We are all acutely aware that the future is impossible to predict.
So if businesses simply react to changes or trends as they happen, how can they maintain a competitive edge?
The strategic use of design can provide some answers.
Author Nassim Taleb coined the term anti-fragile, that characterises how something can grow and increase in strength when it is exposed to unpredictable or random circumstances.
This paradigm is useful when designing organisations, as well as new products and services. To become anti-fragile, businesses need to abandon long-term strategising, planning and incremental innovation for flexibility through design. At that point, change is no longer the enemy but effectively becomes a friend. As Charles Darwin said: “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.”
Apple’s development of iTunes and the iPod is a great example of applying anti-fragile characteristics through design. In 1998, Apple missed the music rip-off and burning trend, neglecting to add a CD-burner to their iMac. Their design team, without delay, came up with iTunes and iPod in 2001, a legal alternative, leapfrogging the eventually declared illegal Napster in 2001. Leveraging Apple’s ability to design the synchronisation of software, effectively changed the way we now consume music.
Design has been shown to contribute to the progress of organisations at four, increasingly integrated levels:
- Lowest level – differentiating offerings,
- Second level – streamlining the process,
- Third level – creating unique internal and external configurations and;
- Top level – assisting in the creation of actionable strategies.
Design-oriented businesses manage the lower and second levels of differentiation and process well. Yet the strategic use of design at the top level is recognised by only a few of the world’s top brands such as Apple, Dyson, Nike and BMW.
Strategic use of design requires integration into the corporate culture, organisational architecture and procedures, and needs to be as methodically managed as any other business investment.
When Apple decided to develop the iPhone, the firm was entering a fiercely competitive and adaptive market with low malleability and low predictability. Plenty of marketing data was available for traditional cell phones and Apple’s touch screen concept was rooted in a mature and proven technology. Apple had gained some experience by launching a short-lived phone together with Motorola in 2005 and felt that compromising with a non-Apple designer hurt the offering.
What then CEO Steve Jobs did, was to pursue a strategic disruptive innovation direction. He envisioned Apple leveraging its ability to provide excellent synchronisation software by betting on cell phones becoming essential devices for portable information access. When launched in July 2007, the iPhone disrupted the entire cell phone market, effectively driving Nokia out of the business, which previously had close to fifty percent of market share.
In this instance, the top level application of design helped Apple achieved it’s strategic goals in sales, brand value and stock performance. The new category Smartphone, enjoyed explosive growth and Apple successfully positioned itself in synchronisation software. The firm's brand value (according to Interbrand) went up by 790% from 2007 to 2013 and its share price grew by 530% from January 2007 to October 2013.
Top design driven organisations cultivate design experts, managers and leaders, while nurturing a culture that encourages design excellence. To accomplish this requires continued development of a design approach, which is tailored to the organisations strategic environment and business strategy, whether it is sustainable or disruptive.
However, this is just the admission ticket for becoming a design driven business. Continuous development of new capabilities is needed to stay ahead of the curve. This is where Design Science can make a significant contribution as an essential capability.
Design Science is the continuous building of an organisation’s understanding of design as well as the development of new support tools. The foundation for Design Science is based on solid data and research lead by Stanford Center for Design Research (CDR).
Myself and other design practitioners have collaborated with Stanford CDR to take on tough questions such as “How best to include design in the business development phase” and “What is the link between business strategies and the performance of design execution?”
Some of the key findings from the studies show that the strategic use of design and inclusion of design in business development can increase design performance by up to 30%, reduce the risk of budget overrun in the conceptual phase by up to 60% and reduce the number of intuition biases creeping into design concepts by up to 75%, leading to a performance increase up to 40%.
Like global brand Apple, Australian businesses have the potential to take design to the next level and reap the financial rewards.
S√∏ren Ingomar Petersen, Design Strategist
Soren will be speaking about leveraging design in business at the agIdeas Business Advantage Breakfast on Thursday 3 April. He’ll be joined by a panel of Australian business leaders from Qantas, Geelong Football Club, Heinz and The Laminex Group. More information can be found by clicking here.