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Apple's PowerBook computer. Gillette's Sensor razor. Reebok's Pump sneaker. Motorola's MicroTac cellular phone. Chrysler's LH cars. IBM's ThinkPad notebook computer. Different products, different markets, yet they're all wild commercial successes with one thing in common: smart industrial design. Leveraging the power of design is one of the hottest strategic games being played today. A handful of smart companies are making industrial design one of their core competencies and are using it to drive their entire product-development process, sharply increasing their chances of generating hit products--the kind of billion-dollar winners that make companies excel.

The Sensor, Pump, MicroTac, and the LHs are all on their way to becoming billion-dollar sellers. PowerBook and ThinkPad are already there. Like the Taurus, which in the 1980s lifted Ford Motor Co. out of the doldrums, these design-driven products are transcending the traditional norms of market success. Products such as My First Sony--a traditional boom box redesigned with bright colors and rounded shapes that appeal to preschoolers--define whole new categories.

LOTS OF PUNCH. "A hit product goes beyond just selling well," says Bob Brunner, the 35-year-old manager of industrial design at Apple Computer Inc. "A true hit product establishes an entirely new franchise in the marketplace. You can design these products, and they not only win awards but sell like crazy, too." PowerBook is one example, having taken Apple from nowhere in the notebook market to No.1.

How can industrial design deliver such punch? Because it can solve some of the most significant problems confronting corporations in the global economy of the 1990s. First, good design helps them get really close to customers. Unlike marketing, which focuses on statistical surveys to gauge attitudes and feelings, industrial design has traditionally taken an anthropological approach. Ethnographic tools, such as videotaping human behavior and observing the work environment, are the perfect vectors for connecting companies to their customers. "Industrial design understands the needs of the customer and knits the customer into the fabric of our product development," says Seth Banks, manager of market communications and industrial design at GE Medical Systems.

Another stubborn problem that design can help solve is how to transfer new technology out of the labs and into the market. U.S. corporations can't afford a rerun of the 1970s and 1980s, when so many great American innovations, such as the VCR, lay fallow in the U.S. only to find product definition and market success in the hands of Japanese rivals. Because they can identify customer needs, designers can also do a better job than engineers of picking out technologies, hidden away in the R&D labs, that can solve real-world problems. "Coupling the needs of users to advanced technologies is the key to our growth and survival," says Charles L. Jones, head of Industrial Design/Human Interface Strategy at Xerox Corp. "Industrial design links the two."

In fact, design could emerge as the discipline that brings together the myriad parts of the modern corporation. As organizations deconstruct themselves into "virtual corporations" made up of autonomous in-house units and various external partners, the old headquarters' bureaucracies are disappearing. Industrial design's ability to integrate information from functional experts and outside partners such as distributors makes it the glue that can hold teams together and give them direction.

It's no coincidence, then, that the companies that are racing to market with winning products are the ones that have elevated industrial design to a position of prominence. "The lines are blurring between the traditional divisions of labor among design, engineering, and manufacturing," says Rudy Krolopp, director of industrial design at Motorola Inc. "Reduced cycle times are driving product managers to develop creative ways to bring the right product to market quickly, and the industrial designer is at the core of this process."

GOOD QUESTION. Take Apple's PowerBook. The first portable Mac was an engineering feat: a portable stuffed with so many bells and whistles that it weighed in at 17 pounds--and sank in the market. When Brunner took over Apple's design department in 1990, he was asked to help. His industrial designers began reworking the portable from the outside in, from the point of view of the user. Under Brunner's guidance, the entire PowerBook team--software designers, industrial engineers, marketing people, and industrial designers--left the office to observe potential customers using competing notebook computers. "We looked at other notebooks and saw that they were still really desktop units, only made smaller. We asked the question: 'How do people use it?' The answers drove the product," says Brunner.

The Apple product-development team found that people used laptops on airplanes, in cars, and at home, often in bed. They discovered people didn't really want "small" computers per se, they wanted mobile computers. Size was just one dimension to that. They saw people in airplanes searching for a bit of surface to move a computer mouse and a place to put their hands.

