roznicowanie white goods

A Design-Based Model of Strategic Change

A DESIGN-BASED MODEL OF STRATEGIC CHANGE

Davide Ravasi, Gabriella Lojacono*

Abstract

Past studies have emphasized the role played by product design and corporate identityfor defining and reinforcing a companys strategy. In recent years, however, thedominance of strategic models focused on positioning within the industry structure oron the endowment of resources has moved attention away from the design process and

its link with strategic renewal. In this paper, we analyze the relations between designactivities and strategic planning, building on the experience of companies like Bang &Olufsen, Alessi, Zanussi and Oticon, whose attention towards product design iswitnessed both by their success on the market as well as numerous awards conferred.After having briefly set out the theme in the context of the changes in the dominantschools of thought in the strategy field, we shall propose a general conceptualframework, supported by references from the cases studied.

JEL Classification Numbers: M30, M19

KEYWORDS: Design, Corporate identity, Innovation, Strategic renewal, New productdevelopment

* DAVIDE RAVASI. (Corresponding Author), SDA Bocconi - Bocconi University School ofManagement, Strategic and Entrepreneurial Management Department, Via Bocconi 8, 20136 Milano. Tel:+39-02-5836-2540 Fax: +39-02-5836-2530. E-mail: [email protected].

GABRIELLA LOJACONO, SDA Bocconi - Bocconi University School of Management, Strategic andEntrepreneurial Management Department, Via Bocconi 8, 20136 Milano. Tel: +39-02-5836-2541 Fax:+39-02-5836-6892. E-mail: [email protected].


1.INTRODUCTIONOz Zanussi, a fridge that looks like an egg, Apple iMac, the first computer produced infive different colours, and Nokia 3210, a mobile phone the external shell of which canbe changed as if it were a dolls dress: products like these, over recent years, havedemonstrated the importance of redefining concept and look in determining market

success. In these products, shape is not simply a question of style, but has become themedium for pointing out a new way of understanding, designing and using them, and toexpress an identity, which becomes the main link with the consumer. Companies suchas Nokia, Apple, Electrolux Zanussi, Philips, Sony and Bang & Olufsen, have eitherbuilt or reinforced excellent competitive positions through renewed attention to productdesign and corporate identity.Thanks to this attentive and co-ordinated management of product design and identitydesign processes, these companies have carried out stylistic, functional and conceptualinnovations which have affirmed the uniqueness of the companies and that of theirproducts, and expanded the capacity to meet needs previously unmet both on a practicaland symbolic level. Products such as the small home appliances from Alessi-Philips, theNokia 3210 and 5110 mobile phones and the personal computers iMac and iBook, haveredefined the logic of competition and forced most competitors to change, at least in

part, their product and communication strategies.The importance of the role played by design for defining and reinforcing a companysstrategy is certainly nothing new. Other researchers, in the more or less recent past, haverecognised the importance of product innovation for a companys success (e.g.. Lorenz,1986; Walsh, Roy, Bruce and Potter, 1992; Thackera, 1997). The domination exercisedsince mid 1980s by strategic analysis models focused on positioning within the industrystructure (e.g. Porter, 1980), however, had moved attention from the design process toits contribution towards product differentiation. Also, with the notable exception ofDumas and Mintzberg (1989), the various studies which over recent years have lookedat the theme of design as a strategic resource have rarely attempted to connect theprocess of strategy formation with that of the design process. The majority of writersconcentrated instead on the effects of the latter, underlining how a careful managementof design activities could improve performance, quality, look and cost of the product

and therefore customer satisfaction (e.g.. Kotler and Rath, 1984).In this paper, we will present an analysis of the relations between design activities andstrategic planning, based on evidence gathered during a study conducted intocompanies, whose attention towards product design is witnessed both by their successon the market as well as numerous awards conferred1. After having briefly set out the

1 The conceptual model presented in this paper is based on evidence collected in the course of a researchproject jointly financed by Bocconi University and by the Ministry for University and ScientificResearch, termed Gestire il design in prospettiva strategica, and by a research grant of the Strategic and


theme in the context of the changes in the dominant schools of thought in the strategyfield, we shall propose a general conceptual framework, supported by references fromthe cases studied. In the third and final section, we will discuss the implications of thisnew strategic model in terms of company senior managements role in devisingstrategies.

