COMPETITIVE ADVANTAGE THROUGH DESIGN

INTRODUCTION
By Andrew Summers, Chief Executive, Design Council and Digby Jones, Director General, CBI Businesses today face an increasingly stark choice. They can turn out products and services aiming simply to be the cheapest - and leave themselves vulnerable to being beaten on price. Or they can inspire genuine loyalty from customers by giving them products, services and a whole experience, answering needs that not even the customers knew existed.
Andrew Summers Chief Executive Design Council

To take the second path and achieve secure growth, enhanced efficiency and continuous improvement, businesses need design - not just giving the makeover treatment to what they already do, but right at the heart of their strategy, acting as a catalyst for completely new offerings. That requires vision, a measure of courage and a willingness to take risks and work in new ways. The businesses featured in this publication demonstrate the potential rewards for showing faith in designs power to provide a differentiator in crowded markets. We hope their stories inspire you to do the same.

Digby Jones Director General CBI

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One of the great functions of design is to be able to project and embody the future rather than the present: that is where added value comes from.
Sir Christopher Frayling, Chairman, Design Council

CONTENTS
STORIES
04 GO 08 SMILE 12 LIFEBUILDING COMPANY 16 HEWLETT PACKARD 20 TESCO 24 UNILEVER 28 DUCHY ORIGINALS 31 DESIGN COSTS 32 BLACK & DECKER 35 PRODUCT DESIGN 36 IKEA 39 STRATEGIC DESIGN 40 SMITH & NEPHEW 44 CHARCOLONLINE 43 DESIGN THE BUSINESS CASE 47 CONNECTING DESIGN & MARKETING

ADVICE
07 BRANDING 11 E-BUSINESS 15 LIFESTYLE & COMMUNITY 19 INNOVATION CULTURE 23 CUSTOMER FOCUS 27 ENVIRONMENT & SUSTAINABILITY

48 USEFUL INFORMATION

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STORY 1 GO

GO COMPETES WITH THE HIGH STREET TO GET PASSENGERS ON BOARD

The deregulation of air travel in 1997 spawned a quartet of low-cost airlines in the UK: Go, Easyjet, Ryanair and the now defunct Debonair. Rather than just entering a head to head battle with the other airlines, Go, a former British Airways subsidiary, decided to set itself apart from the competition by deliberately taking on the High Street retailers for a slice of the growing leisure spend.

Barbara Cassani Chief Executive

To achieve this, Gos design and marketing strategy was aimed at persuading the increasing number of ABC1s with disposable income that a trip to Barcelona, Bilbao or Venice was an alternative to a meal out or a new pair of designer trousers. Hence Go positioned itself as a classier, more designconscious airline than the competition, while offering equally cheap fares. Because it entered the market slightly later than its competitors, Gos business David Magliano, model sees Marketing Director retailers, not of Go, was able to just airlines, as carry out detailed competition observational research. He realised that the airline had three potential markets: passengers visiting friends or relatives, self-employed and middle-tier business people and pure leisure travellers. Most of these could afford a more expensive option

but preferred to spend their money on something else. What would attract them was reliability and style, plus a few affordable extras such as allocated seating. Go used branding and customer focused design (both up front and behind the scenes in its A restrained business operation) image sets Go to build a apart from competitive brasher rivals position in the market. Its logo and overall image are modern and restrained - in contrast to the brash tabloid style of its main competitors. Both its brand and advertising are designed to appeal to upmarket professionals - visual, stylish, clean, crisp, with a clear invitation to travel. It aims to emulate well-known retailers such as Ikea and Gap and banks like First Direct.

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Design correctly harnessed can enhance life, create jobs and make people happy - not such a bad thing. Paul Smith, Fashion Designer

Even the in-flight catering fits in with Gos design ethic. Like other no-frills airlines Go doesnt offer free food or drink, but it has brought High Street values to its service by doing a deal Managing the with Costa Coffee customer to offer the same experience, from quality of fresh the website to the in-flight coffee, sandwiches, cakes and coffee that its has paid off customers are already used to. And this in itself is good business as some 67% of passengers now buy food or drink on board. An easy-to-navigate website (rated as one of the quickest in the UK) and efficient airport systems to reduce queues and speed up loading all add to Gos reliability and customer experience. In fact shorter, more efficient, turnarounds are also a key to financial success: Go can fly a Boeing 737 for 11-13 hours a day whereas a more traditional carrier might fly for just five to eight hours. Those extra hours translate into improved productivity, increased revenue and therefore lower prices. To achieve this Go has reinvented the turnaround. It now takes a mere 25-28 minutes to get passengers off, clean the cabin and undertake security checks. Gos crews do the cleaning themselves, starting

work immediately the passengers leave the plane. The new passengers then have to be ready, the ramp and steps in place, baggage loaded and the gate clear. According to David Magliano, Its just like a pit-stop in a Formula One race. Cheap airlines currently have only 6% of the European market but Go estimates that the no-frills airline sector will grow to 12% in the next five years. The airline is expanding rapidly and, as a final demonstration of its confidence in the future, the management team has completed a buy-out from British Airways. Magliano concludes: We measure our own customers satisfaction and over 80% of customers rate our overall experience as Good or Excellent. This is well above the consumer industry norm so we believe we are getting it right. Certainly the results look good so far. Partially thanks to Gos rapid growth, Stansted Airport is now the fastest growing airport in the world. When Go first took off from Stansted, Londons newest airport handled four million passengers a year. Now it handles 12 million and much of that can be attributed to the airline that used design to take on the High Street multiples for a slice of the leisure pound.

FACT BOX COMPANY CHIEF EXECUTIVE MARKETING DIRECTOR FLIGHTS GO Barbara Cassani David Magliano 24 European destinations Airline - low cost Easyjet, Ryanair www.go-fly.com

PRODUCTS & SERVICES COMPETITORS WEBSITE

Winter 2001 Advertising campaign

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We measure our own customers satisfaction and over 80% of customers rate our overall experience as Good or Excellent. This is well above the consumer industry norm so we believe we are getting it right.
David Magliano, Director of Marketing, Go

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ADVICE 1 BRANDING

In competitive markets, where theres little to choose between rival products or services, a compelling brand message can set you apart and keep you ahead. But brands arent created overnight. They need to be carefully managed and nurtured. Once these intangible company assets have been established and accepted, however, they can be translated into genuine, tangible profits.
Good branding should permeate a company like the lettering on a stick of rock. The most obvious manifestation of branding is in the visual image - every conceivable aspect of it. From its logo and publicity material to its stationery, signage and vehicle livery. From its website and staff uniform to its offices and advertising. This corporate look, is what distinguishes you from your competitors and should also hint at your values. Take the online bank Smiles identity, for example, which not only subverts the traditional image of a High Street bank, but also suggests a friendly service and cleverly adopts the visual language of the internet. A brand works on several levels. Its a statement of identity, but its also one of intent. Its saying this is who we are, this is what we do and how we intend to do it. So its important that you deliver on your visual promise. A slick logo wont ever compensate for a shoddy product or service. Customers are quick to see through a veneer of style if there is no substance to back it up. And that substance comes in all forms. Staff need to believe in and reflect the corporate values too, in their attitudes and behaviour - in the way they answer the phone, deal with customers and suppliers, how they present and handle themselves, even how they write their letters. Larger companies are keenly aware of the power of branding and usually invest in design specialists to unleash its potential. They are rightly confident that theyll get returns on their investment. But on a smaller scale, successful branding is also achievable. The rigour and consistency required might seem daunting, but if your objectives and style are clear, reinforcing your brand values almost becomes second nature, to the extent that staff instinctively recognise when something is or is not us. Certainly design can create a template and guidelines for branding, consultancies can even advise on enhancing internal efficiency and corporate culture, but ultimately branding comes from within, reflecting the ethos and philosophy of your company. Design is a tool for making that philosophy visible and managing it, so that your customers perceive you as an organisation they can trust and rely on, and your staff firmly believe in the values they represent.

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STORY 2 SMILE

PUTTING A SMILE ON THE FACE OF A BANKS CUSTOMERS

You dont see many people with a smile on their face when they are queueing in a bank. So when the Co-operative Bank launched smile, the UKs first full-service internet bank, in 1999, the first principle it established was that it had to be personalised and user-friendly.
To underpin these core brand values a coherent design strategy was needed, to encompass: Branding - to attract potential customers to try something really new Customer needs - to keep clients with the bank, and ensure they recommend it to their friends! e-business - a genuine solution, not a trendy, not-very-useful add-on. smiles logo with bright pink branding was a deliberate strategy to enable it to stand out from the crowd among the major banks. The Design drives colour pink was every aspect chosen because of business, it clearly separated right down to it from the usual telephone manner blues, greens and reds of conventional banks. And the design, reminiscent of e-mail sign-off smileys, is appealing to the technological generation that would most likely be the banks first customers. Yet design means much more to smile than creating a friendly logo and a shocking pink house style. Design principles drive the way the banks printed literature is written and presented, the informal but efficient telephone manner of the staff and, most importantly of all, the development of its website. To ensure reliability, smile has always used technology that is widely available and which allows as many customers as possible to access the site quickly and easily. Chief Executive Bob Head believes that smiles internet design has been the key to business success. Simple clean design and clear language have ensured that smile customers like to use our site and recommend it to their friends. At the same time, we have to deliver products to customers at a low cost to the bank and customer alike. The result is a website which is straightforward, simple, human and, above all, easy to navigate.

