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10 Factors to Be Like Apple

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Webinar March 24, 2015
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10 Factors to Be Like Apple

Design is key to innovation, competitiveness and to driving organizations’ economic value through creating desire with clients and customers. Design enables organizations to succeed, from innovation and new product development, operations and human resource management, to communications and branding.

In this webinar, Jean-Pierre Lacroix will discuss the topic of design in organizations with Arlene Gould; Strategic Director, Design Industry Advisory Committee (DIAC) and Course Director, Department of Design and Faculty of Environmental Studies, York University; and Kevin Stolarick; Director of the India Institute of Competitiveness in Toronto.

In this session, you will learn:

  • the role and impact of design on organizations
  • how to use design as an effective business element
  • long-term vs. short-term design investment
  • which organizations have done it right (there is more than Apple Inc.)

Also visit http://www.diac.on.ca/ and download the research on Why Invest in Design and watch CEO interviews.

This webinar aired on March 24, 2015.

Fill out the form to watch to the webinar.

Webinar Transcript

Interviewer: Good afternoon, and thank you for joining us at today’s session of Design Lounge. We’re going to be talking about the power and impact of design in the industry, and I’m very fortunate to have two market leaders when it comes to understanding design and what it can provide the industry. I have Kevin Stolarick, who is actually the director of the India Institute of Competitiveness in Toronto. Kevin, thank you very much for joining us. And obviously, Arlene Gould, an old colleague of mine, who is the executive director of the Design Industry Advisory Committee, which actually leads a lot of the thought leadership across different disciplines in Toronto on the impact of design. And she is also the course director department of design and faculty of environmental studies, that’s a mouthful, at York University. Arlene, thanks for joining us.

So what are we talking about today? Well, we’re going to look at what is the role and impact of designing in the marketplace. You know, how does design impact businesses and how can businesses better take advantage of design? It’s really kind of ironic that today we’re meeting to talk about the impact of design and Apple is having their announcements on the new introduction of the iWatch. Obviously, they’ve pioneered and are the leaders when it comes to the impact of design. You know, how to use design and effective business elements? So design, although it’s well established, really, how do we leverage design and what is the role of design within organizations? I think we’re looking at the long-term/short-term. I think both of you are going to bring some perspective on what’s the value, long-term or short-term, of design and how it plays in organizations, and which organizations have done a really great job. I think there’s a study here, I thought, that was published on the DIAC website that, you know, why invest in design. I think this is very…a huge study done. So, why don’t we start, Arlene, I’m going to ask you, what was the study about?

Arlene: Well, this study we did last winter, so just a year ago today we published this. It was funded by Industry Canada with some support from the City of Toronto, and we looked at this question of why do companies invest in design and what’s really the benefit of that? And we didn’t have a lot of time to do this. We did this in three months, and Kevin and I worked on it. So, it was DIAC and then Martin Prosperity Institute. And we decided to pick five Canadian-based organizations that had invested in design significantly and were internationally recognized as successful. That was the criteria. And we went to the top, and we interviewed the CEOs and leaders of those organizations and asked them a series of questions about their investment. We videotaped the interviews, and from that we published our report. So the report and excerpts from the video are on the DIAC website.

Interviewer: Great. And so Kevin, any insights that came out of this study that you find of interest?

Kevin: What we really found out and when we wrote…it was designed and written at Lawbridge, right? So it was designed about specific types and everything, right? And really trying to get a sense of how companies and how CEOs really see the value of design. And so the big thing for us was getting a handle on how, as you said, the short-term and the long-term, and how they’re really looking at that and understanding that it’s an investment and understanding that they have to look at things kind of holistically. It wasn’t about design as something that you outsource or you contracted away or that you did in some little corner someplace. It was integral to the organization. You know, you mentioned Apple, and I think…there’s an old saying from too many years ago when I was a student in university that IBM…I was in computer science…and IBM was a marketing company that happens to sell computers. Well, now they’re a marketing company that happens to sell services, right? I’ve always said, though, that Apple is a design company that happens to sell mobile devices and computers, right? To see how pervasive design actually should be in order to be successful, and so, as you said, it’s not just Apple. I mean, we talked to AUC, we talked to Umbra, we talked to several leading companies across Canada, and what we found time and time again was exactly that same kind of issue of, it’s embedded in what they’re doing and a really important part of their whole business, no matter what.