2. NEW STRATEGIC MODELS FOR NEW COMPETITIVE SCENARIOS

Over the last decade, some factors have led companies to renew their strategic modelsand competitive thinking. The increased importance of intangible and expressiveaspects in consumers decisions (Belk, 1988; McCracken, 1988) and the extension of

fashion-related factors and trends into a growing number of industries (Peters, 1992;Lawrence & Phillips, 2000) have rewarded those companies who, operating inindustries from drinks to air travel, food to IT, have dedicated special attention to theaesthetic and symbolic aspects of their products or services (Schmitt and Simonson,1997). In other industries, born on the boundaries between telecommunications, IT,publishing and entertainment, the rapid evolution in technology and the intensificationof competitive dynamics, have rendered ever-less effective managerial models based onplanning and industry analysis (DAveni, 1994; Mintzberg, 1994; Chakravarthy, 1997).The approach of strategic planning and industrial economics (e.g. Porter, 1980 and1985), in fact, was based on an idea of competition as a battle for positioning, in whichcompetitors tried to build and defend their competitive advantage, anticipating theiropponents moves and setting up barriers of various kinds via economies of scale,control of distribution channels or technological standards. However, over the last ten

years, the joint evolution of technology, lifestyles and consumer behaviour have madethis approach ever less appropriate for explaining competitive dynamics and guidingmanagement decisions. In a growing number of industries, the competition seemedrather to follow a Schumpeterian type of logic, in which it is innovation in products,services or production processes that determines competitive advantage. Schumpeterianadvantage, however, is by its very own nature ephemeral: destined to be rapidlyannulled by competitors imitation or innovation, or by the rapid changes going on inthe market. The sustainable nature of said advantage, therefore, is not based on theerection of solid but rigid barriers, but on the companys own capacity to continuallyrenew its competitive strategy, getting to the point of eroding the very bases of its

Entrepreneurial Management Department of SDA Bocconi. The analyzed companies belong to traditional(Alessi, Kartell, B&B Italia, Cassina, Flou), and high-tech industries (Nokia, Bang & Olufsen, Oticon,Electrolux Zanussi, Apple). Research investigated both the way the design process is connected with theprocess of strategy formation and how the outcome of the design process influenced the very rules ofcompetition. The authors acknowledge the helpful discussions with Antti Ainamo, Antonio Catalani,Giovanni Comboni, Tore Kristensen, Majken Schultz and Lisbeth Svengren. However the authors mustmust be considered the sole resposible for the ideas expressed in this paper.


current competitive advantage in order to build a future one, anticipating both customersand competitors.

Recognition of the importance of this process of creative destruction (Schumpeter,1934) for maintaining competitive advantage, has thus led to a redefinition of thedomain of strategic action. If a companys advantage is based on its capacity tocontinually innovate its products, then the essence of the process of strategic changebecomes the continual renewal of the range of products and services offered tocustomers (Brown and Eisenhardt, 1997). In the past the managements attention wasconcentrated on the analysis of the variables (sales volumes, market share, price level,

etc.), which defined the companys position on the market and in the industry and hadan impact on manufacturing efficiency in terms of economies of scale andtraining/learning curve. More recently, the recognition of the importance of a continuingstrategic renewal process brings forward the companys ability to manage the process ofinnovation both on a product level and marketing policy. Ultimately, the companyscompetitiveness resides on the possession of dynamic capabilities, which allow it todevelop distinctive competencies that support a process of continuous innovation(Teece, Pisano and Shuen, 1997).

