Jeremy Myerson
We are going to talk about management thinking and where design fits in to this. I don’t know whether we can have a slide up? Great. So what I am going to do is spend a couple of minutes just reviewing the literature and just picking up on some of the things that Stefan was going to do, what are management thinkers, what are the big gurus talking about when they are writing these best selling management books and where does design fit in to that? Andrea is going to respond with some comments about what that means for design and George is going to reflect on that and then we are going to open it straight on to the floor before the break.
So I think a lot of you will have seen this business week survey and what was interesting, that came out in 2006, the hundred most innovative companies and the top four were of course Apple, Google, 3M and Toyota, and what the commentators were saying was that these people were innovative because they were focusing right at the front end of innovation, they were putting a lot of effort in to the discovery end of innovation as opposed to not simply the delivery, or even the creative design phase in the middle, they were looking at unmet needs and emerging trends and change. And if you look at the literature and what has been riding in the best selling charts, not necessarily a barometer of what is good, but certainly a barometer of what’s being read, you get books like Blue Ocean Strategy which is by Renee Mauborgne and W Chan Kim which came out in 2005, and they have a very, very simple formula. They were saying that most business strategy and most design strategy which supports it is a total waste of time because it is in the red oceans where the water is bloody red with competition, it is full of price cutting sharks and what you really should be aiming at is the blue ocean where your competitors are completely irrelevant because they are not there and you haven’t got customers you’ve got fans, and you are just in that area on your own, and they have a way of helping companies orient towards the blue oceans.
What is interesting about the book is the case studies and I will just tell you about one. This is Cirque du Soleil, has anybody seen Cirque du Soleil. Yes lots of people. It was started in 1984 by a former stilt walker and fire eater. It is one of Canada’s major cultural exports experienced by 40 million people world wide. What is interesting is that Circus was going downhill, Ringling Brothers, Barnum and Bailey and all of that, they were in a red ocean. Kids were spending money on other things like Sony PSP’s. Animal rights activists were after them, prices were falling, admission prices, costs were rising and what Cirque de Soleil did was to find a blue ocean directly bang smack between two red oceans. So on one had you have got your traditional circus and on the other you have got grand opera, and what they did was to create entertainment that cuts out the major cost factors of both. It is circus without animals and it is opera without great orchestras and operatic stars and their motto was re-invent the circus.
This was using a form of design thinking, I was waiting for Cirque de Soleil to appear in Peter Higgins’s presentation, he would probably hate them actually, I don’t know. What is interesting is that in twenty years they generated the revenues that took Barnum and Bailey nearly a hundred years to achieve, and just looking through other books Clayton Christensen has written a number of books around innovation and the innovator’s dilemma, and his big take is that really customers buy things and hire products, and he talks about getting the job done. Unless companies work out what is the job that a particular product or service is doing then you are absolutely doomed and the new product has actually got to work on a functional and emotional, social level, and achieving that definition is a design exercise with user research experience prototyping and so on. And Christianson talks about FedEx and EBay as being companies successfully built on getting a job done, and things like a Sony walkman and the Kodak easyshare are brands that get a job done. Eric Von Hippel has come up in discussions yesterday, a very interesting management thinker, has been very much picked up in this country by the Design Council and NESTA and others. His book democratising innovation, it is interesting as he looks at the very powerful role of user groups and one of his case studies, so this whole co-creation, co-design field that we have begun to talk about, this is Lego Mindstorms where Lego thought they were designing a kind of software driven toy for 12 year old boys and actually there was a whole army of adults out there who were taking the kit, re-writing the programmes, having Lego Mindstorm wars and going back to the company and demanding higher levels of functionality. Now their latest range is being co-designed.
It is interesting that designers are now getting in to the management literature; this is a book by Tom Kelly, a colleague of Tim Brown. I won’t go in to it in any detail, The Ten Faces of Innovation and interestingly three of those faces are right at the front end of innovation, so there is a kind of role for design emerging at the strategic level and Kelly talks about the anthropologist, looking and learning and the designer as ethnographer, the experimenter, multiple prototyping fail often and quickly, and to succeed eventually, and then the cross pollinator which came up in a lot of debates yesterday. The idea of the T-shaped designer or T-shaped engineer where you have got deep vertical skill in your own discipline as a designer, but you can reach out to other disciplines.
Finally Henry Chesbrough, a book that I was first introduced to by James Woudhuysen and the idea of open innovation, R&D is no longer happening so they say men in white coats behind closed doors in the lab on the corporate campus, but it is spilling out in to consortia, often between rival companies and certainly involving universities and research centres, and design having a role to play as a facilitator in all of that. So my message really, if you review the kind of literature and what is hot at the moment, there is a lot of debate around the front end of innovation and the role of design and unlocking strategy around that, so I will hand straight on to Andrea just to pick up on that.
