Market forces versus innovation

Innovation is the lifeblood of product design consultancies, or at least it should be. But how ground-breaking can a consultancy actually be when faced with business pressures of today’s commercial world?

Product design consultancies are quick to agree that the chief problems arise from those clients which lack the wherewithal to do anything different. And it’s not about being conservative – many see the potential value of new design but simply fail to act.

Seymour Powell director Dick Powell sums the situation up thus: “The forces that conspire to keep things the same outweigh the forces that seek to change things.

“Big organisations get bogged down very quickly. They can spend three days at a brainstorming event, get all fired up listening to [management guru] Edward De Bono, but when they get back to the office very little gets changed. Many companies just aren’t set up to do it.”

The problem is one of organisation not intent, agrees Gus Desbarats of Alloy Total Product Development. “Everyone is keen to do new stuff, the issue is how much of what kind of risk do you take to be innovative,” he says.

Product design group Therefore seems to do more innovative-side work than most. Recent research commissioned by the group shows 75 per cent of its output is innovation-based, according to director Jim Fullalove.

“Seventy-five per cent is a high innovation ratio, especially when there is a formula that says ‘innovation equals risk’,” he says. But in the technology sector, in which Therefore figures strongly, there is probably more of a propensity for innovation generally.

“Its easier [to innovate] with smaller businesses that can make decisions quickly, and where the lines of communication and access are good. You have to have continual commitment from the same people for it to work best. With the bigger corporates you run a risk because they would rather play a softer game. There is plenty of risk-aversion around,” according to Fullalove.

But the risk-averse nature of big corporates is no secret, not even to the clients themselves. Technology businesses such as Therefore’s client Siemens operate “Skunk works” teams, designed to break red tape.

“In order to get things done, they break down their usual structure and create autonomous cells, which get given more flexibility and space to work in,” Fullalove says. These small, off-line management teams can typically halve the amount of time needed to bring a product to market, he explains.

Desbarats, too, says clients are actively addressing the situation. “Our brand-led clients, such as BT, are getting increasingly keen on innovation. For them the issue is also to ensure an effective overall mix across the entire product range and development budget,” he says. “Our work for Hewlett Packard is totally innovationfocused. Every six months brings a breakthrough in technical capability, but at each generation, innovative design is the only guarantee of differentiation,” he says.

He reckons that there is a lack of freedom to invest, particularly by the bigger corporations which are so dominated by their share price. “The shame is that many of our UK clients are suffocating from lack of investment, usually from a share-price-watching parent. We are seeing far too many UK manufacturing clients eroding brand equity by over-extending the life of old models,” he says.

He goes on to say, “Another worrying trend is a growing aversion to anything but the simplest engineering development risks, even if these risks are easily managed by people like us with the right knowledge and tools.”

Desbarats says the most risk-averse clients tend to be those stuck by limited investment capital. He is convinced that there is “capital starvation of subsidiaries” within large businesses run by finance people in particular.

“There tends to be a strong ‘financial-bias’ in the decisionmaking culture. This creates a blindness to ‘behavioural risks’ that don’t fit comfortably in a spreadsheet cell,” he says. “They are often prisoners of past success, who believe the cash bonanza that followed their last launch will last forever – wrong.”

What more can be done to encourage the take-up of innovation-led projects and cut down extensive lead times? “You have to be in at the right level with the client,” says Fullalove. “If you are not dealing with the principals of a company, it is much less likely that your projects will ever see the light of day.”

The best clients, or at least the clients product design consultancies prefer to work with, seem to have a lot of other things in common, too. “It’s down to the individual. You need a maverick element in a client – it certainly helps,” suggests Powell. “The bigger Japanese companies (like Sony) hive off a special lab to focus on new products as well.”

“They are passionate about their customers, and learn from them constantly. They have a clear understanding of their brand, but are constantly probing its limits. They budget for ongoing innovation as a matter of routine, and scale their distribution to suit,” says Desbarats.

He says that the better organised clients offset innovation risk with strong brand management, and have senior managers who care about the product and R&D. The shrewd ones aim for steady capital gains over time, with good ongoing dividends, rather than being obsessed with daily shareprice movement.