FACT BOX COMPANY CHIEF EXECUTIVE PRODUCTS & SERVICES ACCOUNT HOLDERS smile Bob Head Online banking 500,000 in first 18 months BS7799 - Information Security management Active e-panel of 500 customers 429.0 million Co-operative Bank. Up 25.7 million on 1999

SECURITY OF SITE

CUSTOMER FOCUS

TURNOVER - 2000

OPERATING PROFIT - 2000 96.3 million (before tax) Co-operative Bank WEBSITE www.smile.co.uk

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Every aspect of our daily lives has been designed, but some things were better designed than others. Alice Rawsthorn, Director, Design Museum
Bob Head Chief Executive

Advertising campaign

At the height of the e-commerce boom, many of the banks with internet offerings rushed in without researching this crucial issue of navigability. smile, on the other Navigability, hand, turned to simplicity and what the Japanese clarity are guiding principles would term kaizen - a process of of smiles continuously web design implementing small improvements. These improvements have been introduced onto the website virtually on a daily basis, something that gives smile a major advantage over branch-based banks with their fixed and inflexible infrastructure. To ensure that smile really listens, an e-panel of 500 customers has now been established, as well as a physical panel of 20 customers, who discuss their views with bank staff on a regular basis. The panels also measure performance against six scruples: Value, Transparency, Service, Commerce, Ethics and Accountability. The outcome of this intensive customer feedback has been the relaunch of the site, designed to make it faster and even easier to navigate. New content was added and pricing was made more transparent. The site has been awarded a Crystal Mark for plain English and, with the help of the Royal National Institute for the Blind, can be

used by the visually impaired through special software which converts text to speech. The site is also designed to be very secure. smile was the first internet bank to be accredited with BS7799 for Information Security Management. The results speak for themselves. By exploiting its flexibility and its customer focused web design strategy to the full, smile attracted 500,000 account holders in its first 18 months. This is backed up by recent awards: smile was voted Improvement is constant because top in a UK league table for electronic of rapid response banking customer to customer satisfaction feedback (Virtual Surveys February 2002). And Presswatch, the independent press monitoring service that assesses positive and negative press coverage, placed smile third out of 2,921 companies in the UK last year. Bob Head emphasises that the banks core position is that smile people help each other to be better off, while fully supporting the Co-operative Banks strong ethical and ecological stance. Design has been at the heart of our business and our website... of course, if they want to, smile customers can also use the extensive branch network of the Co-operative Bank to conduct their business.

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ADVICE 2 E-BUSINESS

Chastened by recent lessons, these days companies are approaching e-commerce with a little more realism and caution than they used to. And so they should. But, handled in the right way and entered into for the right reasons, e-commerce can still make good business sense. Just look at Tesco, which has so far spent 60 million on tesco.com, and is already enjoying turnover of around 350 million.
The first thing to realise about e-commerce is that it is essentially no different from any other business channel in that it requires constant commitment, investment and refreshment to keep it functioning at its best. When youve got your website up and running, thats only the beginning. From there it has to be maintained, updated and, most importantly of all, be able to back up its promises quickly and efficiently. After all, a customer might have a wonderful experience exploring your site and ordering a product from it, but theyll certainly end up being bitterly disappointed if the goods turn up two months late in a crumpled heap. To save your blushes later, there is a series of essential questions that need to be asked before you get started in e-commerce. Firstly, why exactly do you want to get online? Will you be using your site purely as a marketing tool, or do you intend to trade from it? Where does it fit into your overall business strategy? How much money can you afford to spend on it? Once youve addressed these issues and are convinced youre doing the right thing by going ahead, you need to get in the experts. Remember, there are two distinct kinds of web/internet designer - one is a technical expert who can build a site from scratch, the other someone who specialises in on-screen visual layout. You could well need both, and there may be some overlapping of skills sets, so its only sensible to establish who will be responsible for what from the outset. The type of website you have in mind will have a bearing on the expertise you require too. If you intend to trade online, for example, an e-commerce specialist will be able to advise you on essential issues such as secure payment processes, navigating a visitor around your site and helpful online shopping devices such as a virtual shopping basket. There are several other basic rules to bear in mind. Keep the words clear and to the point. A simple layout is quicker to download and reacts faster to commands. And never be afraid to change things if theyre not working - the online bank smile uses what the Japanese call kaizen, a process of continuously implementing small changes, almost on a daily basis.

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Physical products are becoming containers for the delivery of services and experiences and it would surprise me if housing doesnt follow that route.
John Weir, Group Design Director, Wilson Connolly

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STORY 3 LIFEBUILDING COMPANY

BUYING A LIFESTYLE NOT JUST A HOUSE

John Tutte Chief Executive

Some people argue that house building in Britain is largely in a time warp with most new homes based on a jumble of derivative styles, using antiquated and inefficient building methods and laid out with little, if any, aesthetic or environmental sensitivity. Worse, people generally dont trust house builders and dont expect good service from them either.
Starting from that assessment Northampton-based builder Wilson Connolly faces an uphill task. But this company is using design to turn stereotypes on their head by tackling customer satisfaction, sustainability, environment and community concerns, choice and flexibility, while introducing high technology and also recording a 22% increase in operating profit last year. Its new brand is simply called The Lifebuilding Company. The business believes that its future success lies in careful consumer research and environmental planning which will set it apart from the competition. Through research of the new and second-hand housing market, Wilson Connolly has taken a leaf from the book of the best retailers and created homes that are customer-focused, with a design policy which takes a holistic view of buyers differing lifestage requirements. The company is particularly targeting those with clearly established community values who traditionally buy older homes and who would not normally look twice at a brand new, raw housing development. To explain his concept, Group Design Director John Weir compares houses with mobile phones: Mobile phones used to cost a fortune and you got one service with a single call charge rate. Now they cost nothing and what you pay for is the service and experience Defying that you get with stereotypes with the phone - and homes geared that is tailored to to customers your needs. lifestyles Physical products are becoming containers for the delivery of services and experiences and it would surprise me if housing doesnt follow that route. That route has tremendous implications but we are
FACT BOX PARENT COMPANY Wilson Connolly Holdings plc John Tutte John Weir Housebuilder

CHIEF EXECUTIVE DESIGN DIRECTOR PRODUCTS & SERVICES

CONSTRUCTION & 34 DESIGN AWARDS - 2000 BROWN FIELD HOUSING CUSTOMERS 49% 75% would not buy a new home because of concerns of neighbourhood and community 571.2 million 469.1 million 78.4 million

TURNOVER - 2000 TURNOVER - 1999 OPERATING PROFIT 2000 WEBSITES

www.wilsonconnolly.com www.thelifebuildingcompany.com

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Good design is not simply about aesthetics or making a product easier to use. Its a central part of the business process, adding value to products and services and creating new markets. Tony Blair, Prime Minister

already on the first step down it and in the future we will be offering our consumers something very different from what is normally available today. Customers of The Lifebuilding Company get a real choice of properties and internal layouts, which can range from open plan loft-style living with no bedrooms to extra bedrooms for large families. This flexibility is possible because of the use of many factorymanufactured solutions to speed up build times and improve quality and reliability. For instance, the use of timber frames has the potential to reduce build time by an average of 25%, reduce waste, increase energy efficiency and allow the use of IT to transfer designs directly to the production process on the factory floor. The company has also drawn up a sophisticated environmental policy that has been externally verified by AEA Technology Environment. The policy covers five areas of operation: land management (both strategic Environmental and current), responsibility is part of a carefully planning and design, clearance managed identity and production, marketing and sales, and business operations. Each area is managed with a set of guiding principles and challenging annual objectives to be met. Under land management, for example, the Wilson

Emscote Lawns development

buildpack.com

Marketing material Lifebuilding Company

Connolly group of companies currently builds around 49% of its homes on previously developed (brown field) land, but the objective is to exceed 60%. And in production these operating companies have already saved around 1 million by introducing new waste management and minimisation solutions. To help Wilson Connolly judge how sustainable a particular site might be it has designed a 10 point comparison index. This covers: transport, proximity to services, location, land use, flora and fauna, planning policy, employment prospects, mixed uses, social aspects and deliverability. The local community and planners can be involved in helping to weight the scores and the index can be used to distinguish between potential brown field and green field sites in a development area. If a site doesnt measure up then the company looks elsewhere and even sells back land that might have been purchased before the index came into use.

