Design in the DNA how a design ethos can drive business growth

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DESIGN IN THE DNA
HOW A DESIGN ETHOS CAN DRIVE BUSINESS GROWTH


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About this report
Design in the DNA. How a design ethos can drive
business growth is a UK Trade & Investment
(UKTI) report commissioned from the Economist
Intelligence Unit. The report seeks to examine how
design thinking might shape corporate strategy
and drive business growth over the coming decade.
In particular, it focuses on the following sectors:

professional services, energy/natural resources,
creative industries (including technology, media
and entertainment), infrastructure/construction,
manufacturing, healthcare and pharmaceuticals.
To quantify this, the Economist Intelligence Unit
conducted a survey of 633 executives in Brazil,
China, France, Germany, Italy, North America, Mexico
and the UK. All company sizes were represented:
51 per cent of firms polled had annual revenue of
less than US$500 million, while 32 per cent had
revenue of at least US$1 billion. All respondents held
management positions, with 59 per cent representing
the C-suite or board. All graphs and tables in this
report are sourced from this global survey and other
Economist Intelligence Unit data.

To complement the survey findings, the
Economist Intelligence Unit also conducted
wide-ranging desk research and in-depth interviews
with a range of organisations. Our thanks are due
to the following for their time and insight (listed
alphabetically, by organisation):
■■ Mat Hunter, chief design officer, Design Council
■■ Jonathan Sands, chairman, Elmwood
■■ Charles Bezerra, executive director, Gad’Innovation
■■ Paul Lester, chairman, Greenergy
■■ Carl Liu, author and partner, at Idea Dao
Design Shanghai
■■ Dr Mandy Savage, programme and technical
operations director, Lockheed Martin

■■ Sir John Sorrell, chief executive and chairman,
London Design Festival
■■ Ken Shuttleworth, founder of Make architects
■■ Alex Laskey, president and co-founder, OPower
■■ Paul Priestman, director, Priestman Goode
The Economist Intelligence Unit bears full
responsibility for the content of this report, and
the findings expressed do not necessarily reflect
the views of UK Trade & Investment.

Design in the DNA: How a design ethos can drive business growth

1


EXECUTIVE SUMMARY
What is the role of design in
a 21st century business?
For many people, that question may make them think
about slick advertising campaigns and plush corporate
headquarters. But design is not, and never was, just
about image.

The key findings include the following:

Design — as practised by the world’s most innovative
companies — is a multi-skilled discipline that involves
engineers, product innovators, brand wizards,
technologists and even expert psychologists. Today, the
“design thinking” that has turned the likes of Apple into

a global leader is closely studied by top managers all
around the world.

Given a challenging economic environment, it is not
surprising that executives in the survey are somewhat
torn between prioritising cost control (44 per cent)
and investing in innovation (56 per cent). R&D is an
expensive and unpredictable activity — cutting back
in this area can help shore up the balance sheet in
the short term. A significant proportion of firms in
the survey (22 per cent, rising to almost one-third of
Chinese respondents and those in the logistics and
transport sector) intend to introduce cheaper versions
of existing products, rather than develop first-of-a-kind
innovations (9 per cent). Unfortunately, such a strategy
is unlikely to generate the kind of breakthroughs
that spawn new businesses and markets. The best
companies will strive to become more efficient in the
way they deliver new products and services, but they
also understand that their long-term competitiveness
depends on backing bold design.

Now, design is entering a new level of importance. Vast
new markets are opening up, their populations hungry
for products and services that more closely reflect their
specific needs and circumstances. Demographic shifts
are also changing the landscape, challenging business’s
recent obsession with the young. And always rumbling
on in the background, the advance of technology
continues to open up new frontiers for the next

generation of ingenious designers.
Design is the discipline that fuses commerce with
art, and technology with customer empathy.
Tomorrow’s innovative companies will excel in
these areas, while at the macro-level more countries
will compete for the high ground in design. This
report by the Economist Intelligence Unit (EIU),
commissioned by UK Trade & Investment, seeks
to understand how companies are focusing their
efforts in design and innovation. The EIU conducted
a survey of more than 600 business executives, and
also interviewed a range of influential designers,
business leaders and other experts to establish how
design thinking might shape corporate strategy and
drive business growth over the coming decade.

2

Forward-thinking companies will always
bet on innovation

Emerging markets will make their mark in
the design world
China is already the world’s workshop, while India
is much admired for its IT services sector. But these
countries are no longer content to manufacture goods
or offer basic services that were designed elsewhere.
They want to create the blueprint for the products and
services required by their burgeoning consumer markets.
Executives to our survey have noticed Asia’s advance in

this field — the region is now viewed by one-third of
respondents as having better engineering capabilities,
against respectively 23 per cent and 15 per cent of
respondents for Europe or North America. However, Asia
has further to go in other areas. The West still has strong
advantages in terms of bringing innovative designs to
market — for example, through better financing options
and stronger capabilities in introducing cutting-edge
science and technology to industry.

Design in the DNA: How a design ethos can drive business growth


Simple is the new beautiful
New technology has made many products more
complex to understand and use. A lot of companies
fall into the trap of producing items that bristle
with features, but which are painful to use in
practice. Others focus on aesthetics but forget about
usability. However, a counter-movement is growing
in strength. At one end of the market, Apple is
a shining example of how powerful it can be to
create products and services that are beautifully
intuitive and pleasing to use. At the other end of
the spectrum, a new breed of “frugal innovators”,
focused on delivering products to the world’s poor,
are teaching companies the old adage that less is
more. In many ways, this is a return to design basics,
but it will be a significant challenge for companies
operating in a technologically complex age.

