Era of 'design management'

Enterprises seek sales success through innovation in design By Jung Sung-ki Computer giant Apple had once been on the verge of collapse. With the absence of the company’s co-founder Steve Jobs, who had been ousted from the firm years before due to a clash with then Apple CEO John Sculley, the Silicon Valley-based firm saw its sales plunging from a high of $11 billion in 1995 to $7.1 billion in 1997. But Apple came back successfully with Jobs’ nomination as interim CEO in the summer of 1997. The main reason for Apple’s resurgence was a focus on design thinking. In 1998, the firm released the whimsical iMac computer designed by Apple’s head designer, Jonathan Ive. The iMac’s original models came in bright colors at a time when bland shades dominated the PC world. The design team led by Ive, a self-effacing 44-year-old Brit, had certainly been behind Apple’s success, helping transform the company into one of America’s iconic enterprises with the mega-hit iPod, the iPhone and the iPad, which are currently dominating the technological landscape. This Apple’s case is a classic example of how innovative, sustainable design is tied to corporate management and profit, and how design thinking even could help a new comer turn the tide in the market, according to Kim Ho-gon, president of the Korea Design Management Institute, a private design research think tank, in Seoul. Design in corporate management “In the past, design was regarded only as one of the factors composing a product. But now design has become a key source of corporate management in this modern business environment,” Kim said in a phone interview with BusinessFocus. “If you recognize design as a key management source, then business performance of a firm is largely influenced by how the company manages and develops design concepts that meet consumer demands, not satisfy the taste of designers themselves,” he said. In this regard, Apple’s design strategy is a successful role model for other firms worldwide, according to Kim. “Apple has been leading the global market through its design scheme,” he said. “While many other big companies opted for ‘market-driven’ strategies, Apple initiated a ‘market-driving’ approach. That’s a key factor behind Apple’s success.” The design expert said most of the Korean corporations were still attached to older design concepts in favor of “looks good” design. These days, the life cycle of consumer products lasts only one year at the most. In the case of mobile phones, new models are rolled out every two or three months, he noted, adding then the life cycle of design for mobile phones is believed to be less than three months. “If so, mobile phone makers can’t practically catch up with the fast-changing trend if they only focus solely on good looking, distinctive concepts,” he said, “In this context, what corporations really need is ‘success design,’ not ‘looks good design.’ That is, we need more logical, systematical and sustainable design concepts that can reflect a company’s identity.” If looking at products of Sony and Apple, for example, people could easily distinguish Sony products from Apple’s easily and vice versa because both companies have identical design concepts of their own, but it’s more difficult to distinguish Samsung products from LG’s because of lack of their corporate identity design. Success by design Recognized this importance of products design, Korean conglomerates have invested in design qualities in recent years. Of those, many experts cite Kia Motors as one of the most successful firm making the best of creative design. The automaker, affiliated with Huyndai Motor, had fought an uphill battle against big automobile players here and abroad until the mid-2000s because of deficiency in design despite the company’s outstanding car manufacturing technology. “Kia Motors was a new comer in the domestic auto market, but its strenuous efforts to revamp its corporate identity design has made success, leading to the growth of its sales and profits,” Kim said. Kia pushed for the evolution of automotive design in 2006 when then Kia’s CEO Chung Eui-sun, who serves chairman of Hyundai Motor, decided to scout Peter Schreyer, former chief designer for Audi and Volkswagne, as the firm’s chief design officer. In 2007, Kia opened a design R&D center in Frankfurt, and a second design studio followed in Irvine, Calif. In 2008, as part of efforts to incorporate European car design concepts into the automaker as well as establish a global design network. Based on the design philosophy of “the simplicity of the straight line,” Schreyer has successfully unified the brand’s models with a “family face,” as he calls it, raising the enterprise’s global status as well as threatening the dominat market position of Hyundai Motor, its sibling under Hyundai Group. In the second quarter of this year, Kia announced record sales of its popular models K5 and Sportage R. Compared to a year ago, net profits of 1.1 trillion won ($1 billion) were 66.8 percent higher, as operating profits and sales jumped 55.8 percent and 25.2 percent, respectively. Kia sold a record 622,264 units in the second quarter, and its overseas sales jumped about 20 percent in the first half on-year. “Kia’s design management is not limited to designing products, but is evolving into the firm’s key management strategy to control a creative process, support a culture of creativity, and build a structure and organization for design,” said Baek Byeong-uk at Kia’s public relations office. The Procter & Gamble (P&G) Company, the maker of Pringles, the No. 1 selling stacked potato crisp, is also an exemplary company that has achieved sales success through innovation in package design. Founded in 1837, the consumer goods manufacturers faced a crisis in the late 1990s and underwent a sweeping restructuring in the 2000s. But the company decided at the time to increase the number of designers by four times than before in an effort to innovate products design. After all, the company created the revolutionary Pringles Prints technology that allows P&G to customize the crisps by printing words and images directly on the chip. Words and images can be printed on one side of the crisp right side up, upside down, in blue or red. This technology is the first-of-its kind in the U.S. to be used on food. “Pringles is the leader and founder of the stacked crisp category and now we're taking it to a whole new level," said Jamie Egasti, Vice President of Procter & Gamble's North America Snacks Division. "With the introduction of Pringles Prints, we have developed a new way to delight consumers by adding fun and excitement to one of kids' favorite lunchtime snacks while delivering incremental volume growth for our customers.” In 2011, P&G made $82.6 billion dollars in sales. Fortune Magazine ranked P&G at fifth place of the "World's Most Admired Companies" list, which was up from sixth place in 2010. Failure by design While some enterprises reboot themselves through design renovation, others fall due to failed design strategy. Kang Pil-hyun, a chief researcher at the Korea Design Promotion Agency cited cell phone maker Motorola Mobility as an unsuccessful case. Motorola, which was bought by Google this month, had once been one of the world’s most successful mobile phone manufacturer by pioneering quality management methods, including the Six Sigma program aimed at improving the quality of process outputs by identifying and removing the causes of defects and minimizing variability in manufacturing and business processes. But the company fell behind the likes of Apple, Samsung and HTC in recent years, as those rivals were focusing on design methods. “CEOs should get rid of the prejudice that design is only a piece of efforts to improve products and service,” Kang said. “For this, today’s CEOs should have firm philosophy for design management. “You should understand the difference between design development and design management,” he added. “If a firm adopts a new design and makes it a big hit, that’s design development. But design management offers ways of establishing corporate identity and propel the company concerned well into the future.”

