Digging Deeper into “Good
Business”
By Andrew Hoffman, Consultant
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| Andrew Hoffman |
Editor’s note: The article by Michael McPherson on Redefining
‘Good Design is Good Business’
in the September issue of
the eBulletin sparked a good deal of response. Here’s a followup
from one reader.
The final five words of IBM CEO and Chairman Tom Watson’s
famed 1975 speech—“good design is good business”—should
be the mantra of every smart designer who is paid for his or her
work! What is most important about these words is that the talk
was given at the Wharton School of Business by the man who drove
his company from revenues of $892 million in 1956 to $8.3 billion
when he retired in 1971. The speech opened with the words, “I
eventually came to see design become one of the major reasons for
the success of IBM.” Watson was talking about making money
for himself, his company, and his shareholders, because he recognized
design as a strategy to achieve that goal.
Watson believed that good industrial design “must primarily
serve people.” Master architect Le Corbusier said good design
“is intelligence made visible.” We could discuss what
constitutes “good design,” but I suggest that the real
issue for designers today and for the survival of good design has
more to do with an understanding of the other side of the equation—good
business. For the sake of this argument, let’s assume that:
designers always strive to make a good design; we are speaking of
design as a commercial endeavor rather than art; and the real goodness
in design has to do with its intended effect. Additionally, let’s
acknowledge that some designs are not about profit, and some profitable
designs may not be in the public interest. Nevertheless, I believe
that the key questions for design in the real world are, “Did
it meet its stated goals?” And, as importantly, “Did
it make money for the client?”
We all intuitively “know” that good design sells. Just
look at the experience of IBM (motivated in the late 50s to emulate
the obvious success of Olivetti), or Apple, or Sony, or Oxo, as
evidence of companies that have used good design to create strong,
design-driven brands. By looking at individual products, such as
the new Beetle, Target’s toaster by Michael Graves, Herman
Miller’s Aeron chair, or the Palm 5.0, it's easy to see how
good design leads led to profit.
But a more important question remains. Is it possible to prove
that good design leads to profitability? If product designers could
make a substantiated argument that their work will lead their clients
to increased profitability, they will have demonstrated their productivity
and could begin to charge for the value of their work rather than
for a multiple of time and materials.
Then this is the key hypothesis:
Investment in Design = Improved Enterprise Performance
It is not possible to show a straight and pure relationship between
a good design for a single product and profitability (the ultimate
measure of success of that product) of that product because of the
numerous external factors that come into play. On the other hand,
there is tremendous benefit in attempting to make this connection.
For the sake of argument, let’s focus on product design
because it has the most direct connection to enterprise profitability.
A discussion about design productivity delivers immediate benefits
to both the designer and the client. If, as a policy of engagement,
the design professional asks for measurements of past and future
product sales and profitability, the client understands that the
designer is interested in his business as well as his product and
a single assigned task.
It also gives the designer the opportunity to continue discussing
the effectiveness of the design after the last design deliverable
and after the product is in the market. Take a snapshot at 90 days
after product introduction, 180 days, a year, two years, and revisit
with your client. These discussions keep the client-designer relationship
vital and demonstrate that the designer is aware of the bigger picture
and truly concerned about the “success” of the product
as a function of the design. They also allow the designer to gain
a better understanding of the determinants of effective design for
the product, and may form the basis for a long and productive relationship
with the client.
How can we measure performance? We need to collect data such as
dollars invested in design, number of people employed, and total
resources employed, and such metrics as project profitability, market
share, time to market, and time to breakeven over a large number
of engagements (within a single design firm or spread among a large
number of firms). The initial value of this task is to raise the
discussion of design as a corporate tool from the tactical to the
strategic, to elevate the contact with the client from the middle
manager with his eyes focused on a single product, to the office
of the CEO, and eventually to the board room, where senior managers
will begin to take note of the “value” of design.
Ultimately though, the ability to bring to light that good design
is good business, and to substantiate that concept means that product
designers can start to charge for the value of their work, rather
than time and materials. It becomes a winning situation for both
sides of the equation.
Let’s act together! The effort to quantify the value of design
could start with a single firm measuring projects consistently over
an extended period of time. But how compelling it would be to see
a well-planned, well-funded study guided by academia bring substance
to the understanding of “good design is good business.”
Editor’s note: This response by Andrew Hoffman to Michael
McPherson's September Viewpoint Article,
Redefining “Good design is good business,” elicited
a response to by Michael McPherson.
Andrew Hoffman lives in Los Angeles and currently
works as a consultant providing strategic marketing services with
a focus on new products. Besides a degree from California College
of Arts and Crafts in Product Design, he has an MBA from Columbia
University Graduate School of Business, and for 30 years has been
an entrepreneur.
This article appeared in the October
2003 eBulletin.
Feedback on DMI Viewpoints and article proposals
are always welcome! Please email jtobin@dmi.org.
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