The Journal of the Medinge Group, vol. 1, no. 1, 2007

Ava Maria Hakim 
IBM Global Solutions, Business Transformation Outsourcing
hakimava@us.ibm.com

Microsoft Word version

Thomas Watson, who helped grow one of the first truly global organizations, is quoted as saying ‘Good design is good business’. For the maverick of IBM, ‘Design must reflect the practical and æsthetic in business but above all … good design must primarily serve people’. Tom Peters, an expert on business management practices, has said, ‘Design is so critical it should be on the agenda of every meeting in every single department.’ Charles Eames, a designer in the common sense of the word, said, ‘Design is a plan for arranging elements in such a way as to best accomplish a particular purpose’. Simply put from the perspective of a business person, designer and consumer, design is a system that transforms anything into something new.
   
‘Anything’ can be an idea, an object, a place, a process, a business, a person—it can literally be anything and every thing. If the result is something new within an existing category (a category being the market or economy associated with the thing being transformed), then it is an innovation. If the result is something new that creates an entirely new category, then it is an invention. In 1886, when Dr John Pemberton created Coca-Cola, he created a new category of soda—an invention. In 2007, when Coca-Cola evolved the invention into Coke Plus—they created an innovation. This article will look at the design system and its impact on value creation, business and brand.

The Design System

1. Critical Mind
2. Hypothetical Juxtaposition
3. Value Creation

1. Critical Mind
   Critical Mind is the first phase of the design system. During this phase, ‘anything’ is analyzed by the mind of a three-year-old. That is, everything about anything is questioned at a micro level of detail. First, the input is mapped and broken down into key elements. In a business this may be the standard McKinsey Ss—shared values, strategy, structure, skills, staff, systems, style—or it may simply be one of the Ss segmented into subcomponents or processes.

Depending on how brand is defined, the segmentation for brand may be similar to business with the added Ss to include—sensory experience, solution, and sales. Once broken into the key elements, the critical mind asks: Why this? Why that? Why there? What cost? Why? Who? Why? Why? Why? This is done in order to identify core elements, additional elements that can be changed or removed, and any areas for improvement. It is Kaizen within the system of design.

2. Hypothetical Juxtaposition
   If Critical Mind is about looking deep, Hypothetical Juxtaposition is about looking wide. Hypothetical Juxtaposition looks across categories, trends, and economies, in order to select elements that could be paired with, or juxtaposed with, existing core elements. It takes a critical look at market trends and needs in order to hypothesize where the repositioning of elements could present new opportunities, open new markets, or invent new categories. It is important to note that the more radical the juxtaposition—that is, the greater the difference between elements paired together—the more radical the innovation can be. Think about the impact on business and brand if a hotel experience was combined with a dynamic physical structure—like ice? Or a gas station was combined with renewable power?

3. Value Creation
Hypothetical Juxtapositions is just as it says—hypothetical. The real value of Phase 2 happens in Phase 3 when recombined ideas and innovative scenarios become reality. Value creation reconnects the elements to best accomplish a single purpose—adding value. Value is measured differently depending on the stakeholder view taken. From any view however, value has an impact on price and price is a key determinant of value—i.e. is the value received equal to, or greater than, the price paid? Design is a key determinant of both price and value.

Design impacts value, business and brand

The diagram illustrates categories based on simple design and price combinations. It shows the impact of these combinations on value creation. ‘High Design’ creates greater value in terms of consumer experience (Xp), social capital (community) and competitive advantage. It suggests, too, that design creates greater value by serving basic needs as well as the higher level needs of the consumer—belonging, esteem, self-actualization. The greatest value for both the business and consumer are clearly in the upper two quadrants.
   
All businesses are brands but not all brands are businesses. Even those that ignore branding, develop a brand just by the fact that they are a business. If a weak brand is input to the design system, the output is brand innovation or invention. If a strong brand is entered into the design system, the output is brand innovation or invention. In either case, the output is the same. However, the amount of value created varies based on what occurred during the three steps within the design system—Critical Mind, Hypothetical Juxtaposition and Value Creation. Were the core elements identified? Were they maintained? Why? Enhanced? Why? Removed? Why? What new elements from other categories and trends were added? Why? As in any system, the output eventually becomes the input. The frequency that the design system is applied, and to which elements, also determines the amount of value created.
   
Branding is a design system but the design system is not only branding. The design system is a system for innovation and invention—two things that are vital to the creation of value within both business and brand. Businesses that do not apply the design system still develop a brand but do not produce innovation with any predictability. Without innovation in a world where competition thrives on innovation, a luxury can quickly turn into a bad deal.
   
To conclude, businesses produce brands. Strong brands produce businesses. Design produces both strong brand and strong businesses.