Design is key to tackling the big global issues
There are many new challenges facing designers,
including developing green solutions (one of the top
areas where customers want to see better design,
according to 39 per cent of respondents to our
survey) and the need to tailor products or services
to customers (some of whom survive on less than
US$2 a day) in new and diverse markets. Another
growth area, which has been largely overlooked until
recently, is the issue of population ageing. In Western
countries wealth is increasingly concentrated in the
hands of the over 40s, and China’s population is
also ageing. In addressing demographic shift, there
is demand for smart thinkers who can apply their
design skills to everything from simple products to
complex services and even entire health systems.

Design thinkers will focus on the entire
customer experience
As individuals, the best designers have always
thought about customer needs and how people
interact with products, processes and services. But
large organisations can become inward-looking, and
find this a struggle.

What many companies now also need to consider is
that their products are no longer simply products,
but also need to have services wrapped around them
— smartphones are a case in point. In the survey, the

seamless integration of solutions and services for the
greater convenience of their customers (28 per cent)
is viewed as a bigger priority than simply developing
cutting-edge products (19 per cent) in terms of
performance of functionality. Respondents also say
that one of the greatest challenges in introducing new
products and services is providing customers with the
support to make them easier to use (27 per cent).

Brands must be bold — not bland
Good design is also critical in helping distinguish
companies from similar rivals. Louis Vuitton, Disney,
Virgin — all have powerful brands that foster a
degree of loyalty. By contrast, the pharmaceuticals
industry has largely failed to achieve this distinction.
Success is more than about smart packaging of a
product; the leaders in this space are also able to
connect with their customers at an emotional level.
They do this by thinking deeply about their brand
personality and ethos, a process that is arguably
the ultimate expression of how design thinking can
permeate every corner of an organisation.

Companies must learn when to listen, and
when to lead
There has been a growing trend in recent years for
companies to capture customer feedback and use
this to guide design. Cultural differences mean that
some designs are appropriate in some countries, but
are unused and ineffectual in others. Behavioural

psychology can also improve design, as can the use of
technology to grab customer insights. This is valuable
work, but companies should be careful: breakthrough
design is rarely produced simply by running customer
focus groups. When asked where great design comes
from, 48 per cent of executives to the survey say
“visionary thinkers”, compared with 34 per cent who
say that it comes from “listening to customers”.

Design in the DNA: How a design ethos can drive business growth

3


COMPETING IN THE DESIGN ECONOMY
There is a rich and alluring prize on offer to the
countries, companies and individuals that excel
in design.
Governments increasingly recognise that design
and creative thinking play an important role in
driving economic growth. Many countries around
the world have developed specific goals and targets
to help support and grow their creative industries
(an amalgam of design, arts and performing arts).
Ultimately, they see design not just as the preserve
of the creative industries such as fashion, but across
all industries. Such creativity is seen as the key to
producing the next killer product, the next growth
industry, the next springboard for economic growth.
And of course, anything that paves the way to a new

phase of growth is sorely welcomed in the current
economic environment.
So national governments, but also the world’s global
cities, have begun to tout themselves as centres for
design and creative industry. Every year, the drums
on design beat slightly louder. When Sir John Sorrell
launched the London Design Festival in 2003, it
was a new initiative to showcase great ideas and
talent. Now 80 countries worldwide strut their design
credentials by hosting similar events.
But perhaps the biggest signal of how serious this
competition has become can be seen in China.
The country reportedly spent almost twice as much
building and hosting the 2010 Shanghai Expo
(a showcase for cutting-edge design) as it did on
the Beijing Olympics. The event attracted 70 million
visitors — almost all of them Chinese — and featured
exhibitions and pavilions created by 240 countries and
organisations from around the globe. For China, it was
a clear statement of intent: the country regards itself
as a rising power in the field of innovation and design.
Meanwhile, other countries felt they couldn’t afford to
miss the opportunity to build bonds in this area with
the new economic titan.

4

But of course growth in the BRIC markets (Brazil,
Russia, India and China) brings opportunity for
design-oriented businesses in the West. Again, China is

already a magnet for many of the great west European
designers. There are dozens of examples: in Beijing
alone, a tourist arrives at Norman Foster’s Terminal 3,
catches an opera at Paul Andreu’s National Grand
Theatre, and reminisces on the great feats of the 2008
Olympics at Herzog and de Meuron’s extraordinarily
elaborate Bird’s Nest stadium.
What many European designers are doing is using
their heritage to help them win work and secure sales
in fast-growing Asian and Middle Eastern economies.
Ken Shuttleworth, founder of Make architects, points
out that British urban designers now have offices
across these regions as they win work by evoking
images of the great feats of Victorian engineers such
as Isambard Kingdom Brunel.

Creative Hubs
As countries compete for the high ground in design,
they are also promoting themselves as international
centres for technology, design and creative talent.
This is about their ability to produce home-grown
talent, but also to attract the best creative minds
from abroad. To underpin all this, it is about having
the education and environment in place to support a
vibrant creative community.
While no one would argue with the need for
governments to create the educational systems
and support structures to enable design talent and
communities to emerge, not everyone is convinced
that the current policies they are pursuing will be

successful. One particularly thorny issue is how to
promote creativity, that elusive magic ingredient that
enables individuals and businesses to come up with
something breathtakingly new.

