In The Trend Desk column at Yahoo! Finance, Daniel Pink describes why great design is essential to great products, memorable buildings, and impressive profits.
Link: Good Investing by Design: The Trend Desk - Yahoo! Finance
Academics often describe graphic, interior, and industrial design as a combination of "utility" and "significance." Utility means that the product or service must work. Significance means that it must have some other, more transcendent quality.
Today, utility is abundant. We have more products and services than we can handle, and most function just fine. To stand out in a crowded marketplace, sellers must make a dramatic leap in utility -- or stand out in some other way. They can try to compete on price, but that usually ends in a downward death spiral.
So the alternative is to compete not on left-brain attributes like price and functionality, but on right-brain qualities such as emotion, meaning, and look and feel. Case in point: Target sells toilet brushes and vegetable scrubbers designed by superstar architect Michael Graves. Even the most mundane, utilitarian objects in our lives have been turned into objects of desire.
Yet the investing world has barely begun to grok this new reality. In most consumer markets, companies now make their money more from significance than utility. Motorola's Razr V3 doesn't work any better than other cell phones (trust me -- I own one). But it sure has a cooler look. And that's why it's been such a huge success. And there are other MP3 players besides the iPod and other online music services besides iTunes, so why does Apple dominate? Smart, compelling design.
Or take the Dr. Skud flyswatter, crafted by French designer Philippe Starck. This $12 device kills flies perfectly well (trust me -- I own one of these, too). But people buy it not for its bug-annihilating functionality, but for its aesthetic je ne sais quoi. Indeed, I think this flyswatter should be included in every MBA curriculum in America: Selling five cents worth of plastic for twelve bucks is further confirmation that today's margins come from significance, not utility.
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