Andrea Siodmok
It is great to be here and I am hoping also in this session we can have some more debate and discussion so we are going to keep our presentations quite light and short. If we can just pull up the other presentation. Just picking up on the point that was made at the front, I think quite clearly we have seen a lot of discussion around the role of design in social good but this panel we’re focusing much more on the role of design in business.
I am going to talk very briefly about from stuff to strategy and back again. There is a lot of talk about strategy and actually many designers would have a strategy about where they go to lunch if they were allowed, so there is a lot of talk about strategy, so I think it is important to obviously emphasise both ends of that spectrum from stuff to strategy and back to stuff again. As you well know, as we move from an industrial economy to a creative economy and design and creativity and innovation go up the agenda to Davos at one extreme and obviously people like Business Week and all of the wonderful publications that Jeremy mentioned, this is raising the prominence of design and a spot light on the role of designers in the modern economy.
And as we know design is everywhere. It is kind of interesting when you see this slide, these are submitted by users to a website called ipodlounge.com, and I wonder which tool he is going to find most useful in his contacts on a daily basis. As James made the point very well yesterday that design can do anything, it can do anything – wow. What potential, but also fundamentally, and I think Tim made this point yesterday as well, design is optimistic, it is about a positive approach to the future, it is about progress as Gus mentioned. So as we move from stuff to strategy what does this mean for design and actually I don’t have the answers, but I think people here do and I hope that our discussion might focus on this.
I would like to simplify this and use Roger Martin’s phrase. Roger Martin, a wonderful business thinker from Rotman Business School in Toronto and he says that basically businesses today have two issues. They need to decide where they are going to play and how they are going to win and this to me speaks to the essence of the role of design in the modern economy. Where are you going to play and how are you going to win. Quite clearly this links in to Tim’s discussion previously around design thinking. Design thinking being at the top of the triangle, what is it that you are going to do? What is the vision of strategy, and then design practice, perhaps what we would typically, historically thought of as design practice, is really about how you are actually going to do that.
So I think this calls on three things for designers. At the where are you going to play level, at the very top we are looking at holistic thinking, we are looking at leadership, we are looking at vision and strategy and how you build these strategies and actually frankly designers don’t have a great deal of tools, our education systems although brilliant do not necessarily prepare students and designers for this kind of activity, so there is a gap there I think. At the next level down I would say that we are looking much more at the operations, the complexity, the delivery if you like. So you’ve got your vision and strategy and you know where you want to play and you know how you are going to win. This middle bit is how you are going to do it if you like. This is the site of the Olympics today in East London and you can see the challenge here. This conference is about intersections and I think my point from yesterdays service design panel is actually…one of the challenges is interservices. We have got lots of services but how do they actually fit together is one of the biggest challenges. A point was made that you have got this wonderful telecom systems but we can’t use them on the underground. Here they have got policing, transport, communications just to name a few and it’s a mess when they come together, and how can designers be used to humanise this and deliver it, because obviously services are rendered, they are not just made and shipped.
And I think at the traditional level quite clearly design has this fundamental craft role in terms of added value, products, services and communications, the core activity that we know design has a role in, where it differentiates. Only one company can be the best, well quite clearly only one company can be the cheapest and design has a role in enabling all of the others to actually up their game and make a meaningful mark. So to kind of draw this together, back to the diagram I had before, at the top we have the vision and strategy, in the middle we have the operations and delivery and at the bottom we have products, communications and services. Add those together at the bottom and you have the experience design that I mentioned yesterday. My contention on this is that we have got an awful lot of skill, knowledge, experience at the bottom end of this triangle; we are brilliant at it as designers. We have less skill, knowledge, experience as we move up the triangle, and in fact we are being asked to step in to that ground and we have a valid role to play and I think Tom Kelly’s book showed that. So I think if we do this and we take a holistic view to design moving forwards, which I think we are all up for, we achieve the most beautiful curve in the world – was that Raymond Loewy.
Jeremy Myerson
Well he talked about streamlining the sales curve.
Andrea Siodmok
The upwards sales curve, so this is obviously our design index from Design Council.
Jeremy Myerson
I could think of more beautiful curves in the world, but you don’t want to go there.
Andrea Siodmok
And as you will probably know because you have probably seen this before, we have found that if you look at the FTSE 100, the 63 companies that we identified that had a clear design strategy, they knew their design vision out performed the market over a ten year period by 200 per cent in both bull and bear markets, and the power of design is great and really for us it is a question of how we deploy that.
