Design value and its role in the transition to knowledge based economy

Case study in Puebla, Mexico.

Introduction

This paper presents the results of the preliminary study of a design industry in Puebla and it was developed in order to define the areas of interest and the scope for further studies. Although its limited reach, it lets to understand the main issues linked to the local creative industry. Thus it forms more questions about the future state of design in the city, than it provides answers. In order to facilitate the transition of the design industry it is important to understand the actual condition of the community. The study is based on in-depth interviews with design professionals that works and live in the city of Puebla. It marks the key aspects of the actual situation and permits to define the key features that can help in the transition from industrial economy to knowledge-based economy.

Theoretical background

As Irwin (2015) stays, Transition Design responds to the complexity of actual unsustainable state of our societies. It offers the opportunity of a structural change based on the context and the recognition of interconnection between the social, economic, political and natural character of the issues that design has to confront nowadays. Transition is a participatory, open-ended process that involves different stakeholders, where a design has a key role to play. Tonkinwise (2015) defines Transition Design as: “an attempt to name an ambition for an expert craft of designing that acknowledges the extent of our social crises by advancing the practices of social and sustainable designing through the incorporation of multi-stage practice-oriented transformation.” That “practice-oriented” scenario is placed, among others, within the economical context of any community. Thus it is important to acknowledge and review the role of design in the transition that is currently taking place: from industrial economy, through the knowledge one to human economy. It is recognized that OECD economies are increasingly based on knowledge and information, and the investments are being directed to high-technology goods and services (OECD 1996). Furthermore, as Seidman (2014) stays in his article, the transition of economies is continuing into the direction of human-based economy where “the most valuable workers will be hired hearts. The know-how and analytic skills that made them indispensable in the knowledge economy no longer give them an advantage over increasingly intelligent machines. But they will still bring to their work essential traits that can’t be and won’t be programmed into software, like creativity, passion, character, and collaborative spirit—their humanity, in other words. The ability to leverage these strengths will be the source of one organization’s superiority over another.” In that context it is important to be able to describe the design communities and the key aspects of design industry aligned with the value-based human economy. Thus the present study intends to show the qualitative inputs on the local design community and its relation to the objectives of design and their clients.

 

Methodology

During the study, there were four interviews conducted, each one last around 2 hrs. Interview A was conducted with two founders of a design studio dedicated to communication, web, graphic and typography design with 3 years of experience. The second interview (B) was performed with the owner of graphic design studio, who has been working in the field of brand and communication design for over 24 years in Puebla. The interview C was conducted with one of the owners of a design studio specialized in food design that operates since 2012.  The last one, was an interview with a founder of the industrial design studio that has been offering design services for more than 12 years. The results are presented as follow, and were used to form an outline for further studies of a design value and its role in transition process in the local context of a city of Puebla.

Results and insights

Results are presented in four categories that allow summing up the information received during the interviews. These categories describe different definitions from the perspective of design professionals as they develop projects for clients. The first one “design and design process” focus on their own perspective of the design activities. The second one is a definition of “success” in a design project and the description of the “metrics” they use to define it.

The third describes different archetypes of clients as an exercise to categorize profiles of clients for a design project and map the attitudes towards design within the industry. The last category is focus on their own perspective of the local scenario (Puebla, Mexico) for the design industry.

1. Definition of design and design process:

The definition presented by the interviewed design studios is focused on the problem solving attitude and the perception of design as a service for commercial objectives of the industries. They have presented a design as a set of elements that lets to accomplish the aims of the business. Thus, the design process helps to define the value proposition, however it is always the client who sets the limits and the scope of the project. In words of informant D, design is: “A tool to create or modify reality and make it tangible, it is a problem that becomes a reality that should be translated into a real opportunity to be able to differentiate and sell more easily, thus obtaining more resources to finance. The design is comprehensive and complex, but it is sold in parts.”

However, the external perception of design in Puebla is as an “artistic” activity, and most of times the business owner do not link it to the generation of economic value.

As the informant D said: “Our clients understand the design as an artistic part but do not realize that it is a precise method to arrive at a specific result. Sometimes, the difficult part for the client is to understand this”. During the study, all the participants were asked to define a “type” of design they are offering to their clients, varying from purely aesthetic concerns to experience, services and strategic design. All of them confirmed that the first idea of their clients about the design is its aesthetic function, and that is the reason they decide to contract the design studio. However, some of the clients, during the process of design realize the real possibilities that it offers and became a systematic consumers of design services.