gallantjung@koreatimes.co.kr

Enterprises seek sales success through innovation in design
By Jung Sung-ki

Computer giant Apple had once been on the verge of collapse. With the absence of the company’s co-founder Steve Jobs, who had been ousted from the firm years before due to a clash with then Apple CEO John Sculley, the Silicon Valley-based firm saw its sales plunging from a high of $11 billion in 1995 to $7.1 billion in 1997.

But Apple came back successfully with Jobs’ nomination as interim CEO in the summer of 1997. The main reason for Apple’s resurgence was a focus on design thinking.

In 1998, the firm released the whimsical iMac computer designed by Apple’s head designer, Jonathan Ive. The iMac’s original models came in bright colors at a time when bland shades dominated the PC world.

The design team led by Ive, a self-effacing 44-year-old Brit, had certainly been behind Apple’s success, helping transform the company into one of America’s iconic enterprises with the mega-hit iPod, the iPhone and the iPad, which are currently dominating the technological landscape.

This Apple’s case is a classic example of how innovative, sustainable design is tied to corporate management and profit, and how design thinking even could help a new comer turn the tide in the market, according to Kim Ho-gon, president of the Korea Design Management Institute, a private design research think tank, in Seoul.



Design in corporate management

“In the past, design was regarded only as one of the factors composing a product. But now design has become a key source of corporate management in this modern business environment,” Kim said in a phone interview with BusinessFocus.

“If you recognize design as a key management source, then business performance of a firm is largely influenced by how the company manages and develops design concepts that meet consumer demands, not satisfy the taste of designers themselves,” he said.

In this regard, Apple’s design strategy is a successful role model for other firms worldwide, according to Kim.

“Apple has been leading the global market through its design scheme,” he said. “While many other big companies opted for ‘market-driven’ strategies, Apple initiated a ‘market-driving’ approach. That’s a key factor behind Apple’s success.”

The design expert said most of the Korean corporations were still attached to older design concepts in favor of “looks good” design.

These days, the life cycle of consumer products lasts only one year at the most. In the case of mobile phones, new models are rolled out every two or three months, he noted, adding then the life cycle of design for mobile phones is believed to be less than three months.