The Lifebuilding Company extends these principles to the end consumer, based on the concept that house buyers A designed want to choose a way of living, totally designed not four walls way of living to and a roof suit their lifestage, rather than four walls and a roof. A sense of community responsibility is fundamental to this, and every purchaser of a home from The Lifebuilding Company automatically becomes a member of a Community Trust, which is entrusted to keep the immediate environment in good shape in order to protect and enhance everyones investment. John Weir has a clear ambition for The Lifebuilding Company: to build it into a premium priced brand, synonymous with quality, convenience, choice and flexibility, social cohesion and environmental friendliness - all delivered through a carefully designed, customer focused service.

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ADVICE 3 LIFESTYLE & COMMUNITY

Design has a key role to play, not only in helping businesses become more profitable, but also in creating better environments and communities for us to live in.

The example of house builder Wilson Connolly is a case in point. The company is attempting to change attitudes to new housing developments by adapting its offer to suit peoples lifestyles and by addressing common concerns rather than trying to persuade people they want something that they dont. In a broader context, designers have a responsibility to address the issues of how we live and how the products and services we use on a day-to-day basis affect the people immediately around us. Improving the design and quality of public spaces and buildings, public transport and local amenities of course helps to generate a spirit of community and well-being. And common concerns, such as an increasing crime rate, how to cater for an ageing population and how to deal with pressing ecological issues can all be tackled effectively by a modicum of lateral thinking and inventive design.

In some ways, design that has a positive effect on the community is just plain common sense. But often this involves stepping away from entrenched thinking and examining matters from a fresh perspective, which is easier said than done. Good lighting and visibility not only deter thieves, but make people feel safer. The same is true of other mesures that hamper crime or remove temptation, such as car immobilisers, bicycle pods at rail stations and handbag clasps on restaurant seats.

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STORY 4 HEWLETT PACKARD

This case study was written prior to the proposed merger of HP and Compaq.

WRAPPING THE FUTURE AROUND THE INTERNET

The recent high-profile proposed merger of Hewlett Packard and Compaq illustrates the relentless need for growth and worldwide reach in the computer industry. HP believes that were heading toward a world where everything will be connected by way of a new generation of technology linked to the internet. What is astonishing is how quickly this is happening.
At the same time, there is a strong downward pressure on prices. Whats clear today is that value rarely lies solely in the product itself, but in the service delivered through the product, which is why more companies are wrapping them in e-services. HP believes that it must display six inherent traits to survive in the internet era: inventiveness, optimism, inclusiveness, humanity, qualityconsciousness and trustworthiness. HP still sees itself as a company of inventors in the tradition of Bill Hewlett and Dave Packard, who started the business in a garage. However, inventiveness now is seen to be vital to business success: the smart, ingenious thing that others will admire and respect - and pay for. These traits are wrapped around the HP brand character and soul. The soul defines what HP stands for in an internet age, and sits at the core. The character defines how HP acts and communicates, and performance indicates what HP says and does to make it all ring true. What happens when product design goes way beyond the box? One activity which highlights all the characteristics of an innovative culture is the Superdome high-end server project. The HP Superdome product team Value lies not in designed a the product, but whole customer in the service it experience into delivers their top line UNIX server. By harnessing the collective know-how of far-flung, interdisciplinary teams, the product team learned it could make the whole process of planning, purchasing, integrating and maintaining

FACT BOX COMPANY CHAIRMAN & CEO EMPLOYEES PRODUCTS & SERVICES Hewlett Packard Carly Fiorina 89,000 (pre-merger) IT, hardware, software and solutions $48.7 billion $42.3 billion

TURNOVER - 2000 TURNOVER - 1999

PROPOSED ACQUISITION Compaq NEW COMPANY VALUE $87 billion as of Sept 2001 www.hp.com

WEBSITE

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We are a company of inventors who care passionately about inventing a better world - and unlocking the inventiveness of those around us.
Carly Fiorina, Chairman, President & CEO, Hewlett Packard

high-end server systems painless - and therefore priceless - for customers. The team held monthly Superdome council meetings, inviting representatives from R&D and marketing, manufacturing and sales, and finance and support to cover everything Teams from from bug fixes across HP to how to combined to manoeuvre the design a refrigerator-size customer server onto experience loading docks. In those meetings, and by listening to customers, they had the opportunity to deliver a truly customer focused experience. The companys perceived need to constantly reinvent itself and its products is seen as a journey of three phases: Look, Aspire and Act. Look involves looking at the changing market and its competitors and then analysing HPs strengths and weaknesses in this market. Aspire means wanting to invent a much more human, personal, friendly internet that delivers e-services of all types via an always-on infrastructure. Act is simply described by the company as preserving the best, reinventing the rest. Hewlett Packard believes that to be truly creative, its employees must have the freedom from time to time to pursue their own interests outside the immediate requirements of the business.

Employees are encouraged to spend ten per cent of their time on activities other than their main day-to-day jobs in order to work on the things that they find interesting. HP people are encouraged to pursue their own ideas For example two employees, David Frohlich and Guy Adams, used their ten per cent time to investigate how people would like to augment their photographs. The concept of having sounds with photographs emerged from this research, and set them off looking for a way of playing back sounds from physical paper prints. There are several potential ways in which this could be done. David and Guy explored the options of texture mapping, which is a bit like a record with a bumpy surface, magnetic strips, like those on credit cards, and optical mechanisms, which operate CDs. The idea that stood out, however, was using a microchip. These are getting smaller and cheaper to make, and are already small enough to be embedded in paper. After making a prototype, which embedded a microchip in a photo, David and Guy generated another option of mounting it on a detachable paperclip. This gave HP two possibilities to consider for realising audio-prints, and opened up a new design space in the area of talking office products. At the moment THE COMPANY WAS FOUNDED ON FIVE CORE VALUES:
Respect for the individual Contribution to customers

and the community

Uncompromising integrity Teamwork Innovation

there are no specific plans to take the audioprints or paperclips into production but there are multiple patent applications pending. Thus, by encouraging this type of creative and innovative thinking, Hewlett Packard hopes to retain its dominant position in the internet-led global market.

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Our core values, and the rules of the Garage [Hewlett Packard was founded by two inventors working from a garage], are the heart and shining soul of the system. These are among our greatest, most compelling competitive advantages.
Carly Fiorina, Chairman, President & CEO, Hewlett Packard

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ADVICE 4 INNOVATION CULTURE

If creativity itself is an elusive notion, then creating a corporate environment in which it can flourish is even more tricky. And yet it is essential for companies who wish to bring innovative products and services to market.

Cultures within individual organisations vary dramatically, so theres certainly no right or wrong way of creating an atmosphere in which ideas and creativity can thrive. Indeed, original thinking often arises as a direct result of corporate individuality, so it should be nurtured and encouraged. But undoubtedly one of the most useful exercises for any company is to allow people to share ideas at the earliest opportunity. A half-formed, or even half-baked, idea can often spark tangential thoughts in others, eventually leading to something valuable and worthwhile. Ideas often work well in relay too, with one person pushing them along further from the point where the previous person left off. There are two practical measures which can help. The first is to designate time for new ideas to surface. The computer giant Hewlett Packard, for example, asks employees to spend ten per cent of their time on activities other than their day-to-day jobs to work on anything they find interesting. This non-specific, non-pressured approach has proved fruitful, spawning various radical thoughts, which may or may not be taken further. Even if an idea doesnt get off the drawing board, at least this scheme gives employees the chance to exercise their ingenuity and creative muscles.

The other step companies can take is to set aside a physical space where people can take a break, share their thoughts and get away from their usual desks or workstations. If the space is visually stimulating, so much the better. A change of scene can redirect a train of thought, and an informal forum for the exchange of ideas is always healthy and productive. An interdisciplinary approach often throws up interesting results too, though it can be difficult to put into practice. Though coordinated collaboration usually means youll get there quicker, different groups tend to have developed their own language and acronyms, and may even have wildly different opinions on what constitutes good design. But in a way thats the whole point. Todays successful products and services are complex beasts, which need to be examined and dissected from all perspectives. Its important not to let one particular discipline dominate a brainstorming or ideasgeneration session, and doing some role-play or creating a prototype jointly is a good way of making sure that everyone has a fair say without laying down formal rules. No matter how ridiculous an idea might seem on the surface, dont shout it down. You never know, it may be the beginning of something significant, and egos bruise easily.

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STORY 5 TESCO

THE BIG BRAND THAT HAS CRACKED THE ART OF E-RETAILING

The rollercoaster world of e-commerce is still in its infancy. New technology inevitably attracts entrepreneurs, but the recent spectacular crash of several internet-based businesses illustrates that the key to successful innovation is often the ability to harness new technology to mature businesses with strong brand names. Oh, and dont forget to put the customers first!

