"The Challenge of Building a Great Corporate Design Organization" White paper from Motiv Strategies CEO Jeneanne Rae Most executives today now recognize that design can be a source of competitive advantage. What most executives DON'T recognize is how to manage design strategically, how to use design to win in their industry, and how high-performance design organizations are organized to deliver great results.

1. The Challenge of Building a Great
Corporate Design Organization
By Jeneanne Rae

2. Commoditizing global markets as well as Know the difference between design thinking
increasing sophistication among consumers have versus design
led many leading organizations to make building Much has been made of using design methods
internal capabilities for design a priority in recent (commonly referred to as “design thinking”) for
years. While design has always been solving complex business challenges. In fact, the
fundamental to industries such as fashion and term has gotten so much coverage lately I fear
consumer electronics, it has now spread to non- that many people are starting to think about
traditional settings such as airlines, consumer design and design thinking as interchangeable
goods and even governments, where it has terms when they are not. Design thinking is
become the driver for differentiated end-to-end methodology that is taught in certain types of
customer experiences as well as innovation. design schools, notably industrial design and
architecture; therefore only a subset of all
Today most executives now recognize that designers are bona fide design thinkers through
design can be a source of competitive their academic training and practice. While better
advantage. What most executives DON’T use of design thinking methods should be
recognize is how to manage design strategically, desirable for any corporation to use in solving its
how to use design to win in their industry, and most wicked problems, design thinking will not in
how high performance design organizations are and of itself drive better design.
organized to deliver great results. This article,
based on years of leading assessment and Hiring superstar designers is not the answer
change management efforts with global A common theme that we’ve observed over the
corporations, reveals what leaders need to know last several years is that senior executives who
to start to build design into the DNA or their are hot on pursuing design as a business
organizations. strategy coerce a seasoned design executive into
their companies only to find themselves
Align goals and strategy frustrated twelve to eighteen months out when
The most effective design organizations set goals they haven’t become the “Apple of their industry.”
that are aligned with their organization’s Worse is the situation where corporations go
corporate strategy. When Mark Hurd, former through the time, expense and trouble to hire
CEO of HP, went on a cost cutting spree, its multiple superstar designers only to have them
design organization heroically delivered over leave within a short period of time frustrated by
$200 million a year in savings through the system and lack of results they are able to
standardization of the HP “jewel” logo that produce. Not only does this situation beget very
adorned its vast array of equipment. Having a low returns on substantial investments, but also
clear design vision and strategy like this allows a significant product disruptions and low morale for
design organization to know what it is shooting the people left behind.
for and to put in place the appropriate talent and
other resources to execute the plan. However, While getting the best talent is an important goal,
getting the vision and strategy to align with the creating an environment where design can thrive
talent and resources required to execute is most should be the more important focus.
often where things go awry.
Measuring the return on investment for
In nascent situations, neither the design design is a long-term pursuit
executives nor the executive leadership team Skeptics always want to know why they should
understand the extent of the organizational make such significant investments in design.
development effort required to support the Unfortunately, this is a difficult question to
corporate strategy. Consequently, progress is answer. Companies such as Nielsen that
often slow and more painful than it needs to be. analyze marketing mix investments do not
Simple tools like organizational road mapping account for design. The impact of design can
and the resourcing to support the plan can set span a variety of activities. And measuring
the right course for transformation, yet I’ve seen emotional impact, or “delight factor” of design is
few companies treat design capability building poorly understood in corporations that do not
seriously enough to merit this type of attention. invest heavily in the social sciences behind why
Why? people choose or don’t choose their products.
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3. However, if stock price can be viewed as a proxy design work streams seamlessly integrate with
for the impact of design in the marketplace, the larger set of processes that constitute
consider the performance of this bucket of ten production in their organizations. Whether the
firms who have invested significantly in design process is budgeting, innovation, engineering
during the last ten years. Using an approach development, branding, supply chain
similar to how performance of the S&P 500 is management, or something else, design has an
derived, our analysis shows that a $10,000 uncontested role and decision rights. It is this
investment in our design index of diverse design- “devil in the details” approach where design can
centric companies would have yielded a 64% make its strongest contributions.
return whereas an investment in the S&P would
have yielded a -22% return. The outsized returns Mature organizations aspiring to use design
for design-centric organizations represent a strategically will find this state of nirvana elusive
collective set of design investments on the part of without significant intervention. The process
each firm as no one investment could possibly modification required is painful; managers
drive the type of momentum realized. Note: despise the usurpation of their former roles;
Apple is not included in the list on purpose so design culture and training leave managers
that data is more normalized. unprepared for such organizational wrestling.
Further, such far-reaching change cannot solely
Great design leadership is important; but be design’s job. Any organization that wants
great change management is even more more and better design must make it a mandate
important for its various functions to wholly embrace how
It is true that most high performance corporate design must work in order to gain the highest
design functions have seasoned leaders who can benefit for what design can offer.
command what it takes to make the “magic”
happen for a multi-billion dollar, global enterprise. Organizations that do this quicker than most
employ a range of internal help, not the least of
What is less known but also true is that a which is a senior leadership team whose
hallmark of design-centric companies is that unwavering support ensures the organization
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4. embraces the required change. design culture because they effectively become
designers themselves when using the process.
Companies that get the most from design rely
on a culture of design
Any organization that wants to leverage design Along with understanding design process,
for strategic advantage needs to know that this achieving a culture of design means that
cannot be achieved overnight. A better way to everyone in the organization understands what
think about this is to understand that you will be design is, how it is used for strategic advantage
on a journey for many years -- maybe even in the organization, how and when design
indefinitely given the pace of change today. One resources are used, what the work of design
way to shorten that journey is to concentrate entails, and how design efforts should integrate
some portion of the effort on building a culture of with the company’s production processes.
design.
The best corporate design leaders are
Significant design capability building was champions in getting these messages across,
underway for over a decade before Procter & especially in the early days of their tenure. In an
Gamble took up the challenge to teach design organization the size of Procter & Gamble, Coca-
thinking to the greater organization. One R&D Cola, 3M, Johnson & Johnson, Kraft Foods, or
manager told me recently that it is now a Hewlett-Packard, where remarkable design
“mainstream problem solving practice” for the transformations are presently underway, this can
organization. It is interesting to note while P&G’s be a difficult task. Nevertheless, individual and
design function is responsible for the initiative; collective efforts like those mentioned here are
the practice of design thinking extends far making a difference every day in making these
beyond the walls of design, and has greatly admired companies, as well as many others, the
helped thousands of its employees to embrace design leaders of the future.
Top Tips from the Author for Building Corporate Design Organizations:
Consistently great corporate design is the product of the following elements:
1. A vision and strategy that is well-articulated and understood by its
organization
2. Leadership that is capable and committed to driving its vision
3. An organization that is structured and resourced for success
4. A talent pool that is diverse in design disciplines and deployed at key points of
functional integration
5. A culture that embraces the myriad dimensions of design
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5. Author Biography
Jeneanne Rae
Jeneanne is a nationally recognized thought leader on innovation management and design
strategy. Rae was hailed as one of Business Week's "Magnificent Seven Gurus of Innovation" in
its cover story on the creative corporation. After receiving an MBA from Harvard Business School,
Jeneanne has now spent twenty years mastering the art and science of innovation, including
spending seven years on the senior management team of IDEO. A columnist for Business Week
online, Jeneanne writes on cutting-edge innovation topics. As an adjunct professor for nine years,
she taught new product development and service development at Georgetown University's
McDonough School of Business and currently teaches executive education through various top
ranked programs. Jeneanne can be contacted at: jrae@motivstrategies.com; 703-778-1051.
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