Design in the DNA: How a design ethos can drive business growth


Today, the emphasis in many countries is on
promoting a greater focus on the so-called STEM skills
(science, technology, engineering and mathematics)
in education. Design should be seen as going handin-hand with all of these subjects. But the focus on
design is often lost as governments and universities
concentrate on churning out more scientists and
engineers. In August 2011, Google’s chairman, Eric
Schmidt, partly blamed a failure to nurture polymaths
for what he saw as the UK’s failure to capitalise on
science and technology innovation. “You need to bring
art and science back together,” he told the annual
MacTaggart lecture in Edinburgh.
In the West, funding for what are viewed as “soft”
creative skills, and indeed for the arts in general, is
under pressure in the current downturn. In emerging
markets, the creative process has featured less
prominently in formal education. China is said to
produce 600,000 engineering graduates each year,
but there is a shortage of trained designers (see box
on page 8, Why emerging markets are embracing
smart design).
Our survey shows that the role which companies find

most difficult to attract and retain in their home
market is that of business planner/strategist, named
by 46 per cent of respondents. This is mostly the case
for Germany, Mexico and the UK, where respectively
66 per cent, 62 per cent and 60 per cent of
respondents find it difficult to attract and retain
business planners and strategists who are able to
understand market needs and bring products to market.

Design in the DNA: How a design ethos can drive business growth

5


Which region do you think is best in the following areas (excluding the region in which you are based)?

32%

Engineering prowess

22%

22%

Application of science and technology to industry
Marketing and brand-building of products
and services

17%

14%

Commercialisation of products and services

10

36%

15%

23%

0

25%

16%

16%

Access to finance for innovative projects
and ventures

15%

32%
11%

20

30

50

1%

13%

20%

2%

11%

20%

3%

7%

60

70

20%

4%

19%

80

Asia-Pacific

North America

Western Europe

Latin America

Eastern Europe

Middle East and Africa

More broadly, it is interesting to see how different
regions stack up in terms of their capabilities in the area
of technology and design, as viewed by today’s business
leaders. One of the most striking findings is that when
asked which region leads in terms of prowess in
engineering, the Asia-Pacific is cited by 32 per cent of
respondents, followed by Western Europe (23 per cent)
and Latin America (22 per cent). To some extent it is
unsurprising that Europe, the birthplace of the
Industrial Revolution, has a high reputation. Meanwhile,
some of the economic powerhouses of the Asia-Pacific
region have built vast complexes and infrastructure on
the back of their increasing wealth.

8%

90

100

Dr Mandy Savage, programme and technical
operations director at Lockheed Martin UK, points
out that the US is generally ahead of its international
rivals in fields such as systems and software
engineering, and is in a good position to attract the
best and the brightest. Yet nearly twice as many
respondents from North America than respondents
from China say they struggle to attract and retain
creative thinkers in their home market (38 per cent
against 20 per cent).

However, in other areas of the design process, the
West still holds some strong advantages. North America,
for example, is still seen as by far the best region for
marketing and brand-building of products and services
(by 36 per cent of respondents), commercialisation of
products and services (32 per cent), access to finance
for innovative projects and ventures (32 per cent),
and application of science and technology to
industry (25 per cent).

6

23%

13%

32%

40

7%

Design in the DNA: How a design ethos can drive business growth


The survey also shows how important these
perceptions can be in determining where companies
will invest in the future. A total of 26 per cent
of respondents say that the location of their
innovation activities depends on access to a talent
base. But it is also clear from these results that
companies gravitate to different locations and hot
spots depending on the area of design, but also for
different phases in the design process.

For example, the UK has world strengths across the
design sector and more than its share of world-class
architects, Italy is a powerhouse in fashion, furniture
and textiles, Germany excels in car design, China
builds great technologies, and India is positioning
itself as a global leader in service design. For
governments, it is crucial to plan and invest
around areas where a country can derive long-term
competitiveness as part of the innovation landscape.

Research and Development (R&D) spending
3

2.5

USA
Germany

2.0

France
UK

1.5

China
Italy
Russia
Brazil

1.0

India
0.5

Mexico

Sum of 2007

Sum of 2006

Sum of 2005

Sum of 2004

Sum of 2003

Sum of 2002

Sum of 2001

Sum of 2000

0

R&D spending (per cent of GNP)
Source: Economist Intelligence Unit

One way to measure a country’s standing in that landscape is by looking at its research and
development (R&D) spending. As the chart shows, some countries surge ahead. The United States
invested 2.7 per cent of its GNP in R&D in 2007, closely followed by Germany (2.5 per cent), France
(2 per cent) and the UK (1.8 per cent). The real mover, however, is China, where R&D spending rose
by 56 per cent between 2000 and 2007, from 0.9 per cent to 1.4 per cent of GNP.

Design in the DNA: How a design ethos can drive business growth

7


Why emerging markets are

embracing smart design

next wave of Asian and South American economies
than the leading experts in the well-established
economic powers.

The BRIC countries — Brazil, Russia, India and China
— are becoming more ambitious and confident when
it comes to taking a lead in different areas of design.
Charles Bezerra, executive director at Gad’Innovation,
a Brazilian consultancy, argues that there is no longer
such a sharp divide between developed and emerging
economies: “The technologies and the methodologies
are spread out globally” he says.

There are, however, serious challenges to overcome.
As already noted, China has ambitions to become a
global leader in design. Yet in one respect it faces a
design crisis, just as it is becoming one of the great
glamour destinations for the world’s leading engineers,
fashion names and product craftsmen. Carl Liu, an
author and partner at Idea Dao Design Shanghai, says
that of 100,000 people who graduate from Chinese
universities in design each year, only 3-5 per cent end
up in a practice. “Some students do not really have an
interest in design when they enroll — they just want
to get a degree,” Mr Liu explains. “They think design
is an easier course to get into, and they think that it is
an easy course to graduate in.”