Arlene: I think it’s important that we went to the top. We went to the CEOs, the leaders of those organizations, because very often if you talk to the marketing director about a specific project in an organization that can sound very exciting. But if the CEO is not involved and is not a passionate champion for design, you don’t get the integrated perspective that we think is so important.

Interviewer: There’s still a lot of misconception of design. You know, even when I go in and do presentations and discussions, it’s limited to either graphic design, “Oh, I need a logo,” very tactical use, versus understanding that design goes beyond that and it goes into the fabric and the processes that organizations have. You know, when you did the interviews, was that kind of a preconceived idea of what design was prevalent?

Arlene: We picked these companies because there was an integrated perspective, so there were five organizations, as Kevin said. It was Umbra. It was MEC, formerly known as Mountain Equipment Co-op. We interviewed Technion, the office systems furniture company. Healthcare Human Factors, which is a research organization in the University Health Network. And a plumbing fixtures company called Canplas. So a range of very different industries. However, the 10 indicators of positive design investment that we identified in the study were common across these organizations, and that’s what we found so interesting. So, the idea that, as you say, it’s not tactical, it’s not just graphics or branding, it’s everything. I find it helpful to think of design in three buckets. So there’s products and services. You know, the things that you do in an organization. There’s built environment. So that’s architecture, landscape, and interiors of buildings or retail. And finally, there’s branding and communications. And we would say that an organization needs to be working with designers closely in all of those areas, pushing forward in all of those particular activities in order to get this integrated perspective on design.

Interviewer: Great. And Kevin, you know, you’ve talked about the 10 metrics. What were the 10 metrics that would identify these companies as leading edge when it comes to the integration of design?

Kevin: So the ten. It started with what we always said. We numbered them zero to nine because the zeroth one is kind of this one that’s kind of important and it’s worth pointing out that it impacts the other nine of them, but that is the design thinking and really is the way of approach to design and investment of design is both short-term and long-term. The people are understanding that there may be a short-term investment, but that they should be…even still in the short-term you should be expecting long-term returns…but that the real returns are going to benefit in the long run. That you spend a little bit of money now…There’s actually a great chart, a quick graph…you can’t be a business school director without doing charts and graphs…but there’s a quick graphic that shows the difference between the returns you get, the typical approach is the short-term approach: I’m going to put money in, but I gotta get my money out right away. But then in the long-term, you don’t really benefit. You put a little bit more money in the beginning. It takes you longer to see a benefit, but the benefit you get continually increases. And so the idea of being both short-term and long-term, I think was a really important one.

Arlene: And just to add to that point, the nature of the way in which companies work with designers in the short-term versus long-term process is quite different. So, I’ve seen, and I’m sure you have in your practice, lots of times where designers get called in on a project with a definite beginning and end date. Very often, the start date is too late. A lot of the thinking, the decisions, have been made by the company, they give the designer a tight brief: do this, when you have it done by?

Interviewer: Tactical.

Arlene: Tactical. The designer is cast in the role of a supplier, essentially. The long-term view is that designers are collaborators for the long-term, and this, whether they are in-house or they can be collaborators and be consultants as well. This gives the company a competitive edge because they are always ahead of the competition, so in that case the designer has a role fully close to the management team and they’re continuously working on what we call the virtuous cycle of innovation, where design is helping that company to become serial innovators, and that’s a way to stay ahead. It’s not a matter of just taking out more and more patents. You’re continually innovating and therefore you can sustain your competitive advantage. And that’s a real powerful position to be in.

Interviewer: Arlene, that’s interesting. You know, it really highlights the importance of corporate culture, and I would call it corporate design culture, that the culture of the organization is open to and incorporating the meaning of design versus the purpose of design. So going into the thinking and the thinking process and having that interwoven within the culture of the organization so that everything works together. So that really highlights that.

Arlene: Right.

Interviewer: So on your list, what’s number two? Or number one?

