Innovation & Design

Designing the Future of Business


Forget total quality. Forget top-down strategy. Design is the engine that can transform a company into a powerhouse of nonstop innovation

Imagine a crazy wonderland where most of what you learned in business school is either upside down or backward. A land where customers control the company, jobs are avenues of self-expression, the barriers to competition are out of your control, strangers design your products, fewer features are better, advertising drives customers away, demographics are beside the point, whatever you sell you take back, and best practices are obsolete at birth. Meaning talks, money walks, and stability is fantasy. Talent trumps obedience, imagination beats knowledge, and empathy trounces logic.

If you've been paying close attention, you don't have to imagine this scenario. You see it forming all around you. The only question is whether you can change your business, your brand, and your thinking fast enough to take full advantage of it.

Designing the Way Forward

Until now, companies have used design as a beauty station for identities and communications, or as the last stop in a product launch. Never has it been used for its potential to create rule-bending innovation across the board. Meanwhile, the public is developing a healthy appetite for all things design.

A 2007 survey by Kelton Research for Autodesk (ADSK) found that when seven in 10 Americans recalled the last time they saw a product they just had to have, it was because of design. The survey found that among younger people (18 to 29 years old), the influence of design was even more pronounced. In Britain, a recent survey by the Design Council found that 16% of British businesses say design tops their list of key success factors. Among "rapidly growing" businesses, no fewer than 47% rank it first.

The ballooning demand for design is shaped by a profound shift in how the First World makes its living. Creativity in its various forms has become the No. 1 engine of economic growth. The creative class, in the words of University of Toronto professor Richard Florida, now comprises 38 million members, or more than 30% of the American workforce. McKinsey & Co. authors Lowell Bryan and Claudia Joyce put the figure only slightly below, at 25%. They cite creative professionals in financial services, health care, high tech, pharmaceuticals, and media and entertainment who act as agents of change, producers of intangible assets, and creators of new value for their companies.

But when you hear the phrase "innovative design," what picture comes to mind? An iPhone? A Nintendo Wii? A Prius? Most people visualize some kind of technology product. Yet products—technological or otherwise—are not the only possibilities for design. Design is rapidly moving from posters and toasters to include processes, systems, and organizations. Design is the accelerator for the company car, the power train for sustainable profits. Design drives innovation, innovation powers brand, brand builds loyalty, and loyalty sustains profits. If you want long-term profits, don't start with technology—start with design.

Brand and Deliver

A former editor of Windows magazine, Mike Elgan, illustrated the difference between ordinary brands and charismatic brands in two succinct sentences: "Microsoft (MSFT) CEO Steve Ballmer is famous for a crazy video in which he yells, "I—love—this—company!" In the case of Apple (AAPL), it's the customers who shout that."

In the previous century, a little brand loyalty went a long way. Often, what passed for loyalty was merely ignorance. If customers didn't know what their options were, they would stick with the devil they knew. Today's Microsoft may be one of the last major companies to profit this way. In the new century, customer ignorance won't be enough to keep competitors at bay.

Agility Beats Ownership

Today, there's no safe ground in business. The old barriers to competition—ownership of factories, access to capital, technology patents, regulatory protection, distribution choke holds, customer ignorance—are rapidly collapsing. In our Darwinian era of perpetual innovation, we're either commoditizing or revolutionizing.

Why does change always have to be crisis-driven? Is it possible to change ahead of the curve? What keeps companies from the continuous transformation needed to keep up with the speed of the market?

A company can't will itself to be agile. Agility is an emergent property that appears when an organization has the right mindset, the right skills, and the ability to multiply those skills through collaboration. To count agility as a core competence, you have to embed it into the culture. You have to encourage an enterprisewide appetite for radical ideas. You have to keep the company in a constant state of inventiveness. It's one thing to inject a company with inventiveness. It's another thing to build a company on inventiveness.

To organize for agility, your company needs to develop a "designful mind." A designful mind confers the ability to invent the widest range of solutions for the wicked problems now facing your company, your industry, and your world.

Next, Eco-Everything

Necessity may well be the mother of invention. But if we continue to manufacture mountains of toxic stuff, invention may soon become the mother of necessity. Our natural resources will disappear and our planet made uninhabitable.

As a thought experiment, imagine a future in which all companies were compelled to take back every product they made. How would that change their behavior? For starters, they would make their products with parts they could salvage and reuse at the end of their lifecycles. This, in turn, would spawn whole industries dedicated to the design of reusable materials. As companies struggled to afford the full cost of manufacturing, the prices of products and services would rise. To keep prices under control, companies would localize their operations to save on transportation costs. Localizing businesses would change the nature of communities, creating a network of quasi-independent economies more akin to the Agricultural Age than to the Industrial Age.

In Germany, Volkswagen (VOWG) is demonstrating that corporate responsibility doesn't end at the loading dock. The company is already selling cars that are 85% recyclable and 95% reusable, and it's building a zero-emissions car that operates on a fuel cell, 12 batteries, and a solar panel instead of fossil fuels.

While eco-sustainability isn't yet top-of-mind for most CEOs, when the tide finally turns, it'll turn fast. There's already a significant migration of talented executives from traditional technology to green technology. As venture capitalist Adam Grosser puts it: "They have had their consciousness energized, and they believe there is a lot of money to be made."

Business is Design Blind

Until a decade or so ago, the public's taste for design had been stunted by the limitations of mass production. Now people have more buying choices, so they're choosing in favor of beauty, simplicity, and the "tribal identity" of their favorite brands.

Yet if design is such a powerful tool, why aren't more practitioners working in corporations? If economic value increasingly derives from such intangibles as knowledge, inspiration, and creativity, why don't we hear the language of design echoing down the corridors?

Unfortunately, most business managers are deaf, dumb, and blind when it comes to the creative process. They learned their chops by rote, through a bounded tradition of spreadsheet-based theory. As one MBA joked, in his world, the language of design is a sound only dogs can hear.

For businesses to bottle the kind of experiences that rivet minds and run away with hearts, not just one time but over and over, they'll need to do more than hire designers. They'll need to be designers. They'll need to think like designers, feel like designers, work like designers. The narrow-gauge mindset of the past is insufficient for today's wicked problems. We can no longer play the music as written. Instead, we have to invent a whole new scale.

Business Exchange related topics:

Marketing Innovation

Product Design

Sustainable Design

Business Intelligence


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