Terry Leahy Chief Executive, Tesco

In the mid 1990s, many first-timers launched unproven business concepts on the internet. Tesco.com was launched initially as a defence against all these new e-retailers, however Britains top retailer has now proved that e-retailing can be highly successful if the business model is well designed. Tesco was one of the first retailers to go online, back in 1995 and, to be fair, its website suffered a few early jitters before developing Tesco realised into the sleek and the value of its intuitive site that existing assets to we see today. its next venture More important than the website though was what lay behind it and here is where the company began to succeed.

John Browett Chief Executive, Tesco.com

Tesco decided from the start that the best economic model was structured around its existing assets and so it used in-store staff to pick items ordered over the internet off the shelves, rather than making up orders from a separate warehouse. While other retailers mainly opted for centralised warehouses, Tesco correctly forecast - against all the received wisdom at the time - that warehousing was a recipe for disaster. John Browett, Chief Executive of Tesco.com, explains: Running our home delivery service from the stores gives customers the best service and value. Delivery times can be kept below 30 minutes from store to house, keeping costs down, and the range is huge because stores stock so many products.

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The point about good design is that it imposes order and simplicity on a chaotic world. It makes it easier to think.
Prue Leith, Former Chairman, Royal Society for the encouragement of Arts, Manufactures and Commerce (RSA)

With a turnover of 300 million, Tesco.com is now very large in internet terms. Confident in its success, it has recently received the endorsement of Silicon Valley by agreeing to take a third share in GroceryWorks, the online shopping operation of California-based Safeway inc - so the Americans can benefit from Tescos experience. Tesco is rapidly reshaping GroceryWorks Delivering from shops keeps costs operations by closing down its down and speeds warehouses and up services introducing its own technology and business processes. California is the best market in the world, adds Browett. 60% of people have access to the internet in their homes, compared with 30% in the UK and the e-commerce spend is ten times what it is here. Having conquered the technology, Tesco.com now has to ensure that it reaches as wide a market as possible. The potential customer base comprises millions of internet users - many more people than it could reach through its branch network.

Our dot com business is an important way of getting in touch with our customers and reaching out to new ones too, adds A strong brand Lucy Neville-Rolfe, means it costs Tesco Corporate less to win Affairs Director. customers We have won several awards for innovation including The 2001 Sunday Times Business Innovation Award. We have also won the first See it Right Accessible Website Award from the Royal National Institute for the Blind for the way the site meets the needs of people with sight problems while using informative and entertaining design. And our online retail portal - Tesco Access - is now available from Pocket PC devices and Smartphones. Tescos strong brand, good use of design and innovative approach has helped to minimise customer capture costs. Coupled with its existing IT, retailing and logistics skills, this clicks and mortar front-runner looks set to lead the e-retailing pack for some time to come.

FACT BOX COMPANY CHAIRMAN CHIEF EXECUTIVE CHIEF EXECUTIVE Tesco.com CORPORATE AFFAIRS DIRECTOR TESCO.COM TURNOVER - 2000 Tesco John Gardiner Terry Leahy John Browett

Lucy Neville-Rolfe

300 million

TESCO.COM 60 million INVESTMENT (since 1995) AVERAGE CUSTOMER SPEND STORES (UK) Online 90, in-store 25 692 (300 open 24 hours) Over 1 million (signed up) See it Right Accessible Website Award - RNIB www.tesco.com

CUSTOMERS

AWARD WINNER

WEBSITE

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Our dot com business is an important way of getting in touch with our customers and reaching out to new ones.
Lucy Neville-Rolfe, Corporate Affairs Director, Tesco

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ADVICE 5 CUSTOMER FOCUS

Its easy to say, harder to put into practice. But the best way to make sure customers buy your products and services is to give them exactly what they want. Companies need to take a step back from their offering and try to put themselves in the shoes of their customers. Observing people carefully and analysing how they live their everyday lives needs to be central to the design process.

Tesco.com is a prime example. Realising that many of its potential customers didnt have personal internet access during the day, it made a new online retail outlet available from pocket PC devices and Smartphones, allowing them to shop at home, at work or on the move. And if youre not sure what your customers do want, the best thing to do is ask. Like building company Wilson Connolly, which consulted 16 focus groups across the country before embarking on its groundbreaking Lifebuilding Company project. Or the internet bank smile, which has an e-panel of 500 customers to measure value, transparency, service, ethics and accountability - and to make sure it really listens to what people say they want and expect from it. Before you embark on any design process, its important to really understand the area in which youre working. You need to get smart and get prepared. Read all the relevant journals and documents, style guides and annual reports. Phone people you think might be able to make interesting contributions youd be surprised just how many people are prepared to share their knowledge. Research competitive products and services. Look for key themes, as well as cultural and lifestyle trends that might impact on the design. Once youre well grounded, the next stage is finding inspiration by getting a deeper understanding of the people wholl be

using your product or service. Identify different user groups and really try to get under their skin - what are the particular problems and possibilities with each of them? How and why do they use products? What are they trying to do? As a general rule, its better to conduct in-depth interviews with a few people than undertake a superficial study of many. You can then marry your findings with broader quantitative research. Where possible, its best to observe people in their habitual environments where theyll behave naturally rather than pulling them into an unfamiliar interview room. Encourage them to draw diagrams and never be afraid to ask obvious questions, even if doing so makes you feel stupid. From here, its a question of visualising and crash-testing your ideas. Its not a bad idea to create fictitious scenarios with a variety of characters who might be using your new product or service. You might draw up storyboards, create comic-book style photo stories or even make scale models to act out various scenes. If you are developing a new product, further down the line you might create a paper or polystyrene prototype to test peoples reactions. Or, for a service, dont underestimate the value of using mystery shoppers for piloting. Customer-focused design is about getting feedback right through the design process. Its always effective and can occasionally throw up the unexpected.

23

STORY 6 UNILEVER

Persil tablets Non-biological tablets

KEEP TAKING THE TABLETS

You dont normally associate detergents with design. Washing powders and liquids are hardly the most glamorous part of the weekly shop, and the arrival of designer detergents in supermarkets is clearly still some way off. However, design thinking does help Unilever solve an extremely tricky equation in linking scientific research, customer research, marketing, business strategy and environmental issues to evolve the product offering we see on our shelves.
FACT BOX COMPANY CHAIRMEN Unilever Antony Burgmans and Niall FitzGerald Consumer products

PRODUCTS & SERVICES

UK MARKET SHARE 27% HOUSEHOLD DETERGENTS (3 YEARS) DETERGENT IMPACT Reduced by 125,000 tonnes a year in Europe 28,963 million up 16% on 1999 www.unilever.co.uk www.unilever.com

TURNOVER - 2000

WEBSITES

Persil Tablets are a good example. Persil, manufactured by Unilever, has a dominant 27% share of the fiercely competitive 1 billion UK household detergent market, where players have to be highly innovative to remain competitive. Unilever considers design to be crucial in pulling together its research and development and manufacturing operations to develop the products which help secure more market share. But just as important to the company are its targets for sustainable development, defined as meeting the needs of the Design binds present without research and compromising the manufacturing ability of future to create generations to new products meet their needs. Its policies include using environmental management tools to evaluate the potential whole-life effects of products from the extraction and processing of

raw materials through manufacturing, packaging, distribution, use and eventual disposal. Environmental concern is not the sole preserve of Unilever. The European detergent industry as a whole has taken steps to address environmental issues by developing a Code of Good Environmental Practice, backed by an awareness campaign aiming to show consumers the contribution they can make to sustainability by changing the way they wash their clothes. However, despite efforts like these, good performance is generally still more important to customers than environmental issues when they choose their detergent. Various eco-friendly detergents have been launched over the last few years only to fail simply because they dont do their job as well as conventional detergents.

24

We have a consumer and citizen agenda. The task is to design a product that is consumer friendly but which is also environmentally sustainable
Dr Hamish Will, Environmental Assurance Manager, Unilever

25

Design is the creative harmonic between culture and industry, technology and consumers, and engineering and art. Dick Powell, Director, Seymour Powell

Niall FitzGerald & Antony Burgmans Chairmen of Unilever

In this relatively conservative marketplace a new product has to carry a simple proposition and offer obvious benefits. Past successes and failures illustrate the point. In the 1970s, low temperature bleaching agents in washing powders meant customers could reduce their washing from 90 to 60 and cut their energy bills, but the concentrated New products must carry simple powders of the 1990s met with propositions and resistance because clear benefits people tended to use more than necessary and so came to see the product as bad value for money. Unilevers designers had to find a product that brought together the requirements of eco-friendliness, performance and convenience. They came up with a simple idea - detergent tablets - which proved to be the breakthrough the company had been looking for. They were launched in the UK and France in 1998 after seven years of R&D. At the time, 60% of the market was in big box powders, 20% was in liquids and the remainder was in concentrated powders. Unilever hoped tablets would have a 20% share in five to six years by moving customers from big box powders and concentrates. However, tablets have already secured a 25% share in just three years.

