Incubating Design Gene — An Interview with Richard Kelly, Managing Director of IDEO Asia
21st Century Business Review
A lot of Chinese companies agree that industrial design breeds enormous business value, while at the same time they consider industrial design to be nothing more than an add-on incremental innovation, the goal of which is limited to making products lighter, smaller or better-looking. So how will industrial design contribute to those Chinese companies that are eager to step beyond their status quo?
Richard Kelly: That’s true. Generally speaking, industrial design focuses on incremental innovation. But here in China, I’m not sure if this traditional view point is still applicable. If companies want to grow, they either create new offerings, or attract new customers. With those two key aspects in mind, we can draw a coordinate axis, with new markets or new customers as the horizontal axis, and new products or new services as the vertical axis. The area A close to the start point is defined as a company’s current business (see Chart 1). For example, a company, whose current business is making mobile phones, hires designers to help them make better products. The mobile phones are improved, but not to the extent of attracting new customers or creating new products and services. Then industrial design only enables designers to make some minor incremental improvements to existing products.
Things will be totally different if, with the help of industrial design, a beauty product company successfully enters man cosmetic market, or brings out unprecedented products to the market, creates new value and a brand new market, then the company enters areas B and C. It is thus called an evolutionary innovation.
The most valuable innovation, known as disruptive innovation, happens when a company goes from area A into area D. For instance, a mobile phone manufacturer shifts from making better products to providing an internet-based service platform. As a matter of fact, industrial design can play a big role in all these types of innovation.
21st Century: Will evolutionary innovation and disruptive innovation bring Chinese companies a greater opportunity for development?
Richard Kelly: I believe that industrial design will bring more changes and in more areas in China----in particular how to exert an impact on meeting the demands from the Bottom of Pyramid, and this is exactly why we hope to enter the Chinese market. In the past, China was often considered to be a world factory, closely following orders from western countries. In my view, the mission of industrial design in China is no longer to produce more mobile phones identical with the ones anywhere else in the world. In stead, industrial design is supposed to inspire new things under more constraints as well as in a brand new market and consumer psychology, for example, providing low-cost innovative products for low-income people.
21st Century: Usually what kind of companies will approach IDEO for cooperation? Is industrial design something like “a luxury” that only catches the attention of large companies with great strengths?
Richard Kelly: For IDEO, our clients are from various areas, including consumer electronics, daily necessities, telecommunication, finance, energy, health and education. It’s true that most of them are large companies on the Top of Pyramid.
But it’s more than just about how many resources they have. Many foreign companies are backed up by enormous resources and strong user databases, but how many inspirations do they gain from these databases? When we design and innovate something, it is a practice for us to involve our customers throughout the whole designing process, rather than throw them a great idea. Thus, we can help customers improve their own design capabilities. In this case, resources will not be a key problem.
21st Century: What kind of problems does these companies most want industrial design to help them solve?
Richard Kelly: Many entrepreneurs in China have a very sensitive intuition about market and company development, but unfortunately they don’t have a clear concept of the specific features of the product they want to design. Our Chinese clients all put forward such things like “I want to become the No.1 in the industry”, aiming to overwhelm competitors. They find that, apart from the former market and technical competition, industrial design is a road that they must go through to become a market leader.
21st Century: For Chinese companies with this kind of mind-set, will they come up with any common frustrations when introducing industrial design into their companies?
Richard Kelly: Many companies have seen the value of industrial design, but they still wonder how to keep a balance between the role of design and the role of research and development (R&D) within a company. A lot of companies used to rely on technology to grow, but what technology can bring to a company is largely limited, and after it reaches a certain extent, breakthroughs will hardly be achievable. R&D and design are in nature two different concepts. R&D is aimed to push forward a market, while design is concerned with inspiring consumers’ internal emotions and obtaining driving power from the market. It is a challenge for many companies to switch from one concept to another, from R&D-oriented to design-oriented.
21st Century: How to validate whether a design is good or bad?
