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Annual Design Awards: '95 INDUSTRIAL DESIGN EXCELLENCE AWARDS

Winners

In the '70s, companies wanted designers to provide styling for their products. In the '80s, they began to ask for mechanical engineering as well. In the '90s, corporations are demanding that design firms deliver the whole shebang in product development--user research, industrial design, mechanical engineering, rapid prototyping, ergonomics, software interface design, graphics, packaging. As the 1995 BUSINESS WEEK/Industrial Designers Society of America annual awards show, a few even demand global capability--designing products that sell in Asia and Europe as well as the U.S.

Changing corporate needs are forcing flamboyant designers to become serious business people. Design firms, which only yesterday revolved around outsized egos, are fast becoming de facto extensions of the corporate world. Where companies once treated designers simply as creative "talent," used on a short-term basis, they are now hiring design firms for complex development work once done in-house.

A new BUSINESS WEEK/Industrial Designers Society of America survey of 143 independent design consultancies highlights the shift. Big corporations increasingly want to work with multiservice design firms that can do more for them. Read through the survey returns: "We are moving from a single-project approach to multiple programs and long-term relationships with our clients," says Fitch Inc. in Columbus, Ohio. "We are more integrated into the rest of our clients' work," responded New York City's Smart Design.

Clients have a need for speed, too. Again, the BW/IDSA survey: "Clients demand shorter product-development schedules," says Volan Design Associates of Boulder, Colo. "Time to market is it," says GVO in Palo Alto, Calif. "Clients want projects done now," writes Lunar Design, also in Palo Alto.

All of this is pushing industrial designers into the role of product innovation suppliers to Corporate America. They're doing soup-to-nuts turnkey projects that provide clients with new products or entire product lines. And, for a select few design firms at the top, it actually means selling innovation methodology itself. "We are now doing their research, applying their core technologies, and conceptualizing future product lines," says Gianfranco Zaccai, president of Boston-based Design Continuum. "Design is becoming much more strategic, a lot more like [management consultant] McKinsey."

Big management consultancies need not worry about competition from design houses yet. But design shops are clearly becoming more formidable. One striking change: They are bulking up on technology. Ten years ago, a pencil and a $100 drafting table were all the tools needed for industrial design. Today, it's more like $50,000 to $100,000 per person. Workstations from Silicon Graphics, Hewlett-Packard, and Apple Computer have replaced the drafting table. Sophisticated three-dimensional-rendering software now substitutes for the pencil.

The BW/IDSA survey shows that expenditures for technology are doubling and tripling every year. For example, if Design Edge of Austin or IDEO Product Development of Palo Alto, Calif., do a turnkey product-development project for a client, they might use the following: Alias 3-D surface software ($90,000 for the software and workstation); an IRIS high-resolution color printer ($100,000); Pro-Engineer software that simulates the physical properties of the product ($70,000 for a workstation and software); software for mold-flow analysis that allows data to be shipped to rapid prototyping CAMAX machines ($50,000) that interpret the information for the milling machines ($200,000).

Design is suddenly capital-intensive, and not every design boutique can scrape up that kind of money. Which is why a shakeup is consolidating the industry. At the top are a few firms, such as IDEO and Fitch, that offer full-service, global product development and consulting. These companies, with about 200 employees each, are among the biggest design firms in the world. Their revenues, workforce, and spending on technology are rising at near double-digit rates at a time when much of the design industry is shrinking.

A prime example of designer-cum-consultant, IDEO now creates combined teams with its corporate clients. As they work on a particular product, the IDEO employees also teach the client's workers the methodology of product innovation. At IDEO University, designers from Samsung Group and other clients also take courses on user research, rapid prototyping, and other design subjects. IDEO has a number of such relationships--with Steelcase, Japan's NEC, and AT&T. "We leave our clients with a new culture, not just a new product," says David Kelley, president of IDEO. "We work together on projects, but the goal is to pass on the process. It's strategic."

There's still a healthy business, however, for midsize shops that simply deliver the goods. These firms, with 30 to 50 people each, include SG Hauser in Calabasas, Calif.; Lunar Design in Palo Alto, Calif.; Ziba Design in Portland, Ore.; Group Four in Avon, Conn.; frogdesign in Sunnyvale View, Calif.; and Herbst Lazar Bell in Chicago. They tend to specialize in certain industries--SG Hauser emphasizes medical and computers. Sundberg-Ferar in Chicago, with 27 people, has one major client--Whirlpool Kenmore, with whom it is linked digitally.

For smaller design shops, it's a race into niches. Makers of consumer products--especially in Asia, where many gadgets are now made--don't need fast prototyping or sophisticated software. With Taiwanese, Korean, and Chinese companies trying to move away from simply building components and appliances for others to sell, this kind of business is growing fast.

At the top end of the business, however, the trend is clear: The biggest design firms are shifting to a professional-services model, a la Booz, Allen & Hamilton Inc. or Andersen Consulting. Instead of charging time and materials per job, they are beginning to enter retainer relationships, playing a major role in helping clients plot overall product strategies.

Will the trend bode well for the design industry? Well, despite the pain of consolidation, the results of the Industrial Designers Society of America awards, sponsored by BUSINESS WEEK, indicate that some truly terrific work is being executed. There were 150 Industrial Design Excellence Award winners, twice the number of 1994. Some 33 golds, 56 silvers, and 61 bronzes went to corporate and independent design firms.

A number of patterns emerged during the awards process. The most important: Borders between kinds of products are falling quickly, thanks to the evolution of digital technology. The most obvious: the blurring of the line between consumer products and computers. With its ergonomically designed curves, Microsoft Corp.'s new natural keyboard, a silver winner, looks more like an appliance than a computer.

The boundary between the office and the home office is fading, too. With so many people working at home or taking work home, there is growing demand for comfortable furniture that can be used in either place. The Herman Miller Aeron chair, which won a silver, is not only beautiful but great on the back.

The final border to disappear is in the medical field. The sterile, metal look is out. The Denver Instruments Microcentrifuge, created by Design Continuum, has soft shapes and colors making it appear friendly. It took a gold.

Concept designs were big. Chrysler Corp.'s curvaceous Atlantic concept car harkens back to the '30s, the era of Bugattis. A liquid-crystal-display screen by Design Edge won a gold as a concept. It is being transformed into a product being built in Taiwan.

It was a great year for consumer products, too. For sheer beauty, there is little to compare to the silver-medal-winning Flashcast SP 2000 Spin Reel. Cost? Only $39.95. The Jeep portable stereo was the darling of the IDEA jurors: They loved its rugged, retro, ammo-box look, with toggles instead of touch-sensitive membranes. The Bell mountain bike helmet is pure excitement.

In software, this was the year for CD-ROMs. The Cartoon History of the World, by Human Code, took a silver, as did Microsoft's Encarta--both for their user interfaces.

There were also some serious business lessons to be taken from this year's contest. Despite its great bottom-line power, design can't compensate for the wrong pricing strategy or the wrong technology. One badly positioned gold-medal-winning product went out of production shortly after taking the award.

In the following pages, BUSINESS WEEK presents some highlights of the 1995 competition. The IDSA jury that decided on the award was composed of eight designers, who sifted through 766 entrants. Now, a few choice selections...By Bruce Nussbaum in New York


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