Sir George Cox
Well I think your analogy of Peter Crouch and the super sub is very flattering and totally inappropriate. I did not come along hoping to play the….I came along to sit in the director’s box, to boo, hiss and have a nice drink at half time, and this bloke says have you got your boots with you, so here I am. I do feel passionately, as some of you know, about getting business to make much greater use of our design capability and the reason that I feel so passionately about that is that if you look at the world of business it is being transformed. The whole business environment is changing dramatically. It is being changed by a number of powerful forces. Sheer level of economic activity, in the last hundred years this country which was already the richest nation in the world then and very advanced, it’s GP has gone up seven fold. That means that we produce everything we did, all the wealth we did in 1907 in the first six weeks of the year. The world is generating wealth now at an incredible rate. It has been re-shaped by technology which continues to advance and takes us down directions that we don’t expect. It is being re-shaped by different attitudes in society and you are going to get to the point where I will feel about as embarrassed of driving my current car as I would wearing a fur coat, it is being re-shaped by globalisation, by environmental issues. Completely re-shaped.
It has become unpredictable as well as fast moving, if you had said to me 3 months ago – and I am a director of a mortgage bank – which mortgage bank do you most admire and I would have said Northern Rock, great business. What happened there you couldn’t predict what ever the newspapers say, and in this very dramatic changing world, also with completely changing balance of economic and political forces around the world, what does it mean for business? It means that no business can survive and succeed with what it was doing yesterday. No business. Innovation has always been the key to success, and now it is essential for survival. And that applies to services, big companies and small companies, so in this world you have to be much more innovative to introduce the new, to use design to that effect.
Now that is not a difficult message to put across and I talk to business audiences all the time about this, give this message and it is over powering and everyone agrees with it, but where does it leave you? It is like an athlete saying to you that I want to win a gold medal at the 2012 Olympics – no trouble, what have you got to do? Well I have got to run 100m in 9.71 seconds – great, I will go and do that. Just saying be more innovative does not get you anywhere, to be more innovative means acquiring new skills, new thinking. Innovation can be completely destructive, it can destroy the business and design can be miss-used, picking bad design can be misused. Implementing change badly brings the business down, so just urging people to be more innovative is only the start of the matter. You have got to be better in business and seeing where the world is going, to spot opportunities quicker, to spot threats more quickly, to be able to stand back and see what is happening. You have got to be better at introducing change. If you introduce change badly then you destroy it. How do you keep introducing change without destabilising the business? And the same applies to the public sector. I have got relatives who are school teachers, you talk about new ideas and new innovation and they say we are up to our ears with it, for Christ’s sake, not another wave of new ideas. How do you do it in business? How do you keep this change going? How do you change direction quickly? How do you think strategically which has always been a long term thing with the need to act quickly? The old idea that a big corporation is like an oil tanker and you throw the wheel and a year or two later it starts to move – you are dead. This is demanding, you have to have new skills in business, new ways of thinking, new ways of acting, new ways of leadership and new ways, better ways of employing design.
Now the trouble I find when I talk to individual business is that again they take the message, but where is the relevance to them? I have a lot of businesses that say that is a great message but they don’t see how it applies to them at all. That is part of the big issue we tackle and I think to tackle it the design community and profession has got to be better at dealing with business, better understanding of the issues, better at understanding issues of particular business. If you go through the door at Northern Rock now and talk about design, then unless it is actually relevant, recognise the problem there is actually finding the money for next week. The business which was ticking along and can’t see what is wrong with it’s products, but it is not going any where but doesn’t see what you can do about them, anyway we are going to have to get out because they are being manufactured cheaper else where – nonsense. Understanding the issue is very important, empathising with the business, understanding what the problem is of the management before you come up with any kind of solution or start talking about your own skills. I think it is tremendously important and this applies to all sorts of businesses and that is why I am so pleased at what I see going on now in our universities. In Northumbria the way the new design school is next to the business school, because you need this link. We are not trying to water down skills, far from it, but an appreciation of how my skills fit with others is very important. I could go on passionately about the way we produce engineers and you assume that because you become an engineer you can’t speak or communicate, or because you have studied the creative arts you can’t be numeric – ridiculous. Getting people to understand each others skills and work with them is part of the key to getting design used better and that is why this concept of the T-shaped individual is one that I entirely applaud. That is where I come from, can I go back to the director’s box.
Jeremy Myerson
You can, thank you very much indeed. We have a few minutes before we break for coffee and I am going to throw it open to the floor. Design has got to do better with dealing with business. Who would like to pick up on that?
Audience member 1
My name is Patrick Tower and I run a company called Patrick Tower Consulting and I spoke yesterday at the other sessions and made the point that I had been doing strategic design and working in business as well as the public sector for ten years, but didn’t know that that was what it was called. I think one of the things that I see in the businesses that I work with is that they don’t really know what strategy is. If you are dealing with SMEs they often don’t have plans, they often don’t have strategies and they don’t understand the different between the two. It’s absolutely true that facilitation methods, development methods with staff and customers for correcting new visions are critical because at this kind of work there is no brief. You’re pre-brief, you are helping them work out not just where they want to go but in many cases who they are, and that sounds terribly philosophical but actually when you are working with the SMEs or with founders who inevitably will be in a lot of control of their businesses, you are actually helping them work out what they care about and what they are best fitted to do. These are very vague concepts and you have to wing it quite often, you have to use every tool and human ability that you have at your disposal, including design skills and including facilitation skills, to actually help them work out where they want to go and at that point you are then talking to them about changing strategies, a theoretical thing into a set of service design, communication design and organisation design and then suddenly they understand.