Furthermore, the impact of communication on the companys competitiveness(Coda, 1991) becomes fundamental due to the increased importance of the symbolicaspects of consumers choices. The fact that a growing number of products arepurchased more for the meaning attributed to them by the consumer or by otherreferential groups rather for their function, shifts the field of competition onto elements

such as identity and company image. The latter depends on how everything thecompany communicates directly, via advertising and corporate communication, andindirectly via its products and the overall visual and architectonic aspects, is judged byexternal constituents. The image of the company is therefore the result of a series ofdecisions taken by members of the organisation, consciously or unconsciously, on thebasis of the perception that these people have of the companys values and objectives, inother words its identity (Albert and Whetten, 1985). The management of a companysidentity therefore becomes an essential context in strategic decision making.

3. THE CO-EVOLUTION OF STRATEGIC DECISIONS AND DESIGNPROCESSES

The experience of companies such as Apple and Philips suggests how to interpret in awide sense the design process and allows an expansion of strategic alternatives available

to a company. Via a careful management of design activities in the widest sense, thecompany can shift the search for differentiating elements, and therefore the field ofcompetition, from the financial and functional level to an aesthetic, symbolic,


ergonomic and ecological one. Companies such as Philips or Electrolux - Zanussi areexamples of how a mindful management of the design process, and of all the optionsthis offers, can open new competitive opportunities in the search for advantages inindustries that are apparently mature or with consolidated positions. In a industry suchas that of small kitchen electrical goods, where for years shape, colour and materialshave been characterised by a basic neutrality, innovation in stylistic aspects has recentlybecome one of the main drivers of competition.

The second half of the 1990s saw the diffusion of new aesthetic standards in the worldof home appliances. The new trend saw many products lose their artificial appearance(square shapes, white or metallic colours) and acquire a more natural shape (soft orrounded outlines, curved shapes, pastel colours, shades varying from yellow, orange,green or blue, soft or velvet textured finishes), a more friendly look, without sacrificingreliability and functionality. The anthropomorphic and zoo-morphic shapes and theimaginative names, helped the new products to have a personality that responded tothe growing need for affection and domesticity in the consumers relationship with themachines.

The Philips-Alessi range of small home appliances (fruit juice squeezers, kettles,toasters and coffee machines), the result of joint research between the Italian companyand the Dutch multinational, have been amongst those products that have interpretedthe new trends most quickly and efficiently, opening the way to a redefinition of theaesthetic standards that Philips has progressively extended to its whole product range.The introduction by Philips of products characterised by lively colours and soft androunded shapes such as the Bob kettle, with its spout and top shaped like a hen, or theSunrise toaster, have obliged competitors such as Whirlpool and Moulinex to alter theaesthetic aspect of their products in order to follow Philips in the new competitive field.

The study of the recent experience of companies who have placed design at the centreof their business and competitive strategies suggests, however, how the relation betweentheir business formula and competitive strategies is more complex and involves processaspects and not just the content of the strategies. On the one hand, in fact, corporatestrategy forms a premise and guideline for managing design activities. On the other, it isfrom these activities that derive those decisions in terms of product and advertisingwhich constitute the actual realisation of the strategy, intended as the sequence ofdecisions and actions that impact on the companys competitiveness (Mintzberg, 1978).

The relation between design process and strategy formation seems therefore to functionon various levels, in a circular sense.Design taken in its widest sense, not just as designing product components, but alsothe visual and architectonic aspects of the company (Gorb, 1988; Olins, 1992) is an


activity which involves persons at various levels, both inside and outside the company.In each product, and each campaign for re-defining visual identity or retail outlets, theideas of internal and external industrial designers, architects, graphic artists andmarketing people converge, as they all contribute to realising the project. The decisionsthat these people take regarding the product or the companys image are guided in partby what Herbert Simon (1996) calls decisional premises, the formulae via which peoplerepresent the world surrounding them and interpret the problems they have to solve,define the area of solutions and judge their appropriateness with respect to theobjectives to be achieved and their own system of values. Inside a company, these

