“I want P&G to become the number one consumer-design company in the world, so we need to be able to make it part of our strategy. We need to make it part of our innovation process.” – Alan G. Lafley, CEO, Procter & Gamble
Innovation and technology have been the driving forces behind new product and service development for decades. Companies have tried to harness the power of these forces to uniquely position and differentiate themselves in an ever-more-competitive, global market environment. While design represents a great intrinsic value in products and services from the perspective of creative consultants and insightful business experts, this concept has not always been meaningfully grasped by business itself. But that is changing.
Corporate marketing executives are beginning to understand that trying to market their unique selling proposition (USP), or point of brand differentiation, on innovations built into products or services, as they have in the past, simply isn’t an effective strategy anymore. It’s too easy to knock off an exciting niche product or new product innovation, and bring it to market quickly. Turn-around time on knock-offs is now measured in a few scant months. Even the mightiest of corporations is vulnerable to this phenomenon.
Citing a great example: Procter & Gamble’s ground-breaking new category/product: the Swiffer. The corporation had invested heavily in R&D prior to the launch of the product. It had also committed substantial advertising dollar commitments to support its roll-out. In a matter of months, a number of P&G’s competitors had replicated the Swiffer. While the product rocketed to the Number 1 spot in the cleaning tool/mop/broom category, this item that had created a new category has had to divide its market share with a number of competitors. So all of this begs the question: how is P&G differentiating itself, and what does its CEO envision for the future of the company?
Since taking over as CEO at P&G, in 2002, Alan Lafley has steadily worked to incorporate the value of design into the entire corporate organization. In an interview with Fast Company, not long ago, he stated that: “We want to design the purchasing experience. . .we want to design every component of the product; and we want to design the communication experience and the user experience. I mean, it’s all design. And I think that’s been hard for people to come to grips with.” Mr. Lafley has been as good as his word, bringing P&G marketing veteran, Claudia Kotchka on board as VP for Design Innovation and Strategy to turn P&G into what she calls a “design-centric culture”. When the CEO of such a behemoth consumer products corporation, embraces experiential branding and its design components at this level, it signals that powerful corporate change is underway.
Procter & Gamble is not alone in its embrace of the concept of designing the entire customer experience-or in its plan to make design the centerpiece of its corporate strategy. Samsung, one of the most stunning examples of a global corporation that has built powerful equity in its brand over the past few years, is on the same path. And there are others: Nokia, Apple, GE, and BMW are also design-centric companies. Using the design approach to be innovative and create a complete customer experience makes these brands, and their products, memorable. If a handful of influential corporations like P&G and Samsung in key sectors embrace design at this level, we can expect an ongoing ripple effect as more and more companies follow their lead.
The Customer Service Factor
As we previously stated, if corporations of the caliber of P&G have come to recognize the power of design, can the shakers and movers in every industry sector be far behind? Whether companies staff inside design departments, outsource design projects to creative consultancies or work collaboratively, one thing has been made patently clear: every department within the corporate structure is now in the design business! Embracing this radical new thinking and integrating it into marketing, R&D, manufacturing and sales departments will necessitate rising to a new challenge, and courage. Yet, every corporate employee is part of the design process. While very few, if any of them, are involved in the actual design of products, services or packaging, they are all involved in designing the customer’s overall experience. Michael Dell, founder and president of Dell Computer has stated that: “We believe that the quality and nature of the customer relationship and experience is going to be the next competitive battleground.”
Dell Computer is another great corporate entity that we can cite. As a technology company, Dell has chosen to adopt the one-size-does-not-fit-all marketing approach. Go to their web site, and you will see what we mean. With its focus on mass customization, Dell has enabled customers to log onto the company web site, and choose the computer components they want. Rather than only inventorying ready-made computer models, Dell can customize computers for a large customer base by turning around sets of components into finished computers quickly. The company efficiently ships these made-to-order computers out within a matter of a few days or a couple of weeks. End result? Happy customers. Therefore, we can state unequivocally, that Dell is in the business of designing their customers’ experiences.
