Design in Economically Lean Times

No-one knows how the global financial crisis is going to effect manufacturing. The traditional view is that businesses will need to reduce non-essential spending. To many businesses this will include R&D and new product development.

However, whilst orthodox and cost-effective in the short-term, this approach will hurt businesses in the medium term and long term.

In US Business Week magazine, innovation commentator Bruce Nussbaum reports on the ‘10 Worst Innovation Mistakes In A Recession’. According to Nussbaum, simply over-reacting to economic downturns with short-sighted agendas like cutting product development “hurts companies when growth returns and they have fewer offerings in the marketplace to attract consumers”.

Whilst the media and some commentators would have us battening down the hatches, wiser heads know that every downturn will run its course and eventually economies will self correct to the next growth phase. There is no doubt some businesses will be so badly leveraged they will not survive, and many other reactionary organisations will close down development projects altogether. Smart companies however, will do the opposite, and use this time to strategically position themselves for tomorrow.

History has proven this approach to work. The British Design Council reports on a recent example of investing in design through tough times. Just after 2001 in the aftermath of terrorist attacks and the SARS health crisis in Asia, the airline industry was facing its own recession. Most airlines stopped all investment in design, but Virgin Atlantic did the opposite. According to Joe Ferry, Head of Design at Virgin Atlantic Airways, “we knew the market was going to come back, and when it did we wanted to have the best product on the market”. By 2003 the market did start to return and Virgin Atlantic gained the momentum by a series of new products in interiors, seating and facilities. The company’s market share boomed over the subsequent years.

5 reasons to continue product development during hard times

  • The fundamentals of consumer perception remain relatively constant regardless of economic climate. That is; if cost and performance are roughly similar, what do consumers use to differentiate and choose between competitive products? A product that is easier to use, better known, or more unique?
  • It’s a myth that design will always add cost. Design and product engineering can be applied to reduce cost and improve margins even if RRPs are reduced. Cobalt has many examples where the objective and outcome of a development project was to reduce cost whilst maintaining and improving (see Work)
  • Successful companies strategically use unfolding economic, cultural and technological conditions to improve their competitiveness. Having a new product ready for the inevitable growth period is an example of strategic development.
  • New product development is not an overnight process. The best time to start development so that a new product is ready for when the market is more optimistic is now, not later.
  • Adversity is the mother of invention and luckily design and creativity always flourish within challenging times.

Recessionary Design

In US BusinessWeek magazine, innovation commentator Bruce Nussbaum reports on the ‘10 Worst Innovation Mistakes In A Recession’. According to Nussbaum, simply over-reacting to economic downturns with short-sighted agendas like cutting product development “hurts companies when growth returns and they have fewer offerings in the marketplace to attract consumers”.

Whilst the media and some commentators would have us battening down the hatches, wiser heads know that every downturn will run its course and eventually economies will self correct to the next growth phase. There is no doubt some businesses will be so badly leveraged they will not survive and many other reactionary organisations will close down development projects. Smart companies will do the opposite, and use this time to strategically position themselves for tomorrow.

History has proven this to be true. The British Design Council reports on a recent example of investing in design through tough times. Just after 2001 the airline industry was facing its own recession. Most airlines stopped all investment in design, but Virgin Atlantic did the opposite. According to Joe Ferry, Head of Design at Virgin Atlantic Airways says “we knew the market was going to come back, when it did we wanted to have the best product on the market”. By 2003 the market did start to return and Virgin Atlantic gained the momentum by a series of new products in interiors, seating and facilities. The company’s market share boomed over the subsequent years.

Adversity is the mother of invention and luckily design and creativity always flourish with challenges. And these are challenging times.