decisional premises are influenced by the common definition of the companys basicvalues, the field of operations chosen by same, the objectives it has set itself and theelements upon which its competitive success depends. This group of elements has beendefined as strategic orientation (Coda, 1988), with reference to the seniormanagement, and company identity (Albert and Whetten, 1985), when it becomesshared by the whole organisation. This profound identity is sometimes made explicitand synthesised in a slogan, a company vision which summarises the strategicorientation and acts as a guideline for decisions made by personnel at all levels (Collinsand Porras, 1996).Summarise, communicate and consolidate the perception of the competitive context istherefore a delicate task, since from the definition of this mission the content of de-centralised decisions affecting the product depends and generates strategic alternatives,and therefore in the final analysis the opportunities and directions for the companys

development. It is necessary to respond to contradictory needs of co-ordination andcoherence of activities around a strategic plan, on the one hand, and freedom andcreativity on the other. A definition that is too wide and generic risks not offering anydirection to design activities, which in turn risk being conducted along personal, casualor extemporaneous routes, thus producing an inconsistent range of products and aconfusing image. Communication of basic strategy and the construction of a strong andcohesive company image, on the other hand, can offer a framework for decision-makingand represent a unifying factor for qualifying a products development and advertisingpolicy. The reinforcement of corporate identity, for example, can serve to avoid that anexpansion or variation of the product range betrays the distinctive and recognisablestylistic elements that are the bases of the companys success (Comboni and Molteni,1994).

Bang & Olufsen is the only European company that produces a complete rangeof audio-video products. The design of their products both stylistic and functional has always been an element upon which the company has based its competitive success,as is shown by the 18 products conserved at the Museum of Modern Art in New Yorkand the numerous national and international awards received. Recently, with a view to


meeting a bigger potential demand and increase sales volumes, the company hasexpanded its range with simpler products at lower prices, aimed at a lower level of themarket. The marketing of a simpler and cheaper product under the same brand name,however, risked confusing the perceived image of the company and its products. It wasimportant that the new line, nevertheless, had all the same basic elements anddistinctive characteristics of Bang & Olufsen products. This same consistency had to bekept in all the corporate communication. Bang & Olufsen must have a unique identitythe top management told all staff If we start communicating in different voices evenif these are adapted and well-suited to the target groups we risk losing our credibility,and thus confusing our image. This is really what we must avoid: that people buyingour upper-end products feels that the magic of owning Bang & Olufsen hasdisappeared.

With the objective of re-focusing its design and advertising efforts on thedistinctive characteristics of the company and the products which have given it itssuccess over the years, the senior management promoted a Corporate Identity Seminar,aimed at all staff at head quarters and branches, with a view to making them aware ofthe issue of identity and image, and the need for consistency and constancy in the choiceof products and their advertising. An exhibition, The Curious Eye, was held to trace, viathe products, the slogans and the advertising, the history of the company and theevolution of its identity. Ending up with a new company slogan, - Bang & Olufsen: theunique combination of technological excellence and emotional appeal which servedto synthesise the values which will have to guide decision-making by personnel at alllevels, and at the same time being essential elements for corporate identity anddistinctive skills which have given it its historical success. The first result of thecompanys efforts was the Beosound Century range (see figure 13), with which thecompany targeted young consumers with limited spending power, with a product thatkept the same stylistic and functional identity as the products in the upper end of itsrange.

The expression of a companys identity is always a delicate matter. An over precise andobjective definition, tied to the products characteristics, can be a limit to peopleworking on the process and thus restrict the alternatives generated and potential routesfor development. The strength of the vision which guided Bang & Olufsen in the mid1990s, lay in its nature of being at the same time a synthesis of the profound skills thatthe company had acquired over the years, in the development of technology and careful

regard to all those aspects (shape, materials, mechanical movements etc.) that contributeto the consumers sensory and emotional experience, and the essential image elementsthey perceive of the company, as was revealed by a survey carried out into the relevantsegments (Ravasi and Phillips, 1998). The words chosen to express the companys


identity therefore summed up the really distinctive properties it possessed and, in thisway, oriented design and advertising efforts towards what really made its value amongstconsumers grow compared to the competition. In other cases studied, a re-definition of acompanys identity and mission set in motion a process of strategic renewal which, inre-focusing attention, offered new opportunities and widened the space for decision-making by product designers. In turn, the results of these efforts led to the developmentof new and diverse skills which became part of the companies assets in terms ofidentity and a qualifying factor for their image.

