Looking for Growth - design and innovation led companies are outperforming all the way
As Lord Digby Jones said last Friday at the 'Made in the Midlands' Awards hosted at Birmingham City University's Faculty for Technology, Engineering and the Environment at Millennium Point, 'the economic debate has so far been all about cutting spending; no one is talking about earning.'
And of course with GDP figures out later this week our economic growth challenge will remain front of mind.
'Let the Chinese do the commodity stuff,' he exhorted. 'We need to focus on value added, innovative, quality and branded goods and services. We want the Indians and the Chinese to get rich so they can buy Brand Britain.
'In the 21st century the only international currency is knowledge. Innovation is about taking an idea and making money out of it. And you can only do this where you have more skilled people. Enterprise is now circling itself around knowledge and education.
'But the West Midlands has the highest standard of innumeracy and illiteracy outside the Scottish Parliament,' he quipped.
'The younger population are not tooling up. I would almost make it compulsory for businesses to link up with schools and universities. With (hypothecated) taxpayers money supporting compulsory apprenticeships,' he continued.
This is very much the message of my report, with its Oxford Union styled title, 'Looking for Growth, Sack the Economists and Hire a Designer : Creating Economic Value from Design'.
Published 9th October, in time for our fringe event debate at the Conservative Party Conference, it attracted a lively crowd.
With standing room only economist Vicky Pryce spoke as former Chairman of the Design Commission Inquiry, about the significant economic contribution made by design.
Contributors included Prof John Heskett, former Chair Professor of Design at Hong Kong Polytechnic University, Chris White MP, Warwick & Leamington, William McGrath, AGA Rangemaster, Glenn Howells, Glenn Howells Architects, with Charles Morgan, Morgan Motor Company emphasising the sales growth his company had experienced by employing a young talented designer through the new products they had introduced including the Morgan Aeromax and their new three wheeler.
Digby is great at banging the drum for innovation and the importance of ideas very effectively, but I don't believe I have ever heard Digby utter the word, 'design'. And I can't help wondering why.
Is it that design is still seen as a little vague, perhaps something simply about making things look good... Dare I suggest that perhaps it is seen as a touch 'girly'.
I'd be interested to know because another famous Midlander, Sir Jonathan Ive of Apple has observed that there are some very important contributions that design can make to the leadership of a corporation, even if they are not always obvious.
'People are much more comfortable talking about attributes which they can evaluate with a number. Easy conversations. Problem is that these conversations can take a lot of oxygen are are often not that important.'
My report shows that design-driven innovation is important because it prompts innovation inspired by the 'user'. It is meeting and anticipating changing user needs that drives greater levels of innovation in these businesses and creates new market demand. Apple is an obvious example.
Whilst the last research by the Design Council in 2007 showed that fewer than half Midlands businesses had introduced new products within the preceeding three year period; all the companies I surveyed for my report had introduced new products and services within the past year.
It was these new introductions which were driving tremendous growth in revenues and profits, with these companies massively outperforming our flat-lining economy. In fact the companies surveyed were spending over £3bn on new product introduction out of total revenues of £24.5bn.
44% of the sample as a whole had experienced significant growth (over 10%)over the last 12 months, with 35% experiencing modest growth (1-10%).
However the more integrated their design approach within the business, the more likely these businesses were to experience significant growth. Of the most design aware businesses 54% had been experiencing significant growth and 24% modest growth.
93% of the most design aware businesses were planning for growth - 62% for significant growth and 31% for modest growth against the sample comparators of 46% planning for significant growth and 32% for modest growth. And 62% of the design aware businesses had taken on new employees in the recent past compared to half of the sample as a whole.
It is clear that the report and its findings offer a route to growth for our businesses. And these findings do not sit in isolation. They mirror those of the Design Council and the Danish Design Council which has developed a stepped approach to understanding the degree of design integration or design awareness of businesses.
We now need to roll this out. Three recommendations are contained in my report. Firstly, we need to celebrate success and let others see this so it can stimulate new collaboration. That is why we need our Birmingham Made Me Design Expo.
We need to develop a design and Innovation eco-system or an Innovation and Design Leaders Network between businesses, education, sources of knowledge in our universities and research centres, and important elements in the public sector supporting business. Finally, we need to support new business formation drawing on multi-disciplinary, collective learning activity as we have been doing at Birmingham City University through our two Birmingham Made Me Entrepreneur Stores at the Mailbox.
And we need to boot strap up and act fast, because as Digby Jones said last Friday, 'it is the private sector who create the wealth that pays the taxes. There will be no public sector without the private sector creating wealth.'
Beverley Nielsen is Director Employer Engagement, Birmingham City University