Kevin: Number zero is short-term/long-term thinking. Number one is actually disruption, that what we really saw was that people were understanding…especially that we really…we interviewed CEOs and that they understood the disruptive power of design and what they were doing and how to go about using design to change their markets and the places that they were doing them. Arlene mentioned Canplas. It’s a great example. It’s actually a French-owned now, but still Canadian, with a Canadian portion of the company. And they manufacture plumbing fixtures out of plastic. That’s the obvious plas part. And they spend a lot of time really thinking about how that works and what you have to do and how do you redesign it and totally change it. So one of the big things for commercial properties, especially restaurants and stuff, you have to have grease separators. You can’t dump your grease as London found out with their three ton ball of grease that they found in the sewer, right?

Interviewer: Oh, really?

Kevin: Oh, yeah. If you don’t separate the grease out, it starts to accumulate in the sewers and it becomes a real problem. So, in typical grease separators, it ends up being this kind of sheet metal contraption because of the way you have to assemble it what you have to do and the whole process on how it all works. I don’t know the plumbing engineering, but I know it’s messy and actually a bit complicated. But they actually figured out how to do it in plastic. Lower cost, more effective, smaller space.

Interviewer: And firms who have incorporated design thinking, are they more operationally efficient? Is there benefits beyond the consumer or the end product?

Kevin: Oh, yeah. Absolutely. That’s, I think, number seven.

Interviewer: Oh, okay. Good.

Kevin: We haven’t hit number seven yet. So yeah, disruption was number one. So number two of our list is that design was embedded. I talked about this already, how it really was, it was part of everything that they do. It wasn’t…it’s not compartmentalized, right? They’re kind of, if you will, the opposite of being embedded is to completely compartmentalize it. It wasn’t this, so you know, we bring in the graphic designer at the very end. “Okay, now all we need is a ‘box.’ Everything else is done. We just want you to do a box for us.” It’s much more about design from the beginning. How they are approaching the product and what they’re doing, how they are thinking about it, how they’re thinking about their market and all the rest. The design is just part of everything, really, that the company is doing.

Interviewer: Arlene, I also think, well, you know, you’ve got quite the diverse types of companies. You’ve got manufacturing, and so plumbing which is industrial in nature. And then you’ve got medical which is scientific. And then you’ve got fashion which is Umbra, which is home fashion. Are there similarities in that dimension of how they incorporated it or are they…even though that criteria is the same, that they execute it differently?

Arlene: Well, I think that there are similarities in that all of these organizations talked about the value of cross-disciplinary teams. So it was designers working with engineers working with the marketing people. Everybody integrated on the teams, so design is part of it, but it’s not the total expertise you need. So being able to recognize that, and we always say that you put a designer on your team and you work smarter, which I think is true. So in this case, these companies really thought that way too. In the case of the medical research lab, and this is really interesting because the kinds of costs that they were looking at of products that didn’t work well or weren’t efficiently designed, there was a human cost to that. So what they talk about is adverse patient outcomes. If you have complex medical technology products that are not designed well, the healthcare workers, the nurses, the doctors can’t operate them efficiently, there’s a time cost and a productivity cost, there can also be a cost to patient outcome, so we’re talking about really serious downsides of not using design in this way. So this lab was established some years ago now, and it’s embedded within Toronto General Hospital, so this team actually uses the hospital in down time as its research lab. So another one of our factors in our 10 indicators was this idea of design research at the front end, and I think of that as seeing the market, the users, through designers’ eyes. So they actually observe how radiation treatments are given. Look at the operating room, actually see the way the tools are used and then make inferences about how to improve the human interface, the usability of these tools.

Interviewer: Design principles are diverse. You know, we talk about multi-disciplinary. Do you find that there’s two battles going on in most organizations, is the role of design within the operation of the company because a lot of organizations see it as a cost-center versus an investment, value added-side.

Arlene: Right.

Interviewer: And then within the disciplines of the design, there’s differing tiers of design, graphic design versus environmental designers versus behavior designers, HR designers, toy branding designers. When you have these organizations, are they relying on these different disciplines that work together or within that context, are there conflicts happening with different types of design principles?

