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Design
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The Designful Company
Marty Neumeier, President, Neutron
Reprint #08192NEU10
This article was first published in Design Management Review Vol. 19 No. 2
Building Brands at the Intersection of Design and Business Strategy
Copyright © Spring 2008 by the Design Management Institute . All rights reserved. No part of this publication may be reproduced
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KEYNOTE
The Designful Company
by Marty Neumeier
n a challenging business environment,
I there is no substitute for having an
innovative and distinctive brand express-
ed 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.
Industrial Age thinking has delivered change, ultra-savvy customers, balka-
some dazzling capabilities, including the nized markets, rapacious shareholders,
power to churn out high-quality prod- traitorous employees, regulatory head-
ucts at affordable prices. Yet it has also locks, and price pressure from desper-
trapped us in a tangle labeled by ate global competitors with little to lose
Berkeley professor Horst Rittel as and everything to gain.
“wicked problems”—problems so per- In a 2008 survey sponsored by my
Marty Neumeier, President, sistent, pervasive, and slippery that they consulting firm, Neutron, and Stanford
Neutron seem insoluble. Unlike the relatively University, 1,500 top American execu-
tame problems found in mathematics, tives were asked to identify the
chess, and cost accounting, wicked wickedest problems plaguing their
problems tend to shift disconcertingly companies today. While the top 10
with every attempt to solve them. included the usual suspects of profits
Moreover, the solutions are never right and growth, they also revealed concerns
or wrong, just better or worse. that hadn’t shown up on corporate
The world’s wicked problems crowd radar screens until now: aligning strate-
us like piranha. You know the list: pollu- gy and customer experience, addressing
tion, overpopulation, dwindling natural eco-sustainability, collaborating across
resources, global warming, technological silos, and embracing social responsibili-
warfare, and a lopsided distribution of ty. The number-one wicked problem
power that has failed to address massive cited by corporate leaders was the con-
ignorance and Third-World hunger. In flict between long-term goals and
the world of business, managers face a short-term demands.
subset of these problems: breakneck Clearly, these were not the concerns
10 Design Management Review Spring 2008

The Designful Company
of twentieth-century managers. The last man- of the assembly line, the laser-like focus of
agement obsession of that century was Six Newtonian science applied to the manufacture
Sigma, the total-quality movement inspired by of wealth. The assembly line was intentionally
Dr. W. Edwards Deming and his postwar work blind to morality, emotions, and human aspira-
with the Japanese. Six Sigma has been so suc- tion—all the better to make your competitors
cessful that quality has virtually become a com- and customers lose, so you can win.
modity. Customers now expect every product Yet business at bottom is not mechanical but
and service to be reliable, affording no single human. Today, we find that innovation without
company a competitive advantage. emotion is uninteresting. Products without aes-
Unfortunately, the more progressive elements thetics are not compelling. Brands without
of Deming’s philosophy were all but ignored by meaning are undesirable. And business without
a business mindset that preferred the measura- ethics is unsustainable. The management model
ble over the meaningful. that got us here is under-
powered to move us for-
2008 Survey of Wicked Problems* ward. To succeed, the 1,500 top American
(Sponsored by Neutron and Stanford University) new model must replace
the win-lose nature of executives were asked
the assembly line with to identify the
1. Balancing long-term goals with short-term demands
the win-win nature of
2. Predicting returns on innovative concepts
the network. wickedest problems
In 2006, when Ford
Motor Co. announced plaguing their
3. Innovating at the increasing speed of change
plans to close 14 facto-
ries and cut 34,000 jobs,
companies today.