Hamish Will, Unilevers Environmental Assurance Manager for Home Care products, likens the convenience of detergent tablets with that of Tablets combine teabags: Both customer products are advantage with pre-measured, environmental which means benefits convenience and minimum waste. Although we tried to get across the environmental message with concentrated powders, it simply didnt work because there was very little perceived consumer advantage. Consumers want to do the right thing, but when it comes to the crunch they do what suits them. We have, therefore, both a consumer and a citizen agenda. The trick is to provide a product which is consumer friendly but also environmentally sustainable. Detergent tablets fulfil both criteria. Will added: The success of detergent tablets has reduced the volume of detergent used in Europe by Using tablets 125,000 tonnes a has cut overall year. We have no detergent use doubt that this in Europe new unit dose format represents an opportunity to make further major contributions towards the sustainable consumption of detergents.

26

ADVICE 6 ENVIRONMENT & SUSTAINABILITY

Its estimated that 25% of vacuum cleaners, 60% of stereo systems and an incredible 90% of PCs still function perfectly well when people decide to get rid of them. Its clear that if the highly commendable goals of sustainable living and energy conservation are to be met, a sea change in consumer attitudes and behaviour needs to be initiated.
Its just as clear that such a shift in attitudes needs to be adopted by businesses too. So how close is it to materialising? Recent research by the Design Council suggests that British businesses have some catching up to do with their European counterparts when it comes to seeing sustainable design as an opportunity to enhance competitiveness and build brand values rather than a way of staying within regulations. While only 3% of Swedish businesses, for instance, saw designing for sustainability as a product development cost, 21% of British companies saw it that way. In Sweden, 76% viewed it as an investment, compared to only 38% in the UK. Of the German businesses surveyed, 35% said they pursued sustainability in the name of competitiveness, compared to only 18% in the UK. A reactive attitude by UK businesses is suggested by the fact that 36% said customer demand was the main driver for sustainability. Of course, figures like these may simply be a reflection not so much of some in-built British reticence as the fact that sustainability has been on the business agenda longer in some European countries than in the UK. Nevertheless some UK companies are already taking a proactive stance. Unilevers continued efforts to put sustainability at the heart of its work prove that its possible to tackle environmental issues positively and strategically and not regard them as a tiresome obstacle. With guidance from external advisors such as Bjorn Stigson, President of the World Business Council for Sustainable Development, and Jonathon Porritt, Programme Director of Forum for the Future, it has developed tools such as Life Cycle Assessment which gauge the environmental impact of products and help to spur innovation rather than stifle profitability. For others, ready access to information on the possibilities of sustainable design would be a major step in the right direction. Then they could start to integrate appropriate programmes into their business strategy. In the UK too many companies are unable to look beyond principle-specific issues such as waste management and recyclable materials, rather than taking a more holistic approach which would result in more far-reaching, innovative solutions. If the issue is given an appropriate priority at the beginning of the design process, rather than tacked on as an afterthought, the chances are that more breakthroughs will follow. Taking a leaf from more progressive countries, exchanging ideas, creating forums for debate and sharing information are all positive measures that could and should be taken. Good practice should be highlighted, encouraged and aided with help from relevant industry and governmental bodies. Armed with relevant information and perhaps even coaxed by incentives, companies can put more energy and initiative into sustainable strategy. Sustainability is something that most companies realise will become ever-more important to the way they do business. They just need the will and necessary tools to integrate it into their corporate culture.

27

STORY 7 DUCHY ORIGINALS

THE ROYAL BISCUIT WITH AN ORGANIC MESSAGE

Duchy Originals is the organic food brand established by The Prince of Wales in 1990. This followed the establishment of a 450-acre organic farm on the estate at Highgrove in the mid-1980s. By the early 1990s, the estate was producing sufficient crops to turn them into commercial products, and this led to the idea of establishing a food brand which would actively encourage the establishment of more organic farming and food production. A secondary objective was to raise money for charity, namely The Prince of Waless Charitable Foundation.
FACT BOX COMPANY MANAGING DIRECTOR COMPANY SIZE PRODUCTS & SERVICES SALES - 2000 CHARITY DONATION 1999-2001 EXPORT MARKETS WEBSITE Duchy Originals Belinda Gooding Seven employees Organic food and drink 12 million 1.3 million

Duchy Originals now has a strongly branded range of organic food products that sets out to persuade the public that sustainably produced comestibles are also very good to eat. According to Fiona Gately, PR and Communications Manager, Duchy Originals products exemplify what organic farming is about. We launched the brand in 1992 with Oaten Biscuits made with Highgrove wheat and oats. They were attractively packaged with a printed explanation of the wheat-growing and manufacturing process. The original biscuit took about 18 months to develop in partnership with Walkers Shortbread and now all Duchy Originals products are produced under licence. The source of the raw materials is also more diversified, although much still comes from Highgrove, including the recently launched Duchy Originals Organic Milk from the farms Ayrshire herd.

USA, Germany, Japan www.duchyoriginals.com

Despite the proselytising motive behind the launch of Duchy Originals, the business is run on Combining tasty strictly commercial food with sound lines. Costs are business and a kept to a minimum pro-organic through the message licensing structure, enabling the firm to be run by a small core team. This team handles sales, marketing and new product development, while manufacturing and distribution are handled by the licensees. The company spends no money on advertising, so depends entirely on in-store promotional activity, public relations and high quality packaging to develop brand awareness and tempt new customers. Fiona Gately emphasises that packaging is the key to the brand. Packaging has to tell people what the brand and the

28

One of the missions of The Prince of Waless organic food brand is to persuade the British public that organic farming is vital to the long-term sustainability of the planet and good use of design is helping to achieve that aim.
Fiona Gately, PR and Communications Manager, Duchy Originals

product are about, so we rely heavily on good design. A couple of years ago we needed to develop a consistent design to give us a clear brand identity across a growing product range. Being organic, our products most often sit alongside the supermarkets own label equivalent. The trend towards merchandising organic foods within the product category, rather than in organic blocks, means that the products are increasingly sold beside mainstream brands as well. They therefore need to stand out and compete on the shelf. Customer research is important. Gately adds: Research shows that people will come to the brand Branding conveys because they know tradition and the connection. innovation A lot of people first buy the products because they are aware of The Prince of Waless views in the organic and environmental fields, and it does help that many customers like the fact that the profits go to charity. However, customers will only make repeat purchases if they like the products as much as the principles behind them. But perhaps most importantly, Duchy Originals is about innovation. While the products may seem traditional, there is always something different - an ingredient or a process - that is not available in

other products. The objective of the brand is to deliver something new to the sector and each product has to have its own identity. A question The Prince of Wales always asks is Is it original? A great effort is also being made to encourage other farmers within the Duchy of Cornwall estate to convert to Farmers are being encouraged organic farming, to provide a potential to grow source of organic organically raw materials for the future. At the same time, overseas links are being set up to ensure a sustainable and reliable source of crops, such as organic cocoa and ginger, which cannot be grown in the UK. Although products are exported to the USA, Japan and Germany, Duchy Originals is concentrating its efforts on the home market. Judging from the rapid growth in sales to 12 million, and the brands presence in Tesco, Sainsburys, Waitrose and Safeway, in addition to specialist stores all over the UK, this seems to be working well. Furthermore, The Prince of Waless Charitable Foundation has received a donation this year of 580,000 out of Duchy Originals profits, an amount which the company aims to boost to 1 million within the next five years.

29

30

ADVICE 7 DESIGN COSTS

No one likes spending money if they dont have to. Thats not only sound business sense, its human nature. And its also one of the underlying (if misguided) reasons that companies are reluctant to invest in design many feel its an unnecessary, not to mention hefty, expense.
But theyre missing the point. The scope and potential of design within a business context is far reaching - among other things, it can contribute new ideas and approaches, make your business processes more effective, offer knowledge and expertise in relevant areas, and improve strategic planning and thinking. Of course you can pick and choose from these various offerings - you may need one, a combination or all of them. Its also worth remembering that in the longer term, good design solutions can have a tangible effect on profit margins, customer relations and the perception of your brand. Design may not come cheap, but the savings and benefits it can achieve easily outstrip initial costs. Once youve decided to invest in design, youll need to decide what type of agency is most appropriate to your requirements. There are many different outlooks and set-ups and youll find that professional charges vary considerably depending on location, specialism and experience. Whichever designer you decide to hire, you will need to supply a design brief and an indication of the budget you will be making available. Larger, multi-disciplinary agencies offer a one-stop shop, providing a holistic approach and integrating design skills and expertise in a number of different areas. This type of agency, for example, could tackle an integrated response to a brief combining contributions from hardware and software designers, design psychologists and researchers. They can see a project through from start to finish, commencing with research, moving through to concept development, and then on to testing and engineering of the product or service. But you can expect to pay handsomely for this array of skill sets as these agencies represent the upper end of the market. Alternatively, you could employ a single-discipline agency, which specialises in one particular area and can deliver focused, quality expertise. This type of agency can, where necessary, bring in people with other skills through its network of contacts. Finally, you could take a chance on a raw young designer, just starting out in their career, from whom you can expect inspiring, perhaps even provocative work. On the other hand, youll probably have to provide more input yourself and exercise a greater level of control. This is a general guide - the main point is to consider exactly what you need and cut your cloth accordingly.