In some areas emerging market designers have a
natural advantage. In a recent paper, Design for
BRIC: the new frontier, Mr Bezerra went further,
claiming that emerging market designers should
have a competitive advantage in these fast-growing
economies: “The BoP [bottom of the pyramid,
referring to those around the world who live on
less than US$2 a day] represents a big opportunity
for BRIC businesses. This is because in the logic of
traditional capitalism, multinational companies from
the developed countries create products directed at
their own national consumers and consumers like
them; only as an afterthought are those products
brought to developing countries.”
If this is correct, Brazilian and Chinese designers
could be better prepared to create products for the

As more Western companies have opened up in
China, Mr Liu believes that domestic businesses have
started to grasp the importance of design. However,
he believes that Chinese businesses are still not
making design a top priority and that they will have
to improve their design standards if they are to
compete on the world stage. “Local brands that want
to go into international markets will soon realise just
how weak they are and will then have to focus more
on design,” he says.

Ten of the most innovative design stories from emerging markets
■■ India’s Mumbai dabbawallas, who dependably

deliver by bicycle 200,000 meals per day

■■ India’s Aravind Eye Care System, delivering
high-quality eye care at minimal cost

■■ Indonesia’s “SMS e-government”, a channel of
communication between citizens and legislators

■■ Brazil’s Embraer, the only aircraft manufacturer
based in an emerging market that competes with
the likes of Boeing on price and design

■■ Kenya’s M-Pesa banking service, which turns
millions of “unbanked” in Africa into users of
banking services through simple mobile telephones
■■ India’s Hindustan Unilever’s Project Shakti, where
poor rural women become micro-entrepreneurs
who teach their neighbours about basic nutrition
and hygiene
■■ South Sudan’s first beer brewery by SABMiller,
making beer accessible to eight million people

8

■■ India’s DBOP project, showing local communities
how design can help create innovations that improve
people’s lives and create sustainable economies
■■ China’s largest networking and
telecommunications equipment supplier, Huawei,
and its installation box for optical cables

■■ India’s Tata Nano, the world’s cheapest car, at
US$2,000

Design in the DNA: How a design ethos can drive business growth


DESIGN THINKING IN BUSINESS
The importance of design in modern business can be
traced right back to the Industrial Revolution. Back
then, there were plenty of entrepreneurs generating
cheap and cheerful (but not always well designed)
products. Many achieved temporary popularity. But
the names that are remembered centuries later are the
innovators that were able to harness new technologies
and production techniques to bring brilliantly
designed products to a new and burgeoning consumer
market. These innovators came up with great ideas
and managers brought the insight to design a process
that helped successfully commercialise those ideas.

So it is perhaps surprising to find that many top
managers today remain diffident about the importance
of design. This is one of the paradoxes of modern
business: CEOs constantly espouse the need to
innovate, yet few seem obviously comfortable with the
design ethos that is likely to produce such innovations.
As Sir John Sorrell notes: “Design is difficult to get a
handle on. It’s a word that provokes suspicion among
many business leaders and civil servants.”

W
 here will you focus your design and development efforts over the next three years, in terms of
creating better services or products?
Providing seamlessly integrated solutions or
services for greater convenience of customer

28%

Providing a similar product or service but at a lower
price than the competition

22%

Providing products/services that are cutting edge in
terms of performance or functionality

19%

Adapting products, processes and services to meet
regulations and standards in home/overseas markets

14%

Creating products/services or services that are a first
of their kind

9%

Modifying products to meet customer preferences or
technological challenges of individual markets

7%

Other, please specify 0%

0

10

20

30

100

“Design is difficult to get a handle on. It’s a
word that provokes suspicion among many
business leaders and civil servants.”
Sir John Sorrell

Design in the DNA: How a design ethos can drive business growth

9


Attitudes are beginning to shift. Most of the world’s
fastest-growing companies are achieving success by
embracing design principles. But the survey indicates
that while some companies are ready to invest in
inherently risky innovation or in the vagaries of the

creative process, others are holding back. When asked
whether their priority is to invest in innovation or to
cut costs, only a slim majority (56 per cent) pick the
former (see table on page 9). This is at least
understandable in the current climate.

Perhaps more worryingly, only 9 per cent of firms are
striving for first-of-a-kind innovation, compared with
more than twice the number (22 per cent) that plan
to focus on creating similar products to competitors
at a cheaper price. Apart from the 28 per cent that
say their priority is to work on integrating solutions
and services to improve customers’ experience, the
remainder are content to fine-tune and improve
existing products or services. This may well be a safe
and profitable course — until customers’ tastes change
or a new entrant arrives to disrupt the market.

Is it most important to increase investment in innovation and design or is cost control a bigger
priority than innovation and design?

China

52.6%

Brazil

47.4%

50.7%

Mexico

49.3%

57%

UK

43%

49.4%

Italy

50.6%

42.9%

France

57.1%

24.5%

Germany

75.5%
43.1%

N America

56.9%

25.3%

0

10

74.7%

20

30

40

50

60

70

Cost control is a bigger priority than innovation and design
It is most important to increase investment in innovation and design

10

Design in the DNA: How a design ethos can drive business growth

80

90

100


Three-quarters of respondents in France and
North America think it is most important to
increase investment in innovation and design,
while respectively 57 per cent and 53 per cent of
respondents in Mexico and China think that cost
control is a bigger priority. In the UK, respondents
are divided almost 50-50.
It would be too simplistic to divide companies
between the innovative visionaries destined for
success, and the cost-cutters making short-term
profits but lacking a long-term plan. Designing new
products can be expensive. There are many failures,
and spending heavily on R&D is no guarantee that a
product will even make it to market. It is not foolish
for chief executives to want to find smarter, more
cost-effective ways to design the next big thing.
But the companies that embrace design thinking are
more likely to take a long-term perspective on these
crucial issues.

