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Contents 1.0 Introduction

P. 2

1.1 Company Background

P. 2

2.0 Industry issues affecting innovation

P. 2

2.1 Credit

P. 3

2.2 Design for society

P. 3 - 4

2.3 Intellectual Property

P. 4 - 5

3.0 Future issues affecting innovation


3.1 Forecasting

P. 5

4.0 Internal Analysis

P. 6

4.1 Work processes

P. 6

4.2 SWOT analysis

P. 6-7

5.0 Strategy

P. 7

5.1 Involving stakeholders

P. 7

5.1.1 Client engagement

P. 7

5.1.2 Participatory Design

P. 8

5.1.3 Sub Contractors

P. 8

5.2 Work Processes strategy

P. 8-9

5.3 Differentiation Strategy

P. 9 - 10

5.4 Cost Leadership Strategy

P. 10

5.5 Hybrid Strategy

P. 10 - 11

6.0 Summary and conclusions

P. 12

7.0 Bibliography

P. 13

8.0 Appendices

P. 15



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1.0 Introduction Under rapidly changing and highly competitive circumstances, the design, development and marketing of new products or services with creative and innovative features are essential for a company's survival. In order to capture and retain market share, customer requirements and expectations should be met and exceeded through product innovation (Shen, 2000). This document will discuss the current and future issues affecting innovation within the design industry. It will also propose strategies for “progressive innovative designing” in order for a company to attain a competitive advantage.

1.1 Company background The Creative Powerhouse is a Sheffield based design consultancy founded in 2008. According to Steiner (1989), ‘design groups need to be large enough to accomplish the work assigned to them, but when too large, groups may be dysfunctional due to heightened coordination rules’. With this taken into account The Creative Powerhouse employs a workforce of six people. The company produces detailed design work in many industries and does not specialise in one. In network theory language, they are “well connected in several networks, rather than extremely central to just one” (DiMaggio, 1992).

Recently The Creative Powerhouse has been struggling due to a lack of innovation and financial investment, a board decision has been made to move the company into new provision areas. The company’s aim is to be a provider of “best of breed” design with the focus on highly innovative and market leading products. To help achieve a competitive advantage, The Creative Powerhouse is in need of producing new strategic design solutions to keep up with and to create new markets.

2.0 Industry issues affecting innovation It is important for a designer to stay well informed about events within the design industry including social trends, government policies and daily business issues. Outlined below are the main issues within the design industry that can have effect on progressive innovative -



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2.1 Credit Due to the recent economic crisis there is no doubt that the design industry faces a testing time. It is the companies that focus on innovative design, such as working capital management and cost efficiencies that are likely to emerge the strongest (BDO, 2011).

The credit crisis has had both indirect and direct impacts on the design and manufacturing sectors. In the past six months restrictions in the availability of credit and rises in the cost of borrowing have hit the sector hard (BDO, 2011). This affects businesses such as The Creative Powerhouse when they are struggling, as stakeholders are reluctant to invest in the company and they can’t acquire sufficient funds to reinvest in innovation. The benefits of innovation can be seen when Switzerland's watch industry ran into crisis during the mid1970s when Asian companies began to take over the market with new Technologies. Battling recession at the same time, Swatch became insolvent, forcing its creditor banks to take control. Eventually, in the mid-1980s, CEO Nicolas Hayek started a design revolution, combining innovative design strategies, product aesthetics and reengineering (which reduced costs), to save the business and put Switzerland back in the vanguard of watch manufacturing (The Design Council, 2010).

Investing in Innovation can assist The Creative Powerhouse to successfully add value to its products and services, stimulate sales growth and exploit new markets in turn providing competitive advantage (Brews, P. and Hunt, M. 1999).

