[Advanced] Good Design Is Good Business (3)

If Design Leads, Then Relentless Innovation Is the Norm
The main question remaining for VCs and old-line companies alike is whether design can deliver a sustainable edge. There’s reason to think that it can. Unlike a few more features or marginal increases in computing speed, a better user experience can mean everything. When Path, today’s most elegantly designed social networking app, launched in November 2010, it was quirky, textured, and a little bit too complicated. The second version, released a year later, cut the core interactions down to one simple screen and had plenty of lively touches.

Its present valuation, rumored to be about $250 million, has less to do with users than the user experience Path has created.

A reliance on design-driven innovation poses a challenge for the companies that live by it: You can’t easily patent how something looks, or the feel of a user interface. Features, subtleties, and finishes spawn imitators with unprecedented speed. That means that design-led companies must innovate constantly to maintain their edge.

Design isn’t being looked at as a solution to only business problems. Its practitioners are now taking up roles that used to be dominated by not-for-profits and governments, seeking new ways to raise the fortunes of the developing world. In our first Innovation by Design Awards, projects such as the Embrace Infant Warmer, a low-cost incubator, and the BioLite CampStove, a hyper-fuel-efficient cooking device, aim to significantly improve and even save the lives of people in poor countries with little modern infrastructure.

What everything in this issue shares is a motivating ethos that Watson also hinted at during his Wharton speech, just before the quote that everyone knows. "We are convinced," he said, "that good design can materially help make a good product reach its full potential." Replace product with business. Or even person. In every instance, the wisdom rings true.


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[Advanced] Good Design Is Good Business (2)

You might wonder what design can possibly have to do with the success of a jet engine or an MRI machine. But hospitals and power plants are now linking their machines into ecosystems. And well-designed iPad apps are the simplest way to manage them. "If we don’t do it, someone else will," says Greg Petroff, general manager of user experience and design at GE. "GE could be relegated to not having the top relationship with the customer," Petroff says. "Our hypothesis is that we can build a better solution."

Designers are the ones best situated to figure out how a kit of parts can become something more--they’re the ones who can figure out the human interface for a vast chain. If they do their job right, the result--a working ecosystem--is a far better platform for innovation than an isolated product. Just think about Apple and how its products have expanded from iMacs to iPods, iTunes, iPhones, and iPads, all linked via its iCloud.

Commoditization Pushes Designers to the Fore
Innovation usually cycles between periods of raw, technical inventiveness and the finer task of packaging it for mass adoption.

Consider Bump, an app that lets users swap data between phones simply by bumping them together. Its cofounder, Dave Lieb, notes that in the first dotcom rush, online enterprises had to build their infrastructures from scratch, so engineers were paramount. In our app economy, everything has changed. Bump had 1 million users before it spent $1,000. It didn’t need infrastructure, thanks to Amazon’s server-hosting service; it didn’t need advertising because of social media; and the App Store solved any distribution problem. Development was a breeze, too, because of Apple’s software developer kit. "These are all things that used to cost millions," Lieb says.

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[Advanced] Good Design Is Good Business (1)

These words, spoken almost 40 years ago, are the guiding spirit of our innovation age today
by Cliff Kuang

When Thomas Watson Jr. told Wharton students in 1973 that good design is good business, the idea seemed quixotic, silly even. To many people, design still meant the superficial polish of nicer homes and cleaner graphics. But Watson had earned the right to his beliefs. The recently retired IBM CEO was a business oracle, having grown the company tenfold during his tenure by transforming its signature product line from cash registers to computer mainframes. Along the way, the perception of IBM had changed irrevocably. Once rooted in the grime of cogs and springs, Big Blue had become the face of a new computer age.

Watson had always been a pioneering advocate for design, going back to 1954 when he recruited Eliot Noyes to reinvent the street-level showroom at IBM’s Manhattan headquarters. And as IBM transformed, it became synonymous with the rise of modernism.

Only now, 19 years after his death in 1993, is Watson being proved right. Innovation today is inextricably linked with design—and design has become a decisive advantage in countless industries, not to mention a crucial tool to ward off commoditization. Companies singing the design gospel range from Comcast to Pinterest to Starbucks. But why now? What makes this moment different?

Good design yields higher profits 
Apple’s rise offers a few important lessons about today’s connection between design and business. The easiest is that design allows you to stoke consumer lust—and demand higher prices as a result. Whirlpool’s VP of design, Pat Schiavone, recently told me, “We’re changing from being a manufacturing-based company to being a product company. It’s not just about cost cutting.” Schiavone was hired three years ago from Ford, where he most famously rebooted the Mustang’s design. “Why change? Because good design is very profitable.”

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