Oticon is a manufacturer of acoustic equipment. During the 1990s, following aprofound re-orientation of its strategies, Oticon introduced radical innovations in theindustry, both from the technological standpoint (automatic adjustment of amplificationintensity, digital amplification, etc.) and from the aesthetic standpoint (shapes, colours,etc.) The renewal of the product range which has taken the company to a level ofabsolute technological, competitive and profit excellence, was guided by a re-definitionof the companys mission which shifted attention away from performance and thetechnological content of its products, towards the users quality of life, taken in thewidest sense. Instead of thinking of ourselves as a manufacturer who has to serve hiscustomers, we need to see ourselves as a service company offering a concrete product said the new Chairman and CEO, Lars Kolind Oticon has to stop regarding itself as aproducer of acoustic equipment: our real mission is to help people with hearingproblems to live the life they would wish.

This new outlook has first and foremost re-oriented the process of new productdevelopment. If in the past the emphasis was placed on engineering aspects, linked tothe development and refinement of the technological content (sound reproduction,amplification intensity), since the early 1990s in Oticon psycho-acoustic researchcarried out directly with patients has been pre-eminent. This research activity is aimedat identifying the various ways that hearing problems are perceived, in terms of age,work, lifestyle, etc. The development of revolutionary products such as Multifocus andDigifocus, was guided by the intention of offering a product built according to usersneeds, capable of adapting itself to changes in said needs. Shifting attention towardsusers quality of life has, moreover, led the companys designers to bear in mind as wellthe psychological aspects involved in using the device, traditionally considered as asign of handicap, and therefore a source of unease. Attention was, therefore, dedicatedalso to the aesthetic aspect of the device, making its shape more appealing andchanging the flesh pink colour to opaque titanium, so as to change the perception of theproduct. The new design leads it to be associated mentally with high-tech electronicitems, rather than medical prostheses, lightening the psychological burden on theuser. The PerSonic line, on the market since 1992 and soon becoming one of the


companys best sellers, even offered users the choice of a range of colours allowing thedevice to match the colour of their hair. A year later, the Oticon 4 Kids line completelyrevolutionised the range and colours in order to help children and young people acceptmore calmly and with less severity their own handicap, by designing a more pleasingand socially acceptable manifestation of same.

Strategic processes and design ones therefore seem to be connected in a circularrelationship, in which the companys identity is the fundamental nexus (see figure 1).On the one hand, the roots of a companys identity lie in the many decisions which arethe daily business of planning and advertising, and the success (or lack thereof) of its

image and collection of skills that it has acquired over time. On the other, thecompanys leadership is the protagonist of this identity, given that it expresses thesefundamental values with words and deeds, making the companys mission explicit anddefining areas for its future development.

Figure 1. The relation between design activities and strategy formation

Following this model, a fundamental step for changing strategy lies in the alteration ofthe ways of interpreting which guide decision-making and how staff work (Hedbergand Jnsson, 1977; Berg, 1988). The management of strategic changes, therefore,

consists first and foremost in focusing on or re-defining the elements that define acompanys identity and the essence of its products or services (Gioia and Chittipeddi,1991; Gioia and Thomas, 1996; Ravasi and Phillips, 1998). In this process, design doesnot represent only the result, but can become an important driver of change, when a

Corporateidentity

Strategy asvision

Corporateimage

Strategy ascollectivelearning

Product andcorporate

design

Decisionpremises

Corecompetencies


product or a visual identity re-definition are used to express the essence of the newstrategic course and the new brand positioning, better than a thousand words could.

