| SEOUL / September
2005 Professor Martin Darbyshire gives talk to Korean Institute for Design Promotion. The UK is recognised as a global centre of excellence in design services. Not only is it home to several leading design consultancies but now a growing number of global businesses also base their design centres in Britain. Why? Firstly there are historical and sociological reasons. The British are an emotional, island race on the edge of Europe - given to observing but also with an explorer's spirit and desire to seek out new things. Secondly, we readily embrace and absorb new ideas and cultural influences: London is perhaps the world's most cosmopolitan city. Then there are economic reasons. Because we have progressively eroded our capability in manufacture we have needed to develop and become world-class experts in creating and providing high-level experiences through products and services that are benchmarked with the best. Design effectiveness is absolutely fundamental to the creation and delivery of these experiences. Direction involves guiding how they need to be tailored to fit with the cultural context of markets in different continents and nations. Design has traditionally been known as a tool that is used to provide 'differentiation' but it is more than that - it is about making differentiation 'meaningful'. Consumers build a lasting relationship with products and services. Meaningful differentiation is demonstrated by the repeated preference and higher visibility of one product or service above another. This is especially true in crowded markets. Design, not necessarily manufacturing capability, is the key driver of meaningful differentiation. To confirm this, last week I heard a leading businessman state on a national news programme that his business was about 'emotion', 'style' and 'aspirations.' Quality and reliability were seen as 'givens'. He was Carlos Ghosn, the new CEO of the car manufacturer Renault. This business has just announced a 2 Billion Euro profit yet most of their cars are still manufactured in France, where labour rates are almost the highest in Europe. Of course, I am not suggesting that this is a good thing - it is rumoured that Mr. Ghosn has been brought in to cut costs and increase efficiency. But, like 'quality' and 'reliability', 'cutting costs' and 'increasing efficiency' are givens. What he is saying, though, is that design matters because it stimulates emotions that pull people towards your business, giving value that goes beyond the things that people increasingly take for granted (quality, reliability, ease of use, suitability, etc.). In an increasingly competitive global manufacturing arena, and especially here in East Asia, the key challenge is to raise the perception of products and services above commodity level. The best - and most lasting - way to do this is through design leadership. The success of iPod is a good example. In a short time, Apple has managed to own 80% of global MP3 player sales as well as creating a world-recognised icon. 5.5 million units were sold in the year to April 2005, an extraordinary 558 per cent increase on the previous year. Moreover, iTunes software has become the global leader in its sector and has incidentally played a large part in revitalising the fortunes of the music business. Apple revenues year-on-year increased by 70 per cent in 2004, but perhaps more impressively, the company sold over 1 million PC units - a 43 per cent increase and a reversal of the falling trend of previous years. Distinctive and bold design have been key to the change in fortunes of this company - from the iMac through to the G series laptops Apple have relentlessly innovated. But the 'halo' effect of the iPod has been the catalyst that has raised the company's profile immensely. Apple still has less than 10 per cent of the global PC market but owns the MP3 space. I wonder how much less Apple has to spend on advertising than other manufacturers because product recognition is so high? This has been achieved by meaningful differentiation. On the other hand, Apple must be aware that business will become increasingly tough for them as the number of competitors grows, its price premium comes under pressure and MP3 technology is increasingly embedded in mobile phones (which are bought based on a subsidy). Another good example is Dyson vacuum cleaners, which have successfully launched into the US where they outsell competitors even though they sell for nearly twice as much as products from recognised domestic brands. Their success is entirely based on differentiation through design: in their case, the 'cyclone' bagless cleaner, which promises much greater efficiency than competitors. Designers would argue that success has come from the fact that both the physical and emotional experiences of the products from these companies are perfectly aligned with the 'promise' of the brand. Both, incidentally though, could suffer because the product does not quite deliver an experience the brand suggests it should. Questions are being asked in the press about the costs of changing a battery in the iPod, and the real cost/performance/reliability of the Dyson vacuum cleaners. (This reintroduces the 'quality, service, reliability' aspect of design, which, let's not forget, should be a given). The point of giving these examples, though, is to show that a company does not necessarily need to be a big player to succeed. Indeed, it's often a competitive advantage to be positioned slightly behind the leaders. Both Apple and Dyson have grown quite quickly from small businesses but design has always been a core competence. I believe that both companies have developed because they are confident about their identity, their image and what they do. They communicate this clearly to their customers. Renault, for example, were very unclear for a long time about and it was then that their business really suffered. What stands out for me now is that they have all established a good balance of what it is that they are about, and they are all producing products that are right and have great emotional qualities. There is also a coherence in their visual language that gives tremendous re-assurance to a customer. A further interesting twist to all three of these examples is that you could not say one is French, one is American and one is from the UK. They are just great, global products that display design leadership! So what relevance does this have to Korea? Well, I think the same rules apply. Korea is a mature economy that can no longer rely on low cost labour or even manufacturing capability for lasting success. To create a dimension beyond technological capability, we need to deliver ideas and values that give direction: something people can feel and almost taste! This means adding new and unique values that are aligned with the 'promise' you are making to your customers. This is exactly what Korea's leading brands have been doing: Samsung and LG, to name but two companies as examples, are now seen as first rank global brands. They have largely achieved this position through meaningful design in their sectors. At the root of their success you will find icon products - mobile phones and flat screen technology, for example - which raise overall brand perceptions. You do not need to be a big company to do this - in fact, I would argue quite the opposite. Managing design and delivering on a promise from within a large business, that sells very different types of products, is a very complex and difficult thing to manage successfully. A particular problem is the time it takes for such a business to reposition itself and move from one direction to a new one. Small to medium sized businesses, however, are generally less complex and can much more quickly change their profile or the promise they are making through both communication and design. On the other hand, they are generally more constrained by a lack of experience of how to use communication or design, or having an understanding of how to define what are the differentiating factors of their business, products and services, or how to best express them. There are some industry sectors where design will not always be a key dimension, but those businesses tend to exist in areas where the dimensions of design cannot easily drive up value. Design drives value up when the designer can get really close to a customer of the business as the first step in understanding what will make the experience between the products and services of the business, meaningful and that will give direction. As a general rule, where an emotional link between the product and its user can be expressed, it can be further emphasised and fine-tuned through good design. Of course, the reverse applies - indifferent design will weaken that link and drive down value. This rule applies to virtually all consumer goods. There is scarcely a product that cannot be improved by effective design direction. The question is usually how much value can be added and at what cost? But what the examples we have discussed today clearly show is that design plays a much wider role in defining the spirit and direction of a company than merely increasing the sales of a specific brand. Thus I would strongly advocate taking the view that effective design direction can give any company, large or small, the ability to amplify its value and strengthen its links to its customers. We, therefore, are firstly about helping a business understand how it can use design! And then, secondly, working with that business to deliver a meaningful difference that fits with their brand promise! |