2.2 Design for Society ‘Far from being the basis of the solution to society's problems, it has become apparent that design - that is, 'market-led' or 'consumer-led' - is one of society's problems’ (Whiteley, 1993). Today's current society is strongly influenced by consumerism. The term 'throw-away society' describes the critical view of over-consumption and excessive production of short-lived



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products. The philosophy amongst designers and manufacturers of computers, mobile phones, IPods and other electronic products seems to be that since consumers will surely want an "upgrade" every twelve months, there's no reason to make products last any longer

The mood for reassessment is particularly strong amongst a new generation of designers who are more able to grasp the connection between their own professional activities, and the problems facing society at large (Whiteley, 1993). The design profession needs to become more innovative, thoughtful and outward looking in order to tackle such an issue. Whiteley states; “Designers can no longer take refuge from the responsibility of their own actions and continually repackage the same old consumer goods at a time when issues about consuming and its relationship to the world's resources and energy need to be urgently acted upon” (Whiteley, 1993).

2.3 Intellectual Property Intellectual property rights are major elements a designer must take into consideration. JISC (JISC legal, 2008) state, “Intellectual property rights are rights granted to creators and owners of work that is the result of human intellectual creativity.” The copyright, Design and Patents Act (1988) provides the creator/innovator of a product the right to say how it can be used. It also gives the creator the right to be identified as the creator of a piece of work. It is illegal for someone to copy the work, adapt the work, rent, lend or issue copies of the work to the public, perform, broadcast or show the work in public. (The copyright, Design and Patents Act, 1988)

Intellectual property rights provide ethical laws designers have to abide. To some extent the government, i.e. protection against theft and plagiarism, should certainly protect an owner’s intellectual property rights (G. Swarson, 1997). Although, as copyright law has expanded to grant creators more rights and has all but abandoned the concept of allowing, let alone encouraging, productive use of protected designs, providing an argument that intellectual



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property restricts innovation. Innovating new products allows a company to have ownership of sole legal rights. This allows the company to get the product to market before competitors, which over time produces higher profits. On the other hand, followers and adopters of such innovation never make enough profit to be secure within the industry. A demand for innovation within a design company is important for its success. 3.0 Future issues affecting innovation Designers like it or not, need to have one foot firmly planted in the future (V. Papanek, 1995). Everything produced and consumed provides an argument of how society should live, guiding people towards a future designers have shaped. Outlined below are the key issues forecasted to affect innovation within the design industry.

3.1 Forecasting The modern designer is required to balance knowledge from multiple professions to design products that are; usable, useful and desirable while meeting the needs of many different stakeholders. With so much to consider within innovative design, it is not surprising that social and environmental issues are often over looked, especially when many designers are ignorant to the major issues surrounding sustainability. Too often, both professionally and academically, sustainable design is mis-conceived as ‘green design’ and ‘social design’ and understood to be no more than project areas. Chapman and Grant (2007) elaborate; ‘To be effective, sustainable design must become more than a ‘bolt-on module’ that enables ‘conventional design’ to transcend its current form.’

As forecasted in the Kondratieff wave (Appendix C) there is a growing awareness that the society of the future will need to be more ecologically and socially balanced, a sustainable society (S. Marzano, 1999). It is of course, unclear exactly how a society like this is to be attained but designers have the potential to regenerate the natural environment whilst enhancing the value of products (V. Papanek, 1995). Some companies have started to embrace the notion of sustainable development (Hart, 1997, Magretta, 1997) Plus Minus Design Ltd in Leeds have taken on a sustainable ethos in ambition of having competitive advantage within the design industry (Eales, 2008). In order to meet the emerging challenges



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associated with the concept of sustainability, innovative design thinking, methods and tools are required.

4.0 Internal Analysis The internal environment is the environment that has direct impact on the business (Chen, et al. 2006). The internal factors may be viewed as strengths or weaknesses depending upon their impact on the organisations objectives.

4.1 Work processes The Creative Powerhouses’ work processes differ from descriptions by other leading design consultancies, which all claim to use multidisciplinary team approaches to enable new, creative solutions. This is in line with much innovation research, showing that teams consisting of different personalities and competencies have a greater likelihood of a creative break-through than more standardised teams (Belbin, Leonard & Swap, Darso 2007). Design problems are becoming increasingly complex, which demands the participation and collaboration of many competencies and skills (Heskett 2004, Next 2004). If design practice moves in the direction of, among other things, multidisciplinary teamwork The Creative Powerhouse appears in some aspects to currently be at the other end of the spectrum.