Arlene: I think that there can be conflicts, but if you look at a firm like IDO in the US, now they have cross-disciplinary teams of designers, biologists, all kinds of different scientists, working together because they realize that innovation happens at the intersection of the disciplines. And actually, the Design Industry Advisory Committee, as you know, was established to bring the disciplines together. So we…more recently we have been working with IRAP, looking at emerging start-up companies and how they use design. And we’ve taken an interior designer to work with a company, a technology company, again looking at the context for medical technologies in a hospital environment. So these are designers that know the trends and how hospitals, health care institutions, would be designed, and so they can make observations and share insights on how those products should be designed to fit within the space.

Interviewer: So what’s the next thing on your list.

Kevin: Number three was that they were intensely focused. I like the phrasing. And I think it’s actually true. What we heard time and time again was how much they understood that design was important to their business and how important it was for their success and that they knew that. I mean, it really wasn’t…I mean, you still have to be wide-ranging and scan the environment and do all these other things, but there was this intensity that came across. Every single person that we talked to, there was just this intensity about…you know, I was going to say, look, they get it. Number four was that the CEO owns the process. They own the idea, right? When we were interviewing…I mean, granted we cherry-picked. We picked firms because we knew we had heard good things. I think we learned a lot even so. And one of the things clearly was that these were CEOs who said, “No, I’m behind this. This is important.” It’s not…It’s important to me, personally. It’s my value. It’s what I want to do.

Arlene: And they thought it was fun to be working with the design team, so one of these CEOs said, “Gee, I probably spend too much of my time. It may be 20% or more. I’m the CEO of a large company, but I work a lot with the new product development team because I like it.”

Interviewer: Well, it’s very creative, and it’s the opposite side of doing a marketing or business plan, right? It’s not all about the numbers. It’s about the aesthetics and the functionality and all the fun stuff.

Kevin: Number five was that design is tested.

Interviewer: So, validation?

Kevin: It’s validation, yeah. And it’s testing with, it’s testing internally, it’s testing with customers. I mean it’s something like healthcare human factors is all about testing. But even so, I mean for Canplas or for MEC with the stuff that they’ve done in their re-branding, we really…that was one that was really interesting because it started as a re-branding exercise. They went from being M dot, E dot, C dot, Mountain Equipment Corporation, to actually being MEC. One of the things we’re testing is you have to be willing to say, “This didn’t work.”

Interviewer: Yeah.

Kevin: I am not going to wed myself to an idea. I want to be able to test it, and if I test it and find out it’s not very good or it’s not doing what I want it to do or I’m not going to be able to do it at the cost I need to do it at, or whatever it is. But the testing may actually…the risk of testing may actually reveal that in fact it failed. A good test should tell you what’s wrong with something.

Interviewer: Yes, that’s a great point. Validation is really important because it’s the business dynamic. I mean, design serves the purpose, but if it doesn’t serve that purpose then it’s not good design. So the idea of validation or testing is not just about testing, it’s about the processes of testing. So testing numerous times throughout the entire process….

Arlene: Right.

Interviewer: …versus waiting until the end to do that test.

Arlene: That’s right. And actually modeling, doing scale modelings at the right scales so you can actually see what isn’t working.

Kevin: Number six. Design investment is about technology and materials.

Interviewer: About technology and materials?

Kevin: And materials, right. Because what was interesting was that technology, in effect, is a material, if you think of it that way. Or a raw component, a piece of the whole thing. But it’s not just technology. It’s also about materials. We talked about Canplas and plastics and…

Arlene: Umbra.

Kevin: …Umbra with what they do. Or Technion, as well, with the materials and thinking about for their office furniture and what they’re doing. And actually for everybody, right? It’s the same for health treatment, actual technology and the materials and how you are using them.

Arlene: The relationship between technology and design is an interesting one because design is really what makes technology work for users, so you can have the smartest technology and until you build that bridge, the human interface bridge, which is what designers do, it may not be successful in terms of a commercialization process. So, the relationship is key, and in the case of Umbra, what’s really interesting is a housewares company…they’ve been very smart, not just the design and the curvaceous shape of the Garbo can. They’re very smart in the use of color. Color and plastic, as Kevin said. And color in particular, they worked out that you could add a few drops of color, which is not at a high cost, completely change the value of the product in doing that.

Interviewer: So the technology doesn’t necessarily have to be inherent with the product, it could actually be inherent with the process that delivers the product?

Arlene: Correct.

