Business Week's Bruce Nussbaum on Design

An advocate for the coverage of design in Business Week, editorial page editor Bruce Nussbaum talks here with Peter Lawrence, chairman of Corporate Design Foundation, about why designers must take the lead in the New Economy and the magazine's new architectural design awards.

Business Week frequently refers to the New Economy. Could you define what that means.

The New Economy simply means that the world has changed. The rise of globalization and information technology has dramatically altered the economic environment. The huge amount of global competition out there has meant that companies can't raise prices very easily. At the same time, technology has allowed whole sectors to actually lower prices while producing more.

This has forced Corporate America to rethink the way it had operated throughout the '70s and '80s, when everyone went on the assumption that if you had high growth, you generated inflation. If you had low unemployment, you generated inflation. If you had inflation, companies generated profits the easy way by raising prices.

No longer able to raise prices, Corporate America set about protecting profit margins by aggressively shrinking operations and cutting costs. They had to do this, and they are not quite finished yet. But the net result is that they've become fairly productive in the new world economy, and no longer want to, or can't, shrink anymore.

Today, we are seeing numbers that are truly revolutionary - strong and rising productivity combined with falling inflation. It's rather unheard of in the eighth year of a business cycle. We haven't seen numbers like that for maybe 30 years. Business Week calls it the New Economy, the new business cycle.

Are companies still shrinking?

No. The new buzzword in Corporate America is top-line growth, meaning revenue growth. Over the last 5-7 years, we've switched from a cost-cutting obsession to a top-line growth obsession.

How does top-line growth differ from a "shrinking" strategy?

For a long time companies that wanted to shrink went to consultants for help. Consulting groups did a pretty good job in helping them. But the people who can tell you how to shrink are not the people who can tell you how to grow. They may be good at helping you to control the numbers but not at helping you to expand and create new ideas. For top-line growth, you have to sell something. For that you need design. Design innovation will provide the new products. Designers can tell you how to grow, how to innovate, how to change your culture.

What needs to happen for design to be used for top-line growth?

If this new economic paradigm is true, then design has to become a basic part of business education. It is absolutely critical to make design an integral part of business school education and not an elective, as it is in most schools. It has to become a core part of the curriculum because we are no longer in the business of shrinking, streamlining and tightening. We're in the business of growing, expanding and creating, and that is what design does best. The New Economy is opening up enormous opportunities for design professionals who are willing to walk through that door and know what to do.

Are design schools preparing students to step into the New Economy?

I think design education needs to change dramatically. Design schools shops especially have their own engineering capabilities. Not only do they design, they have arrangements in Asia to manufacture parts and assemble them. They're adding functions and providing services. This is a real evolutionary change.

Is design serving a different function in business today?

Design has become very much an innovation industry. We're not just talking about the design of one product. We're talking about the design of the whole process of innovation in a company. Designers are thinking of themselves more as consultants and moving into what traditionally has been a management consulting function, providing "tutoring" on innovation as well as product design. They're also charging the way management consultants charge, and for good reason. Still, I am a little concerned when I get together with a bunch of designers and they don't even mention the word design. I don't want them to go too far and forget their roots and the fact that the glory of design is something that you can see and feel and hear. Product "lust" to me is really the soul of the industry. I don't want them to lose that.

 

When you say designers are beginning to charge management consultant fees, I'm assuming you are saying prices are going up?

The cost of good design has been going up for the last 3 years. For what it delivers, it is still incredibly cheap. You can hire one of the best designers in the country today for the price of a New York shrink. My advice: Get it while it's cheap because it can provide terrific payback. In the area of information design, we haven't talked about Web site design, the Internet. That has lifted graphic design right off the floor. Graphic designers were even more poorly paid than product designers until a few years ago. Now graphic design has taken off and it's really booming.

Is the use of design for innovation widespread throughout Corporate America?

No. I think we're still dealing with a small number of smart companies making the best use of design. I'd say 70 to 80% of Corporate America doesn't really know the value of design and isn't utilizing it properly, if at all. Design has to be a central concern of top management - the CEO or senior VP level - to work. If design is a peripheral function, the company will only get about 5% of what design can deliver. It's critical that it is brought close to decision makers in an institutional framework.

Are consumer research groups effective in improving design or are they an impediment to innovation?

If you don't over-generalize the results, focus groups can be a useful tool. I know design firms that use them to learn what is good or bad about a product in the marketplace. It gives them a starting point for innovating, a way to learn what people like and don't like about a product. That's pretty useful. But it won't give you a Palm Pilot. It won't give you a breakthrough. It's what you do with the information that determines how effective it will be.

Last year Business Week began collaborating with the American Institute of Architects on a joint architecture competition. What prompted this interest?

Over the last couple of years it has become clear that architecture is being used as a powerful business tool. That was not always so. Ten, 15 years ago, architecture was basically a plaything of oversized egos for both individuals and corporations. Corporations created these monuments for themselves. We were not interested in that at Business Week. But once architecture transformed itself into a design service that could do powerful things for corporations, we became interested in it.

In analyzing the architectural entries, were there any surprises?

I was struck by two things. One, the power of architecture to save enormous amounts of money. We're talking in the case of one company, Nortel, a hundred million dollars. Talk about power!

On the other hand, in looking at some of the losers, there's some really awful architecture out there that works to be anti-innovative. It makes people stupid. Spaces can be created that suck the life out of a work team, suck the life out of an organization. Terrific spaces help teams stay fresh and foster an environment that sparks new ideas and products. I was struck both by how powerful architecture can be and how dangerous it could be.

From a business perspective, what is design ultimately about?

Design, in the end, is about creating better things for people. Along the way, it can generate better profits as well.