Design to Compete
Deepa Prahalad and Ravi Sawhney
Today, firms in all industries find themselves competing on design. The concept of design has broadened beyond the purely aesthetic and now includes every aspect of the consumer’s interaction and experience with the brand.
Companies invest vast resources into innovation and strategy. They hire market researchers, consultants, and armies of internal staff to identify new opportunities and develop new concepts. Yet the results are less than encouraging: Some studies suggest that 70 percent of strategies never get executed and more than 80 percent of new product introductions fail or underperform. Of course, there are visible exceptions in the most crowded and competitive industries such as Apple (computing) and Target (discount retail). The companies that manage to innovate successfully enjoy financial rewards and the respect and affection of consumers. These successes depend on carefully integrating corporate strategy with design to forge deep, emotional connections.
These emotional connections are the little-understood magic that can transform a product from an object that simply serves a purpose into a rewarding and empowering experience. By creating these connections, design transforms business strategy into business success.
Those on the front lines leading innovation know the importance of balancing inspiration with execution. Design is an increasingly important ingredient in carrying out strategy and can also be a powerful tool for mitigating the risk inherent in bringing innovations to market.
A New Perspective on Design
Careful analyses reveal a simple and profound truth:
“It’s not how you feel about the design, it’s how it makes you feel about yourself.”
This counterintuitive idea has major implications for how companies approach their study of consumers and the innovation process. Few consumers buy purely on the basis of need. In the developed world, a majority of purchases are driven by a need for entertainment and self-actualization. But even for the four billion people in the world who remain poor, aspirations play a pivotal role in their consumption decisions—note the size and growth of the cell phone industry in emerging markets.
When we look at design success across industries, it’s clear that the relationship between what catches our attention and what eventually wins our hearts can be mysterious and complex. Consider some of the brands in different categories that are consistently given top ratings from consumers—from airlines (Jet Blue, Southwest), cars (BMW, Honda, Toyota), and food (Costco, Trader Joe’s, and Wegman’s), to Internet businesses (Amazon, eBay, and Google).1 There isn’t a pattern to the functionality, aesthetics, or price points in their offerings. But there is a consistency to their quality and the unique and consistent experience they provide—in short, in the way that they tend to the well being of their consumers.
Of course, there is no shortage of alternatives for the specific products and services that the top brands provide. It is the way they respond to the emotional needs of consumers that sets them apart. The ultimate goal of design is not merely making things that people enjoy or creating awareness of the company. When design creates feelings of empowerment, people are eager to share their experience with others. This cycle is essential to generating demand virally and building brand loyalty.
Overcoming the Hurdles
The importance of creating emotional connections comes as no surprise for business leaders engaged in the strategy, innovation, and design process. Regardless of organizational function, those involved with creating new concepts or taking ideas to market are likely to find themselves frustrated in confronting two major hurdles:
• Information overload—There is no efficient way to process and prioritize the volumes of data and research that exist in most corporations today. The market research industry is estimated at a staggering $19 billion2 as consumer behavior and demographics can be studied in exhaustive detail. However, the vast majority of consumer purchase decisions are made on an emotional basis and experts estimate that up to 95 percent of buying behavior originates at a subconscious level.3
Although information is abundant, insight can be in short supply. Traditional market research reveals very little about the consumer’s emotional triggers in the decision process in a way that can inform design and strategy.
• Inadequate models for collaboration—Even in the most enlightened organizations, fostering collaboration between executive and creative teams brings special challenges. The differences in tools, education, and perspective frequently lead to delays, battles, unsatisfying compromises, and uninspired results. However, companies that find ways to resolve these issues can create an important source of competitive advantage.
The Importance of Emotion—and Action
Our experience shows that anticipating and responding to consumer emotions, rather than parsing demographics and focusing on market research, has proven to be the most reliable indicator of design success. Developing a simple, intuitive process for incorporating this emotional insight into the design process has involved vigorous experimentation. Over time, we discovered that factoring in emotion has not made design more complex but introduced clarity to the decisions and trade-offs that come with implementation. That clarity has enabled us to breathe new life into stale categories, help companies climb back from decline, and enter the market and seize share, faster, with more lasting results than we dared to hope for.
What does this mean in practical terms? How can a firm begin to practice this philosophy? What are the resources and skills involved in implementation? Based on our work with diverse clients, we have distilled the process into distinct phases that can be easily remembered with the acronym EMPOWER. Coincidentally, EMPOWER also describes the experience that we aim to create for consumers. Empowering experiences create connections between consumers and brands. These bonds are the basis of market leadership and sustained financial performance.
Enable Your Stakeholders
Map the Future
Personify Your Consumer
Own the Opportunity
Work the Design Process
Engage Emotionally
Reward Your Consumer
The idea that emotional connections are the real drivers of growth and prosperity seemed radical when we began to use this approach. If the results from objective data can be misleading, it was hardly surprising that business people were once hesitant to base major strategic decisions on emotional considerations. But emotional insight translated into design creates real business results. Consider some of the following examples of this philosophy in practice:
• In the mid-1990s, the Minimed insulin pump was a breakthrough technology that unintentionally reinforced the stigma of being a patient. By redesigning it to look like a pager (which were then perceived as “cool” and “hip”), sales went from $45 million to $171 million in 3 years and the firm was acquired by Medtronic for more than $3 billion.
• An appliance engagement with Amana revealed that its products’ high quality was not reflected in its styling. Enhancing badging, knobs, and graphics to reflect its brand raised costs by $0.30 but commanded a $100/unit premium at retail. The result was more than $20 million in profits and an acquisition by Maytag.
• Collaboration with Discus Dental to create the Zoom! Tooth Whitening system began more than 2 years after Brite Smile entered the category and began taking market share. Psycho-Aesthetics was used to design all components of the professional tooth whitening experience (from the syringe to the whitening lamp). Today, Zoom! sells more than 100,000 of the patented syringes per week and ultimately acquired Brite Smile Professional to secure its market position.
Looking at design as a means to deliver empowerment was central to all these efforts. The credibility of many companies today rests on whether they actually deliver value to consumers as they produce profits. In an increasingly global marketplace, few opportunities can be understood with financial metrics alone (although these will always be an important measure). Many of these markets and new consumers can be better understood—and designed for—through a deep understanding of their needs, desires, and aspirations.
The poet Maya Angelou once observed, “People forget what you said, they forget what you did, but they never forget how you made them feel.” The emotional impact companies have on consumers is perhaps their most lasting legacy...and the largest element of their brand equity. It certainly deserves to be at the forefront of everything the company does.
Endnotes
1 Rajendra S. Sisodia, David B. Wolfe, and Jagdish N. Sheth, Firms of Endearment: How World-Class Companies Profit from Passion and Purpose (Upper Saddle River, NJ: Wharton School Publishing, 2007). These and other companies were examined in this study.
2 John Gerzema and Ed Lebar, The Brand Bubble (San Francisco, CA: Jossey-Bass, 2008), 33.
3 Gerald Zaltman and Lindsay Zaltman, How Customers Think: Essential Insights into the Mind of the Market (Boston, MA: Harvard Business School Press, 2003).