4.2 SWOT A SWOT analysis was taken of The Creative Powerhouse to analyse the companies' internal strengths and weaknesses and external opportunities and threats, as seen in Appendix A. A SWOT analysis allows The Creative Powerhouse to then produce a TOWS matrix in which they can develop new innovative company strategies.

The Creative Powerhouse proves to have several strengths offering it an advantage over other companies in the industry. The company has proved to offer a high standard service having had repeat business from the same clients. On the other hand the SWOT analysis highlights many weaknesses within the company such as not adopting a unique design attribute that is valued by customers to be better or different from competition.



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“Škoda took the opportunity to develop a new market approach in 1999 after bad views regarding the brand. Other car makers have straplines that put the emphasis on a feature such as technology or luxury. Škoda decided to use the key strength identified and focus on ‘happy customers’. Skoda has worked to change this image. By 2006, the image of poor vehicle design and quality had gone” (The Times, 2007).

5.0 Strategy In order for The Creative Powerhouse to help achieve their aim of producing “best of breed” design and gain a competitive advantage, several strategies have been proposed. The strategies will look at how The Creative Powerhouse can foster good teamwork and innovative design whilst including diverse stakeholders in the process.

5.1 Involving stakeholders From the finding in the SWOT analysis (Appendix A) The Creative Powerhouse currently has weak interaction with its stakeholders. In order to produce low cost innovative solutions, increase understanding of issues and succeed within the design industry, The Creative Powerhouse needs to begin to build strong relationships with diverse stakeholders. A strategy has been devised for The Creative Powerhouse to demonstrate how “progressive innovative designing” can be achieved by working closely with its stakeholders.

5.1.1 Client engagement In order to offer a satisfactory service The Creative Powerhouse team need to work closely with clients and investors. Collaborative communication is required to produce an innovative design’ (Schrange, 1992). Whilst offering a service to the client, they also need to develop a relationship in order to gain a better understanding of their opinions and criteria. Building this relationship will allow The Creative Powerhouse to produce innovative design that meets the needs and requirements of the client. Offering a satisfactory service to clients will increase the awareness of The Creative Powerhouse brand resulting in future investment and ‘kick-



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back’ business. 5.1.2 Participatory design To help understand stakeholders needs and requirements The Creative Powerhouse should adopt focus groups within the design process. Focus groups are an effective way of evaluating and refining a range of design concepts and prototypes under strict confidentiality, to encourage an externalisation of the decision making process (Gaffney, 1999). However, they can also provide valuable insights into perceptions and preferences of existing or competitive products and can be a useful way of exploring new requirements and desires. Through participatory design it will enable The Creative Powerhouse to identify key product weaknesses and strengths throughout the design process. This will ensure that products designed are innovative, whilst meeting the needs and requirements of consumers.

5.1.3 Sub contactors The Creative Powerhouse needs to begin to build and keep close relationships with its sub contractors. ‘Representatives from marketing, manufacturing and engineering often have different definitions for basic terms such as ‘product’ and ‘market’ (Ancona & Caldwell, 1991). Building a relationship with sub contractors, such as manufacturers, prototyper’s and suppliers, will not only build an understanding between both parties, but there will be a decrease in product turn around and an increase in quality. Strong Relationships will also allow The Creative Powerhouse to achieve cost savings through large volume purchases. The company can then use low cost direct materials to develop the cheapest consumer goods possible. If The Creative Powerhouse is to become successful sub contractors will be provided with more work that in turn is beneficial to both parties.

5.2 Work processes strategy The Creative Powerhouse design consultancy has a workforce of six people divided between product designers, graphic designers, researchers and administration. From the findings of the internal analysis it was evident that the The Creative Powerhouse needs to foster better teamwork in order to produce successful, innovative design. Kuffner (1991) states that, ‘Teams must interact throughout the design process to produce a viable product.’



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A work processes strategy has been devised for The Creative Powerhouse team based upon the works of Belbin (1981) and Tuckman (1965). The results of the Belbin Self-Perception Inventory (see Appendix D) would allow The Creative Powerhouse directors to identify team roles. This will ensure The Creative Powerhouse identifies the strengths within the team and that the directors of the company can manage the weaknesses of the team as best they can.