Richard Kelly: When you come up with a concept after closely observing consumers and understanding their future demands, what you need to do is to see whether you have available technology, whether it is feasible from a business perspective, and whether you can make a correct orientation for market demands. The point at which the three answers overlap constitutes a good design.
21st Century: What is the relationship between design director and such departments as R&D and marketing? Who will be responsible for carrying forward a design project in what you said a design-oriented company?
Richard Kelly: In collaborating with European and American companies, which have a more matured concept in industrial design, it is usually the company leaders, like CEO, that carry forward projects and make decisions. As they are responsible for company growth, they can put forward “big ideas”.
For example, when Marriott approached us, they put forward such an idea: based on their research on the industry and competitors, they must take respond to the emerging trends in the entire industry.
My suggestion is that many companies introduce the concept of prototype in the initial stage. We’ve been using prototypes to validate whether a certain technology is feasible or profitable, no matter when we design a mobile phone, hotel services, or financial services. You may create a prototype in an easiest way. The space prototype that we did for Marriott is made from cardboard, which only costs 10% of a near real-size prototype that hotels used to make.
The key for prototypes lies in engaging relevant staff in the design process during the initial stage of projects, so as to inspire internal communication. As the saying goes, early failures and repeated failures lead to early success. This cheap prototype helped initiate several dialogues: CFO considers the viability of finance or costs, CTO or COO considers the feasibility of technology, and CMO considers the desirability of consumers’ needs (see details in Chart 2).
21st Century: Apart from a good design, what else would companies gain after such a process?
Richard Kelly: Ideally, in the process filled with incessant thinking and feedbacks, companies are expected to get more view points from the market, thus incenting more learning activities and R&D inspirations. At the end of a project, the market gains a new product and desirable profits, while the company improves its brand image and makes its industry position more target-oriented. Meanwhile, it leaves a long-lasting impact within the company. As new business breeds new infrastructures and factories, adjustments will be made to internal structures, which then bring about changes in the entire organization and improved capabilities in R&D and innovative teams (see details in Chart 3).
In a traditional definition, what we design is no different from what others do. But if you work with us, we will change your company and your culture, because what we see in your company is not the same as what you see. Design can be a strategic method, instead of remaining as a tool for beautifying products.
21st Century: What kind of knowledge structures is required for a good industrial design?
Richard Kelly: Every participant must be a T-shaped person. Design is quite complicated, and therefore we need those who have both a disciplinary depth and a broad understanding of the other disciplines, that is to say, a combination of a vertical line (expertise) and a horizontal line (broad and systemic thinking). For example, we need human factors experts to do observations. Human factors experts are just like small T-shaped people, specializing in maybe anthropology while being extensively curious about the external world. Engineers are also T-shaped people with a discipline depth in their own specialty as well as a broad thinking. Those two kinds of people together form a big T-shaped team (see details in Chart 4).
21st Century: Many Chinese entrepreneurs started as technical experts or factory directors, and they are familiar with such discipline knowledge as professional technology and craftwork. However, when it comes to broad and systemic thinking, they have somewhat deficiency. How can they make up for this thinking deficiency?
Richard Kelly: In my view, at the beginning it’ll be enough if they can shift their focus from solely on vertical analysis to on innovative and systemic thinking. It takes time to cultivate such kind of thinking. A good design requires not only good designers, but also design thinking to embrace them. Design thinking has two characteristics: first, it realizes and visualizes concepts; secondly, it requires an optimistic mentality, since pessimism does stimulate neither imagination nor inspiration. Entrepreneurs with a narrow thinking may tend to be conservative. Whenever trying new things, they are often tangled in such problems as which is what I’m good at for the time being and which is not, and how much price I may pay for it. It is just like the story about half a cup of water. Those companies which only see the empty half of that cup will find it hard to be imaginative, while those companies which see the full half will take a further look at the industrial prospect and their own future. Most of our clients are thinking not only about how to become No.1 in the Chinese market, but about how to be a forerunner in the international market as well.