The designer boss
All chief executives face the challenge of how to

embed innovation into their corporate culture. It
is an uphill struggle given that organisations tend
to create structures and hierarchies that discourage
creativity and risk-taking as they grow larger.
Much depends on the CEO’s own attitude to design
and innovation. The survey indicates that chief
executives are at least moderately involved in elements
that make up their company’s design strategies. For
example, 96 per cent of respondents say that the CEO
plays a hands-on role in tracking market trends and
opportunities, while 87 per cent set strategic goals for
innovation. But setting goals is one thing; creating a
culture that is capable of innovation or great design
thinking is a much greater challenge.

Not that chief executives need to be trained
designers themselves, of course. But if they are
serious about innovation, it can be argued, they need
to take steps to elevate the status of design within
the organisation. If the rest of the management team
isn’t design-literate, it helps to have someone to act
as an adviser. Top management in most companies
is disproportionately drawn from people with a
background in roles such as finance and accounts
or operations. And in general, management training
emphasises analytical discipline, rather than a creative
mindset. Sir John Sorrell’s advice to these managers
is that they should do what Apple did, and put its
top designer — Jonathan Ive — on the board.

The bare essentials
Designers have often gravitated to the premium end
of the market, in search of a big budget to help fuel
their creativity. But one widespread current trend is
to use design to produce simpler, more elegant and
cost-effective solutions. This is especially true of frugal
innovation, an exciting trend which sees companies
developing products for consumers who traditionally
could not participate in consumer society. But it
is also a trend which is equally apt for developing
countries where cost-conscious customers, companies
and governments are looking for quality design at a
cheaper price tag. Nearly two-fifths of respondents to
our survey say that their customers would most like
to see them focus on cost and value for money when
developing products or services over the next three
years. This far outstrips the 22 per cent calling for
stronger ethical credentials, or the 17 per cent who
opt for more choices to suit personal tastes (see table
on page 12).

Design in the DNA: How a design ethos can drive business growth

11


What do you think your customers would most like to see you focus on when developing products
and services in the next three years?
Greener/lower carbon footprint on products
and services

39%

Cheaper/better value

39%

Reliability

34%
32%

Top-of-the-range performance or functionality
26%

Brands that they are proud to own
22%

Stronger ethical credentials

20%

Simplicity and intuitive user experience
17%

More choices to suit personal tastes or preferences
13%

Better support and servicing
Other, please specify 0%

0

10

Although designers have always had to consider cost
and affordability constraints, frugal innovation — a
form of product and service development that targets
consumers too poor to afford traditional consumer
products — has pushed the boundaries further.
Famously, General Electric (GE) and Tata, an Indian
conglomerate, take a backwards approach, stripping
out superfluous elements of existing technologies
to make their products more affordable. In 2009,
GE built an electrocardiograph machine weighing
six pounds, half the weight of the smallest machine
available at the time and 80 per cent cheaper than
similar products.

12

20

30

40

100

The same year, Tata launched the world’s cheapest

car, the US$2,000 Nano, in its home market. Almost
every aspect of automotive design was questioned
as part of the Nano’s design, even to the extent of
removing the passenger-side wing mirror and getting
a single windscreen wiper to do the job of two.
Successful examples of frugal design do not only
apply to products but also to services. Witness the
rise of M-Pesa, a branchless banking service that
has turned millions of “unbanked” in Africa into
users of banking services by leveraging the simplest
of mobile telephones.

Design in the DNA: How a design ethos can drive business growth


CASE STUDY

Aravind proves there’s richness
in frugality
India’s Aravind Eye Care System has shown that
taking a frugal approach to the design of even
complex services does not have to mean skimping
on levels of service. Quite the opposite, in fact.
The organisation began life in the 1970s, when eye
surgeon Dr Govindappa Venkataswamy established
an 11-bed hospital with the grand ambition of
eliminating avoidable blindness in India. Millions of
Indians suffer from blindness, which in most cases
is caused by easily treatable cataracts. Since its small
beginnings, Aravind now provides 45 per cent of

eye care in the state of Tamil Nadu, or 5 per cent
for India as a whole. Its success is due to a series of
innovations, in business models, products, processes
and services.
Firstly, says Dr P Namperumalsamy, the company’s
chairman, Aravind recognised that the people
who most needed the service were those who felt
treatment was simply unavailable, and began to
deliver care to villages. Next, rather than import
lenses used in cataract surgery, Aravind began to
make its own at a fraction of the cost. Training
staff is also a costly enterprise, so Aravind now
trains local villagers as paramedics for routine
work, which ensures it gets the most value out of
its doctors. Finally, the company has designed a
fee scale to ensure delivery of the highest levels of
treatment to as many people as possible. Its most
recent innovation has been to partner with major
medical schools, such as Johns Hopkins University,
on telemedicine and education programmes.