Tuckman (1965) identified four stages in order to implement better teamwork. The Forming stage will reacquaint The Creative Powerhouse team members so they can begin to build trust and identify the company director’s ability to manage the group. The team will work together to create a plan in order to achieve maximum group potential. The Storming stage can allow the company director to develop an assertive group in which the director takes all the diversity of thought, experience and channels that energy towards finding innovative solutions. The Norming stage identifies how things will be done within the team. Rules, roles and relationships will be clearly defined using the team’s results of the Belbin self-perception inventory. The director of The Creative Powerhouse can then work to provide a productive environment for the team. The performing stage involves putting this model into practice with the focus on achieving company goals and innovation, through team collaboration.

With this strategy in place The Creative Powerhouse can work together to ensure the companies success, creating a more productive working environment, as well as excelling their standard of innovative work.

5.3 Differentiation strategy From the findings of the TOWS analysis seen in Appendix B, many key strategies were identified. One of the main areas preventing progressive innovative designing within The Creative Powerhouse is the lack of a unique attribute the company has to offer. The Creative Powerhouse needs to adopt a differentiation strategy to progress within the design industry.

For The Creative Powerhouse to follow a differentiation strategy they need to provide a unique product or service that is different from competition and is valued by stakeholders in



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order to gain competitive advantage. From research into future forecasting eco-design and sustainable development has been identified to become an increasingly prominent issue in this decade (Charter, 2001). Eco Design is a way of innovative thinking about design, which takes into account the environmental impact of a product, whilst maximising benefits for consumers. Implementing Eco Design as a unique attribute poses many challenges and innovation opportunities for The Creative Powerhouse (Drucker, 1998). There are tremendous benefits for businesses that spot trends and develop more sustainable products and services (Tischner, 2001).

5.4 Cost Leadership Strategy Due to the current financial climate and from findings of the TOWS analysis seen in Appendix B, The Creative Powerhouse needs to adapt a Cost leadership strategy to reduce expenditure allowing for the production of the innovative products they design. “A cost leadership strategy is a business strategy in which a company tries to provide a product or service at a lower cost than any of its competitors” (Porter, 1980). This can be seen when Wal-Mart's founder, Sam Walton, developed the every day low prices (EDLP) strategy. This innovative strategy hinged upon Wal-Mart's ability to obtain consumer goods at the cheapest possible price and pass these savings on to consumers (Wiedermann, 2011).

In order for The Creative Powerhouse to cut costs they need to improve process efficiencies, gain unique access to low-cost materials, make optimal outsourcing and avoid some costs all together. Creating close relationships with stakeholders (see involving stakeholders) will allow The Creative Powerhouse to save money. If competing design firms, outside The Creative Powerhouse's local cliental, are unable to lower their costs by a similar amount, the company will be able to sustain a competitive advantage based on cost leadership.

5.5 Hybrid Strategy ‘A hybrid strategy combines both cost leadership and differentiation in an attempt to provide quality products and services at low prices’ (Thomas, 1999). Many opposed to the hybrid strategy as companies can become "stuck in the middle". Without a clear direction The



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Creative Powerhouse is losing competitive advantage. The Creative Powerhouse should adopt an eco friendly ethos, providing them with a unique innovative service offering a competitive advantage. To achieve this, The Creative Powerhouse need to implement an innovative process as one of their core competencies and to use John Heskett’s definition, ‘they will not only add value (by modifying products and systems in existing markets) they will create value (by opening new markets and thus giving people what they never knew they wanted)’ (Heskett 2004). However developing a unique and innovative design service is often more expensive. The value added by the uniqueness of the design service will allow The Creative Powerhouse to charge a premium price for its products and service, attempting to create a sense of exclusiveness in consumers. This therefore allows The Creative Powerhouse to cover the extra costs incurred in offering the unique products and service. However, in today’s society consumers and stakeholders expect more and want for all their “needs” to be satisfied. Companies who are now market leaders in the design industry follow a hybrid strategy combining both low cost and innovative products, demonstrated by Lenovo.