Speaking of the technology sector, it is no accident that a number of major players are repositioning their corporate identities as service, rather than product companies. IBM is a perfect example of this repositioning. Decades ago, IBM pioneered large main frame computers for business. The corporation was in the product business-selling high tech software/hardware. It did not get into PC’s when that business was in its infancy, losing substantial market share, until it regrouped. With shorter and shorter life cycles, and global competition in high tech products increasing: what has IBM’s response been? The corporate giant decided to reposition itself with a new corporate identity. IBM is now a service company. Of course the company still markets and sells computers. But that is not the company’s core message. The company’s advertising and its web site states that IBM is now aservice company. Tagline: “On demand business”. IBM now develops technology solutions for companies, large, small and mid-sized. Tailor-made systems for every industry sector. Systems for every application. Consulting. Result? IBM is back-bigger and better than ever. And: it is now a service company.
According to the American Customer Satisfaction Index, and its survey, Amazon is the highest rated company for its delivery of great service. Jeff Bezos, founder and CEO of Amazon: “We see our customers as invited guests to a party, and we are the hosts. It’s our job every day to make every important aspect of the customer experience a little bit better.” Obviously, customer-centric Amazon walks the talk, and Jeff Bezos’s company’s success speaks for itself. The company was once referred to in a Fast Company article as: “. . . one of the handful of Web pioneers — along with eBay, Yahoo, and Google — that have endured as pillars of the Internet. And Bezos is the only founder in that bunch who’s still running his company as the CEO.”
There is definitely a revolution brewing in the corporate world, and it will have a powerful impact on the perception of the value of design in the very near future. The concept of Experiential Branding was the key that opened the door to this new realm of thinking in marketing-new possibilities-and the revolution. Experiential branding holds that the customer’s experiences with the corporate brand go well beyond the products or services the company offers. It goes to the heart of the customer’s perceptions, positive thoughts, emotions and attitudes based on his interaction-and deepening relationship–with the corporate brand. These intangibles transcend the actual products or services a company offers in the marketplace, all of which can be easily purchased from a number of competitors. With the unification of the customer’s brand experience across multiple channels, an actual brand image can be created that is utterly unique to that company. The brand experience then becomes a total one, by design, encompassing each and every customer touch point.
Creating meaningful brand experiences for the customer begins with the actual design of its product or service, but then extends to its communication hierarchy in the packaging of those products/services, the business’s web site, its letters and special offers to customers, its call center interactions with customers, its advertising and promotions, and more. All of this, in concert, creates a total customer experience. A positive experience in one channel does not create total experiential branding: the sum of all of the customer touch points, if properly managed and aligned, do. One of the most crucial touch points: customer service. In fact, in repeated surveys, the American Customer Satisfaction Index, in existence since 1994 at the University of Michigan’s Ross School of Business, has demonstrated that companies have not delivered improved customer service over the past ten years! Delivering a high level of customer service, and the ensuing “fabled” customer satisfaction, is one of the most powerful differentiators in the marketplace-cementing brand loyalty when all other touch points are consistent. The two aspects of service that customers consistently say they value most? Reliability and responsiveness. Constantly meeting, or exceeding, customer expectations in service, yields great rewards for companies.
When customers become emotionally involved with brands, their interaction evolves into a brand dialogue and the formation of ever-deepening relationships based on trust. This results in profound levels of brand loyalty over time. Savvy Chief Marketing Officers and their marketing departments know that the overall design of their customer’s experience is a key differentiator that ultimately builds corporate and brand equity.
Experiential Design – Enjoyment Assets
In our experience as creative consultants, uncovering what we call the “Enjoyment Assets”™ of a brand becomes the foundation for building a unique visual expression for that brand. Emotionally connecting consumers to a brand is essential. Connecting consumers to a product through Enjoyment is powerful, bringing favorable associations to mind at the point of sale and motivating purchase. Then, when the brand promise is fulfilled in the consumer’s mind, this results in building trust and brand loyalty.
For both corporate entities and creative consultancies, the same rule applies: extensive consumer research underpins good design. Good design work has its foundation in researching positive end user experiences. In our opinion, starting from the bottom up-from the customer’s viewpoint-rather than the top down from the corporate viewpoint-yields a can’t-fail strategy. That is, consumer research that observes and studies consumers’ interactions with products and services, yields the most valuable research. Not merely developing products and brand communications based on what the corporate R&D and marketing departments think their customers want. Not taking surveys-it’s a curious phenomenon, but people don’t always mean what they say, or say what they mean in surveys, even with the best of intentions. Observing how consumers interact with products or services, and then getting their feedback as to what they like and don’t like, as well as what they would prefer to see-and unlocking the Enjoyment Assets™ therein–helps companies and creative consultancies design the most satisfying customer experiences!
