The Designful Company by Marty Neumeier

Industrial Age thinking has delivered
some dazzling capabilities, including the
power to churn out high-quality products
at affordable prices. Yet it has also
trapped us in a tangle labeled by
Berkeley professor Horst Rittel as
“wicked problems”—problems so persistent,
pervasive, and slippery that they
seem insoluble. Unlike the relatively
tame problems found in mathematics,
chess, and cost accounting, wicked
problems tend to shift disconcertingly
with every attempt to solve them.
Moreover, the solutions are never right
or wrong, just better or worse.
The world’s wicked problems crowd
us like piranha. You know the list: pollution,
overpopulation, dwindling natural
resources, global warming, technological
warfare, and a lopsided distribution of
power that has failed to address massive
ignorance and Third-World hunger. In
the world of business,managers face a
subset of these problems: breakneck
change, ultra-savvy customers, balkanized
markets, rapacious shareholders,
traitorous employees, regulatory headlocks,
and price pressure from desperate
global competitors with little to lose
and everything to gain.
In a 2008 survey sponsored by my
consulting firm, Neutron, and Stanford
University, 1,500 top American executives
were asked to identify the
wickedest problems plaguing their
companies today.While the top 10
included the usual suspects of profits
and growth, they also revealed concerns
that hadn’t shown up on corporate
radar screens until now: aligning strategy
and customer experience, addressing
eco-sustainability, collaborating across
silos, and embracing social responsibility.
The number-one wicked problem
cited by corporate leaders was the conflict
between long-term goals and
short-term demands.
Clearly, these were not the concerns
K E Y N O T E
n a challenging business environment,
there is no substitute for having an
innovative and distinctive brand expressed
in “experiences that rivet minds and
run away with hearts.” Marty Neumeier
identifies how design drives this reality, embracing not only products and services
but also processes, systems, and organizations. To succeed, companies must be agile,
nurture inventiveness, and have an enterprise-wide appetite for radical ideas.
Marty Neumeier, President,
Neutron
The Designful Company
by Marty Neumeier
I
Design Management Review Spring 2008 11
The Designful Company
of twentieth-century managers. The last management
obsession of that century was Six
Sigma, the total-quality movement inspired by
Dr.W. Edwards Deming and his postwar work
with the Japanese. Six Sigma has been so successful
that quality has virtually become a commodity.
Customers now expect every product
and service to be reliable, affording no single
company a competitive advantage.
Unfortunately, the more progressive elements
of Deming’s philosophy were all but ignored by
a business mindset that preferred the measurable
over the meaningful.
When we look around and see today’s companies
and brands beset by distrustful customers,
disengaged employees, and suspicious
communities, we can link these problems to a
legacy management style that lacks any real
human dimension. The model for twentiethcentury
management was not the warm humanism
of the Renaissance, but the cold mechanics
of the assembly line, the laser-like focus of
Newtonian science applied to the manufacture
of wealth. The assembly line was intentionally
blind to morality, emotions, and human aspiration—
all the better to make your competitors
and customers lose, so you can win.
Yet business at bottom is not mechanical but
human. Today, we find that innovation without
emotion is uninteresting. Products without aesthetics
are not compelling. Brands without
meaning are undesirable. And business without
ethics is unsustainable. The management model
that got us here is underpowered
to move us forward.
To succeed, the
new model must replace
the win-lose nature of
the assembly line with
the win-win nature of
the network.
In 2006, when Ford
Motor Co. announced
plans to close 14 factories
and cut 34,000 jobs,
Bill Ford made a revealing
statement: “We can no longer play the game
the old way,” he said. “From now on, our vehicles
will be designed to satisfy the customer, not just
fill a factory.” Too little, too late, Bill.While Ford
was figuring this out, Toyota had already been
satisfying customers for years.
We’ve spent the last century filling factories
and making minor tweaks to the same basic idea
of efficiency. The high-water mark in the quest
for continuous improvement was Six Sigma—
yet the Wall Street Journal cited a 2006 Qualpro
study showing that of 58 large companies that
announced Six Sigma programs, 91 percent
trailed the S&P 500.1We’ve been getting better
and better at a management model that’s getting
wronger and wronger.
