Design leading the blind

By Vincent Heeringa

Saturday 1st February 2003

THEY LOOK PRETTY GROOVY, those young designers and architects pouring out of Victoria University's funky downtown Faculty of Architecture and Design late on a Thursday afternoon. Am I alone in being quietly envious of these kids scooting about in sneakers, art folders tucked under their arms, off to discuss form and function in a Cuba St café? I aspired to that once, but my tech drawing grades at school seemed to knock out any hope.

But should I be jealous of their career prospects? No way. Of the 1000 or so graduates produced each year, only about 30% get jobs in the mainstream design sector. One might land a plum spot with the other 20 or so designers at Formway Furniture, the $42 million designer and manufacturer that keeps winning prestigious awards. Some graduates may get something with design-led companies like Icebreaker and Snowy Peak, and Fisher & Paykel always takes a few talented kids.

But let's face it, we're not hot-to-trot on the design front. In fact, some of our best designers have had to go overseas to make it big - such as Simon Fraser, who went to Austria's highly regarded Porsche Design. The Hamilton-born, Fisher & Paykel-trained industrial designer spent 20 years with Porsche, most recently as assistant design director. Now he's back, as the director of Victoria's industrial design school, and has a few things to say. "We don't value design in New Zealand and we especially don't value design in business. In New Zealand the question is 'Shall we use a designer?' In Europe the question is 'Which one?'"

If Fraser has his way, this is about to change. Along with a group of militant industry veterans, Fraser has made it his task to convince New Zealand business that the design industry can grow to become an export-earning sector in its own right. More importantly, this group is out to convince you, Mr Chief Executive, that your business model is frequently wrong, your senior team of advisers is incomplete and your processes are inadequate. The missing link? You guessed it: design.

Ray Labone, a founder of leading New Zealand design firm Designworks, sees design as the formula for solving New Zealand's dependence on low-quality manufacturing and commodity exports. "Design is the best key enabler for product development and business innovation. Used right, it is integral to business success." And designers, he reckons, should be occupying top positions on New Zealand boards and executive teams.

To argue the point, Labone's been made chairman of the Design Taskforce, an Industry New Zealand team recommending ways for design to become a strategic discipline in Kiwi business. Along with similar taskforces in film and music, the Design Taskforce is contributing to the government's Creative Industries strategy, which in turn is one of three growth industries picked by Prime Minister Helen Clark as worthy of government attention. The other two are biotechnology and ICT (information and communications technologies).

Okay, so a couple of design flunkies have caught the ear of an interventionist government. What's new? Helen Clark is, after all, just following Britain's lead. In 1997 Britain identified the creative industries sector as one of the fastest growing, and thereby deserving of government support and promotion. British design contributes more revenue to the country's creative sector than anything else except publishing (see "British design rules, OK").

But the taskforce isn't just about designers tooting their own horns. Richard Cutfield is a dry-as-nuts director for Wellington-based finance company Pencarrow Private Equity, manager of the successful Greenstone Fund. The way he sees it, backing design-led companies such as Formway has been a major part of Pencarrow's success. "If you're looking for a company with global potential, you need to see some kind of edge. Invariably, we look for excellent design to provide that edge. You're just not going to displace an incumbent competitor in a global market without design as a key differentiator."

Cutfield joined the design taskforce if for no other reason than to see New Zealand awash with investment prospects. But there is another objective. As with Labone and the other 12 taskforce members, Cutfield is convinced New Zealand has what it takes to produce dozens more Formways and hopefully a Nokia or a Lego, too. "Look at Denmark and Sweden. They have Bang & Olufsen, Ikea, Saab, Volvo, Ecco, Club8 and Ericsson among others. For countries about our size, that's an impressive number of global brands."

Exporting design

So what's wrong with design in New Zealand? Well, for one thing, it's pretty insular and disorganised. No one can tell you much about designers, not even the Designers Institute of New Zealand. An anecdotal survey by Designers Institute past-president Dave Clark suggests only about six design companies out of 150 potential exporters are actually exporting. That's small beans compared with Britain, where the top 100 British firms get the majority of their income offshore and total export earnings, at £1 billion, account for just under 20% of the whole industry. Britain's design exports are growing, too - threefold for the top 100 firms in the year 2000. Indeed, according to a large survey by the Department for Culture, Media and Sport last year, Britain exports more design than any other country, giving some justification to the British government's claim that Britain is "designing for the world".