“Lenovo, which acquired IBM's personal computer business, must attempt to maintain this balance as well. It must invest in research & Development to continuously develop new technology and innovative design such as its newest ultrathin ThinkPad laptop computer. Yet because personal computers have become a commodity, Lenovo must also keep its costs low in order to compete effectively in the PC market.” (Williams, 2004).

Cheap in house structures with clients and stakeholders can also lead to a demise in innovation therefore product quality. Smaller companies like The Creative Powerhouse can achieve a hybrid strategy in which they can easily monitor all standards. The Creative Powerhouse can assign roles to their staff, based upon the work processes strategy, so certain areas of the innovative hybrid strategy can be concentrated on at all times.



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6.0 Summary and Conclusions From carrying out a SWOT and TOWS analysis (see Appendix A and B) internal factors within The Creative Powerhouse where identified. Using this tool is a way to organise the factors into generally accepted categories of external opportunities/threats and internal strengths/weaknesses. This also allows the analysis of how well The Creative Powerhouse responds to these specific factors in light of perceived importance to the company.

In Conclusion, The Creative Powerhouse has come a long way since it began in 2008, although it lacked a strategy to help the company in its vision to become a producer of "best of breed" design. The company now have in place several progressive Innovative design strategies concerning a variety of stakeholders. These include incorporating an eco ethos, low cost strategy and work processes strategy to foster good teamwork. The strategies proposed will help The Creative Powerhouse in producing unique, innovative, low cost internal products and services helping them progress in the design industry and get them through the difficult financial times.



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7.0 Bibliography Ancona, G & Caldwell, D (1991) Demography and Design: Predictors of new product team performances, Santa Clara University Vol.3 BDO (2011) Industry Issues (online)






Belbin Associates (2007) Belbin team role theory (online) last accessed 12



April 2011

Brews, P. and Hunt, M. (1999). ‘Learning to plan and planning to learn: resolving the planning school/learning school debate’. Strategic Management Journal. 20/10: 889–913. st

Chapman & Grant (2007) Sustainable design (online) last accessed 1 May 2011 Charter, M (2001) Sustainable Solutions: developing products and services for the future, Ursula Tischner Chen et al., (2006) Predicting Category Accesses For A User In A Structured Information Space. Proceedings of the 25th Annual International ACM SIGIR Conference on Research and development in information retrieval (SIGIR'02), pages 65–72, 2002. Eales, T (2008) Sustainable design








Hack This Product Please (2010) Article on companies that encourage active user th participation in innovation (online) last accessed 9 May 2011 Heskett & Next, D (2004) Design Practise as a strategic tool, Copenhagen Marzano, S (1999) Aligning Management and Business towards Sustainable Development th (online) last accessed 24 April 2011 development.wpd Papanek. V (1995) The green imperative: Ecology and ethics in design and architecture, London: Thames & Hudson Ltd Shen, X.X (2000) An integrated approach to innovative product development using Kano’s model and QFD, Singapore: University of Singapore st






Steiner (1989) Strategic Management (online) last



The Times (2007) Skoda Business





Thomas, J.G (1999) Generic Competitive Strategies (online) last accessed 5


May 2011

Tuckman. B (1965) Tuckman: Forming, Storming, Norming, Performing Model (online) Last th accessed 9 May 2011 JISC legal (2008) Intellectual property rights (online) last accessed 20




March 2011

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Kuffner, T & Ullman, D (1991) The Information requests of mechanical design engineers design studies Vol12 (No 1 1991) Pg 42-50 (OPSI) office of public sector information (1988) The Copyright, Designs & Patent Act,1988 th (c.48) (online) last accessed 5 April 2011 Schrange, M. (1992) No More teams: Mastering the dynamics of creative collaboration, Currency Dubbleday, 1992 th

Sustainability culture (2009) David Berman’s do-good design (online) last accessed 10 April 2010 The Design Council (2010) Swatch: designs to overcome downturn, Case study (online) last th accessed 12 May 2011 Von Hippel, E. (1988). The sources of innovation. Oxford University Press. (SHU Library) Wierdermann (2011) Leadership Strategies (online) last accessed 9


May 2011

Williams (2004) China’s Lenovo to buy IBM’s PC Business (online) last accessed 1 2011,



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8.0 Appendices

Appendix A - SWOT analysis Appendix B – TOWS Appendix C – Kondratieff Cycles Appendix D – Belbin’s Self Perception team role profile



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8.1 Appendix A - SWOT Analysis STRENGTHS •

The Creative Powerhouse design studio is located 0.2 miles from Sheffield city centre (linked via the Supertram), less than half a mile from the M1, connecting it with the national motorway system.

