Employees Say Executives Do Not Grasp Importance of Design in Global Competitiveness; Apple, BMW, IKEA, Starbucks, Target and Bang & Olufsen Are Among Most Cited For Innovative Design.

Fast Company magazine’s new “Fast Track Leadership Survey” reveals that design is a critical competitive and strategic weapon, and the majority (58%) of employee survey respondents say their top management sees design as a discipline they need to understand. The survey’s results also indicate that a significant relationship exists between the strategic role of design and business performance. Nonetheless, more than one-in-three (37%) respondents believe that design is “fairly far down on (management’s) list of budget priorities.”

The survey, conducted in March 2005 by Fast Company magazine, Switzerland-based IMD MBA and Egon Zehnder International, includes responses of 707 business professionals in the US and abroad who were asked a series of quantitative and qualitative questions about the relationship between design and business performance.

Innovators when asked to name a product or company that exemplifies innovative design, survey respondents most often mentioned (unaided responses):

• Apple Computer (iPod)
• Bang & Olufsen
• BMW
• Coca-Cola
• Ferrari
• Honda
• IKEA
• Nike
• Mercedes-Benz
• Mini Cooper
• Porsche
• Procter & Gamble
• Starbucks

Target
“The results of the ‘Fast Track Leadership Survey’ show a significant relationship between a company’s profit growth and market share and its strategic approach to design,” said Professor Sean Meehan, Director of the IMD MBA Program. “The survey further reveals that business leaders tend to view their commitment to design in a divided manner – it’s either proactively embraced as a competitive weapon or passively regarded as a necessary evil."

Design: A Competitive Weapon or Necessary Evil?
When asked, respondents said that they personally believe design is:

• A discipline that top management needs to understand and champion (90%)
• An essential way to make lasting connections to consumers (89%)
• A vital way of solving problems and driving innovation (84%)
• A key competitive weapon against low cost imports (73%)

However, fewer employees believe top management recognizes the value of design relative to business performance and think top management views design as:

• An essential way to make lasting connections to consumers (66%)
• An effort they'll devote more resources to in the future (61%)
• A vital way of solving problems and driving innovation (57%)
• A key competitive weapon against low cost imports (49%)
• Fairly far down the list of budget priorities (37%)
• Much less important than more technical research and development (36%)
• Really just about how something looks (35%)
• Something that can be left to the design department (33%)

“It’s clear from the survey results that employees embrace design as a key differentiator to their company’s brand, competitive performance and toward winning customer loyalty,” said John Byrne, editor-in-chief, Fast Company magazine. “What’s alarming is employees’ view that their upper management places less strategic importance on design. Certainly, a proactive approach toward design appears to relate to enhanced business performance.”

Leading Industries
Industry sectors nominated by respondents that exemplify great design include:

• Retail (23%)
• Automotive (22%)
• Electronics (5%)
• Computing (3%)
• Cuisine (2%)
• Banking (1%)
• Architecture (1%)

“Apple was repeatedly mentioned in the ‘Fast Track’ survey as a powerhouse that drives the design culture in all of Apple’s products,” said Justus O’Brien, partner of the consumer retail practice at Egon Zehnder International. “Apple was also often cited for its ability as a company to create new markets driven by its design – and this capability is a core measurement of competitive strength for any enterprise.”

Retail: Bang & Olufsen Has Global Design Appeal
In the retail sector, Danish sound system manufacturer Bang & Olufsen was the most popular choice among respondents as a company that “has global appeal and defies time” and uses “design as an established instrument for differentiation.” The next most popular choices were retail stores IKEA, Starbucks and Target that are considered to have changed the face of the retail shopping experience. In particular, IKEA and Starbucks were said to represent a lifestyle that goes beyond their products. In the case of Target, many survey respondents said Target has “brought products of good design to the masses.”

Last, companies including Nike, Procter & Gamble, Dyson, eBay and Zara also were mentioned for their innovative approaches to design in the retail environment.

Automotive: BMW Considered “End User Obsessed”
In the survey, 23 different makers of cars were categorized as examples of either “overall design combined with functionality,” “timeless or emotional design” or “novel concepts.” Specific cars nominated for their “overall design combined with functionality” included BMW, Mercedes-Benz, Volvo and Alpha Romeo. Of these, BMW was the most frequently cited car and was described as “end user obsessed.”

Vehicles nominated for their “timeless or emotional design” included Porsche, Ferrari, Mini Cooper, Jaguar and the Vespa scooter. According to the survey, these vehicles conjured up images in people’s minds that were part of their unique appeal. For example, Ferrari was described as a “work of art” and Vespa scooters as a “recognizable style throughout the world with continued appeal.”

Cars designed around a “novel concept” included the Smart Car, Chrysler, Renault Espace and Ford Mustang

Brand Distinction
According to the survey, key characteristics that employees most closely associate with companies and outstanding designs are “functional,” “aesthetically pleasing” and “simple to use.”

Functionality
When considering products that combine excellent user-friendly functionality with an aesthetically pleasing design, survey respondents cited BMW and the Apple iPod most frequently.

Aesthetics
Products most considered to be “design icons” include Alessi lemon squeezer and Chanel handbags. Respondents said they would purchase these products regardless of their functionality.

Novelty
Retail store IKEA and Bang & Olufsen were seen as “novel” and changing the face of doing business in their respective industries.

Design’s Strategic Bottom Line Importance
When the strategic importance of design was assessed by the respondent’s industry group, respondents from the design and manufacturing industries rated the importance of design highest. Respondents from the technology sector perceived design to be less important than research and development. And, respondents from the finance and investment sectors see low perceived value for investments in design

IMD is a leading global business school based in Lausanne, Switzerland. For over 60 years, IMD has worked with leading global companies to develop and retain management talent. IMD is the “global meeting place”: the most international of business schools worldwide. It offers learning based on innovative and highly relevant research that can be applied to business challenges immediately. This is IMD's "Real World. Real Learning" approach (www.imd.org).

IMD is ranked number one worldwide in executive education (Financial Times, 2008). IMD’s MBA is ranked first worldwide (Economist, 2008).