX vendors are better suited than internal groups to deliver UX innovation. The field of innovation should expand beyond the confines of bounded projects with limited objectives and constraints. So what specific model for engagement with external UX firms will foster conditions of innovation without imposing unreasonable financial burdens on the client? An additional complication: the engagement structure must ensure that the external firm does not become so deeply enmeshed with the client’s organization that they, in effect, become like an internal team.

What does this mode of engagement look like? In general, the structure should maintain a connection, even if it is a low-intensity connection, between the client and the vendor. This keeps the vendor apprised of the client’s activities, ideas, and plans, and keeps the client apprised of the vendor’s other activities, ideas, and innovations. Keeping this connection open provides regular opportunities for slow hunches to bloom into concrete ideas through serendipity or networking with the adjacent possible. These concrete ideas may be for entirely new products or product extensions that can be developed into standalone projects, or insights into existing projects—even ones that the vendor isn’t working on.

Call this combined team an innovation team, or borrow another of Steven Johnsonʼs metaphors and call it a coffeehouse. Johnson’s coffeehouse is a metaphor for a central gathering place of innovators and ideas—a physical space or venue where the mixture of thinking from disparate fields leads to new ideas. Regular coffeehouse meetings between client and vendor, with the information thread continued between the meetings so they can occur within a larger context, can leverage the conditions of innovation towards an ongoing vendor–client relationship that takes advantage of the best reasons for hiring an external vendor.

In my experience as a principal in a UX consultancy, many clients have already recognized that engaging a vendor to parachute in for a single project and then vacate the premises misses an opportunity. Retaining vendors in long-term engagements preserves continuity and the accumulation of experience and understanding that could lead to incremental improvements in the quality of UX projects. But few companies can afford the cost (in dollars, or management time and effort) of keeping an external firm in a constant state of research and development. As a result, external UX vendors that are interested in driving ongoing innovation for their clients must work to structure engagement models that preserve optimal innovation conditions under feasible economic conditions.


For those still interested in this topic, an interesting fact: Nike, "most innovative company of 2013" leveraged external innovation vendors in their conception and development of the award-winning fuelband.

Hi Nick,

I won't try to instigate to much back and forth here, because normally I just enjoy having things to read and think about :)

But it was this quote that seemed a bit sweeping and surprised me: "There’s a clear case to be made that external UX vendors are better suited than internal groups to deliver UX innovation. "

It's a pretty bold statement and left me confused because it felt like it was going against the point you were trying to make.

Hi Kate
I just noticed your comment and thought I'd respond. First, I'm so glad you enjoyed at least some of the article :-) You definitely captured most of what I was trying to say in your comment - however I think you misquoted me a bit. I didn't claim that "the best UX comes from vendors" at all. In fact, I believe I was proposing that the ideal structure would be one in which client and vendor teams partner to bring their respective unique advantages to the innovation process.

Thanks again for your thoughtful response!


I was really enjoying this article until the end and as I came across a few of your overstatements. First, innovative UX can come out of companies without an external vendor. Not to be cliche, but look at Apple. Plenty of innovation going on there. There are countless companies out there not only capable of UX innovation, but are sometimes the leaders off which UX agencies/consultancies springboard.

I say this because I have worked both client-side and at digital agencies. And, while I agree with many of the statements about how ideas are generated and the all to common constraints that internal teams face, I disagree wholeheartedly that the best UX comes from vendors. I think it's a balance. And, looking at the future, I think consultancies need to be careful. Everyday, more and more agency folks are getting employed internally, and we're taking all of our client knowledge, left-over ideas, and practices to our new positions.

Ideally it all comes down to what the product needs and the team structure. It is possible for an internal team to come up with a brilliant idea and it's also possible for a vendor to come up with a shitty one. It goes the other direction as well. Before you get too sold on the idea that external peeps do it better, remember who's selling you that idea to begin with ... (hint)

I have to second John's opinion here.

There's a great foundation here in this article to explore how internal innovation teams can break through the paradigms they face on an everyday basis (with or without the help of external UX vendors).

I would love to see a follow up article about HOW UX ideas come about, instead of just WHO come up with them.

