Design Management Case Studies

David Hands, Jack Ingram, Robert Jerrard

• Publisher: Routledge
• Year: 2005
• Print ISBN: 9780415233781
• eBook ISBN: 9781134568437
• Topic: Business
• Subtopic: Business General
• Index: Business

Design Management Case Studies provides an unusual and timely contribution to knowledge of the management of product and service innovation. The six case studies described are from large and small companies in the UK and overseas. They cover a diverse range of industrial contexts including architecture, consumer products and services, textiles and clothing. Each case study includes an audit procedure, the main research methods used and key findings, providing both a unique understanding and different working definitions of design management in action. The book focuses on design management policy audits from selected companies, emphasizing the importance of communication. It also includes descriptions of the overall nature of design management, together with review and project questions that will enable the development and teaching of design management and design auditing. It provides useful insights into the way that design can be used as a strategic business tool. This invaluable textbook is a welcome contribution to design management, for those studying, teaching and practising in the area.

Part I
Notes on the nature of Design Management

Introduction to the case studies

This book adopts an empirical approach to Design Management: the researchers who provided the case studies generated them experientially, spending extended reflective periods working with the designers and design managers they reported upon. The research attempts to define design management by describing examples of it in action. An underlying assumption is that design has a clear and positive contribution to make to a company when effectively integrated with a range of other business functions. A design manager therefore is seen as a specialist team member who utilizes everything at their disposal in positive business development.

Experience of this audit programme suggests that, among both academics and commercial managers, any coherent and consistent view of the complex set of disciplines that comprises Design Management is constantly evolving. This book attempts to contribute to the continuously developing design management curriculum by presenting both research results and novel associated methodologies. An acknowledgement of the importance of academics working collaboratively with partners in the commercial world is seen as central to the development of the full potential in studies in design management.

There is an increasing body of published work in the area of design management, which reflects an increase in design management activity, as promoted and encouraged by organizations such as the UK’s Design Council and recognized in the curriculum of business schools. To reflect this increased activity, there has been a corresponding development of academic publishing in this area, stimulated in part by the Research Assessment Exercise within UK universities.

The case studies in this book identify a sample of design management issues common in a range of commercial and industrial organizations. Readers will be able to gain insights of both research methods and management processes – they are intended to provide a stimulus for thought rather than simply recording fresh data. It is the authors’ intention to demonstrate some of the variety of issues which engage design management practice rather than promote any particular model of design management process.

However, in offering these examples, we recognize that there are some underlying influences which play a part in determining the design management issues of concern to companies, and how they deal with them. The audits provide a timely insight into both policy and process at a specific period when all the companies displayed a particular commitment to design. Previous experience always has a profound effect on design management performance: all organizations evolve, and with evolution there develops a corporate knowledge evidenced in changing management expertise and mechanisms that reflect shifts in priorities at key stages in that evolution.

Such evolution is not directly related to the size and age of the organization: just because a company is large, and has management systems for dealing with complexity does not mean that it necessarily is mature in design management terms. Equally, some small companies that have not yet evolved sophisticated management systems may well have a highly evolved view of design management and practise it successfully. Indeed, small companies are sometimes focused on their products and services simply because they are young, having come into being to derive commercial benefit from some new product. Equally, it is not uncommon for a company that has been created to market a new product to find that its energies are concentrated on the business of becoming established, a development phase in which quality, price and delivery performance tend to dominate product development. For many companies, the achievement of targets in these three areas makes such demands on management that further new product development may be perceived as relatively unimportant, and may slip off the management agenda completely. Within many long-established industries, this phenomenon is easily recognized; the reluctance to see design as a source of commercial benefit has taxed successive generations of the Design Council whose efforts have been directed towards encouraging companies to take a first step towards integrating design within commercial management. However, the emphasis on encouraging businesses to recognize the commercial benefit of design deflects attention away from the complexity of design management. In this book, it is assumed that design has a part to play in most organizations. The case studies reported here illustrate a range of design issues, reflecting the variation in design maturity attained by the companies as they progress from the first realization of the benefits design can bestow on their operations, through the gaining of experience in the use of design at successively more strategic levels. The companies reported here all subscribe to the idea that design is beneficial: the case studies show how design is managed, how its contribution to the business is perceived, and the extent to which design understanding is shared by key personnel.