In the white-goods industry the competition between the various manufacturershas traditionally been conducted at the level of costs, with the result that white goodshave ever-more devalued styles. In the second half of the 1990s some companies,including Electrolux Zanussi tried to renew the aesthetic aspect of their goods in orderto establish a precise brand image, on the basis of which they could look for a specialrelationship with certain segments of the consumer market. The idea behind the OZfridge, in the words of Roberto Pezzetta, Director of the Industrial Design CentreZanussi in Pordenone, is to surpass the idea that white goods are just a necessity forwhich space needs to be found. The Oz fridge is designed to redefine the relationshipbetween the goods and the consumer, making the former an item of furniture, to belooked at and shown, to choose as a piece of furniture and not just as a machine for aspecific function. Oz therefore represents the first example of bio-design in the area oflarge white goods: it breaks the normal style of the rectangular wardrobe-fridge andthe monotony of white, adopting a rounded shape, a two-valve shell coloured ice-blue, which proposes to redefine the emotional relationship, before the functional one,between man and machine.

During the period the Oz project was being developed, the Electrolux group,having become world leader in the large home appliance industry after the acquisitionof companies such as Zanussi, White Consolidated and AEG, was busy restructuring allthe business activities of the groups major companies. The restructuring was aimedboth at a better logistic and production efficiency, and on focusing and co-ordinatingthe brands and their corresponding product ranges, making the most of the skills ofeach centre and following the concept of design families, based on the differences inconsumer lifestyles. The products marketed under the Electrolux brand, therefore, willbe destined towards offering intelligent products, ecological and ergonomic, to ayoung consumer market, one that is evolved and in the medium/high social bracket.AEG, will make the most of its reputation for technological excellence and will beoffered as an upper-niche brand, with a high-quality product. Lastly, Zanussi, will bedestined to offer products in the medium-medium/high price range, focusing oninnovation and design. Compared to the other two brands, however, Zanussi is lesswell-known on the European market, but most of all has a less-clear image and aheterogeneous positioning on the various domestic markets.

Despite sales figures not being anything outstanding, which was also the result ofchoosing a retail channel not in line with the products characteristics, the Oz fridgehas nevertheless represented an important step in the development of the companyspositioning strategies. The principles of soft design and bio-design which lay behind


planning Oz, strongly underline conviviality at the expense of functionality, the naturalas opposed to the artificial, passion as opposed to reason, a warm relationship ratherthan a cold one and the complexity of the technology, and contribute towards conveyingan image of Zanussi as a company capable of producing not just ordinary objects butsomething extraordinary as well. Both inside and outside, therefore, Oz hascommunicated in a clear and strong way what Zanussi wants to be from now onwards,summarising in the most efficacious way, more than any advertising campaign could,the essence of the product and brand strategy, the basic characteristics upon whichZanussi wants to build its identity and its market image. Thanks to Oz declaredGiancarlo Zanella, brand manager Zanussi now all our retailers have clearlyunderstood how we intend to position ourselves, and at last we are getting to anhomogeneous positioning throughout Europe. As Roberto Pezzetta says, therefore, thereal benefit of an innovative project such as Oz is not to be looked for so much in termsof sales volume, but more in terms of to what extent it represent a trampoline forchanging mentalities inside the company. Little is said about this, because the finalobjective of the company is always to earn money. - explains Pezzetta - But there arevarious ways to do so, and you cannot take for granted that the way we chose fifty yearsago is good forever. And this is just what projects like Oz wish to underline: watch outpeople, we have to be ready to manage different ways of manufacturing too. Today ouroutput is millions of machines all the same, but maybe tomorrow it wont be like that:consumers are becoming ever-more different, they have new awareness, desires andemotions. An we have to prepare ourselves to make and sell products like this type aswell.

4. FROM FORMULATING STRATEGIES TO MANAGING RENEWAL

In the preceding section, we proposed an interpretation of strategic change as amodification of how staff at all levels regard it. From this standpoint, starting up andmanaging strategic change essentially means influencing the evolution of the system ofmeanings shared which guide the decisions and actions of company staff; in otherwords, managing the companys identity (Smirchich and Morgan, 1982; Gioia andChittipeddi, 1991). As various studies in the past have shown, (e.g. Mintzberg, 1979;Burgelman, 1991), strategic change is only in part the fruit of aware management by toppersonnel. Partly, strategic directions are the fruit of a learning and evolutionary processset off by chance events or unrelated initiatives. The success of Nokia in the mobilephone industry, for example, is partly linked to the somewhat chance discovery of a

