Moving up the ladder

Design enhances profitability

I’ve known for some time about a specific and interesting way of looking at the role of design in companies. It was developed by the Danish Design Council in 2003 and is called the Design Ladder. And it’s very clever. It’s based on the fairly obvious perception that companies use design in different ways, if at all. The benefit of this exercise, for the Danes, was to show that using design makes good financial sense, that there is a progressive aspect to it, and that it can be tracked and plotted through the use of this measuring tool.

In this model, Stage One is the absence of design use by the company. Or at least by professionally trained or identified designers. If objects get made, their form and function are determined by whoever is around. Many things are left unconsidered.

Stage Two is when design is consciously used, but as styling. Design is considered to be about the appearance of things. Other aspects of what design might bring to a company are left out. Design, while used, is done fairly superficially.

Rungs of the ladder

In Stage Three, design is considered to be a process, or part of a process. Design work is done internally or outsourced, and is usually limited to a specific part of the total business operation. What is to be designed is decided by non-designers, who apply design to suit a desired business outcome.

The last step up the ladder, Stage Four, is when design is integral to a company’s operations. It is a perception of design as innovation, which can be used and applied in many ways and in many aspects of a business. Design becomes part of the strategy of the company, not only in product or direction but also procedure and process.

I’ve worked with different companies that occupied all of the positions on the ladder and I’ve seen companies move up. But it still seems to be unusual for Canadian companies even to achieve the first rung (which is no design). Maybe it’s part of our heritage: we are the hewers of wood and drawers of water. We’re also the extractors of petroleum and the diggers of ore and we used to be the fishers of fish and the trappers of furs. All of these are primary industries and design doesn’t play a very big role in them.

As a colony, the pertinent-for-Canada secondary industries were elsewhere and maybe we grew accustomed to getting our goods first from England, then the US and now we are accustomed to getting them from China. Our manufacturing industries, never so dominant, are even now in decline. In some ways, we skipped much of the secondary stage of industrialization on our way to the tertiary. So maybe we have missed our chance to be a strong nation of design.

The ‘design’ movement

But we do manufacture, and we could make even more of what we consume. It would likely require a better understanding of design. Over my career, I’ve watched design go from being a word (and concept) that was rarely used to being one that appears often. Maybe I’ve seen a movement that has allowed access to the second stage of the ladder. While this may be an improvement, the real gains are higher up. The Danes demonstrated this by plotting the profitability of companies and how they grew as they moved up the design ladder. And even Canadian companies can verify this.

Back in the late ‘80s, after the Free Trade Agreement with the U.S. knocked some big holes into Canadian manufacturing, the furniture companies that recovered were those that utilized design, and the biggest winners were those that climbed the highest.

Another topical illustration of the role of design in the profitability of companies would be Apple Inc., recently and for a short while, the most highly-valued company in the world. Contrast this to RIM, which has been scrambling to figure out design since it was almost terminally sideswiped by Apple.

It may be the most important observation that the movement by companies is typically only one-way. Companies move up the ladder and the good sense of this is borne out by greater profitability. There’s no point in going back down.

Paul Epp is professor at OCAD University and chair of its Industrial Design Department.

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