As others have commented, it is more a matter of having a culture of innovation in a company. Without this, external or internal teams will have little traction with new ideas.

I think you have outlined some interesting issues that many (not all by a long shot) companies have.

I don't think the solution is as easy as internal or external UX teams. UXMag articles seemed to have become a forum for agencies to push the need for agency use, rather than a real look at solutions for both agencies and internals.

I have lost count of the number of articles that have the clear underlying message; 'use our services (and pay us money)'. I am not anti-agency use, but I am anti the proposal that they are a magic bullet.

I have a little problem here. Seing that this website is uxmag, why the hell is the text so small ?

Such a hard time reading through articles ! Does spoil the pleasure of reading them...

My experience is that great internal design teams also use external resources.

While innovation is important, an internal UX group brings a more complete understanding of the ecosystem within an organization. The article may see this as a limitation, but an external UX firm doesn't have to live with the long-term consequences of embedding an innovating design/system into an organization.

What level of innovation stakeholders SAY they're excited about during design meetings can be far different from how those same internal groups react to living with such changes months later. By then the external group is gone on to the next gig and somebody inside the organization has to do damage control on too much innovating in all the wrong places.

I agree that external firms can bring fresh ideas, and that stakeholders will often inexplicably listen more attentively to the suggestions made by an external group – but that doesn't mean those ideas are the best long-term solution. For that knowledge you have to ask a group who knows both the science of usability *and* the temperament of an organization: a group like an internal UX team.

I just ran across a nice follow-up to Nick's article...

When Ideas Have Sex: The secret to human success is—and always has been—collaboration.

"Since ancient times, the exchange of ideas and goods has fueled innovation. Trade, not necessity, is the mother of invention...Countries [and companies, and designers...] that open their borders to the free exchange of goods and services and ideas and innovations flourish, while those that cut themselves off and seek economic self-sufficiency stagnate."
(bracketed insertion mine)

Matt brings up a good point. If an external consultant plays the role of advisor and is invested in the long term success of their input and ideas, the benefits of non-instituationalized thinking can be abundant.

That's a big caviot. You don't often seen that level of concern and commitment from a designer brought in to fill a resource need, or a design agency commissioned to execute a design that they can then walk away from.

I think part of the answer to this is in the language used. As long as design consultants or designers are brought in as "vendors" then we will add little ongoing value to an organization's culture and long term success as an innovator. If our clients are only interested in buying deliverables then we'll never get there.

If, however, we become actual consultants, a trusted advisor, we are in a position to be of much greater value. This can be accomplished through the ongoing communication that you suggest in your article (and the Janna mentioned in her comments), and also through the way we position our work and relationship. We need to be in a position where they think of us a partners. We need to understand their businesses in depth and be able to offer strategic guidance as well as tactical production.

One of the thing we try to do at Normative is help our clients get to a place where they can understand and manage this type of work throughout their organization, regardless of having a specific "ux" team in house. We try to teach them how to solve the problem they've come to us to solve, rather than just coming back to us for the same type of work over and over. In that way we can establish long term relationships with organizations that result in a great variety of work and problem types. With each solution we both learn something important that allows us to move to a new stage in our working relationship.. It doesn't always work out ideally, but that's the general approach.

Thanks for this, Nick. It raises interesting questions for those of us in a consultancy of how we can bring value beyond the project.

Most importantly, internal and external teams often are unable to bring about innovation purely because there is no culture of innovation and disruptive thinking within the broader organisation. Having access to the leadership of an organisation certainly provides more opportunity to expose, over time, the possibilities.

Oh, and keeping in touch with clients outside of projects about trends and outlooks you've come by just reminds them of the ongoing value you can provide outside of the project lifecycle. How do we make that a regular part of client engagement?

There's a downside when using an external UX vendor. On the one hand, innovation doesn't come by on demand. So hiring an external UX team to come up with a new product idea for a given deadline doesn't work. On the other hand, brewing innovation pipeline using an external UX vendor is costly.

So I think creating an innovation culture within a company is more advantageous. The UX team members must not be sitting in a white castle dreaming up stuff. Rather, the team should comprise members from various product groups spending part of their time making real products, and the other part innovating.