wide segment of the market governed by fashion and trends, which pushed sales of the2100 to sales volumes 50 times bigger than expected. The ability of Nokia was itsrecognition of the reasons for this unexpected success and orientate itself, from then


onwards, towards development and advertising policies for its products via asegmentation based on lifestyles (Pantzar and Ainamo, 2000). Other companies, suchas Oticon, Alessi or Bang & Olufsen, have even institutionalised this role of a motor forchange, encouraging designers and working groups, both internal and external, topropose development initiatives, which the top management reserves the right to choosebetween periodically. In this way, the role of design as one of the main driver ofstrategic renewal becomes legitimised and embodied in organisational routines.

At Alessi, new products often originate from ideas proposed by independentdesigners, either spontaneously or on specific inputs coming from the company. Invitedideas sometimes refer to a new typology of products as it was recently the caseregarding jewellery (pendants, necklaces, ear rings, brooches, bracelets) or moreoften to a re-styling of existing typologies as it is often the case with coffee makers,condiment sets and trays. In this case, Alberto Alessi, co-owner, design manger and co-ordinator of all the development activities, provides the designers with somedimensional and technical references because he already knows what products havemore potential and the minimum number of sets that can be presented.

While prompted ideas tend to follow deliberate strategies that build on theexisting product lines or consciously explore new product categories, thereafter,spontaneous ideas often come from designers who have never worked for Alessi beforeand develop their concepts with little connection to existing styles or typologies.Nevertheless, some of these ideas have led to some of the milestones in Alessiscatalogue.

In 1998, Alessi was contacted by 350 new designers and everyone presented more thanone project. All the incoming ideas are evaluated and selected by Alberto Alessi. Heconsiders independent designers as a window on the world, as they provide thecompany with a multiplicity of perspectives and points of view on emerging lifestylesand local trends. The selection of ideas involves an evaluation of technical feasibility,based on an estimate of the investments and the time schedule for the new project. Afterthis preliminary phase, a committee composed of Alberto Alessi himself, the marketingdirector and the design assistant, evaluates the prototype on a variety of aspects thatinclude the aesthetic and emotional response that the product evokes, its self-expressivecapacity, its functionality and its price. These criteria help the committee to assess thecommercial potential of the product and its consistency with the Alessi brand. 14 of the350 projects collected in 1998 have been developed and most of them will soon be puton the market.Even prompted ideas benefit from external inputs, as design briefs are prepared withinthe framework of so-called meta-projects aimed at the definition of the social andcultural scenario within which the designers will operate. These meta-projects aresustained by workshops organised by Centro Studi Alessi, that involve a pool of external


designers and sociologists who periodically meet to discuss specific issues related toevolution of habits, lifestyles and values. These meta-projects, therefore, imply thegeneration of ideas through a sociological and semiotic exploration without following aspecific design route. Working within a meta-project goes beyond the realisation ofparticular objects addressed to specific functional needs. Meta-projects, therefore,define the symbolic and functional field within which to conduct a free experimentationaimed at exploiting technical and artistic skills, on the one hand, and at exploring newaesthetic solutions, for new tactile and emotional perceptions, on the other.

Companies such as Alessi and Oticon have recognised and incorporated in theprocesses and structures that govern strategic change, the evolutionary nature of thelatter. In these companies, change is not so much the fruit of episodic operations, whichradically restructure competitive strategies, but rather the result of a constant renewal oftheir product ranges, which sees a new family of products being brought out every yearalongside or replacing gradually those already on the market. This continual renewal isthe result of a process of continuing generation and selection of new projects, as shownin figure 2.