21st Century: As design thinking features in-depth thinking modes, will it still be possible for a company to change through some kind of method, if the company and its leaders do not have such thinking modes? For instance, will an enterprise gain design thinking if it concerns too much about avoiding risks?
Richard Kelly: Generally speaking, the more optimistic companies are, the easier it will be for them to make use of all resources to support innovation and transformation. But the situation is by no means fixed.
We have many clients from the financial field. The key lies exactly in the prototype that I emphasized just now. For example, Bank of America used to pay much attention to male customers. In order to develop a new customer base, we turned to female customers. In the past, America was not thought to be country with a saving culture. Through observation, we found that American women had a very interesting habit. They liked rounding up their financial transactions to the nearest dollar and putting the change in jars at home. Uncovering this habit led to one of our credit services, Keep the Change. So, for example, if a customer used the Bank’s debit card to pay for a purchase, which cost $29.30, the service would automatically round up the amount up to $30.00 from the customer’s check account and transfer 70 cents into his saving account. It was a very fresh concept, and it took one year for us to realize the concept in the form of a financial service, during which we constantly modified and improved our prototypes.
Actually, the process of making prototypes and getting feedbacks is just like a mirror, telling companies what your clients want you to do, rather than what is conceived by ourselves. As long as this is understood, it is not impossible to realize coexistence between steadiness and optimism. In less than one year since the launching of Keep the Change, it attracted 2.5 million customers. By 2008, 8 million customers had signed up to Keep the Change, accumulating approximately $10 billion in savings.
21st Century: It is acknowledged that Chinese companies have advantages in large-scale but low-cost manufacturing, but in the field of design, they are undoubtedly latecomers. Do you think that potential advantages exist for Chinese companies in this field?
Richard Kelly: China has a population of 1.3 billion. When we look at the 1.3 billion people, we see them as small entrepreneurs, 1.3 billion entrepreneurs instead of common civilians. We’ve found that after buying a product, some consumers will make improvements to the product by themselves to meet their personal needs. So I’m looking forward to an open design trend in China, where everyone makes design by themselves.
(The interview is done and arranged by correspondent Su Xing.)
Richard Kelly: That’s true. Generally speaking, industrial design focuses on incremental innovation. But here in China, I’m not sure if this traditional view point is still applicable. If companies want to grow, they either create new offerings, or attract new customers. With those two key aspects in mind, we can draw a coordinate axis, with new markets or new customers as the horizontal axis, and new products or new services as the vertical axis. The area A close to the start point is defined as a company’s current business (see Chart 1). For example, a company, whose current business is making mobile phones, hires designers to help them make better products. The mobile phones are improved, but not to the extent of attracting new customers or creating new products and services. Then industrial design only enables designers to make some minor incremental improvements to existing products.
Things will be totally different if, with the help of industrial design, a beauty product company successfully enters man cosmetic market, or brings out unprecedented products to the market, creates new value and a brand new market, then the company enters areas B and C. It is thus called an evolutionary innovation.
The most valuable innovation, known as disruptive innovation, happens when a company goes from area A into area D. For instance, a mobile phone manufacturer shifts from making better products to providing an internet-based service platform. As a matter of fact, industrial design can play a big role in all these types of innovation.
21st Century: Will evolutionary innovation and disruptive innovation bring Chinese companies a greater opportunity for development?
Richard Kelly: I believe that industrial design will bring more changes and in more areas in China----in particular how to exert an impact on meeting the demands from the Bottom of Pyramid, and this is exactly why we hope to enter the Chinese market. In the past, China was often considered to be a world factory, closely following orders from western countries. In my view, the mission of industrial design in China is no longer to produce more mobile phones identical with the ones anywhere else in the world. In stead, industrial design is supposed to inspire new things under more constraints as well as in a brand new market and consumer psychology, for example, providing low-cost innovative products for low-income people.