Audience member 2
Hi, it is Gus again from The Alloy. First I endorse everything totally and wholeheartedly, wonderful thing connecting the narratives in business. Question: given that business actually now gets what they want from design, given that design is beginning to deploy itself in a better direction, why don’t you think we are not better already? In other words, where are the unmet changes, where are the leadership characteristics that aren’t being championed in design? What are they, that is what I am interested in finding out?
Jeremy Myerson
Ok, we’ll take one more question. Gentleman behind you. The reason we are waiting for the mike and getting people to identify themselves is that we are podcasting this not only on the Northumbria University website but also the Design Council website.
Audience member 3
Hi, Joseph from Nokia. It seems that we keep banging big business and saying that big business needs design. We have got a really good design department now in Nokia and we deliver probably quarter of the world’s, if not a third of the world’s poisonous landfill on our planet. However besides that point I see a lot of agencies here and NGOs and stuff but I am wondering why there is not much comment from big business and how do you think that agencies seem to have a lot of comment at the beginning of the design process and very little at the end of the design process in terms of delivery. Delivering the amount of phones that we deliver, that is a lot of hard work on the design side of things, so I am wondering the reality of the delivery might be of interest to the discussion.
Jeremy Myerson
Ok, we’ll take one more. Anybody else?
Audience member 4
It is more of a comment than a question. I think that designers need to be better at explaining what design is. Andy Aldman yesterday said that his aunty didn’t know what he did and his mother couldn’t explain what actually the design part was and if businesses don’t know what design is then of course they don’t know how they could use it.
Jeremy Myerson
George, do you want to pick up on that?
Sir George Cox
Some good points. The first point about are we getting better. Yes we are getting better, we are not getting better fast enough, back to my analogy of the athlete – are we running faster than last year, yes. That is not going to reach the medal; it is what the rest are doing. And you look at what is happening in other countries, and I spend an awful lot of time in other countries, and you see the other paces picking up, so we are certainly getting better and a lot of positive signs, but there is a lot to be done. I think the challenge is working with those companies and there are an enormous amount of companies out there that don’t use design and don’t see it’s relevance. Not working with those who already use it, that is a huge part of the economy and coming back to the point over there which I entirely agree with. Sometimes you have got a strategic problem, but if you walk through the door of a medium sized business and suddenly say I am here to sort out your strategy. Oh, come on, you know? I think one gets involved with it and then you step back and then you point out that actually the issue isn’t this, the issue is that and that is a skill that I found many years ago in management consultancy. If you went through a door and said this is the problem with your business then you are not going to last long, once you have got their confidence they realise that you are good at listening, that is when you have the influence and you say that is it but your problem is not actually that if you think about it, isn’t it this? And then you are away. I think that is where it fits in.
Andrea Siodmok
I think the points were extremely valid and I would like to come back on that by saying that the presentation that I made I am talking to you, I am not intending that you use that to talk to other people, and in particular on Patrick’s point, because I will pick up what George is saying and it is a real question of communications. I only know the stats for Canada sadly, but only 36 per cent of Canadian businesses have a business plan and I don’t know what the figures are in the UK but I suspect most SMEs don’t have a business plan formally worked out. We found in our programme Designing Demand that design is incredibly useful as a road mapping tool, as a visualisation tool and it is the sorts of things that designers take for granted, but if you call it design immediately doors start shutting and if you go in with a pitch immediately backs are put up, so it really isn’t that question of listening and actually the thing I have found from talking to various people in the conference who are working in these emerging areas has been that people kind of call it whatever they need to call it. They can call it development, service development if that works, or innovation, or creativity and I am less concerned about calling it design. I think that the skills are key and they should be deployed as appropriate and the language is kind of a hang up on that. To Gus’s point I certainly think there has been a huge shift in the take up of design, lots of big corporates are obviously building their in house design capabilities and Nokia as we heard has just set up their London studio. This is happening right across and in a sense the UK needs to be a player in this and again that comes back to skills and playing on the world stage really.
Jeremy Myerson
Well thank you very much in deed to Andrea and to George. We are going to close this session here and break for coffee now. We have had a double bill this morning, we have gone from who makes the space to who makes the strategy if you like, so we will carry some of these thoughts forward in to the break-out session.
Over coffee don’t forget question time at the end of the day, please fill in your forms, comments, questions and get them back to the organisers. Thank you very much to George and Andrea for stepping in.