Figure 2. Strategic change as an evolutionary process helped by design

In this process, internal and external designers represent the primary source ofvariations, via the continual generation of development ideas for new products andrefinements to existing ones. It is in this phase that the creativity of the design groupsoffers ideas for innovation and diversification, which the top management then has to

Diffusion

Corporateidentity

Variation

Retention

Selection

Strategic course

Developmentprojects

Vision


tie-in to a consistent strategic route with regard to the skills and identity of the company.It is only in the selection phase, in fact, that the feasibility and utility of said projectswith respect to strategic objectives is evaluated. Not infrequently, however, just fromthis phase of maximum openness to variations ideas come that lead to a change ofstrategic direction and to explore new shapes or technologies and new kinds of products.It is from this learning curve set off by these exploratory processes that it develops that,over the course of time, the basic strategic orientation of the company is formed, theresult of a thought process which leads to reinforcing strong points and graduallyabandoning less profitable routes (Coda, 1989). It is at the end, when the results of this

retentive phase spread out and become a common asset, that the circle closes and thisshared identity becomes a framework for basing change on.

In this different way to interpret strategic change the top managements rolealters radically. The traditional managerial models, trusting in the capabilities and skillof top management, gave them an absolutely central role in the process of formulatingstrategies: top management had the task of gathering and processing information,defining strategic plans, allocating available resources and controlling their efficientuse. These models were based on the conviction that top management could, more orless easily, gather and process all information useful for defining company strategies.The rest of the company was left to collect said information and carry out the ordersfrom above.Interpreting strategic change as an evolutionary process, driven by a collection ofinternal and external people, and not as a linear one, directed from the top, leads also to

profoundly review the role of top management. One of the main functions of topmanagement becomes the building and running of a context within which designprocesses are carried out leading to alternative ideas for development. This means, onthe one hand, as we have seen in the example of Bang & Olufsen, making thecompanys identity explicit, linking it to the companys skills and image, so as toorientate the generation of new ideas that make the most of the companies distinctiveresources. On the other, it means managing relations with all external sources for ideas,which contribute, as in the case of Alessi, to the start up and completion of developmentplans. In both cases, the task is delicate because if on the one hand it is important thatinternal and external designers are aware of the inexorable elements of the companysidentity, on the other, if, as we have seen, the limits that this imposes on coming up withnew ideas are too tight, any real renewal of the product line is precluded, as well as theskills and the identity of the company itself.

Another fundamental function then concerns the choice of projects. In first place, it isvia project selection that the top management defines the relative weight of the activitieswhich affect the existing skills and image and those dedicated to exploring new routesfor development. It is in this phase that the top management can direct the routes ofdevelopment, both via the concrete realisation of the ideas submitted for its attention,


and via the strong message that its decisions send out internally and externally,contributing to the affirmation and reinforcement of the companys identity.

5. CONCLUSIONS

The evolution of competitive dynamics in a growing number of industries has led (or insome cases) brought back the top management to focus more on aspects such as productinnovation and the symbolic dimensions of company strategies. If the more traditionalschools of thought had somewhat neglected the importance of product design activitiesas well as all the visual and architectonic dimensions of a company, the new strategicmodels recognise the fundamental role that this plays in constructing a competitive

advantage and expanding the strategic alternatives available to it. Managing designactivities, therefore, becomes an absolutely critical issue, which needs to be tightlylinked to the companys strategic decisions.

Recognising the fundamentally disperse nature of the decisions which, having an impacton the products design and its advertising, affect the companys strategic routes, takesthe activity of design management to the heart of the process of formulating strategies.This, in turn, requires a substantial redefinition of the top managements role. Intraditional models the management was essentially given the role of analysing theindustry and the resources available, and formulating appropriate courses of action. In adesign-oriented company, on the other hand, the top management is required to (i)create the organisational context and make the strategic plan known, within which thenew design would be developed, (ii) manage external relations (with training centres,professional firms, suppliers, consumer associations, etc.) with those participating in the

design activities and (iii) select and rationalise product flow via which strategic renewalwas realised.

Through the creation and the management of the organisational and strategic context,the top management orientates, without limiting or conditioning it, the process ofgenerating ideas internally and externally which periodically leads to innovations bothin conceptual and stylistic terms. Through its selection activities, the top managementensures stylistic and marketing consistency for the product range, whose continualrenewal represents the essence of the companys strategy. This same definition ofcompany strategy is realised in the decisions that lead to the development of a coherentproduct range both in aesthetic and functional terms, and in terms of the variouselements that make up the companys image.


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