Interviewer: You actually identified that there’s an emerging role of design, and I’ll call it design of business model, or business model design. And we’re more and more involved and not looking at the product but looking at how do you deliver high-quality design at a better margin because the industry, no matter what category you’re in, has been commodotized. And so we spend a lot of time looking at the design of the business model, so obviously Umbra has put a lot of attention…It sounds like a lot of the candidates or the examples that you used have retooled their business model for the design process. Would that be a fair statement?

Arlene: I think so. In the case of MEC, for example, they are a unique manufacturer and retailer, Canadian-based in Vancouver, in that their stakeholders and customers are their shareholders. So they are a co-op, and people know if they shop there you pay a nominal amount to join, become a life member. And they set it up that way. They created a very engaging store model very early on, developed stores through green design using sustainable materials, and actually reflected in their products and store environment these same values of what they stood for. And now they are taking that to multi-channels in the way that they deliver products, so they are trying to stay ahead of the game. But they are very committed to ethical manufacturing, really reflecting these values in everything they do. And of course, good design. But the process is very important to their CEO.

Interviewer: What’s the next…

Kevin: So number seven is exactly what you just said, which is process. It’s what we talked about earlier, that design itself is not only going to benefit, but the process itself is very reflective. All the processes that you are doing are actually reflective of design and design thinking. From financial to real estate location choice, all kinds of things. You started seeing that in fact the various things that were happening throughout the company all reflected this design thinking.

Interviewer: That should be part of the criteria, as part of their DNA. It’s somewhere there that design plays a critical role.

Arlene: For sure. And in the business model of Canplas, our plumbing manufacturer, that process of taking plumbing fixtures products, not seen by the general public at all, these hidden products that do a job, but taking things traditionally made out of steel and making them out of plastics that a lot of these products had a 10 year arc, or a research curve, to develop these products in this way, so that it took great commitment from the CEO and the design team to get to this point. But that has effectively changed the model for their industry and helped them be very competitive, very successful, and they’ve proven that these products are more resilient than the higher cost ones made out of steel.

Kevin: That leads us right to number eight. Businesses that are investing in design think of it holistically. So you can embed design into individual processes, but if that’s all you do…if they can still become silo’d, and that’s not what happens, right? It’s cross-cutting. It’s really thinking about the organization as a whole, and all of the different kind of moving parts and pieces, but understanding the inter-relationships and really thinking about it as a whole. That that’s what you’re going to find…they are complex systems. Business are complex systems with lots of messy parts, but [inaudible 00:25:03].

Interviewer: Silos, lots of silos.

Kevin: That’s just it, right? That’s what you didn’t see, and you started to see. And say, “Well, yeah and we did this and we bring the graphic designers who were helping with the way we were laying out the store and this was helping with…” And the understanding and the mingling and the value of it, but that all the different things that are going on, that, in fact, there’s something to that. And you need to avoid the silos as much as possible.

Interviewer: Those are barriers. Barriers for innovation. Barriers for growth. And also inefficient use of money.

Arlene: I think there’s still baggage around the perception of designers and their value to an organization. And these best practices that Kevin and I are speaking about addresses some of those issues, so people who think that, “Well, designers are creative, kind of flaky, won’t really deliver results that are going to impact on our business, they’ll just make things look nice.” And we’re constantly still fighting those perceptions, and the smart companies realize the true value and power of working with designers. Certainly, Apple provides the model for everyone else. I was struck by an interview that Jonathan Ives, the creative head, did when the iPhone was launched when Steve Jobs was still alive. And he said that he spoke or met with Steve Jobs twice a day, every day. And I cut this out and underlined his comment because I thought to myself, now how many CEOs would speak with or meet with their creative director once a day, even once a week? There is something going on here about the closeness of that relationship, and there’s a straight line from that to Apple’s success.

Kevin: All right, number nine is diversity.

Interviewer: Diversity. What do you mean by that?