The case studies demonstrate some of the variety of design management issues that companies face and that the issues are not necessarily related to company size or age. Experience of working with a large number of organizations suggests that it is useful to differentiate between stages of evolution of design ‘knowledge’ within organizations. A general evolutionary direction has been suggested in Andrews et al. (2001). While it does not suggest that the stages are discrete or occur in a precise order, the model attempts to describe a broadly hierarchical path from the first recognition of the potential commercial benefits of design through to a level of mastery of management techniques and the inclusion of design perspectives into company policy and vision.

The case study of Electrolux demonstrates that the company focuses both on mechanisms for handling the day-to-day complexity of a very large multinational company and on the strategic issues of design policy. In particular, it shows how policy issues at the highest level of abstraction (the definition and maintenance of the values that differentiate the products of its component brands) ensure the maintenance of the company vision and other policies. The company models for new product development include both business strategy and the policy issues that shape it.

Reference

Andrews, S., Ingram, J. and Muston, D. (2001) Product Values and Brand Values in Small and Medium-sized Enterprises: A Cast Study, proceedings of the 4th European Academy of Design Conference, Aveiro, Portugal, March 2001.

CASE STUDY 1
Electrolux: The management of complexity in a large organization

Bob Jerrard, David Hands and Jack Ingram

This introductory policy audit features design management processes of The Electrolux Group and is presented to complement the other studies. Electrolux is as mature in matters of design management as it is as a business entity. The design management issues in Electrolux reflect the company’s size and complexity: design management policies are explicit, and are integrated with the company business strategy. Company policies and management procedures such as the Integrated Product Development Process (IPDP) reported in this study are published internally, contributing to the coherence of corporate effort through a shared understanding of strategic issues.

The Electrolux Group, with sales of 124 billion SEK in 2000, is the world’s largest producer of appliances for kitchen, cleaning and outdoor use, such as refrigerators, cookers, washing machines, chainsaws, lawnmowers and garden tractors. Each year, the Group sells more than 55 million products to consumers in more than 150 countries. Products are sold under famous brand names such as AEG, Zanussi, Frigidaire, Eureka, and Husqvarna. A brief history of the company’s development shows how the size and complexity of the company today have developed over a one hundred-year period from being a manufacturer of a single product.

The early years: realizing opportunities in the electrification of the home

AB Lux, Stockholm, was established in 1901, launching the Lux kerosene lamp for outdoor use, which proved to be a huge success; it was also used in lighthouses around the world. In 1910, having felt the competition from electric lighting, the company moved to new premises and looked for new products. The company Elektromekaniska was formed, producing the first vacuum cleaner, Lux 1 at Lilla Essingen in 1912. Sales were established in Germany, the United Kingdom, France and Sweden, and in 1917, all the shares of Elektromekaniska were purchased by the sales company Svenska Elektron. In 1919, the company name AB Elektrolux was adopted by Elektromekaniska – a combination of Elektromekaniska and Lux. A ten-year agreement was reached, under which Elektron had sole sale rights to AB Lux vacuum cleaners, with Lux as its sole suppliers. Four years later, in 1923, a newly formed company, AB Arctic, started producing refrigerators based on a newly patented application of the absorption process. In 1925, Elektrolux purchased Arctic and launched the first absorption refrigerator, the ‘D-fridge’ for the domestic market.

Company expansion: developing international markets

From 1926 until 1940, the company expanded its operations worldwide. In 1928, share capital increased tenfold from 6 million SEK to 60 million SEK. Turnover of five plants, some 20 subsidiaries and 250 offices throughout the world was 70 million SEK. The Group was consolidated and introduced on the London Stock Exchange (1930 on the Stockholm Stock Exchange). Throughout the 1930s, there was continued expansion of business based on vacuum cleaners and refrigerators.

In 1940, production was reorganized when many plants and subsidiaries were closed due to World War II. New products included air filters for Swedish defence forces and a domestic food processor.

Diversification, new product development and further expansion in the post-war years

In 1944, Elektrolux purchased Bohus Mekaniska Verstads in Goteborg, giving a new product area – industrial washing machines. Penta, manufacturer of outboard engines, also was purchased; and 1951 saw the introduction of the first Elektrolux domestic washing machine. Production of steel shelving moved from Motala to Säffle, the foundations of what would later become Elektrolux Constructor. Five years later, the first chest freezer was launched, and in the same year, 1956, group sales passed the half billion kroner mark.

