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Creating Prosperity:Talent Development and Cross-sector Collaboration in a Creative Economy.
The Bauhinia Foundation, Hong Kong, Sept. 1st, 2011
IN DESIGN CREATIVITY ALONE
IS OF LIMITED VALUE IS OF LIMITED VALUE
John HeskettChair Professor and Acting Dean,
School of Design, Hong Kong Polytechnic University
Economic ValueEconomic Value
Economic Value 1
• What links any commercial business of any kind, is the need to generate economic value, in other words: profit.
• It is an immutable law of business life: • It is an immutable law of business life:
No profit, no survival.
Economic Value 2
• The overwhelming majority of design work takes place in a business context.
• Therefore in any business, design must be • Therefore in any business, design must be judged by successful innovation and competitiveness.
• Designers must function as business professionals, not second-class artists.
Design as Art …
New York TimesMagazine
1 Dec. 2002
… or Art as Cosmetic Design
Design as Art
Form
ColourShapeTrendsTextureMeaning
Design as Art?
AestheticsStyling
Decoration
DesignTools
Meaning
Design as Professional Business Activity.
Toto Electronic
Toilet
Design as aComplexBusinessActivity
Industrial Design
Form Function Manufacturing Marketing
Design as a Complex Business Activity
AestheticsStyling
Decoration
DesignTools
ColourShapeTrendsTextureMeaning
UsePurpose
ErgonomicsEnvironmentLifestyle
MaterialsProcessDurabilityReliabilityMaterials
PricePosition
CompetitionDistributionBrand
InteractionHuman factorsUser-centredness
EngineeringEconomyRecycling
Strategic PlanningSystems designCultural research
Product ValueProduct Value
Product Value 1
• The most basic and obvious role of design is in creating a differentiated visual image.
• This function, however, can be purely superficial and short-term, without any long-superficial and short-term, without any long-term competitive perspective.
• Moreover, in some product sectors, form is no longer the determinant of value.
Which works best?
Which would you buy?Which would you buy?
Lies
Lies
Lies
Product Value
Product Innovation
Level of Innovation Value Means
Fundamental New value Original Creation
Radical Redefining value Enhanced Function
Incremental Adding value Feature
Imitation Appropriating value Adaptation
Process ValueProcess Value
Process Value 1
Change agentsDesign is implicitly about change, but change, like profit, is not an end in itself. It must be justified as a means by it’s content.
Post-Sales ValueValue derived from design through increased market share, cultural appeal in global markets, and brand share, cultural appeal in global markets, and brand building, rather than lower cost.
Process Value 2
Support FunctionsGenerating and developing concepts to support the needs of service-systems, such as catalogues and user-instructions. After-sales services can enhance the value of product, e.g. constant software upgrade and worldwide warranty as tools of product differentiation.
Process Value 3
Pre-productionSourcing alternative quality material and assuring the feasibility of manufacturing.
Risk ReductionMake critical changes before a single unit is actually manufactured, reducing need for change orders.manufactured, reducing need for change orders.
Case study 1. Guangzhou Echom Science & Technology Group Co., Ltd.
Echom was founded by an industrial designer and is located near Guangzhou Echom was founded by an industrial designer and is located near Guangzhou It specializes in research, development and manufacturing of plastic products and moulds.
The company mainly produces home appliance casings and automobile parts and is China’s largest in these fields.
In production of television cabinets it dominates the domestic market, having been leader for five successive years, with 7 million sets securing 33% of the market.
its early success was based on design, but soon marketing skills became essential. Then competence in distribution and logistics became necessary.
Case study 2 : Kinglong
The leading coach and bus manufacturer in China
• Annual production capacity of 30,000 vehicles
• In 2006 sold 23,291 coaches with sales revenue of US$9.2 million.
Process Comparison
Linear process vs. Integrated process
High possibility of decision change
Cost of development
Product Development
High
Decision changes.
Creativity Implementation
Vision Methodology
Copious ideas Focused project
Change Established knowledge
Inspiration Research in depth
Get decisions
right
Avoid changes
Low
Costs Minimum change
Desirable; Maximum Cost
Maximum changepossible; Minimum Cost
TimeConcept Market launch
Low possibility of
decision change
Inspiration Research in depth
Strategic Value
Strategic Value 1
Collaborators and SynthesizersDesign, when used strategically, interacts with a greater number of product creation stakeholders than any other function in an organization.
