When times are tough and revenues are falling there may be a temptation for business to cut ‘discretionary’ budgets – money allocated to activities such as design, perhaps.
But design is a powerful tool in a downturn.
Our research shows that more than half of the UK’s businesses:
- …are looking to design their way out of downturn
Over half (54%) of the firms in our survey thought design would contribute to a large or great extent in helping maintain their competitive edge in the current economic climate.
- …think design is more important now
Similarly, 53% thought that design had become more important in helping the firm to achieve its business objectives over the last three years.
- …think design is integral to the economic performance of the UK
The same number agreed or strongly agreed that design is integral to the country’s future economic performance.
Fortunes can change for any business – large or small – sending a once successful and thriving operation into decline. Shifts in the economy, in consumer sentiment or changes in the marketplace are just a few of the factors that might leave a company in trouble and unsure how to get back on track. Even mighty corporations such as McDonald’s or entire industries like the Swiss watch industry have fallen foul of changes in the market, but both responded through an investment in design and innovation which helped to turn their fortunes around.
What can design do?
There are many ways design can help your business perform more strongly, from improving your image (internally and externally), innovating your products or services, through to enhancing your overall efficiency and saving you money.
Companies of different sizes and from different sectors have worked with designers to improve their performance during challenging conditions.
Castle Rock Brewery
Competing in the competitive real ales market is tough. Castle Rock Brewery in Nottingham brought in designers The Workroom to give its communications and graphics a more professional edge. Demand is now outstripping supply and the company’s barrel sales growth has doubled.
The rise of value chains has meant that hotel groups in the traditional mid-market have suffered. Thistle Hotels is using an image overhaul by designers Navyblue to spearhead a multimillion-pound refurbishment and service improvement programme, and visitor numbers are already rising.
Frozen food company McCain suffered badly following a backlash against poor diets and rising obesity, so it worked with designers Elmwood to rethink the way its packaging speaks to shoppers in supermarkets, promoting the product’s natural ingredients and low fat. Sales have since blossomed to record levels.
High street music specialist HMV has had to react to massive changes in the way its customers buy music and video titles since the arrival of digital files and the internet. It used design to create a next generation store and whole new brand proposition. Sales at a trial store jumped by 25 per cent.
Ian Macleod Distillers
Scotch whisky drinking is in decline. So family company Ian Macleod Distillers employed designers to create packaging for its new Smokehead whisky aimed at bringing younger consumers to the whisky market. Sales have doubled since launch in 2006.
Design beats the blues
During hard times investment in design can give a business a competitive edge over rivals who are reining in their design and innovation budgets in order to save money. As American Express chief executive Ken Chenault told Fortune Magazine: ‘A difficult economic environment argues for the need to innovate more, not to pull back.’ Similarly, in September 2008 following a crisis in the global financial markets and in the face of an impending worldwide recession, Intel‘s chairman Craig Barrett told Reuters that investment in the company’s products and innovation remained very much on track. ‘We’ve always had the attitude that you have to make that investment in good times and bad,’ he is quoted as saying.
While American Express and Intel are global businesses, with dedicated R&D and marketing functions, the same wisdom applies to a business of any size: when times are tough it is change, dynamism and vitality – not hunkering down quietly – which are the keys to success. And this is exactly where design can help.
As you can see in the case studies above, companies big and small are rising to the challenge of hard times through a conscious investment in design. Their decision to innovate – to rethink and regenerate their products, operations and image – can be taken by a company of any size and in any area. Design and brand strategy can help elevate a firm or its products from the ordinary, the tired or the predictable, demonstrating that the business is alive, dynamic and responsive. And in a declining market that just might make the difference between growth and collapse.
Famed for precision timekeeping since the late 16th century, Switzerland’s watch industry nevertheless ran into crisis during the mid-1970s when Asian companies began to take over the market with quartz crystal technologies. Battling recession at the same time, Swatch (then known as SSIH) became insolvent, forcing its creditor banks to take control. Eventually, in the mid-1980s, CEO Nicolas Hayek took the company private and started a design revolution which was to save the business and put Switzerland back in the vanguard of watch manufacturing.
Design was instrumental in this reinvention. A combination of product aesthetics and reengineering (which reduced costs) gave Swatch the edge, leading it to become the largest watch company in the world, rescued from the jaws of collapse. Launched in 1983, the first Swatch wristwatch was a slim model using only 51 components (versus a typical 91 or more) and was marketed at an affordable price with contemporary design and styling. According to Swatch, the product has gone on to become the most successful wristwatch of all time.
Swatch‘s gross sales reached approximately £3 billion in 2007, but Hayek also claims that the design strategies he developed for Swatch in the early 1980s led to the rebirth of the entire Swiss watch industry, regaining its leading position worldwide since 1984. Data bear this out, with Swiss watch exports growing from around £2 billion in 1986 to £7 billion in 2006, according to the Federation of the Swiss Watch Industry.
While the creation of luxury power boats for a global market may represent design for a wealthy minority, Sunseeker International’s success results from a dedication to design from the smallest beginnings, undertaken in the face of the decline of British shipbuilding.
Formed in the 1960s by brothers Robert and John Braithwaite in a single industrial unit in Poole Harbour, Sunseeker was initially a distributor of Scandinavian boats. But Robert Braithwaite believed there was a potential UK market and so designed and built his first boat. From that start, the company has doggedly maintained a priority focus on design, design management, technology innovation and bespoke building. This combination has helped Sunseeker grow from its single unit to encompass seven sites and a million square feet of production space.
Believing that design is a vitally important part of this success, Sunseeker employs exterior and interior designers to work alongside engineering design, yacht styling and production teams, as well as with customers. It reinvests around 6 per cent of turnover in research and development. This has led to truly global success from a UK base: designed and manufactured in Poole, around 99 per cent of Sunseeker’s boats are now sold to the export market.