Bruce Nussbaum, Editorial Page Editor at BusinessWeek, has insightfully stated: “A fundamental shift is underway from an economy dominated by technology into an experience economy controlled by consumers and those corporations that can empathize with them.” Does this sound a bit like Michael Dell’s statement that we already cited above? Both that statement, and Bruce Nussbaum’s statement, really helps us to summarize the new corporate thinking we’re discussing here. In fact,BusinessWeek‘s editor-in-chief, Stephen J. Adler, has begun referring to this new trend as the “rise of the Creativity Economy”, stating that: “It may be less expensive to build computers or cars in India, China or Eastern Europe. But the smartest U.S. companies are learning that they can still lead the way if they listen closely to their customers and rethink product design.”
Positive experiences are built into the overall design strategy of every successful product or service in the marketplace. When corporate branding executives and design firms share the same vision, they can work toward mutual understanding and fulfilling common goals, and a new level of respect begins to emerge. On the one hand, corporate personnel develop a much greater respect for the significance of design, and learn to elevate design to its proper place: as a core value of their brand, not just a value-added component of the actual products and services they offer. This prompts corporate management to be innovative and creative in their approach to integrating design into the entire customer experience with their products and services. On the other side of the collaborative relationship, creative consultants develop a higher regard for their corporate counterparts, recognizing what it takes to develop, brand and bring new products to market with corporate strictures in place. They benefit from taking the more analytical business approach, and integrating it into their design disciplines, also. It is our belief that when both sectors-corporate and design–have reached this level of cooperation, mutual understanding and respect, the customer will be the ultimate beneficiary.
The New Frontier
Ground-breaking new products like Apple’s iPod MP3 player don’t just happen. Steve Jobs and his management group at Apple have a design-centric mentality and create an environment where such innovative thinking is possible. This results in a stream of spectacularly successful new products. A Boston Consulting Group Poll, of 940 senior executives in 68 countries, identified the Top 20 Innovative Companies in the World for the August 1, 2005 issue of BusinessWeek, placing Apple squarely in the #1 spot. Not surprisingly, Microsoft, GE, Dell, Sony, IBM, Google, P&G, Samsung, Amazon and Nokia also made the top 20 list. Rounding out the list were 3M, Virgin, Wal-Mart, Toyota, E-Bay, Intel, Starbucks, BMW and U.S.-based industrial design firm, IDEO. Companies like Apple are constantly innovating and designing, not only their products, but their brand and their very business model. This spirit of design innovation is constantly keeping the company and its products hot, fresh and new. In spite of increased global competition.
This begs the question: at the cusp of this new “creative economy”, how can our future business executives learn to become innovative, creative thinkers, rather than just proficient administrators, knowledgeable in management and finance? If business leaders like Steve Jobs and Alan Lafley are pointing the way to the way executives will be leading in the future, and we believe they are, how can we better integrate the best practices of business by design? Will our B-schools be able to teach design as business strategy? Do they even see the importance of taking such a step?
While several of the nation’s leading B-schools, Harvard, Georgetown, U.C. Berkeley and Northwestern among them, have offered single elective courses in product design, product innovation or the management of the design process in their curricula to MBA candidates, new programs are being pioneered in some MBA programs. Stanford is establishing a new Institute of Design in order to teach design strategy to both business and design students. The University of Toronto’s Rotman School of Management is taking a leadership role in developing a new B-school program in innovation and design strategy. This signals just the beginning of the new trend to imbue our future design leaders and business leaders in design thinking and strategy. After all, if our business leaders are expected to become creative thinkers, problem solvers and innovators to keep their companies ahead of ever-intensifying global competition, won’t the basic premises of design serve them well? We might call this the integration of right brain (creative, innovative and design) and left brain (analytical, business metrics) thinking in the highest circles of business.
For the current leaders of design and business, we need to embrace the new “creative economy” as it begins to unfold. This is an exciting time for business. Full of challenges, but rife with possibilities. The corporate and design sectors must come together as they never have before. This critical integration of the analytical with the creative, by design, will yield the greatest dividends for product and service providers: great customer experiences, deepening customer relationships, trust, brand loyalty and brand equity.
Leveraging the power of design – this is an idea whose time has come.