The Creative Powerhouse specialises in the design, development and delivery of products.

Little competition locally.

Repeat Business from the same clients.

The Creative Powerhouse is a small business therefore it is easy to control standards.


The ability to forecast and interpret the vital implications of behaviours and work out future scenarios.

The Creative Powerhouse has an unclear vision of where they want to be.

The company does not specialise in a certain area of design.

They only have short term partnerships with suppliers and manufacturers.

Does not keep all stakeholders well informed about its design activities.


New clients in a wider geographic area

Eco – Friendly design is becoming more and more popular due to the increase in global sustainable awareness.

The opportunity to provide tips and ideas on their website informing prospective clients about what The Creative Powerhouse has to offer.



In the current economic climate restrictions in the availability of credit and rises in the cost of borrowing have made it difficult for The Creative Powerhouse to invest in the company.

Social trends


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8.2 Appendix B - TOWS

Strengths (S)

Weaknesses (W)

S1 Location

W1 The ability to forecast and interpret the vital implications of behaviour and work out future scenarios.

S2 The Creative Powerhouse specialises in the design, development and delivery of products.

W2 The Creative Powerhouse has an unclear vision of where they want to be. S3 Little competition locally. S4 Repeat Business from the same clients

W3 The company does not specialise in a certain area of design.

S5 The Creative Powerhouse is a small business therefore it is easy to control standards.

W4 They only have short term partnerships with suppliers. W5 Does not keep all stakeholders well informed about its design activities.

Opportunities (O)

SO Strategies

O1 New clients in a wider geographic area

The Creative Powerhouse is located in centre of Sheffield which easy to access from all parts of the UK via the M1 motorway creating the opportunity to broaden its clientele. As Creative Powerhouse is a small design consultancy and is able to control quality standards, it allows the company to carry out a successful eco campaign within the design of their products.

According to trends eco-friendly products are becoming more popular in today’s society creating a new market within the design industry. Creative Powerhouse could incorporate a differentiation strategy, focusing on eco design to provide them with a competitive advantage.

Social networking sites are becoming more and more popular, it is a great way to communicate with a wider audience. They also allow for companies to carry out primary market research, enabling them to produce products targeted accordingly to their consumers’ interests.

ST Strategy

WT Strategies

Creative Powerhouse offers a unique service within Sheffield, with little local competition. This allows them to charge a higher rate for the work they produce for clients within the area because they would rather pay more for something that is locally produced.

O2 Eco - friendly design is becoming more and more popular due to the increase in global sustainable awareness. O3. The opportunity to provide tips and ideas on their website informing prospective clients about what The Creative Powerhouse has to offer.

Threats (T) T1 In the current economic climate restrictions in the availability of credit and rises in the cost of borrowing have made it difficult for The Creative Powerhouse to invest in the company.

WO Strategies

• T3 Social trends



It is unsafe for a company to lack a clear vision or be “stuck in the middle” within such desperate financial times. Creative Powerhouse will design a hybrid strategy that will combine both differentiation and low cost strategies. This will not only provide them with a more attractive brand but also financial safety, which in turn will provide competitive advantage. Stakeholders will be less likely to invest in companies due to the UK’s financial decline. However the hybrid strategy will offer something unique, which will appeal to the company’s stakeholders. Forecasted social trends have identified Eco- design to be very popular within the next 30 years. Specialising within a specific design area such as eco- design will allow Creative Powerhouse to arrange contracts with manufacturers and suppliers with similar beliefs, therefore providing a better understanding between stakeholders.

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8.3 APPENDIX C – Kondratieff Cycles



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8.4 Appendix D – Belbin’s Self Perception team role profile



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