He shares his global perspective on the economic crisis, and its significance for the design profession.
Prompted by the current worldwide economic scenario, China is focusing its efforts on encouraging its rural population to increase domestic consumption in ratios similar to those of the United States.
Chinese farmers have seen their income increase in the past three decades, and an increase in internal consumption from this segment of the population will augment their prosperity and improve their quality of life at a time when fear of social conflict is growing.
From a GDP standpoint, China’s internal consumption represented 39 per cent in 2008. With the above-mentioned efforts, domestic consumption is expected to reach 60 per cent of GDP – as a reference, internal consumption in the US is 69 per cent of GDP.
The foregoing is quite significant, as it is likely that many companies will be gearing products towards the bottom of the social pyramid – China has the largest population on the planet, and many of its people have needs that innovation and design can respond to.
This may be a great design opportunity for developing countries, which concentrate the largest amount of population in the same sector of the pyramid. ‘Developing countries’ is a broad term that encompasses the group of countries where, because of various structural shortages, a significant part of the population still lives in poverty, without access to basic food, health, education, housing and/or utilities.
Two-thirds of the world’s population are inhabitants of developing countries (mostly Latin America, Africa and Asia), so it will be extremely interesting to observe and analyse what happens in China, where the design industry will probably play a significant role.
In this regard, I see co-design as a new global trend. Co-design puts an emphasis on collaboration, where co-creation and co-innovation are important elements, with manufacturing processes outsourced to other countries, and where ‘economy of scope’ is more important than ‘economy of scale’.
Economies of scope are conceptually similar to economies of scale. Whereas economies of scale primarily refer to the reduction in cost per unit resulting from increased production, realised through operational efficiencies with supply-side changes (such as increasing or decreasing the scale of production of a single product type), economies of scope refer to efficiencies associated with demand-side changes (such as increasing or decreasing the scope of marketing and distribution of diversified products).
Economies of scope are the drivers of marketing strategies such as product bundling, product lining and family branding. In other words, economies of scope arise when the cost of performing multiple business functions simultaneously proves more efficient than performing each business function independently.
I deem it of the utmost importance that companies use their best efforts to communicate with their end users and work closely with them, inviting them to participate in the design process of a product, service or design experience, and that, in spite of the crisis, the developing countries can set an example. It is my guess that in the future we may see new business models in the design industry.
Here, I would like to stress an example of co-design, the associative work developed by Fiat over the internet in 2006, which was used in developing and designing the new Fiat 500. I think this trend will continue, aided by new digital technologies and the internet.
Product/service design processes and design experiences will become more efficient and effective, firstly through a very rational use of human resources and energy and simultaneously through greater achievements in terms of meeting people’s needs and requirements so as to help them to be happier, respecting their surroundings and the environment.
This means a change from hierarchical structures to flatter structures with horizontal lines of communication and decision-making, where communication paths are straightforward so that decisions can be made as rapidly as possible.
At the level of design processes I would like to highlight Fiat’s interactive creative laboratory. Using this internet laboratory called ‘500 wants you’ (www.fiat500.com/eng/), the company sent an open invitation to end users to help build and design the new Fiat 500.
Since then, the online initiative has been a great success, thanks to the enthusiasm of a community of thousands of people of all ages, nationalities and professions. For me, this interactive creative laboratory is a clear example of co-design that began a few years ago and that should continue to develop in the years ahead.
At the level of products, I would like to highlight the classic Kikkoman soy sauce bottle designed by Kenji Ekuan in 1961. It has been on the market for more than forty-eight years and has successfully weathered many global crises since the sixties. This global crisis needs local design solutions that respond specifically to the needs or expectations of end users over the long term.
From a different perspective, and in connection with the global crisis and the salvage plan proposed last February by the government of the United States, Edward C Prescott, professor of economics at Arizona State University and winner of the 2004 Nobel Prize for Economics, has commented that Finland, Sweden and Chile were able to achieve a decade of growth following the previous international financial crisis but that Japan and Mexico did not manage so well.
In the successful cases, governments avoided implementing policies that stifled productivity by providing poor incentives to the private sector and focused on enabling financial institutions to provide liquidity to productive firms.
This is just an example, and it seems to me good and prudent that, in scenarios like the current one, practices where innovation, design and improved quality of life are central themes, they should be implemented.
I hope new product and service models and design experiences will emerge as a result of the opportunities for design that are hiding behind or underlying the current economic crisis.
In this scenario, Icsid, as a global organisation, offers the best possible platform to help with the creation of bridges and networks among its four key pillars (education, profession, promotion and corporate management) around the world. We can also act as a facilitator for the further development of some of the processes outlined here.