President & CEO Lawrence J. Lasser has not only led Putnam Investments to top performance in management of more than $150 billion in mutual fund and retirement assets, he has recently overseen the redesign of its headquarters and corporate literature. Peter Lawrence, chairman of the Corporate Design Foundation, interviews him.

As CEO, you have championed quality design at Putnam. Could you explain why you feel design is important?

To be a truly great company, it is necessary to be world-class in everything you do. Not merely at the front line where customers see you, but in everything. What we say to clients about who we are is reflected in the look of our letterhead and advertising, in the look of our offices and in the way people are treated as professionals. The office environment is an important element of the image a company projects to the outside. What is often underestimated is the image projected to our own employees - which employees, in turn, project back to customers in their pride and enthusiasm. This image also influences a company's ability to attract new people.

You recently hired an architectural firm to redesign Putnam's headquarters in Boston. Could you comment on your design brief to them?

We talked about our personality as a firm to Elkus Manfredi. I said that I wanted to project it and advance it, but I absolutely did not want to do anything different from what we are. I wanted people to walk in here and capture the spirit of the company in the way it looked - not to misrepresent ourselves, not to be something we weren't, not to make architectural 3 statements that said more about the architect and designers than it did about the company.

How does a company find a design style for itself?

In the course of my business life, I have visited many corporate offices and have seen countless examples of people trying to be what they are not in their design. Around Boston, many try to duplicate the English club look. I think it is important that we first articulate what we are and then try to design around that personality, rather than take a design and say "maybe people will think we're old conservative Yankees." We have that in our heritage and are proud of it, but that is not what we are today.

With few exceptions, including Putnam, the financial sector has paid little attention to the design of its communications materials. Why has that been the case?

Historically, financial services have had an overwhelming emphasis on investment results as the driver of everything. That is No. 1, and everything else is secondary. Only in recent years has marketing, as it is broadly defined, been introduced into financial services. There have been one or two exceptions - American Express, Merrill Lynch, Fidelity maybe, but in general, marketing has been absent. It's an industry that has been driven by investment professionals and secondarily by sales people. You sold and you produced. Marketing slipped through the cracks. Sales people perhaps didn't have a refined understanding of the elements that go into communications, including design.

What prompted the financial services sector to pay more attention to marketing and design in recent years?

Competitiveness and the growing size and profile of the industry. Not so long ago, people who saved and invested typically bought 100 shares of this, 100 shares of that. Now those traditional investing habits have been displaced and replaced by mutual funds. The mutual fund industry, which used to be very small, has literally exploded in size and become more competitive. In an increasingly crowded market, communications and advertising become ways to rise above the crowd and distinguish yourself.

Has the proliferation of company- sponsored 401(k) plans had an impact?

This is a big growth area. Employee communications are an important aspect of company-sponsored 401(k) or defined contribution plans. A company will contract with a supplier like Putnam to manage its 401(k), but then it has to communicate with employees to explain its plan and encourage them to participate. One way that we acquired the wonderful list of clients we have is by demonstrating our communications skills, in the form sof written materials, videos and other means.

In the investment business are there legal constraints that work against effective design?

Yes, one example is the prospectus, issued by publicly held companies as well as mutual funds. This is a fascinating communications dilemma in our business, and a universal problem. The prospectus is overwhelming. It's the most boring, ponderous thing to read. Yet its contents are largely mandated by law to give investors the legal assurance of full disclosure. The purpose of the law, to me, is valid and necessary. It protects investors in terms of a level playing field by ensuring that everybody understands what they are buying. Today nobody can file a lawsuit and say he didn't know because it's all there somewhere. But try to find it. If you attempt to be creative, you violate the standards. Creativity is not allowed. On the mutual fund side, the law says that a stockbroker cannot call up and persuade you to buy a mutual fund without first sending you a prospectus that gives you disclosure on fees, historical performance, etc. Even most people at Putnam can't make much out of these prospectuses. We know, anecdotally and statistically, that the overwhelming majority of people do not read the prospectuses. They discard them. Even so, mutual funds must mail shareholders a prospectus not only before they purchase a fund, but annually. We spend millions of dollars in terms of legal, printing and postage costs doing these things.