These and similar initiatives have inspired designers
around the world to think how great design can be
delivered at much lower cost to the customer. There
is a need for similar thinking in developed markets.
“It’s important to balance design with cost”, says
Paul Lester, chairman of road fuel provider Greenergy.
“No matter how fantastic a design is, cost has a
major influence on how things look.”
Mr Lester was previously chief executive of VT, a

UK-based support services group that was involved in
the last government’s £45 billion Building Schools for
the Future programme. The consortiums with which
VT was involved would typically ensure that the front
of the school had a distinct design, but would then
use standard designs behind that façade to keep on
budget. “There would be individuality for the front
area, but modular design at the back,” he explains.
In another example of frugality in the West, Motel 6,
a chain of more than 1,100 budget hotels in North
America, asked Priestman Goode, a London-based
design group, to look at redesigning its rooms.
Realising that many people do not use wardrobes in
hotels, for fear of leaving their clothes behind when
they check out, Priestman Goode created a furniture
unit that held the television, a cubby for the remote
control and valuables, and space for shelving and
hangars. A single unit replaced three or four pieces
of furniture, reducing cost by a third. Clever design
offered great value for money, which Motel 6 could
then pass on to their customers to become even more
competitive on cost.
“Manufacturing cost was reduced and it gave a main
focal point to the room, almost like a fireplace used
to be,” says director Paul Priestman. “With frugal
design you can design an object to make it do several
things, reducing waste, cost, weight, materials.”

Design in the DNA: How a design ethos can drive business growth

13


CASE STUDY

The pharma sector and the search for
emotional branding
The pharmaceuticals industry is bland, defensive and
fails to foster loyalty among its customers. These were
some of the thoughts going through the mind of brand
design guru Jonathan Sands, chairman of Elmwood,
a design consultancy as he sat through the Economist
Pharma Summit earlier this year.
“The more I listened to guys from big pharma the
more I heard a recurring theme,” says Mr Sands, whose
consultancy has worked with some of the world’s bestknown retail, consumer and corporate brands. “They
were worried about their patents running out, the rise
of generic drugs.”
Worse still, Mr Sands observed, was that the major
companies appeared somewhat paranoid about their
public image. “They thought that they were almost seen
as being worse than bankers. I found it quite incredible
— here was an industry doing research to help people
have better lives, a front-foot industry talking on the
back foot, relying on patents to protect their revenue
streams,” he says.

Keeping it simple
A cost-driven trend to pare back design could also
be good news for customers and clients in terms of

making products and services more pleasurable to use.
Technology-based products arrive rammed with an array
of features and functions, many of which will never be
used by the customer, or even understood.
Executives in the survey give apparently contradictory
views on this issue. As previously mentioned, 28 per
cent say that a high priority is to provide integrated
solutions and support that make life easier and more
convenient for customers. At the same time, they do
not see simplicity as being particularly high on the
agenda for customers.

14

One issue facing the industry is that although pharma
companies are well known, their medicines are not.
In this regard, Mr Sands argues, pharma is its own
worst enemy — the portfolios at GlaxoSmithKline and
AstraZeneca, for example, include Adartrel, Zyban,
Accolate and Zomig. “These may have meaning
internally in the corporation but are meaningless to the
end user, and nobody can identify one drug from the
next from the packaging,” Mr Sands argues.
Mr Sands believes that brands are like friends. “You can
buy all sorts of smartphones, but you buy an iPhone for
more than its functionality — you are part of the Apple
Club. The iPhone 4 had antennae problems, but people
still want to be part of the club.”
In many of their largest markets, pharma companies
are prohibited from marketing directly to patients,

and regard doctors and governments as their primary
targets. But patients — the ultimate consumers of
medicine — are better informed than ever about their
conditions and treatment options, and are playing an
increasingly important and active role within healthcare
systems. Pharma firms, Mr Sands says, could do worse
than learn how to emulate companies in other sectors
that have become successful because their customers
love the brand.

Only one in five respondents believes that their
customers want them to focus on simplicity and
intuitive user experience. And yet, customers in focus
groups or in online feedback constantly express
frustrations about the difficulty in using technologybased products – and the companies that lead in
consumer electronics are increasingly working hard
to create both a simpler human interface and support
services that wrap around the product.
The same could be said of pure services such as
banking. Where services have been shifted online or to
outsourced call centres simply to save cost, the result
has often been deterioration in service quality and a
backlash from customers.

Design in the DNA: How a design ethos can drive business growth


Smarter players think about service designs that join
the dots between different customer touchpoints. In
this way, banking feels like a friendly and informed

conversation with a bank that values its customers.
Technological complexity is not only a problem for
designers in the consumer electronics sector. For
defence companies manufacturing high-tech weapon
systems, getting the interface right could be a matter
of life and death.

Dr Savage at Lockheed Martin points out that design
has always been intrinsically important in the defence
industry. “But things have become more complex,” she
says. “When I joined as an engineering graduate, there
would be tens of hundreds of lines of code but now
there are thousands upon thousands.”
As technology changes, so designers must keep systems
simple for the user — while not overlooking very
basic problems that would be noticed quickly in less
advanced products.

CASE STUDY

Smart design for an ageing market
The world is getting older. In Europe, for example,
the median age in 1950 was 30 years. Today, it is 40.
Over 65s will make up almost 25 per cent of the UK
population by 2034, according to the Office for National
Statistics, and by 2025 almost 1.5 million people in the
UK will be living with an age-related disability.
Mat Hunter, chief design officer at the UK’s Design
Council, says that while the public sector sees this
changing demographic as a problem, businesses

should spot a chance to develop new products. “If the
elderly become seriously unwell, then the state has to
pick up the pieces,” he says. “But the private sector
should see this as an opportunity: a well-educated,
perhaps the wealthiest, demographic in which to pick
up new types of customers.”
Car manufacturers are among the pioneers in this
field. Mazda has introduced sliding doors on its M5
model to make access easier for their less supple
clients, and Toyota has introduced larger typefaces
on dashboard instruments.
Sometimes, the challenges facing citizens as they age
are being addressed by ageing designers themselves.
Kenneth Grange, a multi-award winning designer who is
in his 80s, recently designed an oversized chair for Hitch
Mylius, a furniture manufacturer, after noticing how
much more difficult it was to rise from a chair
as he grew older.