31

STORY 8 BLACK & DECKER

THE POWER-TOOL BUSINESS DESIGNED TO SUCCEED

Every time you turn on the television, there seems to be another programme about home or garden improvements. This has led to an increase in demand for power tools, but consumer trends are changing and there is a need for a constant flow of innovative products. That is why market leader Black & Decker places paramount importance on new product design and development.
All of Black & Deckers businesses have established a reputation for product innovation, quality, design and value. The companys Consumer Power Tool division sells the brand-leading range of drills, jigsaws and sanders as A constant flow well as garden of innovative items such as products for changing markets hedge trimmers and lawnmowers, and the hugely successful Dustbuster hand-held vacuum cleaner. Product design and development are carried out by a number of strategically sited global design centres. The second largest of these is based in the North East of England, employing more than 100 personnel. Where possible, Black & Decker will seek global design solutions, but Europeans, for example, generally require more compact products than Americans because their homes and gardens tend to be smaller. Danny Bone, Innovation Manager, places great importance on the Three As - Attitude, Ability and Awareness. As designers, we must have a can-do attitude. The moment people go into negative mode theyre not looking for the best solution. By ability, I mean the ability to allocate sufficient time for development and planning. Awareness and understanding of whats around you is the third vital attribute of a good designer.
FACT BOX COMPANY CHIEF EXECUTIVE Black & Decker Nolan D Archibald Chairman, President and CEO (US) Ian R Carter President - Europe Power Tools and Accessories group Consumer Tools, DIY Divisions: Consumer power tools, outdoor, cleaning, accessories $4.56 billion (worldwide) $4.52 billion (worldwide)

PRESIDENT

PRODUCTS & SERVICES

TURNOVER - 2000

TURNOVER - 1999

OPERATING PROFIT - 2000 Net earnings $282 million WEBSITES www.blackanddecker.com (Tools and accessories) www.dewalt.com (Dewalt tools) www.bdk.com (Corporate information)

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New products introduced within the past three years accounted for an impressive one third of our total sales in 2000
Nolan D Archibald, Chairman, President and CEO, Black & Decker, Annual Report 2000

Quattro concept ID sketches Nigel Robson

33

Because new products stimulate retailer and consumer interest, build consumer demand, contribute to market share growth, and represent a vital opportunity to increase profit margins, our new product strength is especially important during periods of economic weakness. Black & Decker, Annual Report 2000

An example of Black & Deckers innovative approach was the launch of the Quattro. During the mid 1990s the companys Multisander had proved to be very successful. Its multifunctionality had dramatically increased both its perceived and real value with commensurate financial benefits. This led the business to consider what the effect may be if multifunctionality were applied to the businesss core product range. Within two weeks of applying the three As to this challenge a concept prototype of a power tool capable of drilling, screwdriving, sanding and sawing had been created and demonstrated. Bone believes it is essential to show a working prototype. It gives concepts, particularly in new business areas, a credibility that can be readily understood and communicated throughout the business. The innovation process Industrial design is aimed at gives products a must-have quality translating concept ideas, derived from insights into consumer needs, into reality. Industrial design further enhances the process by ensuring the finished article exhibits a must-have image reflecting brand values. Creative design is a distillation over time of many ideas. These initial ideas can come from anyone within, or even external to, the business. The role of the

Emerging Consumer Needs & Opportunities B&D Strategy Brand Image Inventors External Technologies Suppliers Universities Milestone Design & Implementation Process

Design Centre Creativity

Initial Concepts

Application of new/ new to us technology

Satisfying The Corporate Need Black & Decker Design Process

Innovation Group is to help prioritise and incubate such ideas into credible business opportunities. In the case of the Quattro, the concept progressed quickly through the business and the seven-strong project team successfully launched the product within 17 months of its inception. As Bone puts it: It began as a ten-minute video conference and ended up as a multimillion dollar product. The result of this approach to design and innovation is that Black & Decker is a global leader in its sector with Creative design a year 2000 distills ideas turnover topping from within $4.5 billion. And and beyond its particular the company success with firsttime DIY-ers, including women, means its customer base looks very secure.

Danny Bone Innovation Manager

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ADVICE 8 PRODUCT DESIGN

You only have to look at the success of the Apple iMac to see how radical, brave product design can galvanise a companys fortunes. This type of design requires original creative thinking, gutsy self-belief and determination, and perhaps just a touch of inspiration. But this is the glamorous, aspirational end of product design, isnt it surely these kinds of criteria arent applicable to more mundane, everyday items?
Not a bit of it. As Danny Bone, Innovation Manager at Black & Decker, recalls: Its often better to ask for forgiveness than permission. If you believe a concept will work, try it, you will learn from the experience. There is very little to lose and everything to gain. Theres probably a life lesson in there somewhere, but it makes sound business sense too - if you dont stick your neck out from time to time, youll never produce anything remotely different and therell be nothing to set you apart from the competition. He points to the need for an open mind too. The Black & Decker Workmate, submitted by an external inventor, was initially turned down by the company, but put into production later after the decision was reviewed. The time might not be right for your particular creation, but perhaps its time will come. Product design has been described as adapting new technology to the application of innovative thinking. Undoubtedly, an in-depth knowledge of relevant manufacturing processes, technologies and materials, as well as the market you are designing for, is critical. Adding that little unexpected twist to your product is the magical added extra. But successful design is also pragmatic design. It should always be able to deliver efficient manufacturing - that is, make sure that the product is made cost-effectively for its specifications within set timescales. Teamwork is an essential part of the design process. Manufacturers, suppliers, and if possible the end-user, should work closely with designers to ensure a quality product and should be involved right from the start of the design process. Up to 80% of a products manufacturing costs are committed in the early stages - if they are managed effectively, you should reap the rewards later. A realistic design concept such as a working prototype made from the correct materials will help iron out niggles before the machines start rolling and will smooth discussions between design and production. Refining your manufacturing plans alongside your product development gives you viable production options and reduces the time it takes to move from concept phase into production. At Black & Decker, the design process for the Quattro power tool was unique in that its start point was clearly defined. This, however, is quite rare as the start point for most projects is difficult to define precisely. Numerous concepts and ideas are generated in response to perceived and real customer needs. The innovation process helps to define credibly what the future product may be. The trick is to provide solutions to genuine customer needs before the customer is even aware of those needs. Doing this helps businesses lead markets with innovative products that reinforce and enhance brand value.

35

STORY 9 IKEA

DESIGN ACROSS THE BUSINESS, PRODUCTS, PROCESSES AND ADVERTISING

When Swedish furniture retailer IKEA first appeared on the British landscape in 1987, it offered a completely new concept. Well designed furniture and household products - although in many ways unfamiliar to the UK market - soon caught on because quality was good, prices were low and the self-assembly drive-away offering reduced the need for deliveries.
Anders Dahlvig President

Since IKEA was founded in Sweden in 1951, it has been driven by the pursuit of a single ideal: well designed products at low prices. IKEA bases its design and new product policy on the customer feedback it receives from its Feedback and locally-based sales collaboration and marketing guide design operations throughout the world. Thus any product modifications or new product ideas are subject to a carefully thought-out operation from original design concept and product development to the selection of suppliers, distribution to the stores and then to customers - mainly through take-home flat packs. Developing or modifying products at IKEA is a blend of co-operation, collaboration and discussion between designers, product developers, purchasers and suppliers.

Hans Gydell Vice-President

A key element in the design of all IKEA products is the need to minimise material waste in order to keep costs down. Therefore design has to be functional and fit in with existing production methods and the finished products must be packaged in such a way as to fit onto Euro pallets. Most importantly of all, the majority of products, with obvious exceptions such as upholstered sofas, must be designed for flat-pack distribution so that they can be easily stored and then transported in the average car. Furthermore, they must be easy to self-assemble when the customer gets them home. IKEA believes in close collaboration with its manufacturers. Thus its co-workers regularly visit suppliers all over the world to negotiate prices, monitor production and carry out quality controls and inspections.

