Technology & Innovation

Design in the DNA

September 26, 2011

Asia, Australasia, Europe, Latin America, North America

September 26, 2011

Asia, Australasia, Europe, Latin America, North America
Anonymous Writer

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A UK Trade & Investment report commissioned from the Economist Intelligence Unit.

Design in the DNA: How a design ethos can drive business growth is a UK Trade & Investment (UKTI) report commissioned from the Economist Intelligence Unit. The report seeks to examine how design thinking might shape corporate strategy and drive business growth over the coming decade. In particular, it focuses on the following sectors: professional services, energy/natural resources, creative industries (including technology, media and entertainment), infrastructure/construction, manufacturing, healthcare and pharmaceuticals.

What is the role of design in a 21st century business?

For many people, that question may make them think about slick advertising campaigns and plush corporate headquarters. But design is not, and never was, just about image. Design—as practised by the world's most innovative companies—is a multi-skilled discipline that involves engineers, product innovators, brand wizards, technologists and even expert psychologists. Today, the "design thinking" that has turned the likes of Apple into a global leader is closely studied by top managers all around the world.

Now, design is entering a new level of importance. Vast new markets are opening up, their populations hungry for products and services that more closely reflect their specific needs and circumstances. Demographic shifts are also changing the landscape, challenging business's recent obsession with the young. And always rumbling on in the background, the advance of technology continues to open up new frontiers for the next generation of ingenious designers.

Design is the discipline that fuses commerce with art, and technology with customer empathy. Tomorrow's innovative companies will excel in these areas, while at the macro-level more countries will compete for the high ground in design.

This report by the Economist Intelligence Unit (EIU), commissioned by UK Trade & Investment, seeks to understand how companies are focusing their efforts in design and innovation. The EIU conducted a survey of more than 600 business executives, and also interviewed a range of influential designers, business leaders and other experts to establish how design thinking might shape corporate strategy and drive business growth over the coming decade. The key findings include the following:

Forward-thinking companies will always bet on innovation. Given a challenging economic environment, it is not surprising that executives in the survey are somewhat torn between prioritising cost control (44 per cent) and investing in innovation (56%). R&D is an expensive and unpredictable activity—cutting back in this area can help shore up the balance sheet in the short term. A significant proportion of firms in the survey (22%, rising to almost one-third of Chinese respondents and those in the logistics and transport sector) intend to introduce cheaper versions of existing products, rather than develop first-of-a-kind innovations (9%). Unfortunately, such a strategy is unlikely to generate the kind of breakthroughs that spawn new businesses and markets. The best companies will strive to become more efficient in the way they deliver new products and services, but they also understand that their long-term competitiveness depends on backing bold design.

Emerging markets will make their mark in the design world. China is already the world's workshop, while India is much admired for its IT
services sector. But these countries are no longer content to manufacture goods or offer basic services that were designed elsewhere. They want to create the blueprint for the products and services required by their burgeoning consumer markets. Executives to our survey have noticed Asia's advance in this field—the region is now viewed by one-third of respondents as having better engineering capabilities, against respectively 23% and 15% of respondents for Europe or North America. However, Asia has further to go in other areas. The West still has strong advantages in terms of bringing innovative designs to market—for example, through better financing options and stronger capabilities in introducing cutting-edge science and technology to industry.

Simple is the new beautiful. New technology has made many products more complex to understand and use. A lot of companies fall into the trap of producing items that bristle with features, but which are painful to use in practice. Others focus on aesthetics but forget about usability. However, a counter-movement is growing in strength. At one end of the market, Apple is a shining example of how powerful it can be to create products and services that are beautifully intuitive and pleasing to use. At the other end of the spectrum, a new breed of "frugal innovators", focused on delivering products to the world's poor, are teaching companies the old adage that less is more. In many ways, this is a return to design basics, but it will be a significant challenge for companies operating in a technologically complex age.

Design is key to tackling the big global issues. There are many new challenges facing designers, including developing green solutions (one of the top areas where customers want to see better design, according to 39% of respondents to our survey) and the need to tailor products or services to customers (some of whom survive on less than US$2 a day) in new and diverse markets. Another growth area, which has been largely overlooked until recently, is the issue of population ageing. In Western countries wealth is increasingly concentrated in the hands of the over 40s, and China's population is also ageing. In addressing demographic shift, there is demand for smart thinkers who can apply their design skills to everything from simple products to complex services and even entire health systems.

Design thinkers will focus on the entire customer experience. As individuals, the best designers have always thought about customer needs and how people interact with products, processes and services. But large organisations can become inward-looking, and find this a struggle. What many companies now also need to consider is that their products are no longer simply products, but also need to have services wrapped around them—smartphones are a case in point. In the survey, the seamless integration of solutions and services for the greater convenience of their customers (28%) is viewed as a bigger priority than simply developing cutting-edge products (19%) in terms of performance of functionality. Respondents also say that one of the greatest challenges in introducing new products and services is providing customers with the support to make them easier to use (27%).

Brands must be bold—not bland. Good design is also critical in helping distinguish companies from similar rivals. Louis Vuitton, Disney, Virgin—all have powerful brands that foster a degree of loyalty. By contrast, the pharmaceuticals industry has largely failed to achieve this distinction. Success is more than about smart packaging of a product; the leaders in this space are also able to connect with their customers at an emotional level. They do this by thinking deeply about their brand personality and ethos, a process that is arguably the ultimate expression of how design thinking can permeate every corner of an organisation.

Companies must learn when to listen, and when to lead. There has been a growing trend in recent years for companies to capture customer feedback and use this to guide design. Cultural differences mean that some designs are appropriate in some countries, but are unused and ineffectual in others. Behavioural psychology can also improve design, as can the use of technology to grab customer insights. This is valuable work, but companies should be careful: breakthrough design is rarely produced simply by running customer focus groups. When asked where great design comes from, 48% of executives to the survey say "visionary thinkers", compared with 34% who say that it comes from "listening to customers".

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