Some businesses are finding that designing products
with older consumers in mind offers a degree of
recession-proofing. OXO, a kitchen tool maker, has
recorded growing sales numbers since the economic
downturn, prompting Bloomberg Businessweek to
point out that the company had “built a following by
designing everyday items so people of almost any age
or physical ability can easily use them.”
But applying smart design to solutions for ageing
populations is not only about developing new products.
Services aimed at older citizens will also benefit from

design innovation. The UK’s Design Council has
launched a competition inviting designers to devise ways
of ensuring that older citizens do not become recluses.
This could be a matter of applying simple design tweaks
to a product or service. A dating website, for example,
could offer options more relevant to needs or retirees
than people in their 20s or 30s.
Service and process design elements will become
especially important when addressing the next big
challenge facing ageing societies dementia, which
already costs the UK £20 billion a year, more than
cancer, heart disease and stroke care put together.
Telecare services, for example, are now widely available
as a way of allowing dementia sufferers to stay at home
for longer before requiring full-time supervised care.

Design in the DNA: How a design ethos can drive business growth

15


SERVICES AND CUSTOMER EXPERIENCE
Companies are seeking to place the customer
experience at the heart of their product and service
designs. There are examples right across almost every
sector, from online shopping services such as Amazon
and Ocado, to smartphones — and even customisable
cars. We see evidence of this thinking in the survey:
28 per cent of respondents aim to focus their design
and development efforts over the next three years on

providing seamlessly integrated solutions or services
for greater convenience of customer. 22 per cent say
that they plan to focus on creating similar products
to competitors at a cheaper price.

Customers are playing a more active role in shaping
next-generation products. Customer focus groups,
the traditional way of finding out what customers
want from products, is now augmented by technology
allowing companies to collect a vast amount of data
on how customers spend their time and use particular
products in their daily routines. The trend towards
customer-led design, in which companies capture
this data and feed it back into the design process, is
an attempt by companies to harness these tactics to
improve the hit rate on innovation.

CASE STUDY

BankSimple’s back-to-basics approach
Rather than focussing on products, which would
see BankSimple competing in an already crowded
retail banking space, its founders decided to partner
with chartered banks to provide the products and
instead concentrate on designing a complete
consumer banking experience, accessible via web
and smartphone.
According to BankSimple’s founder, Josh Reich,
many banks only design their customer offerings
at the surface level, rather than at the foundation,

with gimmicks like 3D bank statements. Instead,
BankSimple’s focus is on the basics of user
experience design.
The goal is simple: to effectively use the data
already held by banks to help consumers
better manage their money. For example, one
functionality displays customers’ “spending
cushion”, which is determined by setting aside
their savings, factoring in their typical monthly
expenses, predicting their upcoming income and
bills and calculating what is left over. BankSimple
also automatically moves funds between savings
and credit to help customers pay less and earn
more interest.

16

In addition to customer-led design, there is also an
enthusiasm for a parallel trend: customer-focused
design. The survey also shows how companies are
moving beyond the design of objects (the traditional
product for many firms) to focus on the entire
customer experience. Sometimes the “product” itself
is a service (such as online banking). At other times,
it is the service wrapped around a product (such as
support services for mobile phones). In either case,
companies are trying to apply design principles to
the creation and delivery of services.
It is a challenge that involves many different corporate
functions, from HR skills and training to process and

workflow design, to the technology infrastructure that
underpins these services and so on. It is not difficult
to think of companies that do this very badly, and far
harder to find those that do it well. But the goal for
companies across all sectors is to design around the
customer, and to hone everything about customerfacing services in order to create a seamless, helpful
and pleasurable experience.

Design in the DNA: How a design ethos can drive business growth


Which of the following is most important to the success of your business over the next three years?

Service or solution design:
Design and delivery of services for customers

48%

Product design:
Developing innovative products for customers

36%

Business process design:
Efficient organisational practices and systems

16%

0

10

20

This may help to explain why customer service and
support looms as such a big issue for executives in
our survey on design. Nearly one-half of respondents
(48 per cent) see design and delivery of services for
customers as key to the success of their business
over the next three years. This is particularly true in
the financial services industry, where two-thirds of
respondents see design and delivery of services for
customers as key to the success of their business over
the next three years.
Respectively 48 and 44 per cent of respondents from
Mexico and the UK believe that customer service
and support strategy are essential in designing and
launching a successful product or service. Meanwhile,
57 per cent of respondents in the logistics, transport
and travel industry believe this as well, while twothirds of respondents in financial services think it is
more important to focus on what customers want.

30

40

50

60

70

80

90

100

Design goes glocal
If companies are genuinely committed to designing
around the needs of customers, what does this
mean when companies are targeting customers and
clients in an array of new and relatively unfamiliar
markets? Western companies are seeking to design
products and services that need to reflect the needs,
aspirations and — of course — price expectations of
the vast consumer markets opening up in the BRIC
economies. Meanwhile, home-grown champions
in those same countries are increasingly seeking to
transform themselves into global brands.

Design in the DNA: How a design ethos can drive business growth

17


What does your company find most difficult when developing new products or services?