2. Definition of successful design project and its metrics.

The definition of successful project as the one that give satisfaction to the client, was shared among the interviewed designers. That “satisfaction” referred mostly to the revenue and the generation of the economical profit. However, all the informants said that they do not have any quantitative metrics of the incensement of the profit after the implementation of the design solution. They rely on verbal opinion of their clients. Although the measuring of a commercial success of a project can help identify successful initiatives, the information is hardly shared by the client.

During the interview with the design studio A, the successful project was also defined as one that was accomplished through the design process that studio has defined, although it is based only on a subjective perception of designers.

There were no other values of design mentioned as metrics of a successful project, neither from the societal point of view nor from the environmental one.

On the other side, as the informant D concluded, the objective of the local entrepreneurs is the large scale of sales and production, it does not matter if they are low quality products. Although some of the investors understands the possibilities that design offers, the sales cycle is the one that governs the behaviors, decisions and the definition of value.

3. Clients archetypes.

During the study different archetypes of design clients were defined. Each design studio form their own profile of their clients by grouping them according to the principal characteristics and the way they interact with a design studio during the development of the project. This kind of an exercise, is based on “Persona-Scenarios” tool described by Madsen and Nielsen (2010).

During the interview A, design clients were grouped within two categories: family business clients (usually SMEs) and large corporate companies. First ones are very closely related to their business and make decisions together, as a family, they are sensitive to market changes and often permits to generate more innovative proposals.

Larger companies are focused on their own internal processes thus the decision making is complicated and the cooperation throughout the design process established by the design studio is complex and hard to achieve.  They are not so sensitive to project costs, however the level of innovation is usually lower as their own processes are more important than the project result.

The informant B have also concluded with two main profiles of their clients: the new ones (20 %) and the recurring ones (80%). New clients are very uncertain because they do not know a design process and it costs them a lot of work to understand the need of it. That is why they want to receive the finished and perfect solution immediately without letting the opportunities for experimentation and co-development of a final proposal. In contrast, recurring customers who have already understood the design process as a sequence of prototyping and adjusting the results have much more trust and are calmer about the final solution. The interesting observation made by the informant B was that once the client understands the possibilities of design he becomes addicted to it and starts to consume design services both in business and personal life. This addiction occurs when the product comes out and the customer sees the results in sales and growth of his business.

However, as the informant B stayed, there are clients who even though they understand the process, they do not perceive the value of design. Usually, that happens when they had a bad experiences with designers of design studios earlier.

At the same time, the design studio C have divided their clients in four archetypes: the “ideal” ones (10%), the “good” ones (30%), the “bad” ones (40%) and the “short-term” ones (20%). The “ideal” client is the one who have clear aims and good management background, it is not the first project he does and he has an experience in his branch of the business. He knows the process and the steps to follow, has a budget and understands the importance of branding and aesthetics. Unlike the “bad” clients who do not have any design culture, do not consider that the expenses on design services are as necessary as, for example, the administrative ones. They do not value the intangible thus they don’t want to pay for it.

“Good” clients are those who know their needs, work hand by hand with the design studio and have the idea what to expect from a design, their lifestyle includes design.

The “short-term” customers are those who hire very punctual, specific services.

In reality they give a little value to design, they discuss the prices of a service and look for the cheapest one. As the informant C observed, this kind of clients, they do not recognize the difference between advertising and design. He also claimed, that at first, most of their customers were short-term ones, however, now they have more experience and are trying to work with “good” or “ideal” clients.

The last interviewed designer, the informant D, proposed a different categorization of his clients, probably due to the industrial design specialization of his studio.

The first group is the “entrepreneur-inventor” type, who has his own capital for a development of a concept. They usually plan to develop, produce and sell the product and the design studio helps them with the first two phases, sometimes even with patenting. However, over the time, this type of clients, they realize that the cost of development is much higher than they had estimated and the process became extremely long (up to 6 years). Thus although they develop patented technologies the commercial opportunities are already gone and the product does not appear in the market.

The second archetype is “SMEs family companies”. Those are the clients that have an engineering area within their company and, many times, they manage products that are on the market since years. They are a second generation of owners, and as a younger one they are more open to implement design solutions, however the cost is usually a problem. It is hard to explain why they should invest in design. As the informant D stayed: “there is no tools to explain the cost of design”.