21st Century: Usually what kind of companies will approach IDEO for cooperation? Is industrial design something like “a luxury” that only catches the attention of large companies with great strengths?
Richard Kelly: For IDEO, our clients are from various areas, including consumer electronics, daily necessities, telecommunication, finance, energy, health and education. It’s true that most of them are large companies on the Top of Pyramid.
But it’s more than just about how many resources they have. Many foreign companies are backed up by enormous resources and strong user databases, but how many inspirations do they gain from these databases? When we design and innovate something, it is a practice for us to involve our customers throughout the whole designing process, rather than throw them a great idea. Thus, we can help customers improve their own design capabilities. In this case, resources will not be a key problem.
21st Century: What kind of problems does these companies most want industrial design to help them solve?
Richard Kelly: Many entrepreneurs in China have a very sensitive intuition about market and company development, but unfortunately they don’t have a clear concept of the specific features of the product they want to design. Our Chinese clients all put forward such things like “I want to become the No.1 in the industry”, aiming to overwhelm competitors. They find that, apart from the former market and technical competition, industrial design is a road that they must go through to become a market leader.
21st Century: For Chinese companies with this kind of mind-set, will they come up with any common frustrations when introducing industrial design into their companies?
Richard Kelly: Many companies have seen the value of industrial design, but they still wonder how to keep a balance between the role of design and the role of research and development (R&D) within a company. A lot of companies used to rely on technology to grow, but what technology can bring to a company is largely limited, and after it reaches a certain extent, breakthroughs will hardly be achievable. R&D and design are in nature two different concepts. R&D is aimed to push forward a market, while design is concerned with inspiring consumers’ internal emotions and obtaining driving power from the market. It is a challenge for many companies to switch from one concept to another, from R&D-oriented to design-oriented.
21st Century: How to validate whether a design is good or bad?
Richard Kelly: When you come up with a concept after closely observing consumers and understanding their future demands, what you need to do is to see whether you have available technology, whether it is feasible from a business perspective, and whether you can make a correct orientation for market demands. The point at which the three answers overlap constitutes a good design.
21st Century: What is the relationship between design director and such departments as R&D and marketing? Who will be responsible for carrying forward a design project in what you said a design-oriented company?
Richard Kelly: In collaborating with European and American companies, which have a more matured concept in industrial design, it is usually the company leaders, like CEO, that carry forward projects and make decisions. As they are responsible for company growth, they can put forward “big ideas”.
For example, when Marriott approached us, they put forward such an idea: based on their research on the industry and competitors, they must take respond to the emerging trends in the entire industry.
My suggestion is that many companies introduce the concept of prototype in the initial stage. We’ve been using prototypes to validate whether a certain technology is feasible or profitable, no matter when we design a mobile phone, hotel services, or financial services. You may create a prototype in an easiest way. The space prototype that we did for Marriott is made from cardboard, which only costs 10% of a near real-size prototype that hotels used to make.
The key for prototypes lies in engaging relevant staff in the design process during the initial stage of projects, so as to inspire internal communication. As the saying goes, early failures and repeated failures lead to early success. This cheap prototype helped initiate several dialogues: CFO considers the viability of finance or costs, CTO or COO considers the feasibility of technology, and CMO considers the desirability of consumers’ needs (see details in Chart 2).
21st Century: Apart from a good design, what else would companies gain after such a process?
Richard Kelly: Ideally, in the process filled with incessant thinking and feedbacks, companies are expected to get more view points from the market, thus incenting more learning activities and R&D inspirations. At the end of a project, the market gains a new product and desirable profits, while the company improves its brand image and makes its industry position more target-oriented. Meanwhile, it leaves a long-lasting impact within the company. As new business breeds new infrastructures and factories, adjustments will be made to internal structures, which then bring about changes in the entire organization and improved capabilities in R&D and innovative teams (see details in Chart 3).
In a traditional definition, what we design is no different from what others do. But if you work with us, we will change your company and your culture, because what we see in your company is not the same as what you see. Design can be a strategic method, instead of remaining as a tool for beautifying products.