In an era of Six Sigma parity, it’s no longer
enough to get better.We have to get different.
Not just different, but really different. In my
book, Zag, I proposed a 17-step process to create
the radical differentiation necessary for companies,
products, and brands to stand out from a
1. K. Richardson, “The Six Sigma Factor for Home Depot,”
Wall Street Journal, Jan. 4, 2007.
1. Balancing long-term goals with short-term demands
2. Predicting returns on innovative concepts
3. Innovating at the increasing speed of change
4. Winning the war for world-class talent
5. Combining profitability with social responsibility
6. Protecting margins in a commoditizing industry
7. Multiplying success by collaborating across silos
8. Finding unclaimed yet profitable market space
9. Addressing the challenge of eco-sustainability
10. Aligning strategy with customer experience
*A wicked problem is a puzzle so persistent, pervasive, and slippery
that it can seem insoluble.
2008 Survey of Wicked Problems*
(Sponsored by Neutron and Stanford University)
1,500 top American
executives were asked
to identify the
wickedest problems
plaguing their
companies today.
12 Design Management Review Spring 2008
Building Brands at the Intersection of Design and Business Strategy
marketplace of increasing clutter. Thanks to
unprecedented market clutter, differentiation is
becoming the most powerful strategy in business
and the primary beneficiary of innovation.
So if innovation drives differentiation, what
drives innovation? The answer, hidden in plain
sight, is design. Design contains the skills to
identify possible futures, invent exciting products,
build bridges to customers, crack wicked
problems, and more. The fact is, if you wanna
innovate, you gotta design.
Imagine a crazyWonderland where most of
what you learned in business school is either
upside down or backward—
where customers
control the company, jobs
are avenues of selfexpression,
the barriers to
competition are out of
your control, strangers
design your products,
fewer features are better,
advertising drives customers
away, demographics
are beside the point,
whatever you sell you
take back, and best practices
are obsolete at birth;
where meaning talks,
money walks, and stability is fantasy; where talent
trumps obedience, imagination beats knowledge,
and empathy trounces logic.
If you’ve been paying close enough attention,
you don’t have to imagine this Alice-in-
Wonderland scenario. You see it forming all
around you. The only question is whether you
can change your business, your brand, and your
thinking fast enough to take full advantage of it.
The management innovation destined to kick
Six Sigma off its throne is design thinking. It will
take over your marketing department, move into
your R&D labs, transform your processes, and
ignite your culture. It will create a whip action
that will bring finance into alignment with creativity,
and eventually reach deep intoWall
Street to change the rules of investing.
Designing the way forward
The discipline of design has been waiting
patiently in the wings for nearly a century, relegated
to supporting roles and stand-in parts.
Until now, companies have used design as a
beauty station for identities and communications,
or as the last stop in a product launch.
Never has it been used for its potential to create
rule-bending innovation across the board.
Meanwhile, the public is developing a healthy
appetite for all things design.
One survey by Kelton Research for Autodesk
found that when 7 in 10 Americans recalled the
last time they saw a product they just had to
have, it was because of design.2 They found that
with younger people (18 to 29), the influence of
design was even more pronounced.More than
one out of four Americans was disappointed in
the level of design in America, saying, for example,
that cars were better designed 25 years ago.
In Great Britain, a recent survey by the
Design Council found that 16 percent of British
businesses say that design tops their list of key
success factors. Among “rapidly growing” businesses,
a whopping 47 percent rank it first.3
The ballooning demand for design is shaped
by a profound shift in how the FirstWorld
makes its living. Creativity in its various forms
has become the number-one engine of economic
growth. The creative class, in the words of
Toronto University professor Richard Florida,
now comprises 38 million members, or more
than 30 percent of the American workforce.