Another interesting comparison is the New Zealand wine industry. A Massey University study in 2001 put the design industry's turnover at about $477 million a year and employment at 4500 - roughly similar to the wine industry. Winemakers exported over half their production in 2001 - a 20% improvement on the previous year - and collected $200 million in foreign exchange. Wine exports are growing at 20% a year. I can't give you a design export figure, because no one has bothered asking (in fact, the Designers Institute couldn't even tell me how many design companies there are in New Zealand) but it's safe to say it's vastly less than the wine industry's.

Nonetheless, Dave Clark is optimistic about the potential to grow our design export income. "We have good quality design talent in New Zealand - in fact, I think it's word class. You find Kiwis are well represented around the world, especially in Britain. The problem is our image as a sort of anti-intellectual commodity player." That, says Clark, and a lack of what he calls "self-belief". The Austin Allegro and other offences notwithstanding, Britain has a design heritage going back to the loom. Who wouldn't feel good about that?

A handful of Kiwi designers are busting down those barriers. Industrial designer Andrew Bissett has leveraged his relationship with New Zealand clients to secure work for their overseas parents. His Auckland-based company Formworks is now designing vaccination equipment (guns, bottles, triggers, that sort of stuff) for US-based veterinary companies. He's also building point-of-sale material for the Sydney office of Pepsi-Cola.

Is distance a problem? "We do everything up to the prototyping on the web using CAD [computer-aided design]. Then we send prototypes to the US by FedEx. Sometimes they get there faster than if I sent something to the North Shore," says Bissett.

It's hard to see why Bissett's experience can't be replicated. At least two clusters are trying. Wellington's Creative Capital cluster recently won several million dollars worth of business designing and building displays for the Singapore History Museum. Dave Clark Associates has joined with Formworks and three other design companies to form Black Sand, a cluster to secure work from the US, Europe and the Middle East. The way Clark sees it, New Zealand can become a "designing nation", a design service centre for the world.

Interestingly, that's not the vision of the Design Taskforce, which Clark was controversially not invited to join. Labone's aim is to see the adoption of design into mainstream commerce to create design-led businesses. We'll get much greater bang for our buck if we're producing well-designed products to sell to the world than if we're the design department for multinationals, he says.

So, when should a mainstream business use a designer? Throughout the complete product life cycle, says Cutfield. A good example is the story of Formway's Life chair. It is a four-year-in-the-making product that won best office chair at the industry's lead exhibition NeoCon in Chicago in 2002. Now distributed in US and Europe by furniture giant Knoll, the chair's annual sales are expected to be 100,000 units, taking Formway into the big league in both design capability and sales.

Ask Mark Pennington, head of design, which part of the Life chair he's not involved in and the phone line goes quiet. "Er ... I'm involved in most things," he says.

The idea of the chair arose because Pennington and his team soaked themselves in market research, including constant travel to trade fairs, customer visits and paying for scientific research. Familiarity with market demands and the inadequacies of what was available meant the team could play with new ideas and materials. "Designers really need to feel the pulse of the market before they start designing," he says.

What followed should be a case study in an MBA text book. Pennington sought written buy-in from the board, management, production, sales and the cleaning lady for a multimillion-dollar research and development project. The aim: to create the best office chair in the world. The company sought advice about design team dynamics from psychological experts and guidance into environmental management from an Australian university ("It's no pleasure knowing you're making something that in future years is going to be a blot on the landscape"). When the concept was refined and proven, Pennington joined the search for a global manufacturing and distribution partner. Of the five companies approached, Knoll was given the nod due to it's brand alignment and manufacturing scale.

"That was a scary moment, having five of their top executives come to see us. We absolutely crapped ourselves."