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Design is 98% commonsense and 2% that magic ingredient called aesthetics and sometimes style.
Sir Terence Conran, designer, restaurateur, retailer

IKEA is design led and many of its products are radically different from its competitors, yet its retail formula is hard-edged. It is based in seven areas, which are all designed for simplicity and efficiency. They can be summarised as follows:
Product development IKEA is a

some of the Swedish retailers more modernistic designs. It thus took some years before the UK was won over to IKEA but sales were boosted in the mid1990s by a tongue-in-cheek advertising campaign developed by American TV Commercial Director Mark Tiedermann, with the strapline Chuck out your Chintz. The strategy was to challenge peoples expectations and to make them question their taste without offending them. The commercials went on air in the last throes of the Major Government and aimed to tune in to the perceived social and cultural changes in Britain at the time. Research showed that when the commercials first went out, two-thirds of all IKEA visitors were female and women took 90% of purchasing decisions. The research also showed that men were happier than women to live in the minimal, functional environment that IKEA-style encouraged. The initial campaign raised awareness of the IKEA brand from 39% to 63% in the stores catchment areas. By last year IKEA had ten stores in Great Britain, which has now become the companys second largest market. However judging from the number of conventional furniture warehouses that still stand proud along our arterial roads, there are still plenty more potential customers to be won over.

production company. Its operations are a balance between design, function, environmental sensitivity and a low price
Suppliers new products are made with

good materials from the best suppliers, backed by well designed supply chain management systems
FACT BOX COMPANY PRESIDENT VICE-PRESIDENT MANAGING DIRECTOR UK STORES UK ADVERTISING MANAGER COMPANY SIZE PRODUCTS & SERVICES IKEA Anders Dahlvig Hans Gydell Goran Nilsson

Purchasing co-workers work closely with the suppliers to negotiate prices, monitor production, and carry out quality controls and inspections Distribution a vital piece of the low

Frances Evans

price puzzle. Well designed flat packed products contribute to keeping storage and transport costs low
Stores are simple, well designed, cost

58,000 employees Home furnishing products 139 in 22 countries 1960 in 53 countries

effective and easy to navigate

Customers contribute to creating a low price by choosing to collect, take home and assemble their goods Advertising, though IKEA offers a

STORES SUPPLIERS

TURNOVER BREAKDOWN Europe 80% (UK 13%) North America 17% Asia 3% TURNOVER 2000 WEBSITE $8.5 billion www.ikea.com

defined range of products, advertising differs from country to country While the British have always liked IKEAs low prices and take-away operation, there has always been some resistance to

37

We will achieve the IKEA vision by offering a wide range of well designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them. Anders Dahlvig, President, IKEA

38

ADVICE 9 STRATEGIC DESIGN

An awareness of the power and potential of design should be at the strategic heart of any good business. Used intelligently and thoroughly, design can increase profits and turnover and open new markets, as well as improve take-up and market share. Softer benefits might include more solid relationships with your customer base and suppliers, and fewer customer complaints.
To reap some of these potential rewards, find out how design is currently being used within your organisation. Everything is designed, though not necessarily with a coherent focus. You need to make sure your company starts thinking about the implications of design at the early stages of a project. A strategic overview of design can both manage and co-ordinate the activities of your business, with advantages of competitiveness and efficiency. Like any strategic aspect of your business, you need to be able to evaluate what design has achieved for you on a particular project by setting out targets and goals before you start, and take a judgement as to whether these have been met when the project is completed. Its also worth considering the broader picture, linking all the parts of your business that are affected by design (marketing and customer relations as well as product development, for example) and looking at how each of these areas may have benefited. Engaging with design techniques, methods and perspectives adds value the whole way through the creative business process. From the refinement and clear articulation of a strategic vision, to identifying problems and coming up with relevant solutions, to working through concepts, finding the right emotional ergonomics and managing the development process. Finally, it brings an added impetus to your marketing drive and clarifies the branding of the finished goods. At best, design can be used as a powerful instrument for managing and co-ordinating how your business looks to its customers as well as the way it communicates with them and, most importantly, thinks about them. Its also a tool for helping you realise and evaluate future business, service and product opportunities, and a way of maximising a companys potential to deliver useful, useable and desirable products and services. Its always worth bearing in mind that strategic objectives are unlikely to be delivered through investment in a single project. A holistic approach, combined with a little patience, will always yield more encouraging results - creating better business processes through effective design is best thought of as an ongoing initiative, involving a series of investments and design-led programmes. These may be needed over a period of time and might include your products and services, your communication material and your working environment.

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STORY 10 SMITH & NEPHEW

NAILING THE COMPETITION THROUGH INNOVATION

The competition in the healthcare market is probably among the fiercest in the world. Smith & Nephew is one of the best known and respected brand names in the medical field yet it is still driven by the need for constant innovation in order to remain one step ahead of the field.
FACT BOX COMPANY CHIEF EXECUTIVE MARKETING DIRECTOR Orthopaedics COMPANY VALUES Smith & Nephew Christopher ODonnell Rory Gleadhill

Innovation is taken seriously throughout the organisation, not least in the boardroom. Chief Executive Christopher ODonnell believes innovation is the lifeblood of a medical device company like Smith & Nephew. Product development therefore sits at the heart of profitability within the company, backed up by its other core values, which are performance, trust and innovation. Product development is managed via a stage-gate process, to ensure that products will meet customers demands and perform clinically. Market research, stage one, defines the unmet needs of Smith & Nephews customers. Stage Product two involves development is research and central to development profitability engineers working in partnership with leading clinicians to develop new products, as well as

Performance, innovation, trust Healthcare 1.135 billion 1.120 billion 171.4 million

innovative surgical techniques and instrumentation designed for shortening and improving patient recovery. Following extensive design testing, stage three, the staged development process concludes with limited clinical trials to ensure that the products will perform as designed. Whenever possible, Smith & Nephews R&D process seeks to develop platform technologies on which a number of new products can be produced. This strategy maximises the return on the costly investment involved in commercialising implantable medical devices by building on proven technologies and designs. Smith & Nephew is particularly strong in the orthopaedic sector and has been recognised for its innovative designs in intramedullary nails for many years. Intramedullary nails are tubular metal implants which are placed in the central bone marrow canal of badly broken

PRODUCTS & SERVICES TURNOVER - 2000 TURNOVER - 1999 OPERATING PROFIT 2000 WEBSITE

www.smith-nephew.com

Christopher ODonnell Chief Executive

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Innovation is the lifeblood of a medical device company like Smith & Nephew.
Christopher ODonnell, Chief Executive, Smith & Nephew

bones. They are used when a traditional plaster cast will not provide the necessary level of mechanical Innovation cuts stability required operating time for predictable and speeds healing. However patient recovery the companys world-renowned product, the Russell-Taylor stainless steel nailing system, now faces strong competition from more recently developed products. Smith & Nephew recognised that it was time for a new innovative approach to counter the competition. With the assistance of two world-renowned surgeons, Dr Toney Russell and Dr Roy Sanders, the company developed TriGen, a titanium nail system, with the goal of simplifying the technique. Since operating room charges are often the most costly part of this treatment, Smith & Nephew recognised the need to reduce operating times. Reduction of operating times is also critical to patient recovery, in the instance of multiple traumatic injuries, and in particular the case of serious motor vehicle accidents. The TriGen nailing system is a major advance in intramedullary nailing technique and has been recognised by five patents with two more pending. It has significantly reduced the number of instruments required to treat lower limb fractures. It also makes it easier to train the operating room staff, thereby

improving efficiency, in part by increasing familiarity with the technique through repetition. In addition, the TriGen nailing system is colour-coded for instant recognition of the correct components for the implant system as well as matching the correct instruments. This also reduces the chances for inadvertent mistakes that might otherwise lead to wasted operating room time and a potential increase of patient trauma. Rory Gleadhill, Marketing Director for all orthopaedic trauma products, points out that TriGen really makes life simple for the surgeon. The design allows surgeons to treat fractures with just three nail designs, compared with six or seven nailing systems for the RussellTaylor product line. Clear brand In addition, the values are surgeon now only attractive to needs one customers instrument set to treat almost any lower-extremity fracture. As well as making surgery easier and reducing the cost of the procedure, the new design causes less trauma and leads to a better rate of patient recovery and success. This is a highly customer and patient- focused approach. The product was launched into the US, German and Japanese markets a year ago and has been well received. It has not yet been sold into the UK market, although it is being evaluated.

Gleadhill believes that the Smith & Nephew brand strength having been built on trust, performance and innovation makes the medical profession more receptive to its developments than to those of its less well known competitors.
Rory Gleadhill Marketing Director, Orthopaedics

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Design is not an add-on, but ground level, base station thinking.

Peter Crowley-Palmer, Principal Designer, Land Rover Group

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ADVICE 10 DESIGN - THE BUSINESS CASE

Because design initiatives are hard to measure in a directly quantifiable way, many companies need convincing about their efficacy. They want hard evidence before they commit time and money to something they perhaps feel is irrelevant to their day-to-day working practices.

There is, however, a compelling reason to apply design techniques, methods and perspectives to every possible aspect of your organisation. Its a reason that makes every business person sit up and take notice... namely, the bottom line. In fact, if your company is prepared to embrace sound design principles fully, it can expect to reap significant rewards. These include increases in the take-up of services, better products that enjoy a greater market share, fewer customer complaints and less wastage on warranty repairs and returns. These are the kinds of advantages that are a springboard to the running of a healthy, profitable business. Design can increase your profits in two major ways - by cutting costs and improving margins. The best way to achieve costcutting is to bring in design-for-manufacture (or implementation) expertise from the very outset of a project. As for improving your margins, you can add value to products or services by designing greater usability, heightened aesthetics or a more engaging customer experience. And effective design, particularly as far as products and graphics are concerned, is a major source of differentiation in customer perception of quality and brand value. But if you want hard facts and figures, try this: In 1998, Fitch, a large, well-respected international design consultancy quoted on the Stock Exchange, conducted an experiment. It tracked the share prices of a selection of its publicly quoted clients, back-dated over a five-year period. The results were staggering.