28%

Bringing products to market
Creating a better user experience

27%

Building good support services around your
core offering

27%

Tracking changing patterns in customer
demands/needs

26%
19%

Working with third parties on innovation projects

17%

Recruiting talent
15%

Getting management backing and focus
12%

Getting funding
Adapting products or services to specific needs
of different global markets

10%
4%

General lack of understanding of design issues
2%

Other, please specify

0

10

Only 10 per cent of respondents to our survey say that
their company’s biggest struggle when developing new
products or services is adapting products or services to
the specific needs of different global markets. Perhaps
this is because there is a widespread view — among
34 per cent of respondents — that great design
comes from listening to customers. However, this
opinion varies between country and industry. About
40 per cent of respondents in the UK subscribe to
that view, for example, compared with only 27 per
cent of respondents in China. Meanwhile, 42 per cent
of respondents in the IT, telecommunications and
technology industry say that great design comes from
listening to customers, but only 25 per cent in the
logistics, transport and travel industry share that view.

18

20

30

100

Every customer is unique, but differences are even
greater due to varying cultural and social norms
across markets. This is most obvious in the leap from
developed to emerging markets, but actually every
market and customer segment has its quirks.
Priestman Goode, among other projects, has worked
on transport systems around the world. “You must
have cultural understanding,” says Mr Priestman, who
is now setting up an office in Qingdao, China, where
his company works with Sifang Locomotive. “If you’re
manufacturing trains for a country, the key is it must
look like something that belongs to that country.”

Design in the DNA: How a design ethos can drive business growth


Even multinationals that standardise their products
to cut cost can benefit from tweaking designs.
For example, burger giant McDonald’s noted that
Europeans liked to eat in chic-looking restaurants,
but still enjoyed a Big Mac.

In 2006, a French interior designer, Philippe Avanzi,
was hired to redesign more than 6,000 McDonald’s

stores in Europe, introducing leather chairs and
wooden features. He also created a portfolio of
designs for each country to reflect their slightly
different tastes.

CASE STUDY

Want to boost green thinking? Apply a
little behavioural science
Today, businesses ignore sustainability and green
issues at their peril. According to nearly 40 per cent
of our survey respondents (60 per cent in France and
43 per cent in China), consumers today would like
to see companies reduce their carbon footprint on
products and services. The issue is more important,
they say, than designing cheaper, better value or
more reliable products.
But consumers themselves have a big role to play
in reducing greenhouse emissions — not simply in
the product choices they make, but in being aware
of their own behaviour, especially regarding energy
consumption. Encouraging citizens to become
greener has not always been easy.
OPower, a US-based company which aims to reduce
global carbon emissions, has grown rapidly since its
founding in 2007. But the success of the company
— which has been feted by Barack Obama and David
Cameron — is based entirely on the simplest of
premises: a good understanding of human behaviour.
“Nearly everyone says saving energy is a good thing,”

says OPower president and founder Alex Laskey.
“But it’s not the first thing people worry about when
they get up in the morning. The challenge is getting
people interested in something that is boring.”

OPower works with utility companies to help
customers cut down their energy consumption.
The firm takes a series of complicated data — from
energy meters, local land registries, utilities and
other sources — and turns it into easy-to-understand
information that allows households to see how much
energy they use compared with their neighbours and
those in the local community.
OPower’s presentation of simple bar chart and graphic
comparators of energy consumption of customers
against their neighbours has proven to be a great
motivator to switch off lights and improve insulation.
On average, customers with utilities using OPower
have cut their bills by 2-3 per cent as they try to save
more energy and money than their neighbours.
Mr Laskey compares the company’s methodology
to Amazon’s. Amazon has more than one million
products, but does not email customers random lists
of what they can buy. Instead, it looks at what they
have previously bought and what they have browsed,
and creates a tailor-made list of products customers
seem most likely to want to purchase.
OPower is now expanding internationally. First Utility,
its UK partner, believes that £400 million could be
saved by consumers each year if such a system were

deployed on all British households. As Mr Cameron
told an audience in 2010, “That sort of behavioural
economics can transform people’s behaviour in a
way that all the bullying, all the information, all the
badgering from government cannot possibly achieve.”

Design in the DNA: How a design ethos can drive business growth

19


CONCLUSION
The desire to create a better experience for customers
goes right back to the most basic design principles.
Whether they are developing a product, process or
service, the best designers always want to make
something well, to ensure it is fit for purpose, and
that it is delightful for people to use or interact with.

Meanwhile, advances in technology mean that
companies now have new, more precise ways
of understanding customers’ needs. When this
is combined with visionary or creative thinking,
companies can dramatically improve their ability
to bring great ideas to market more effectively.

If only it was as simple as listening to customers —
but more often than not, customers can only talk
about their current experiences. This is all well and
good when you are trying to improve an existing

product and service, or to tailor it to different
customer needs. But that will only take you so far.
The goal is to think ahead and outside perceived
boundaries, enabling the company to introduce a
ground-breaking product or service.

As veteran brand designer Ivan Chermayeff has said,
“To design is to solve human problems by identifying
them, examining alternate solutions to them,
choosing and executing the best solution.”
To do that well, this report suggests, designers also
need to know when to listen and when to lead.

Henry Ford is once said to have remarked: “If I asked
customers what they want, they’d ask for faster
horses”. Customer-led design is limited by the fact that
buyers often don’t know what they want until they see
it. There is still a need for design-oriented companies
to make the leaps of imagination. Our survey
respondents seem to understand this point, with the
majority saying that great design comes from visionary
thinkers, rather than listening to customers.

20

Design in the DNA: How a design ethos can drive business growth


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The Economist Intelligence Unit

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UK Trade & Investment is the Government Department that helps UK-based
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We also help overseas companies bring their high-quality investment to the 
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to succeed in global business.
UK Trade & Investment offers expertise and contacts through its extensive
network of specialists in the UK, and in British embassies and other diplomatic
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For further information please visit www.ukti.gov.uk 
or telephone +44 (0)20 7215 8000.

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