The third group of clients are the academic institutes. They have research and development projects and they usually need a design of a prototype in order to validate the concept. This kind of clients they look for a specific design service, they are interested in the development of the functional chassis for their technology, however most of times the product does not have a commercial purpose.

The last group defined during the interview are the customers that hire a complete service of industrial design and product engineering. They value the role of design as a commercial and competitive advantage, and they are willing to pay for it. However, as the informant D stayed, until now, they never were Mexicans.

4. Strengths, weaknesses of design industry in Puebla

 

Throughout the interviews it became very clear that the principal weakness of a design industry in the city is the possibility of “selling” and valuing design. That is a main concern of all interviewed designers. It seems that the gap between the offer and the demand of design services is big and there are still no platforms for the mutual cooperation of professional designers and the local industry. As the informant B stayed: “In Puebla the design profession is little specialized and the market is contaminated by many people who offer design and do not know what it is”. There are also many designers who have not known how to communicate what they do and do not know how to sell themselves as problem-solvers. As the informant A said: “One of the main design barriers in Puebla is to convince the entrepreneur to buy design and that it can help him to achieve his goals. In Puebla there is a lot of money and many companies, it all depends on dignifying the value of the design”. As the informant B said: “It is not possible to communicate what is design, if we do not assume our role in the industry”.

The relatively small design community and the unidirectional development of the industries in the state of Puebla, provokes the low competitiveness between the investors and among the designers. As the informant D stayed: “In other countries you pay for a solution that has to come up in a very short time (they develop three or four products per year). In Mexico, there is no competition among sectors, so the pressure on markets is relatively low. The client wants to earn 5M but he is not willing to invest 500,000 in design process”. And furthermore, “There is a total ignorance of the cost and the real scope of the design and the investment of the complete product to bring it to the market”.

Future scenarios for a transition of the design industry

As the hypothesis of the study marks the need of a transition from the actual economy based on the present industries towards a knowledge-based economy, three key points were identified during the research and these are crucial for the transition: values, capabilities and metrics.

As Prahalad stays: “Unlike physical assets, competences do not deteriorate as they are applied and shared. They grow.”(Prahalad & G. Hamel, 1990). Different core competences were detected within the professional designers in Puebla that could allow the creative industry to enhance a transition for future scenarios that are related to the local industries.

1. Redefinition of Values

Three strong values appear in the interviews that could be identified as characteristics of the local design industry. The first is a clear business objective in design projects, a complexity driven motivation to solve problems and help clients to clarify their needs, and a precision focus on the process and methodologies that involve a design project.

Business objective: This value enhances the designer to create and solve business problems for their clients. It relates to the amount of economic value a design project can create for a business and how it will impact to a market. Most of the interviewed design studios are willing to help and take their clients business to new markets and most of them get involved in a sales process for the product or brand that they are working.

Complexity driven: At the early stages of a design process many of the design studios try to help or clarify the project or problem with their client, they establish requirements and try to anticipate undiscovered needs. This value behavior could be observed in most creative industries, the particularity within the local industry is correlated with the businessman behavior. Most of the local business depends on one person that gets involved in most of the decision and they tend to lost focus on the complexity of their business.

Precision focus: As designers had got experience in a local industry they tend to understand many of the intrinsic mechanisms of their markets. As they iterate with a design process and the businessmen understand it, the precision of the results improves. They can define a specific outcome and move towards it if their client is willing to collaborate with the process.

2. Redefinition of Capabilities

Most of the current capabilities of the local design industry are determined by the projects that are required by the local demand. These projects are focused on current problems; they are mostly driven by the need for competitive advantage and differentiation. But the design industry is just reacting to the current demand and it’s not defining its direction an ally for the creation of a future context. During the interviews we could identified three capabilities that evolve from the values that were described above.

Common language: As designers get involved more and more in strategic projects for solving specific problems, they get to make decisions with owners and managers of different businesses. If designers can’t talk the same language of their clients there will be a great barrier for collaboration. There is a constant need for communicating creative knowledge within a business world.

Future perspective: As many of the design methodologies are used as a tool to solve problems and create business differentiation for an existing business, the value of a design profession has been question. But the level of expertise of many local design studios has given theme the capability to anticipate future scenarios within a level of uncertainty. This capability is hard to accomplish with a non-creative process.