“If so, mobile phone makers can’t practically catch up with the fast-changing trend if they only focus solely on good looking, distinctive concepts,” he said, “In this context, what corporations really need is ‘success design,’ not ‘looks good design.’ That is, we need more logical, systematical and sustainable design concepts that can reflect a company’s identity.”

If looking at products of Sony and Apple, for example, people could easily distinguish Sony products from Apple’s easily and vice versa because both companies have identical design concepts of their own, but it’s more difficult to distinguish Samsung products from LG’s because of lack of their corporate identity design.

Success by design

Recognized this importance of products design, Korean conglomerates have invested in design qualities in recent years. Of those, many experts cite Kia Motors as one of the most successful firm making the best of creative design.

The automaker, affiliated with Huyndai Motor, had fought an uphill battle against big automobile players here and abroad until the mid-2000s because of deficiency in design despite the company’s outstanding car manufacturing technology.

“Kia Motors was a new comer in the domestic auto market, but its strenuous efforts to revamp its corporate identity design has made success, leading to the growth of its sales and profits,” Kim said.

Kia pushed for the evolution of automotive design in 2006 when then Kia’s CEO Chung Eui-sun, who serves chairman of Hyundai Motor, decided to scout Peter Schreyer, former chief designer for Audi and Volkswagne, as the firm’s chief design officer.

In 2007, Kia opened a design R&D center in Frankfurt, and a second design studio followed in Irvine, Calif. In 2008, as part of efforts to incorporate European car design concepts into the automaker as well as establish a global design network.

Based on the design philosophy of “the simplicity of the straight line,” Schreyer has successfully unified the brand’s models with a “family face,” as he calls it, raising the enterprise’s global status as well as threatening the dominat market position of Hyundai Motor, its sibling under Hyundai Group.

In the second quarter of this year, Kia announced record sales of its popular models K5 and Sportage R. Compared to a year ago, net profits of 1.1 trillion won ($1 billion) were 66.8 percent higher, as operating profits and sales jumped 55.8 percent and 25.2 percent, respectively. Kia sold a record 622,264 units in the second quarter, and its overseas sales jumped about 20 percent in the first half on-year.

“Kia’s design management is not limited to designing products, but is evolving into the firm’s key management strategy to control a creative process, support a culture of creativity, and build a structure and organization for design,” said Baek Byeong-uk at Kia’s public relations office.

The Procter & Gamble (P&G) Company, the maker of Pringles, the No. 1 selling stacked potato crisp, is also an exemplary company that has achieved sales success through innovation in package design.

Founded in 1837, the consumer goods manufacturers faced a crisis in the late 1990s and underwent a sweeping restructuring in the 2000s. But the company decided at the time to increase the number of designers by four times than before in an effort to innovate products design.

After all, the company created the revolutionary Pringles Prints technology that allows P&G to customize the crisps by printing words and images directly on the chip. Words and images can be printed on one side of the crisp right side up, upside down, in blue or red. This technology is the first-of-its kind in the U.S. to be used on food.

“Pringles is the leader and founder of the stacked crisp category and now we're taking it to a whole new level," said Jamie Egasti, Vice President of Procter & Gamble's North America Snacks Division. "With the introduction of Pringles Prints, we have developed a new way to delight consumers by adding fun and excitement to one of kids' favorite lunchtime snacks while delivering incremental volume growth for our customers.”

In 2011, P&G made $82.6 billion dollars in sales. Fortune Magazine ranked P&G at fifth place of the "World's Most Admired Companies" list, which was up from sixth place in 2010.

Failure by design

While some enterprises reboot themselves through design renovation, others fall due to failed design strategy.

Kang Pil-hyun, a chief researcher at the Korea Design Promotion Agency cited cell phone maker Motorola Mobility as an unsuccessful case.

Motorola, which was bought by Google this month, had once been one of the world’s most successful mobile phone manufacturer by pioneering quality management methods, including the Six Sigma program aimed at improving the quality of process outputs by identifying and removing the causes of defects and minimizing variability in manufacturing and business processes.

But the company fell behind the likes of Apple, Samsung and HTC in recent years, as those rivals were focusing on design methods.

“CEOs should get rid of the prejudice that design is only a piece of efforts to improve products and service,” Kang said. “For this, today’s CEOs should have firm philosophy for design management.

“You should understand the difference between design development and design management,” he added. “If a firm adopts a new design and makes it a big hit, that’s design development. But design management offers ways of establishing corporate identity and propel the company concerned well into the future.”