The two distinctive features of the PowerBook, the TrackBall pointer and the palm rest in the front of the keyboard, are the result. They make the notebook compact, easy to use, and distinctive. "The user focus permeates everything we do now," says Brunner. "There's no more of: 'Here's a great technology, let's go sell it someplace.'"

That's how Ingersoll-Rand Co. did business--until the Japanese began eating its lunch in the 1980s. Until then, Ingersoll-Rand created products the way most every other U.S. company did: sequentially. Ideas went from marketing to engineering to manufacturing to sales. Design was brought in late to add a dash of good looks. In 1989, that all changed. Says Jim Stryker, manager of product development in the Power Tool Div. at Ingersoll-Rand: "We said for 100 years we've been doing products from the inside out, but these tools are used by people from the outside in." Stryker hired Group Four Design in Avon, Conn. The designers immediately sent everyone to factories where the tools would be used. Customers and distributors were brought in as advisers.

The team found that half the people using wrenches on an auto assembly line were women. The result? A two-size variable-grip wrench that was made even easier to hold by using rubberized plastic. An unexpected bonus: The wrench was a hit in Japan, where hands are smaller.

Smart design even offers hope for America's most beleaguered giants. IBM's ThinkPad notebook computer is testimony to that. After 19 years with Big Blue, Tom Hardy became manager of the IBM Design Program in Stamford, Conn., in 1989. "IBM wasn't being perceived as innovative in the marketplace," Hardy says. He felt it still had great technology but it wasn't being transferred into the right kind of products.

JAMMED MARKET. The first step was persuading IBM to spend millions to link all 15 of the company's design studios around the world electronically. With a new Sony color-imaging system to swap high-resolution digitized photos over regular phone lines, Hardy built a virtual product-development team. It included Kazuhiko Yamazaki in the IBM Design Center in Yamato, Japan; Richard Sapper, an independent design consultant in Milan, Italy; Ted Selker and Joe Rutledge in the IBM Thomas J. Watson Research Center in Yorktown Heights, N.Y.; John Wiseman of IBM's Personal Systems Div. in Boca Raton, Fla.; plus Hardy.

To succeed in the already crowded notebook market, IBM badly needed a way of differentiating ThinkPad. Hardy pushed Sam Lucente, the program manager who was on his staff, to roam all the IBM research and development labs in search of buried treasure. "We needed to pull research into product lines faster than going through channels," says Hardy. In 1991, they found Selker and Rutledge in Yorktown working on a funny-looking cursor device, shaped like a pencil eraser, that fit in the middle of the keyboard. At that point, it was destined for a larger desktop PC. "We saw immediately that the TrackPoint cursor could be a terrific differentiation factor for our notebook, and we wanted it," says Hardy. The R&D people built a quick prototype, which Hardy used to chat up marketing folks and top management. "Corrigan [now president of the IBM PC Co.] thought it was a terrific idea."

Yorktown transmitted the TrackPoint data over the Sony system to Yamazaki in Japan, who became the ThinkPad team leader. Yamazaki liked the new cursor but wasn't satisfied. He wanted something more for the new IBM notebook. Yamazaki knew IBM had been working with Toshiba Corp. in a joint venture building a color, liquid-crystal display screen. The 10.4-inch, high-resolution screen was bigger than those in most laptops, and IBM had earmarked it for a low-voltage "green" desktop PC. Yamazaki and Hardy decided they wanted it for themselves. Yamazaki was able to design and engineer the notebook so that the display fit the smaller physical envelope of the notebook.

The result? One of IBM's best sellers in years. "We got it all down up front," recalls Hardy. "We transferred new technology, went into prototyping quickly, defined the product early, and understood the cost constraints before moving to manufacturing. But the key was bridging the gap between technology and the user."

Corporations are increasingly turning to outside design consultancies to help search for new technologies to develop new products. When Reebok International Ltd. was looking for a new way to compete with Nike Inc., it turned to Design Continuum. Gianfranco Zaccai, the senior partner of the Boston-based design shop, found a solution in existing medical technology--the inflatable splint. Developed by a Reebok/Design Continuum team, the inflatable splint technology was transferred from the hospital to the sneaker to become the successful Pump.