21st Century: What kind of knowledge structures is required for a good industrial design?
Richard Kelly: Every participant must be a T-shaped person. Design is quite complicated, and therefore we need those who have both a disciplinary depth and a broad understanding of the other disciplines, that is to say, a combination of a vertical line (expertise) and a horizontal line (broad and systemic thinking). For example, we need human factors experts to do observations. Human factors experts are just like small T-shaped people, specializing in maybe anthropology while being extensively curious about the external world. Engineers are also T-shaped people with a discipline depth in their own specialty as well as a broad thinking. Those two kinds of people together form a big T-shaped team (see details in Chart 4).
21st Century: Many Chinese entrepreneurs started as technical experts or factory directors, and they are familiar with such discipline knowledge as professional technology and craftwork. However, when it comes to broad and systemic thinking, they have somewhat deficiency. How can they make up for this thinking deficiency?
Richard Kelly: In my view, at the beginning it’ll be enough if they can shift their focus from solely on vertical analysis to on innovative and systemic thinking. It takes time to cultivate such kind of thinking. A good design requires not only good designers, but also design thinking to embrace them. Design thinking has two characteristics: first, it realizes and visualizes concepts; secondly, it requires an optimistic mentality, since pessimism does stimulate neither imagination nor inspiration. Entrepreneurs with a narrow thinking may tend to be conservative. Whenever trying new things, they are often tangled in such problems as which is what I’m good at for the time being and which is not, and how much price I may pay for it. It is just like the story about half a cup of water. Those companies which only see the empty half of that cup will find it hard to be imaginative, while those companies which see the full half will take a further look at the industrial prospect and their own future. Most of our clients are thinking not only about how to become No.1 in the Chinese market, but about how to be a forerunner in the international market as well.
21st Century: As design thinking features in-depth thinking modes, will it still be possible for a company to change through some kind of method, if the company and its leaders do not have such thinking modes? For instance, will an enterprise gain design thinking if it concerns too much about avoiding risks?
Richard Kelly: Generally speaking, the more optimistic companies are, the easier it will be for them to make use of all resources to support innovation and transformation. But the situation is by no means fixed.
We have many clients from the financial field. The key lies exactly in the prototype that I emphasized just now. For example, Bank of America used to pay much attention to male customers. In order to develop a new customer base, we turned to female customers. In the past, America was not thought to be country with a saving culture. Through observation, we found that American women had a very interesting habit. They liked rounding up their financial transactions to the nearest dollar and putting the change in jars at home. Uncovering this habit led to one of our credit services, Keep the Change. So, for example, if a customer used the Bank’s debit card to pay for a purchase, which cost $29.30, the service would automatically round up the amount up to $30.00 from the customer’s check account and transfer 70 cents into his saving account. It was a very fresh concept, and it took one year for us to realize the concept in the form of a financial service, during which we constantly modified and improved our prototypes.
Actually, the process of making prototypes and getting feedbacks is just like a mirror, telling companies what your clients want you to do, rather than what is conceived by ourselves. As long as this is understood, it is not impossible to realize coexistence between steadiness and optimism. In less than one year since the launching of Keep the Change, it attracted 2.5 million customers. By 2008, 8 million customers had signed up to Keep the Change, accumulating approximately $10 billion in savings.
21st Century: It is acknowledged that Chinese companies have advantages in large-scale but low-cost manufacturing, but in the field of design, they are undoubtedly latecomers. Do you think that potential advantages exist for Chinese companies in this field?
Richard Kelly: China has a population of 1.3 billion. When we look at the 1.3 billion people, we see them as small entrepreneurs, 1.3 billion entrepreneurs instead of common civilians. We’ve found that after buying a product, some consumers will make improvements to the product by themselves to meet their personal needs. So I’m looking forward to an open design trend in China, where everyone makes design by themselves.
(The interview is done and arranged by correspondent Su Xing.)