4. Winning the war for world-class talent Bill Ford made a reveal-
ing statement: “We can no longer play the game
5. Combining profitability with social responsibility the old way,” he said. “From now on, our vehicles
will be designed to satisfy the customer, not just
6. Protecting margins in a commoditizing industry fill a factory.” Too little, too late, Bill. While Ford
was figuring this out, Toyota had already been
7. Multiplying success by collaborating across silos satisfying customers for years.
We’ve spent the last century filling factories
8. Finding unclaimed yet profitable market space and making minor tweaks to the same basic idea
of efficiency. The high-water mark in the quest
9. Addressing the challenge of eco-sustainability for continuous improvement was Six Sigma—
yet the Wall Street Journal cited a 2006 Qualpro
10. Aligning strategy with customer experience study showing that of 58 large companies that
announced Six Sigma programs, 91 percent
*A wicked problem is a puzzle so persistent, pervasive, and slippery trailed the S&P 500.1 We’ve been getting better
that it can seem insoluble.
and better at a management model that’s getting
wronger and wronger.
In an era of Six Sigma parity, it’s no longer
When we look around and see today’s com- enough to get better. We have to get different.
panies and brands beset by distrustful cus- Not just different, but really different. In my
tomers, disengaged employees, and suspicious book, Zag, I proposed a 17-step process to create
communities, we can link these problems to a the radical differentiation necessary for compa-
legacy management style that lacks any real nies, products, and brands to stand out from a
human dimension. The model for twentieth-
century management was not the warm human- 1. K. Richardson, “The Six Sigma Factor for Home Depot,”
ism of the Renaissance, but the cold mechanics Wall Street Journal, Jan. 4, 2007.
Design Management Review Spring 2008 11

Building Brands at the Intersection of Design and Business Strategy
marketplace of increasing clutter. Thanks to gated to supporting roles and stand-in parts.
unprecedented market clutter, differentiation is Until now, companies have used design as a
becoming the most powerful strategy in business beauty station for identities and communica-
and the primary beneficiary of innovation. tions, or as the last stop in a product launch.
So if innovation drives differentiation, what Never has it been used for its potential to create
drives innovation? The answer, hidden in plain rule-bending innovation across the board.
sight, is design. Design contains the skills to Meanwhile, the public is developing a healthy
identify possible futures, invent exciting prod- appetite for all things design.
ucts, build bridges to customers, crack wicked One survey by Kelton Research for Autodesk
problems, and more. The fact is, if you wanna found that when 7 in 10 Americans recalled the
innovate, you gotta design. last time they saw a product they just had to
Imagine a crazy Wonderland where most of have, it was because of design.2 They found that
what you learned in business school is either with younger people (18 to 29), the influence of
upside down or back- design was even more pronounced. More than
ward—where customers one out of four Americans was disappointed in
Design contains control the company, jobs the level of design in America, saying, for exam-
are avenues of self- ple, that cars were better designed 25 years ago.
the skills to identify expression, the barriers to In Great Britain, a recent survey by the
possible futures, competition are out of Design Council found that 16 percent of British
your control, strangers businesses say that design tops their list of key
invent exciting prod- design your products, success factors. Among “rapidly growing” busi-
fewer features are better, nesses, a whopping 47 percent rank it first.3
ucts, build bridges to advertising drives cus- The ballooning demand for design is shaped
customers, crack tomers away, demograph- by a profound shift in how the First World
ics are beside the point, makes its living. Creativity in its various forms
wicked problems, whatever you sell you has become the number-one engine of econom-
take back, and best prac- ic growth. The creative class, in the words of
and more. tices are obsolete at birth; Toronto University professor Richard Florida,
where meaning talks, now comprises 38 million members, or more
money walks, and stability is fantasy; where tal- than 30 percent of the American workforce.
ent trumps obedience, imagination beats knowl- McKinsey authors Lowell Bryan and Claudia
edge, and empathy trounces logic. Joyce put the figure only slightly below, at 25
If you’ve been paying close enough attention, percent. They cite creative professionals in finan-
you don’t have to imagine this Alice-in- cial services, healthcare, high-tech, pharmaceuti-
Wonderland scenario. You see it forming all cals, and media and entertainment who act as
around you. The only question is whether you agents of change, producers of intangible assets,
can change your business, your brand, and your and creators of new value for their companies.