McKinsey authors Lowell Bryan and Claudia
Joyce put the figure only slightly below, at 25
percent. They cite creative professionals in financial
services, healthcare, high-tech, pharmaceuticals,
and media and entertainment who act as
agents of change, producers of intangible assets,
and creators of new value for their companies.
When you hear the phrase innovative design,
what picture comes to mind? An iPhone? A
NintendoWii? A Prius? Most people visualize
some kind of technology product. Yet products—
technological or otherwise—are not the
2. 2007 Autodesk “Design for Living” survey, conducted by
Kelton Research between March 23 and March 28, 2007
(http://images.autodesk.com/apac_grtrchina_main/files/de
sign_for_living_highlights_final.pdf).
3. The Design Council, “The Value of Design Factfinder
Report,” 2007, originally published in Design in Britain
(http://195.157.47.227:8080/designcoun
cil/pdf/TheValueOfDesignFactfinder.pdf).
Design contains
the skills to identify
possible futures,
invent exciting products,
build bridges to
customers, crack
wicked problems,
and more.
Design Management Review Spring 2008 13
The Designful Company
only possibilities for design. Design is rapidly
moving from posters and toasters to include
processes, systems, and organizations.
Dr. Deming, the mid-century business guru
who inspired Six Sigma, had some far-reaching
ideas beyond quality control. You’d expect his
thinking to be stuck in the rusty past, but it
remains remarkably progressive by modern
standards. His trademark 1982 System of
Profound Knowledge was an attempt to get
managers to think outside the system they work
in. It featured a list of “deadly diseases,” including
a lack of purpose, the mobility of executives,
and emphasis on short-term profits (sound
familiar?). Among the diseases was an overreliance
on technology to solve problems.
The sure cure for Deming’s diseases, as well
as for the top 10 wicked problems, is design. It’s
the accelerator for the company car, the powertrain
for sustainable profits. Design drives innovation,
innovation powers brand, brand builds
loyalty, and loyalty sustains profits. If you want
long-term profits, don’t start with technology—
start with design.
Brand and deliver
There are really only two main components for
business success: brands and their delivery. All
other activities—operations, finance,manufacturing,
marketing, sales, communications,
human relations, investor relations—are subcomponents.
In my earlier book, The Brand Gap, I defined
a brand as a person’s gut feeling about a product,
service, or company. I showed how brands
derive their financial value, drawing a distinction
between me-too brands and charismatic
brands. Charismatic brands support higher
profit margins because their customers believe
there’s no substitute for them; they form
unbreachable barriers to competition in an era
of cut-throat pricing.
A former editor of Windows magazine,Mike
Elgan, illustrated the difference between ordinary
brands and charismatic brands in two succinct
sentences: “Microsoft CEO Steve Ballmer is
famous for a crazy video in which he yells, I—
LOVE—THIS—COMPANY.With Apple, it’s the
customers who shout that.” This may explain why
BusinessWeek’s top-100 survey placedMicrosoft’s
brand value at only 17 percent of its market cap,
and Apple’s at an impressive 66 percent.
The well-documented connection between
customer loyalty and profit margins has encouraged
many companies to launch so-called loyalty
programs, using incentives or contracts to lock
in customers. Trouble is, customers don’t like to
be locked in. It makes them disloyal. Not only
that, loyalty programs are expensive to manage
and easy to copy. They’re nothing more than
Band-aids on a much deeper problem—offerings
so uncompelling that customers prefer to
keep their options open.
In the previous century,
a little brand loyalty went
a long way. Often, what
passed for loyalty was
merely ignorance. If customers
didn’t know what
their options were, they
would simply stick with
the devil they knew.
Today’s Microsoft, with its
low brand score,may be
one of the last major companies
to profit this way. In the new century,
customer ignorance won’t be enough to keep
competitors at bay.
To build a brand that fosters voluntary
loyalty, it’s better to do what Google does—use
design to create differentiated products and
services that delight customers. If you can deliver
customer delight, you can dispense with the
high cost and relationship-straining effects of
loyalty programs. Organic loyalty beats artificial
loyalty every time.