Deal done, the next task was production. Formway people travelled to the US, Knoll had people visit downunder and the two teams of designers redesigned whole parts of the chair to fit production and cost criteria. Even after production, Pennington continues to be involved in brand development, sales and marketing and a range of new designs for the Life chair and related products. The result, all things going to plan, is that Formway receives 2-8% on a multimillion-dollar sales machine hungry for more products.

To dos

The Design Taskforce wants to repeat the Formway experience - over and over. "We can't create a design culture overnight. But we can help encourage more stars like Fisher & Paykel, Formway or Icebreaker. And the high-performing companies will have a disproportionate effect on raising awareness of design in business," says Labone.

He wouldn't reveal the targets the taskforce has set (they're still subject to peer review) but a little ferreting dug them out: create 50 design-led companies in five years, producing sufficient foreign exchange to significantly affect New Zealand's economic growth figures.

So how exactly does a group of well-meaning folk create 50 crash-hot design-led companies? For one thing, says Cutfield, no one's saying "create" - they're already there. "When we invested in Formway about seven years ago, its turnover was less than $10 million. It had great products and a strong vision, but didn't have market access to leverage its design capability." With the Pencarrow investment, Formway opened markets and expanded its customer base to create the $42 million (and growing) revenue it has today.

Cutfield says this could also be the case for many more companies supported by the Greenstone Fund and Pencarrow, including retailer Rodd & Gunn, technology company PulseData, Fairydown manufacturer Arthur Ellis, motor-maker Wellington Drive Technology, plastics designer Strahl (now Click Clack) and tap-maker Methven. All still have a long way to go before global success but are showing healthy signs, he says.

The taskforce's report is not due until at least March, if not later, and Unlimited has not yet seen its recommendations. Industry insiders suggest four key areas could significantly boost design in New Zealand:

Improving links between design schools and industry, including scholarships and internships.

Improving links between designers and the business community, including targeted match-making programmes.

Identifying design-led businesses with the potential to grow, and the road blocks to growth.

Redirecting public research and development from the likes of the Foundation for Research and Technology into design categories and creation of a trade finance scheme to help business invest in conceptual design.

If it's all sounding a bit self-evident, think again. It ain't as easy as it looks. For one thing, not everyone buys the view that the design industry deserves such special attention. Roger Kerr, executive director of the Business Roundtable, sees the industry policy as "picking winners", something government is poor at in his view. He also questions the implied critique of the commodity business. "The bias against commodities is based on the old idea - which was behind New Zealand's inward-looking policies of import substitution - that the terms of trade are stacked against primary producers. Yet there has been no long-run terms of trade decline for primary products, whereas the prices of many high-tech products - from semiconductors to telecommunications services - have sunk like a stone."

Nor does design sit well with New Zealand's number-8-wire mentality. Wearing his newly fashioned academic hat, Fraser is dismayed at New Zealand's fascination with amateurism (see "Can Kiwis design?"). "When I first arrived home someone said, 'You need to go and see John Britten's V-1000 motorbike at Te Papa.' So I took a look at this amazing piece of innovation but was distracted by the label underneath titled 'What's so special about it?' Point one, right at the top of the list, was, 'Built on the cheap by an amateur.' Welcome home, I thought!"

You can sense his frustration, but convincing business to adopt design will require more than complaining. At the very least it will require nailing down exactly what's meant by a "design-led business". At this point let me confess a connection. Last year I was one of four judges in the Design Institute's Design-led Business awards. It was great to see so many companies doing such amazing things - from textile and paint manufacturers to marine and technology companies.

Usually the hardest part of business awards is deciding which company should win. This time the hardest part was understanding the criteria. Exactly what were we looking for? A process? An aesthetic? Having a staff designer on board? In the end it was a sort of muddled bunch of design-sounding stuff plus that most reliable of criteria: export success. The winner was Glidepath, the baggage handling company that, funnily enough, also won Trade New Zealand's exporter of the year. Fisher and Paykel Whiteware was second.

Now here's the rub. Which part of the business contributed most to their export success? Smart financial management? Great software? Clever sales strategy? Good engineering? Design, even? Who knows?

It's clear, though, that if design is to become a core discipline - up there with marketing, sales and finance - its role in business success needs to be clearly demonstrated. Over to you, Ray.

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