Within the next ten years, in which turnover doubled, there were changes which established many new products for which the company has become known in its second half-century. In 1957, the spelling of the Group’s name was changed throughout the world from Elektrolux to Electrolux. New products included its first dishwasher, a benchtop model, and the first combined fridge/freezer in 1959. In 1962 came the acquisition of Elektrohelios, providing new production facilities and a new product group – cookers. Sterilization equipment was added to the product portfolio in 1964 through the acquisition of Getinge Mekanista Verkstands AB.

International expansion through acquisition of established brands

Group turnover passed the 1 billion kroner mark in 1965, and in just over 25 years would increase to one hundred times that figure, due in no small part to a sustained programme of acquisitions on an international scale. The company purchased Norwegian Elektra (cookers), Danish Atlas (refrigerators), and Finnish Slev (cookers, sauna units) in 1967, then lawnmower manufacturer Flymo and 50 per cent of cleaning company ASAB in 1968, when the Group head office was moved from Stockholm to the factory premises at Lilla Essingen.

The year 1969 brought the establishment of subsidiaries in the USA (Domestic Sales Corp), and Hong Kong. A large-scale face lift for the Electrolux range took place, and the environment began to take a central position in public debates. Then, 1973 saw the acquisition of office machinery, the production of kitchen and bathroom cabinets, and manufacturing facilities in Luxembourg and Germany to meet demand in European markets.

In moves to gain a strong foothold in the US household appliance market, the acquisition, in 1974, of what is now the Eureka Company made Electrolux the world’s number one producer of vacuum cleaners, and boosted the Group’s air conditioning technology research and knowledge resources. White goods were marketed under new brand names, and commitment to nature conservation products continued.

In the five years from 1975 to 1979, acquisition of many new companies, in sectors such as laundry service, materials handling, agricultural machinery, in addition to French, Belgian, Dutch, US and Swiss manufacturers of white goods and vacuum cleaners, strengthened the Group’s position in household appliances. The acquisition of Husqvarna also brought the addition of chainsaws to the product range, which in turn initiated new purchases in the same industry.

The year 1980 saw the important acquisition of metals conglomerate Gränges (mines, steel works, aluminium and copper, vehicle safety belts). The Group’s turnover was almost 23 billion SEK, an increase of 51 per cent over the preceding year.

In 1984, the Italian company Zanussi was acquired, including its subsidiaries in Spain, making Electrolux the unquestioned leader in Europe for household appliances, and number one in food service equipment. In the following five years, acquisitions included white goods manufacturers Zanker in Germany and Duo-Therm in the USA. White Consolidated Inc. (USA) brought brands such as Frigidaire, Gibson, Kelvinator and White-Westinghouse, while the outdoor products business area expanded with new acquisitions which included Poulan/Weed Eater (USA). The white goods division of Thorn-EMI (Britain) brought brands Tricity, Scott Benham and Parkinson Cowan, and white goods were further strengthened by the purchase of Corbéro and Domar, Spain’s leading companies in this sector. American Yard Products (USA), Unidad Hermética (Spain) and Buderas Group’s manufacturing operations (Germany) were added, and an agreement was reached with Sharp Corporation for the sale of white goods in Japan. Group sales first exceeded the 100 billion SEK milestone in 1993, in which year Electrolux exercised its option to buy a second 10 per cent of AEG, having purchased 10 per cent in the previous year, and began negotiations to take over the remaining shares.

Consolidation and restructuring: the reduction of complexity

In 1997, the Group began a two-year restructuring programme with the aim of improving profitability. Streamlining led to the divestment of the industrial products sector and the production of sewing machines, agricultural implements and interior decoration equipment, followed in 1998 by operations in recycling, kitchen and bathroom cabinets, professional cleaning equipment and heavy-duty laundry equipment. A new brand policy was adopted to focus resources on a smaller number of large and well-defined brands. The core business now comprised household appliances, professional appliances and outdoor products.

Design management at Electrolux

In 2000, the three core business areas were further redefined as just two areas: consumer durables (indoor and outdoor) and professional products (indoor and outdoor). Consumer durables account for approximately 75 per cent of Group turnover, and include white goods, floor-care products, garden equipment and light-duty chainsaws. Professional products include food-service and laundry equipment, leisure appliances, chainsaws, trimmers, etc., landscape maintenance equipment and power cutters. The size and complexity of the business affect the design management processes. In this study we shall concentrate on just one aspect of the consumer durables product area – refrigeration – illustrating some key ...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Figures
• Tables
• Notes on contributors
• Preface
• Acknowledgements
• Introduction
• Part I: Notes on the nature of Design Management
• Part II: Research methodologies for postgraduate studies in Design Management