Kevin: So, everything. It’s across the board. It’s diversity of people and backgrounds, and as I said about Umbra that intentionally hires designers from all over the world, industrial designers from all over the world because they want to bring people in that have had different experiences and make them part of the team. There’s a professor at the University of Michigan by the name of Scott Paige that has written a book called “The Difference”, that talks about how diverse teams create unique solutions, right? So a lot of the work that I’ve done with Richard Florida when I was at the Prosperity Institute talked about the value of diversity to regional economies. And you start seeing the value of having diverse opinions there, that it brings new ideas. It brings new things. It adds to the mix, right? It adds something to the mix. So from that angle, diversity was really important. Diversity was also really important just in terms, again, being the cross-cutting and the silo-busting and all the things that were going on that way, you started to see that, in fact, it was…I also call it a diversity of diversities. It’s not just about, oh, I need…”Checkbox, I have an Asian person, checkbox, I have an old person. Whatever, I have three women. Oh, I have someone with a mobility device. Great.” No. That’s helpful and those perspectives are…but it’s really about being much more inclusive about how you’re thinking and what you’re doing. I’m doing a lot of work now with the Inclusive Design Research Center here at Oak Head, which focuses on accessibility and design for accessibility and actually creating products that help reach to the people at the tails of the tails of the distribution, right? And it’s not about universal design as inclusive design and how can you be inclusive in what you’re doing and think about different people and different experiences and various kinds of levels of ability and heights and all kinds of other things. And how do you do that? And how do you make things work for that way? So thinking about diversity of customers and markets and all those other things.

Interviewer: And designers.

Kevin: And designers.

Arlene: And diversity of designers, and of course Toronto is a great place for multiculturalism, and we do have diversity in our design workforce for sure. So there’s lots of potential to hire designers from all of those…yeah, different cultures.

Interviewer: We’re wrapping it up here, and I got a couple of questions for both of you. I’m going to make it very difficult. You know, obviously, you’ve got 10 criteria here, and typically when you start with a criteria list, you have 15 or 20 and then you whittle it down to 10, because 10’s an easy number to remember. So, were there criteria that you had on the list that you took off?

Arlene: These criteria actually emerged from the research, so we didn’t start with any preconceived notions of what these CEOs were going to identify. We know that there’s a set of best practices for using design, but we parked that to one side and really listened very carefully to what the CEOs told us in these interviews. And then we went through the transcripts and found the overlap that they were actually talking about the same things. And from there we identified the 10 points that came out. And some of those we already knew. Some of the others were surprising.

Interviewer: So when you think of those criteria, those 10 criteria that emerge from your interviews in the study, would you say one of them…If you to select one that was the most difficult for organizations to adhere to or to deliver, which one of those would it be?

Arlene: I would say it’s this idea of using design as a disruptive force, that design can actually change business models for your industry. That’s a difficult concept. If you get it right, that can really drive organizations to the top, but so that’s not about superficial change. You know, hiring a designer to make you look better in some way.

Interviewer: Cosmetics?

Arlene: No. It’s not about cosmetics. This is the equivalent of open heart surgery for your sector, but if you get that right, you know, that’s a win-win. So, something to strive for, I would say.

Interviewer: Kevin, you?

Kevin: I actually would go off the list and go back, I think, to the idea of really thinking of design as an investment. I think we…you know, we started with the set up. We didn’t start with criteria and the standards and the questions that we approached the CEOs with was about why they invested in design and how they thought of that design. And so, we went into that knowing that that was the framing that we were all in, but I think looking at other companies and from a lot of the other stuff that I’ve done, I think that it very much becomes people want to think of it as a cost. “Oh, it’s a line I have in my budget. I have this much for marketing and design. I gotta pay for whatever. Or my R and D, I only have so much.” And so, not really making that transition, right? Very difficult, right, to kind of make that transition and say, “Hey, wait a minute.” Right? And as Arlene said, you gotta do that self-open heart surgery is not an easy thing.

Interviewer: I want to think you very much, Kevin, Arlene, for joining us today and sharing your thoughts on the study you conducted on why invest in design and the 10 very important factors that we should be looking at for organizations for truly delivering the design experience and the investment of design. Thank you very much for joining us. We’re going to open up the lines, so if you have any questions to ask Kevin or Arlene, there’s a phone number there. Please dial it, and we’re online. We’re going to answer your questions, and we want to thank you very much for joining us. You can download this presentation, and you can actually go to the DIAC website. What’s the URL?

Arlene: That’s right. www.diac.on.ca.

Interviewer: Great. And download the research study.

Arlene: And the video.

Interviewer: And the videos? Great. Thank you very much.

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