thinking fast enough to take full advantage of it. When you hear the phrase innovative design,
The management innovation destined to kick what picture comes to mind? An iPhone? A
Six Sigma off its throne is design thinking. It will Nintendo Wii? A Prius? Most people visualize
take over your marketing department, move into some kind of technology product. Yet prod-
your R&D labs, transform your processes, and ucts—technological or otherwise—are not the
ignite your culture. It will create a whip action
that will bring finance into alignment with cre- 2. 2007 Autodesk “Design for Living” survey, conducted by
ativity, and eventually reach deep into Wall Kelton Research between March 23 and March 28, 2007
Street to change the rules of investing. (http://images.autodesk.com/apac_grtrchina_main/files/de
sign_for_living_highlights_final.pdf).
Designing the way forward 3. The Design Council, “The Value of Design Factfinder
Report,” 2007, originally published in Design in Britain
The discipline of design has been waiting (http://195.157.47.227:8080/designcoun
patiently in the wings for nearly a century, rele- cil/pdf/TheValueOfDesignFactfinder.pdf).
12 Design Management Review Spring 2008

The Designful Company
only possibilities for design. Design is rapidly brand value at only 17 percent of its market cap,
moving from posters and toasters to include and Apple’s at an impressive 66 percent.
processes, systems, and organizations. The well-documented connection between
Dr. Deming, the mid-century business guru customer loyalty and profit margins has encour-
who inspired Six Sigma, had some far-reaching aged many companies to launch so-called loyalty
ideas beyond quality control. You’d expect his programs, using incentives or contracts to lock
thinking to be stuck in the rusty past, but it in customers. Trouble is, customers don’t like to
remains remarkably progressive by modern be locked in. It makes them disloyal. Not only
standards. His trademark 1982 System of that, loyalty programs are expensive to manage
Profound Knowledge was an attempt to get and easy to copy. They’re nothing more than
managers to think outside the system they work Band-aids on a much deeper problem—offer-
in. It featured a list of “deadly diseases,” includ- ings so uncompelling that customers prefer to
ing a lack of purpose, the mobility of executives, keep their options open.
and emphasis on short-term profits (sound In the previous century,
familiar?). Among the diseases was an over- a little brand loyalty went There are really
reliance on technology to solve problems. a long way. Often, what
The sure cure for Deming’s diseases, as well passed for loyalty was only two main
as for the top 10 wicked problems, is design. It’s merely ignorance. If cus-
the accelerator for the company car, the power- tomers didn’t know what components for
train for sustainable profits. Design drives inno- their options were, they business success:
vation, innovation powers brand, brand builds would simply stick with
loyalty, and loyalty sustains profits. If you want the devil they knew. brands and their
long-term profits, don’t start with technology— Today’s Microsoft, with its
start with design. low brand score, may be delivery.
one of the last major com-
Brand and deliver panies to profit this way. In the new century,
There are really only two main components for customer ignorance won’t be enough to keep
business success: brands and their delivery. All competitors at bay.
other activities—operations, finance, manufac- To build a brand that fosters voluntary
turing, marketing, sales, communications, loyalty, it’s better to do what Google does—use
human relations, investor relations—are sub- design to create differentiated products and
components. services that delight customers. If you can deliv-
In my earlier book, The Brand Gap, I defined er customer delight, you can dispense with the
a brand as a person’s gut feeling about a prod- high cost and relationship-straining effects of
uct, service, or company. I showed how brands loyalty programs. Organic loyalty beats artificial
derive their financial value, drawing a distinc- loyalty every time.
tion between me-too brands and charismatic The central problem of brand-building is get-
brands. Charismatic brands support higher ting a complex organization to execute a bold
profit margins because their customers believe idea. It’s as simple and as vexing as that. First,
there’s no substitute for them; they form you have to identify and articulate the right idea.