Number creative: If the design industry is capable of defining itself as a transitional allied for different local industries, there will be a need to quantify the qualitative knowledge so it can be used as a tool for transition. This is a new skill or capability for a design industry that requires a different kind of creativity and will enhance a design project to have precision on the intended focus.

3. Redefinition of Metrics

The metrics used in a design project could vary in many ways as most of the projects use different tools and methodologies to accomplish their objectives. By carefully selecting a specific metric for a project it can decrease the risk of implementation and optimize many resources for future projects. We identified the following groups of metrics.

Objective metrics: These metrics helps the design process to determine the limits of a particular project and its part of the early definition. The settings that are used to determine these metrics have to be standardized on a local perspective, so the project objectives can get a realistic return of investment.

Iteration metrics: As design project get different iterations and the results are measured, the amount of investment should be correlated with the business objectives. When industry is mature and its competitive forces are innovative the speed of development increase with their iterations. Aldo this behavior is common in the local design industry in many cases the use of metrics in different iterations doesn’t change.

Validation metrics: The intrinsic uncertainty of every project requires validation methods that reduce its risk of implementation and allows investment in future projects. As the industry gets more familiar with new tools of project validation designers have to define its metrics to accomplish the project objectives.

Impact metrics: One of the most complex things to achieve in a social project is an impact metric, sometimes it requires more time and resources than the project itself. These particular metrics will increase as the future scenarios move towards sustainability design projects. Traditional metrics for impact are constantly challenged by new market behavior and industry structure.

Conclusions

If businessmen sees little value on the design process it’s harder to focus on future scenarios and new approaches to respond as an industry. Most of the business decisions are made exclusively on a return of investment approach; this is difficult for a strategic design project that requires resources for research.

Most of the design clients tend to have control over the information in a design project, this constraint the objectives of the project and they don’t perceive the value of investing in research. When the design client doesn’t have experience in a design process, the information is not accurate for the target market.

Most of the knowledge of a design process and methodologies requires a deep understanding of business and management that the design industry lacks.

A designer in Puebla has to convince businessmen to invest on design and prove that this is a good investment for its business. However, the use of metrics, returns of investment and business strategies are skills that most of the designers do not possess.

By tracking money in the local economic activities we can have an understanding of the demanding needs for design projects. Most of the financial resources are being invested on construction and hospitality services. This leaves the existing technological infrastructure without the proper resources so to keep innovating. At the same time the knowledge created by the design industry is not applied because there is not enough technological infrastructure.

The local design industry has to adapt itself to a new speed of business and try to accelerate it. Businessmen tend to have short investment times, if the creative industry is to help the investment capital to increase designers will have to adapt to these conditions.

Looking for budgets in development will help design industry to create knowledge of innovation that could be translated in technological capital, as investors perceive a tangible value, they will have more willing to invest in it. The design industry will have to make this translations to develop itself and influence in the demand.

Designers will have to assume the responsibility of connecting different elements in the business world to respond to the future context that challenge the needs for more integrative and sustainable innovation. If there is no economic capital for future context there will be a trend for adapting external solutions to a local reality.

Further questions:

  • Which variables of investment would be more appealing for a design project?
  • What are the compare returns of investment in different industries, including design?
  • Which are the metrics of success for a project in different industries?
  • What is the perception of future scenarios?

Presented results are the first stage of a wider study that can present the actual situation of the design industry in Puebla. The research is continuing in order to help the local design industry to define itself, making it capable to offer critical responses to future scenarios.

References

 

Irwin, T. et al., (2015) Transition Design 2015, Retrieved from http://design.cmu.edu/sites/default/files/Transition_Design_Monograph_final.pdf

Prahalad, C.K. and Hamel, G. Core; (1990) Competences of the Corporation, Retrieved from https://hbr.org/1990/05/the-core-competence-of-the-corporation.

Tonkinwise, C., (2015) Design for Transitions – from and to what?, Digital Commons @ RISD Articles. Paper 5, Retrieved from http://digitalcommons.risd.edu/critical_futures_symposium_articles/5.

Madsen, S. and Nielsen, L. (2010) Exploring Persona-Scenarios – Using Storytelling to Create Design Ideas, Human Work Interaction Design: Usability in Social, Cultural and Organizational Contexts, ed. Dinesh Katre et al. New York: Springer, p. 57-66

Seidman, D. (2014) From the Knowledge Economy to the Human Economy, Harvard Business Review, Retrieved from https://hbr.org/2014/11/from-the-knowledge-economy-to-the-human-economy