The shares, bundled into a fund, out-performed the Standard & Poors 500 benchmark by a factor of nearly four. The fund grew by an impressive 350%, while the rest of the market averaged just 90%. Such figures at least suggest a link between strong performance and a design-led approach. In 1999, the Design Council conducted a further study. Here, the FTSE-quoted clients of six top UK design consultancies were monitored. For the purposes of the research, six hypothetical funds were established - one for each of the consultancies as well as a joint fund containing all of them. Significantly, all of these funds out-performed the FTSE All-Share Index. While individual funds were between 5% and 28% more profitable, the joint fund proved 10 points more effective. The fact that design isnt just for blue-chip companies was underlined by a similar exercise undertaken in 2000 with a hypothetical fund based on the 31 FTSE-quoted companies awarded Millennium Products status by the Design Council for excellence in design and innovation. These companies included relatively small businesses launched on to the market on the basis of the product or service which won Millennium Product status. The results were even more impressive, with the Millennium Products companies out performing the FTSE All-Share Index by up to 150% over a four-year period.

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STORY 11 CHARCOLONLINE

FIXING A MORTGAGE WITHOUT GOING ANYWHERE

The internet has created a new breed of consumers who want to make their purchases instantly via their computers and dont want to be bothered with visiting shops or making phone calls. The mortgage broker Charcol, formerly John Charcol and now owned by Bradford & Bingley, spotted this trend in the late 1990s, so it set up an internet mortgage service which would allow people to compare mortgages and apply online. Up front, the service it designed is clearly customer-focused, while behind the scenes the system also improves the companys operational efficiency.
Although Charcol had operated a website like those of its competitors since 1996, it primarily offered mortgage information. By the millennium, the company realised that an interactive service would capture a lot of business from beyond its traditional client base. CharcolOnline - a complete online mortgage broking service - was launched in November 1999. Since then, the service has flourished, gaining Charcol a larger market share and several awards, including the Microsoft Digital Britain award and the Mortgage Site of the Year award. Charcol employed both external consultants and its own staff to design the site. The result was an online tool to enable potential clients to find a mortgage tailored to their needs, go through the entire application process online and get a quick decision from the mortgage provider. This has enabled Charcol to reach a new market sector. Traditionally, its Broking services clients wanted appeal to advice on choosing empowered a mortgage. Now clients the increased capability of broking services available on CharcolOnline appeals to clients the company describes as more empowered, with a different mindset. Recently, Bradford & Bingley decided it wanted to provide an online investment service. CharcolOnline was given the job of developing an investment site for the group. This was developed in close co-operation with the regulatory authorities and now offers an ISA and cash management account platform.

FACT BOX COMPANY CHIEF EXECUTIVE DIRECTOR SPECIAL PROJECTS PRODUCTS & SERVICES AWARDS Charcol Toby Strauss Clive Kornitzer

Financial Services Mortgage Site of The Year 2000 Microsoft Digital Britain Award

OWNER

Bradford & Bingley Building Society www.charcolonline.co.uk

WEBSITE

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We would like our site to enable our clients to view all their finances in one place - even where we dont manage all their affairs.
Clive Kornitzer, Special Projects Director, CharcolOnline

The technical and visual design of the site is client-led, and based on functionality rather than gimmicks. To suit clients needs, the site is straightforward to use and downloads quickly. But most Web design is importantly, it based on does what clients functionality, want it to: they not gimmicks can go through the complete process of applying for a mortgage on the site, in most cases with no additional paperwork or face to face contact. The sites design also suited Charcols business needs, which were to cut down the amount of processing involved in each mortgage transaction. Because there is a lot of selection of products and vetting of the clients involved in the early stages of the online process, the client is less likely to be refused a mortgage by their chosen provider. A plug and play design has been used which means that a module can be removed or re-designed easily if it is not meeting expectations. Things can change fast, and the capabilities of the site allow Charcol to remove products which are no longer available and add new ones quickly and easily.

Charcol is now looking to the future of its site. Clive Kornitzer, Director of Special Projects, predicts that the financial products market will move towards a more integrated approach. We would like our site to enable our clients to view all of their finances in one place. Even where we do not manage all their financial affairs, we want our clients to be able to view their current and deposit accounts, as well as their mortgage and investments through the site, move money around and buy and sell equities. Although this is a challenge, we feel that it is no less possible than anything else that we have achieved to date. Kornitzer does, however, sound a note of caution for Charcols competitors. It takes longer, it costs more and its much harder to develop Clients want to see a site like ours than we realised. all their finances Having Charcols in one place strong brand and over 25 years experience as an IFA behind us is an integral part of CharcolOnlines success and the results have proved all that hard work was well worth it. We view our online proposition as part of an integrated bricks and clicks strategy. Our clients value the ability to transact online in the knowledge that face to face advice is just a click away.

Toby Strauss Chief Executive, CharcolOnline

Clive Kornitzer Director of Special Products, CharcolOnline

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Design is the creative force by which we realise our hopes for a better environment. (the late) Jimmy Knapp

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ADVICE 11 CONNECTING DESIGN & MARKETING

Two products. They do exactly the same thing just as well as each other. They look and feel similar. They are identically priced. As a consumer, how do you choose between them?

Youll probably go for the brand you feel most empathy for. You might have seen advertising which appealed to you. Your friends might have bought one recently. You might like the products image. What youre doing is identifying with the softer, emotional resonance of a brand. What does it say about you that you own an Apple iBook rather than a Sony Viao PC? That you prefer Nike to Adidas trainers? That you drink Buxton mineral water rather than Evian? That youve plumped for an Orange mobile phone as opposed to one from Virgin? Theyre subtle signifiers, but consciously or subconsciously they say something about you, your choices, and the kind of person you are. Its the role of marketing, working in tandem with design, to create desirable auras around brands. Together with market research, marketing and design are key strategic components of business which have a significant mutual dependence. All three are concerned with connecting to customers and determining the look and feel, features, functionality and appeal of a service or product range. They are collectively responsible for reaching out and touching the consumer, so a close relationship and a shared strategic vision is vital to market success. The aim of market research and design is to find out what really makes consumers tick. To find out what appeals to them and why. Quantitative market research tends to rely on results

collated from hundreds of questionnaires. Qualitative market research is more in-depth, using controlled interviews with individuals or small demographically differentiated groups to eke out attitudes and opinions. Design research can, in addition, help to discover customers unexpressed needs because it is not predicated solely on existing knowledge. These findings may then be filtered through into design concepts and product planning. Both marketing and design play a pivotal role in product planning. Whether youre involved in the design of a financial service, a website or a machine tool, you need to bring together the same basic elements. Firstly, the needs of the end-user within the context of the market. Then, your companys resources - these may include technology, manufacturing or IT. Finally, your corporate vision and strategic objectives. These fundamental parameters will define your product. Valid, intelligent marketing should be able to express eloquently the soul of the product. It should use elements unearthed during the research and design phases of the production process to entice and delight potential customers. In other words, it should take whats already there and build a credible story around it. And if its a story people want to hear, theyll buy your product rather than your competitors.

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CONTACTS
Design Council www.designcouncil.org.uk CBI www.cbi.org.uk
Other useful websites: DTI/Design Council Living Innovation website www.livinginnovation.org.uk DTI Future and Innovation Unit www.innovation.gov.uk Design Business Association www.dba.org.uk Centre for Sustainable Design www.cfsd.org.uk Engineering and Technology Board www.etechb.co.uk Patent Office www.patent.gov.uk Small Business Service www.sbs.gov.uk Trade Partners UK www.tradepartners.gov.uk UK online for business www.ukonlineforbusiness.gov.uk Fit for the Future www.fitforthefuture.org.uk Design Directory www.designdirectory.org

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Publication Team Project Manager: Paul Sykes, Design Council Contribution: Dr Tim Bradshaw, CBI Design: Heard Design Copy: Mattison PR

The Design Councils purpose is to inspire and enable the best use of design by the UK, in the world context, to improve prosperity and well-being. Design Council 34 Bow Street London WC2E 7DL United Kingdom Phone +44 (0)20 7420 5200 Fax +44 (0)20 7420 5300 www.designcouncil.org.uk info@designcouncil.org.uk In partnership with: Confederation of British Industry Centre Point 103 New Oxford Street London WC1A 1DU United Kingdom Phone +44 (0)20 7395 8071 Fax +44 (0)20 7497 3646 www.cbi.org.uk enquiry.desk@cbi.org.uk March 2002 Published by the Design Council Registered charity no. 272099 2002 The Design Council ISBN 1-904335-00-4