Fortunes can change for any business – large or small. Shifts in the global economy, changes in the marketplace or the ebb and flow of consumer sentiment are just some of the factors that can send a once-successful operation into decline. Even mighty businesses such as McDonald’s or national industries like Switzerland’s watchmakers can fall foul of challenging market conditions.
Experience has taught companies that have survived (and even thrived in) a downturn that investing in design and innovation when times are tough can give a vital competitive edge over rivals who are reigning in their marketing and innovation spend. As American Express CEO Ken Chenault told Fortune magazine: “A difficult economic environment argues for the need to innovate more, not to pull back.”
This sentiment was echoed by Ram Charan, one of the Fortune 500’s favorite management gurus: “When the top line looks shaky and the bottom line worse, the temptation is to go after discretionary spending. Fine – but do not consider product development, innovation, and brand building optional. Sacrificing your future for a slightly more comfortable present is not worth it. If you keep building, you can come back strong.”
It’s not just the Fortune 500 that think this. Over the past few months, the Design Council has talked to 1,500 UK firms, from SMEs to large organizations in a whole variety of sectors, and the message is clear: more than half of those companies said that they intend to use design to a large or great extent to help maintain their competitive edge to survive recession. What’s more, the same proportion also think that design has become more critical in helping them achieve their business objectives. This is in part because firms are realizing that design isn’t just about creating new products – design can be used in so many ways to transform business competitiveness, from reducing costs and exploiting new markets to transforming your branding and customer service offering. And it’s never been more important to put your customers’ needs at the heart of your business, and make sure that service, brand and customer engagement strategies are continually reviewed.
Take luxury online retailer Net-a-Porter, launched in the middle of the dot-com bust in 2000. The company started off fighting tough market conditions that finished many other online businesses, but by focusing on design and innovation in brand, user experience and service design, it has grown into a household name among fashionistas, turning over £55 million a year. Net-a-Porter hasn’t just provided a glamorous website; it’s worked to ensure that every aspect of its offering distinguishes its brand from other luxury retailers, both online and offline. From the elegantly turned-out delivery drivers in its key London and Manhattan markets to the mix of editorial content and ecommerce functionality on its website, Net-a-Porter has used design to unify customers’ experience of its brand from their very first click.
And it’s not only start-ups that can embrace design-led thinking. Castle Rock Brewery in Nottingham, England, was one of the UK’s leading independent real ale brewers, but it knew it needed to polish up its image. New products weren’t the problem: a range of new ales had been introduced over a number of years. But with no common thread to tie them together, there was no cohesion when these products were presented to customers in bars and pubs. The company brought in design group Strangebrew – now part of The Workroom – to examine its brand, visual identity and portfolio of drinks. For a fee of around £3,000, The Workroom brought into clearer focus the brewery’s overall identity and developed a coherent range of different badges for its beer pumps. Since the rebranding launched in 2007, the company’s barrel sales growth has doubled to around 20 per cent year on year – a full year ahead of business projections.
Any company can take the decision to use design to rethink and regenerate its products, operations and image – whatever its size. Castle Rock Brewery employs just six people in its head office, whereas a multinational like McDonald’s is seeing its European business growing more quickly than in the US, which it partially attributes to its investment in improved restaurant design. And the Swiss watchmakers? Well, Nicolas Hayek, co-founder of Swatch Group, credits his 1980s investment in design with the rebirth of the entire Swiss watch industry.
As these examples show, an investment in design can be instrumental in turning the corner to renewed growth. Design can elevate a business or its products from the ordinary, the tired or the predictable – demonstrating that the business is alive, dynamic and responsive. And in a declining market, that just might make the difference between growth and collapse.