unbreachable barriers to competition in an era Next, you have to get hundreds or even thou-
of cut-throat pricing. sands of people to act on it—in unison. Then
A former editor of Windows magazine, Mike you have to update, augment, or replace the idea
Elgan, illustrated the difference between ordinary as the market dictates.
brands and charismatic brands in two succinct Stacked against this challenge are two prevail-
sentences: “Microsoft CEO Steve Ballmer is ing headwinds: the extreme clutter of the mar-
famous for a crazy video in which he yells, I— ketplace and the relentless speed of change. The
LOVE—THIS—COMPANY. With Apple, it’s the antidote to clutter is a radically differentiated
customers who shout that.” This may explain why brand. The antidote to change is organizational
BusinessWeek’s top-100 survey placed Microsoft’s agility. Although agility was not a burning issue
Design Management Review Spring 2008 13

Building Brands at the Intersection of Design and Business Strategy
when business moved at a more leisurely pace, solutions for the wicked problems now facing
in 2008 it showed up as wicked problem number your company, your industry, your world.
three. Companies now need to be as fast and “He that will not apply new remedies must
adaptable as they are innovative. expect new evils,” warned Sir Francis Bacon 500
years ago, “for time is the greatest innovator.”
Agility beats ownership
Today, there’s no safe ground in business. The Next, eco-everything
old barriers to competition—ownership of fac- Necessity may well be the mother of invention.
tories, access to capital, technology patents, reg- But if we continue to manufacture mountains of
ulatory protection, distribution chokeholds, cus- toxic stuff, invention may soon become the
tomer ignorance—are rapidly collapsing. In our mother of necessity. Our natural resources will
Darwinian era of perpetual innovation, we’re disappear and our planet made uninhabitable.
either commoditizing or revolutionizing. On the top-10 list of wicked problems, eco-sus-
A visible victim of change was Kodak at the tainability is number 9 with a bullet. My hunch
turn of the new century, when its ownership of is that it will move up rapidly until it settles in at
the patents, distribution channels, and dominant the top three.
market share protecting its The problem with consumerism isn’t that it
film and camera businesses creates desire, but that it fails to fully satisfy it.
The problem became irrelevant against Desire is a basic human drive. But part of what
the steady advance of digital we desire is to feel good about the things we buy.
with consumerism photography. Though Kodak We yearn for guilt-free affluence, to use the words
isn’t that could see the revolution of Worldchanging’s Alex Steffen.
coming a mile off, it couldn’t As a thought experiment, imagine a future in
it creates desire, extricate itself from its own which all companies were compelled to take
culture—a culture based on back every product they made. How would that
but that it fails to squeezing profits from a change their behavior? For starters, they would
fully satisfy it. commoditizing film busi- make their products with parts they could sal-
ness. By 2004, its share of vage and reuse at the end of their lifecycles. This,
the camera market was in turn, would spawn whole industries dedicated
down to 17 percent, despite being the first on to the design of reusable materials. As compa-
the scene with a digital camera 15 years earlier. nies struggled to afford the full cost of manufac-
Why does change always have to be crisis- turing, the prices of products and services would
driven? Is it possible to change ahead of the rise. To keep prices under control, companies
curve? What keeps companies from the continu- would localize their operations to save on trans-
ous transformation needed to keep up with the portation costs. Localizing businesses would
speed of the market? change the nature of communities, creating a
A company can’t will itself to be agile. Agility network of quasi-independent economies more
is an emergent property that appears when an akin to the Agricultural Age than to the
organization has the right mindset, the right Industrial Age.
skills, and the ability to multiply those skills As you can see, the domino effect caused by a
through collaboration. To count agility as a core focus on waste reduction would alter our com-
competence, you have to embed it into the cul- mercial landscape beyond recognition, creating
ture. You have to encourage an enterprise-wide more wicked problems, but also more opportu-
appetite for radical ideas. You have to keep the nities for innovation.