Innovation Collaborative approaches bring an increased likelihood of innovation. Ideas generated by collaborative efforts tend to meet innovation. Ideas generated by collaborative efforts tend to meet less resistance than those developed in isolation.
Shaping IdeasDesigners shape and provide meaning to innovative concepts, thereby lessening the potential negative impact of new technology on users.
Strategic Value 2
Future Scenarios & VisionariesCommunicating what “might be” rather then altering “what is”.
ResearchTechnology ImageMarketUsersUsers
Systems DesignInternally, systems design can bring order to administrative, sales and financial activities, making them more sustainable and profitable.
Externally it enables cooperation of multiple disciplines on more complex projects.
Strategic Value 3
Strategic Planning
Design contributions to:Profitability Market efficiency Creditability/Customer loyalty Market value in the stock market
User Value
Generic Value Chain as developed by McKinsey & Co.
- Source - Function - Integration - Warranty
Where is there any mention of users in all this?
Technology Product Manufacturing Marketing Distribution ServiceDesign
- Source
- Sophistication
- Patents
- Product/
Process
choices
- Function
- Physical
characteristics
- Aesthetics
- Quality
- Integration
- Raw materials
- Capacity
- Location
- Procurement
- Parts production
- Assembly
- Prices
- Advertising/
Promotion
- Sales force
- Package
- Brand
- Channels
- Integration
- Inventory
- Warehousing
- Transport
- Warranty
- Speed
-Captive/
independent
- Prices
From: Jay B. Barney. Gaining and Sustaining Competitive Advantage. Reading, MA: Addison Wesley, 1996,p.176.
Company/ Distributionchannel
Targeted Advertising
Design as Formgiver
Company/Designer channel
Retail sale
Targeted consumers
Advertising
AdvertisingDistribution
channelUsers
Company/
Design
Design as User-centred
User Scenarios
channel
Retail
Design
Concept Implementation Evaluation
The Context of Design
Perception
Brand
Potential
Techno-
Security
Profitability QualityImage IntegrityRecognition
Perception
Financial Institutions
Acceptable values
Interface
Perception
R&D
CultureLaw
Techno-logy Design
Patent Protection
Constraints
Acceptable values
CompatibilityLegal Structures
Fashion
Advert-ising
Purchase
Interface
Taste
Perception
Company Communication Market User
User Value
UsersValue is in the user’s mind and can be derived from personal history and memory.
Voice of the UserDesigners frequently represent the standpoint of users in the product creation phase.
Human FactorsDesigners have developed a range of tools and methods for use in understanding users:
Physical Human FactorsPerceptual Human FactorsSocial Human FactorsCultural Human FactorsEmotional Human Factors
User Value 2
Present Value/Future ValueTwo approaches to “economic value”: one is best utilization of existing resources (e.g. reduce cost, improve efficiency and effectiveness); another is enhancement of profitability (designer as visionary to articulate needs not realized by the user).
Actual need/latent needGiving users what they didn’t know they wanted or never thought Giving users what they didn’t know they wanted or never thought they could have. Role of coded and tacit knowledge.
Tangible/IntangibleTangible and intangible needs, or material and experiential needs, can be explored on several levels, such as functionality, profitability, social concern, cultural concern, sustainability.
Creating value
Markets do not exist,
they are created.they are created.
Brand Value
Brand and Reality
Friends of the Earth?
Brand and Reality
It is unlikely that a brand will be successful without a basis of quality in product and service. On the other hand, products and services can succeed on the basis of quality without a highly contrived brand identity.
Social Value
Social Value
Vienna Strassenbahn by Porsche Design
Cultural ValueCultural Value
Cultural Impact: UK telephone call boxes
Cultural Value
Political ValuePolitical Value
Danish national logo
Ministry of Foreign Affairs
Finance Ministry
State Identity - Denmark1
Foreign Affairs
Culture Ministry
Danish State Railways
Royal TheatreThe Royal Library
State Identity – Denmark 2
State Services 1: Hong Kong tax form