The central problem of brand-building is getting
a complex organization to execute a bold
idea. It’s as simple and as vexing as that. First,
you have to identify and articulate the right idea.
Next, you have to get hundreds or even thousands
of people to act on it—in unison. Then
you have to update, augment, or replace the idea
as the market dictates.
Stacked against this challenge are two prevailing
headwinds: the extreme clutter of the marketplace
and the relentless speed of change. The
antidote to clutter is a radically differentiated
brand. The antidote to change is organizational
agility. Although agility was not a burning issue
There are really
only two main
components for
business success:
brands and their
delivery.
14 Design Management Review Spring 2008
Building Brands at the Intersection of Design and Business Strategy
when business moved at a more leisurely pace,
in 2008 it showed up as wicked problem number
three. Companies now need to be as fast and
adaptable as they are innovative.
Agility beats ownership
Today, there’s no safe ground in business. The
old barriers to competition—ownership of factories,
access to capital, technology patents, regulatory
protection, distribution chokeholds, customer
ignorance—are rapidly collapsing. In our
Darwinian era of perpetual innovation, we’re
either commoditizing or revolutionizing.
A visible victim of change was Kodak at the
turn of the new century, when its ownership of
the patents, distribution channels, and dominant
market share protecting its
film and camera businesses
became irrelevant against
the steady advance of digital
photography. Though Kodak
could see the revolution
coming a mile off, it couldn’t
extricate itself from its own
culture—a culture based on
squeezing profits from a
commoditizing film business.
By 2004, its share of
the camera market was
down to 17 percent, despite being the first on
the scene with a digital camera 15 years earlier.
Why does change always have to be crisisdriven?
Is it possible to change ahead of the
curve?What keeps companies from the continuous
transformation needed to keep up with the
speed of the market?
A company can’t will itself to be agile. Agility
is an emergent property that appears when an
organization has the right mindset, the right
skills, and the ability to multiply those skills
through collaboration. To count agility as a core
competence, you have to embed it into the culture.
You have to encourage an enterprise-wide
appetite for radical ideas. You have to keep the
company in a constant state of inventiveness. It’s
one thing to inject a company with inventiveness.
It’s another thing to build a company on
inventiveness.
To organize for agility, your company needs
to develop a “designful mind.”A designful mind
confers the ability to invent the widest range of
solutions for the wicked problems now facing
your company, your industry, your world.
“He that will not apply new remedies must
expect new evils,” warned Sir Francis Bacon 500
years ago, “for time is the greatest innovator.”
Next, eco-everything
Necessity may well be the mother of invention.
But if we continue to manufacture mountains of
toxic stuff, invention may soon become the
mother of necessity. Our natural resources will
disappear and our planet made uninhabitable.
On the top-10 list of wicked problems, eco-sustainability
is number 9 with a bullet.My hunch
is that it will move up rapidly until it settles in at
the top three.
The problem with consumerism isn’t that it
creates desire, but that it fails to fully satisfy it.
Desire is a basic human drive. But part of what
we desire is to feel good about the things we buy.
We yearn for guilt-free affluence, to use the words
of Worldchanging’s Alex Steffen.
As a thought experiment, imagine a future in
which all companies were compelled to take
back every product they made. How would that
change their behavior? For starters, they would
make their products with parts they could salvage
and reuse at the end of their lifecycles. This,
in turn, would spawn whole industries dedicated
to the design of reusable materials. As companies
struggled to afford the full cost of manufacturing,
the prices of products and services would
rise. To keep prices under control, companies
would localize their operations to save on transportation
costs. Localizing businesses would
change the nature of communities, creating a
network of quasi-independent economies more
akin to the Agricultural Age than to the
Industrial Age.
As you can see, the domino effect caused by a
focus on waste reduction would alter our commercial
landscape beyond recognition, creating
more wicked problems, but also more opportunities
for innovation.
In France, where the Agricultural Age is still
in evidence, the large-scale BoissetWinery is
currently rediscovering the value of the old ways.