company in a constant state of inventiveness. It’s In France, where the Agricultural Age is still
one thing to inject a company with inventive- in evidence, the large-scale Boisset Winery is
ness. It’s another thing to build a company on currently rediscovering the value of the old ways.
inventiveness. It’s replacing heavy, diesel-burning tractors with
To organize for agility, your company needs horse-drawn plows and grass-munching sheep
to develop a “designful mind.” A designful mind to restore the compacted, depleted topsoil. It’s
confers the ability to invent the widest range of also discovering value in new technologies,
14 Design Management Review Spring 2008

The Designful Company
bucking the French tradition of corks and glass Yet if design is such a powerful tool, why
bottles by shipping its wine in recyclable Tetra aren’t there more practitioners working in cor-
Pak containers that reduce oxidation and cut porations? If economic value increasingly
transportation costs. derives from intangibles like knowledge, inspira-
In Germany, Volkswagen is demonstrating tion, and creativity, why don’t we hear the lan-
that corporate responsibility doesn’t end at the guage of design echoing down the corridors?
loading dock. The company is already selling Unfortunately, most business managers are
cars that are 85 percent recyclable and 95 per- deaf, dumb, and blind when it comes to the
cent reusable, and it’s building a zero-emissions creative process. They learned their chops by
car that operates on a fuel cell, 12 batteries, and rote, through a bounded tradition of spread-
a solar panel instead of fossil fuels. sheet-based theory. As one MBA joked, in his
The European Union has announced a world, the language of design is a sound only
“20/20 vision.” It wants to get 20 percent of its dogs can hear.
energy from renewable sources by the year This is illustrated by a story about railroad
2020. If this were to come from sun power, it baron Collis P. Huntington, who visited the
would require 25 times the current annual pro- Eiffel Tower just after its completion. When an
duction of solar panels to meet the need. In interviewer for a Paris newspaper asked him for
Silicon Valley, Applied Materials has a compli- a critique, he said: “Your Eiffel Tower is all very
mentary vision—to have its equipment used for well, but where’s the money in it?”
making three-quarters of the world’s solar pan- It’s not that spreadsheet thinking is wrong.
els by the year 2011. It’s just that it’s inadequate. A designer might
American furniture manufacturer Steelcase is have offered a completely different critique of
currently attacking the waste stream with its the tower: “What a stirring symbol of progress!
Think chair, which is nearly 100 percent fixable From now on, people will never forget their visit
and recyclable. The company has also set up to Paris.” According to one estimate, more than
three factories around the world to lower trans- $120 billion worth of Eiffel Tower souvenirs has
portation costs and support local economies. been sold since 1897. The trinket business alone
Industrial giant General Electric once found has been worth the investment.
itself in the penalty box for dumping toxic The lesson of Paris has not been lost on cities
chemicals into the Hudson River. Today it like London, with its majestic London Eye, or
spends nearly $1 billion a year on research into Bilbao, with its shimmering Guggenheim
eco-friendly technologies to improve energy effi- Museum. Frank Gehry’s design has not only cap-
ciency, desalinate water sources, and reduce tivated the world’s imagination, it has catalyzed
dependence on fossil fuels. The motive? Profit. an economic turnaround for the whole region.
As CEO Jeffery Immelt says, “Green is green.” For businesses to bottle the kind of experi-
While eco-sustainability isn’t yet top-of-mind ences that rivet minds and run away with hearts,
for most CEOs, when the tide finally turns, it’ll not just one time but over and over, they’ll need
turn fast. There’s already a significant migration to do more than hire designers. They’ll need to
of talented executives from traditional technolo- be designers. They’ll need to think like designers,
gy to green technology. As venture capitalist feel like designers, work like designers. The nar-
Adam Grosser put it, “They have had their con- row-gauge mindset of the past is insufficient for
sciousness energized, and they believe there is a today’s wicked problems. We can no longer play
lot of money to be made.” the music as written. Instead, we have to invent a
whole new scale.
Business is design blind Reprint #08192NEU10
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.
Design Management Review Spring 2008 15