Are regulatory agencies trying to remedy this?

The SEC and regulatory agencies are constantly battling over how much to say. One theory is that the more information you make available, the more informed and risk-aware the investor. The other supports summarizing and saying less in the hope that people will actually read the prospectus. There are some good experiments underway, but the typical product is still the traditional one. The prospectus is a dilemma of design, presentation and communication weighed against degrees of disclosure. There's a real opportunity here to persuade the government to make changes, but in fairness to them, there would surely be cases of people cutting corners if too much flexibility was allowed. It might lead to misleading disclosure. It's a big problem.

What were the reasons behind Putnam's recent redesign of its communications program?

With our growing range of products and the great growth experienced by our industry, it was becoming increasingly difficult to differentiate ourselves. The intermediaries, brokers and financial advisors who recommend our products and receive our sales material were being overwhelmed with competitive materials. This made it all the more important that ours stand out, not simply as provocative design, but as workman-like sales tools that would enable them to do their jobs more easily and with greater ability to give their customers an understanding of what they were doing.

What was the scope of this project?

We had approximately 70 funds when we initiated the redesign project. Today we have nearly 90. Each requires us to do annual and semi-annual report mailings to our shareholders. We also develop packages of sales support materials. These are not unique funds; they can be grouped into categories. We needed an integrated design program. Initially, we thought of the design as packaging, but our designers showed us that we were talking about content as well. I don't think we totally understood this at first. Carbone Smolan Associates, the world-class designers we hired, helped us understand that we needed a more comprehensive program. If Putnam was to have a new look, we had to go beyond mutual fund literature and first talk about our logotype and bring more parts of the company into an integrated look, so that we could project a consistency and rationale for what we were doing in all our markets. The design didn't need to be identical, but it needed to be consciously related.

How did this redesign change your approach to presenting information?

We went from a one-off technique to a literature system that has elements of sales support attached to everything. Visually, we started with two objectives: First, we wanted to differentiate ourselves. In this industry, everybody is still doing the same thing: the straight, photographic approach retired couple sitting on the porch, walking down the beach holding hands, the graduation shots, and the lovely baby pictures. We wanted to break through the clutter of all that and be able to get both the intermediary's and the investor's attention. Our second objective was to simplify. We wanted to simplify the language by getting rid of jargon, and make our literature visually inviting and user-friendly. In this industry, companies typically jam as much as they can into every piece, thinking more is better. We took the opposite approach, saying let's give people something they can comprehend and absorb. We used vivid colors and icons. We changed the size of the literature so that even if it sat on a pile of competitors' information, it would stand out. We added white space, we tiered information so that key phrases and key messages were highlighted, so that if you just read the headlines and subheads you got a story. Collectively, the whole thing became much less intimidating.

Have you been able to measure the program's success?

It's hard to measure except anecdotally, but it's been very successful. People comment on the literature. They notice it. They use more of it than ever before, and customers react favorably to it.

Can you comment on corporate annual reports? Do you think your analysts and fund managers are influenced in their decision-making by their visual impressions of the material?

As individuals, investment people are subject to the same influences of good, interesting design. Maybe more so than other people, typical analysts are inundated with materials - some things they have to look at because it's their job, but there's a lot that is discretionary. Like a well-designed book cover, things that attract their attention are more likely to be picked up.

Can design be used to make financial reports more useful to analysts?

Corporate financial materials have special design requirements because there are a lot of numbers. The way the numbers are organized and presented can make them easier to work with and more useful. Mutual funds are confronted with different yet similar challenges. Our materials are directed to non-professional individual investors. In our communications with them, we must convey fairly complex financial concepts and results, with implications for what they may mean for the future. We also have to deal with the exacerbating complications of regulatory limits that define how we say things, what we say, even the words we can use to describe things. Design has provided a major way for us to communicate clearly and convincingly what is sometimes pretty archaic stuff.

Do you see design playing a bigger role in business today?

As marketing plays a greater role in the business of every company and increasingly in institutions such as hospitals, colleges and law firms, design as an element in the marketing package becomes much more important. There is hardly a part of society today that does not have something that is the equivalent of a marketing department. That wasn't the case until recently. So, I would say yes, design will play a bigger role.