Design management is also getting more corner-office attention. Like a growing number of CEOs around the world--including John Sculley at Apple and George M.C. Fisher at Motorola--Alfred M. Zeien, chairman and CEO of Gillette Co., is directly involved in managing his company's design-driven product-development process.

A GOOD FIT. When Gillette decided to create the Sensor razor, it set up three hurdles. First, it had to have terrific "functionality," which meant it had to work well, fit in the hand comfortably, and fit on the medicine-cabinet shelf. It also had to convey a high-tech image, suggesting a precision tool, not a health-and-beauty aid. Finally, the new razor had to be designed for manufacturability, with cost of supply and assembly a major factor.

It took years for Gillette to develop the Sensor's new technology--a laser-welded twin floating-head cartridge. But when the company tried to put the high-tech head on a plastic handle, like the ones used in throwaway razors, the chairman didn't appreciate it. "He said you are underachieving in design, and the plastic didn't capture the exciting potential of the high-tech cartridge," recalls Edward DeGraan, senior vice-president for manufacturing and technology. "We had to start all over again."

At this point, the Gillette team did what they should have done in the first place: check with the users. Customer research showed that people wanted a solid instrument, not a throwaway. The design solution was a metal-based, silver-colored handle.

Using 3-D computer imaging, Gillette's designers quickly moved through a series of prototypes. With each iteration, a data file for building manufacturing tools and creating parts was compiled. When the Sensor prototypes became close to the finished product, the data base was used to begin tooling and organizing manufacturing. "We edge closer and closer to full manufacturing as we design," says DeGraan. The sleek metal handle was a perfect complement to the high-tech blade. The Sensor is such a hit that Gillette went on to design a separate Sensor For Women. Not only has it won a gold Industrial Design Excellence Award for 1993, it has taken the No.1 spot in the market.

MANY SPATS. Stitching teams together from independent engineering, design, marketing, and manufacturing departments is no cinch. Take Motorola's experience with the MicroTac cellular phone. In 1986, it created a team to build a phone small and light enough to fit into a shirt pocket. Watching consumers with prototypes, they were horrified to discover that people were always dropping portable phones.

The team agreed that the product had to be able to withstand a 4-foot fall--but that's about all. "We had lots of disagreements," recalls Krolopp. The materials and supply people wanted a thick casing for strength. But designers wanted thin walls to keep the package pocket-size. They pushed GE Plastics and other suppliers to go further than ever before with plastics to give the product both strength and thinness. Instead of walls 1 16 inch thick, they were able cut it to 1 32 inch.

Battles raged over a host of other issues. Designers wanted a lighted keypad, but the engineers said it would take up space and drain power. And so on. "Teaming isn't at all easy," says DeGraan. "There's a lot of push and shove going on." But by managing the design and development process so well, Motorola came up with a product that defined the market and had a solid year's head start over Japan's first pocket-size phones.

Designing to surprise the customer is the least understood factor in designing for hit products. But that extra delight may provide just what is needed to push a good-selling product into the stratosphere. Motorola built two surprises into MicroTac. First, it delivers an hour and 10 minutes of talk time, not just an hour. And when people drop their MicroTac's on the floor, they discover not only that the phone still works but that the plastic doesn't scratch. Chrysler Corp.'s cab-forward design in its LH cars not only offers wider doors for easier entry and exit and better visibility in the front but it also gives passengers in the back enormous leg room. Passengers have been known to tap the driver on the shoulder to express their surprise.

Keiichi Totsuka, chief design manager at the Sony Design Center in Park Ridge, N.J., expresses the change in the role of industrial design metaphorically. "Designers are like lighthouse keepers for the engineer, who is like a ship. The engineer can go anywhere with his technology but doesn't know which direction to take. In the 1980s, we had many ships at sea going their own way. In the 1990s, the lighthouse keeper must guide the ships. We must design the right product the first time."Bruce Nussbaum in New York, with bureau reports


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