It’s replacing heavy, diesel-burning tractors with
horse-drawn plows and grass-munching sheep
to restore the compacted, depleted topsoil. It’s
also discovering value in new technologies,
The problem
with consumerism
isn’t that
it creates desire,
but that it fails to
fully satisfy it.
Design Management Review Spring 2008 15
The Designful Company
bucking the French tradition of corks and glass
bottles by shipping its wine in recyclable Tetra
Pak containers that reduce oxidation and cut
transportation costs.
In Germany, Volkswagen is demonstrating
that corporate responsibility doesn’t end at the
loading dock. The company is already selling
cars that are 85 percent recyclable and 95 percent
reusable, and it’s building a zero-emissions
car that operates on a fuel cell, 12 batteries, and
a solar panel instead of fossil fuels.
The European Union has announced a
“20/20 vision.” It wants to get 20 percent of its
energy from renewable sources by the year
2020. If this were to come from sun power, it
would require 25 times the current annual production
of solar panels to meet the need. In
Silicon Valley, Applied Materials has a complimentary
vision—to have its equipment used for
making three-quarters of the world’s solar panels
by the year 2011.
American furniture manufacturer Steelcase is
currently attacking the waste stream with its
Think chair, which is nearly 100 percent fixable
and recyclable. The company has also set up
three factories around the world to lower transportation
costs and support local economies.
Industrial giant General Electric once found
itself in the penalty box for dumping toxic
chemicals into the Hudson River. Today it
spends nearly $1 billion a year on research into
eco-friendly technologies to improve energy efficiency,
desalinate water sources, and reduce
dependence on fossil fuels. The motive? Profit.
As CEO Jeffery Immelt says, “Green is green.”
While eco-sustainability isn’t yet top-of-mind
for most CEOs, when the tide finally turns, it’ll
turn fast. There’s already a significant migration
of talented executives from traditional technology
to green technology. As venture capitalist
Adam Grosser put it, “They have had their consciousness
energized, and they believe there is a
lot of money to be made.”
Business is design blind
Until a decade or so ago, the public’s taste for
design had been stunted by the limitations of
mass production. Now people have more buying
choices, so they’re choosing in favor of beauty,
simplicity, and the “tribal identity” of their
favorite brands.
Yet if design is such a powerful tool, why
aren’t there more practitioners working in corporations?
If economic value increasingly
derives from intangibles like knowledge, inspiration,
and creativity, why don’t we hear the language
of design echoing down the corridors?
Unfortunately, most business managers are
deaf, dumb, and blind when it comes to the
creative process. They learned their chops by
rote, through a bounded tradition of spreadsheet-
based theory. As one MBA joked, in his
world, the language of design is a sound only
dogs can hear.
This is illustrated by a story about railroad
baron Collis P. Huntington, who visited the
Eiffel Tower just after its completion.When an
interviewer for a Paris newspaper asked him for
a critique, he said: “Your Eiffel Tower is all very
well, but where’s the money in it?”
It’s not that spreadsheet thinking is wrong.
It’s just that it’s inadequate. A designer might
have offered a completely different critique of
the tower: “What a stirring symbol of progress!
From now on, people will never forget their visit
to Paris.”According to one estimate,more than
$120 billion worth of Eiffel Tower souvenirs has
been sold since 1897. The trinket business alone
has been worth the investment.
The lesson of Paris has not been lost on cities
like London, with its majestic London Eye, or
Bilbao, with its shimmering Guggenheim
Museum. Frank Gehry’s design has not only captivated
the world’s imagination, it has catalyzed
an economic turnaround for the whole region.
For businesses to bottle the kind of experiences
that rivet minds and run away with hearts,
not just one time but over and over, they’ll need
to do more than hire designers. They’ll need to
be designers. They’ll need to think like designers,
feel like designers, work like designers. The narrow-
gauge mindset of the past is insufficient for
today’s wicked problems.We can no longer play
the music as written. Instead, we have to invent a
whole new scale.
Reprint #08192NEU10