Towards a Design Policy for Quebec

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ACKNOWLEDGEMENTS 3

INTRODUCTION 4

CHAPTER 1 | WHAT IS DESIGN? 6 DESIGN AS SUSTAINABLE COMPETITIVE ADVANTAGE 6 FOR PRODUCTS 6 FOR BRANDS 7 DEFINING DESIGN 7 SECTORIAL APPROACH 9 DESIGN AS PROCESS 10 DESIGN AS PROBLEM-SOLVING 10

CHAPTER 2 | THE DESIGN ECONOMY 13 METHODOLOGICAL DIFFICULTIES 13 ENTANGLEMENT OF DESIGN 14 DESIGN AS INTANGIBLE VALUE 15 ECONOMIC IMPORTANCE 17 MICRO LEVEL 19 MACRO LEVEL 21 ECONOMIC IMPORTANCE IN CANADA 26 MARKET FAILURES 28 INFORMATION ASYMMETRY 28 KNOWLEDGE SPILLOVERS 28 POSITIVE EXTERNALITIES 29 SYSTEM FAILURE 31

CHAPTER 3 | MEASURING DESIGN 32 FIRM LEVEL 32 NATIONAL LEVEL 32

CHAPTER 4 | DESIGN POLICY 35 A BRIEF HISTORY OF DESIGN POLICY 35 DESIGN SYSTEMS 37 FOR SMES 40 MINI CASE STUDY: SOUTH KOREA 42

CHAPTER 5 | DESIGN POLICY IN QUEBEC AND CANADA 44

WHY A DESIGN POLICY? 44 MAPPING THE DESIGN SYSTEM IN QUEBEC 45 TOWARDS A DESIGN POLICY 49 RECOMMENDATIONS 51

CONCLUDING THOUGHTS 57

BIBLIOGRAPHY 59

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Acknowledgements The research for this paper was conducted over a short period of three months.

Its aim was ambitious: to understand the role of design in the competitiveness of nations or regions, and in Quebec particularly. I spent most of my early professional life in the creative industries, yet I am not a designer, nor am I directly involved with this sector. My recent foray into formal management training, through the undertaking of an executive MBA, has sharpened my competitive intelligence skills. During the program, and thanks to a variety of stimuli, I developed a hunch that design could possess a relatively untapped power to make our firms more competitive. It is this hunch that I wanted to validate (or invalidate) at the outset of my research. To say that I found more than I expected is a gigantic understatement. I found more global awareness of the power of design, more insightful research, more groundbreaking firms and, above all, more talented and dedicated people.

I must thank all of the local and international actors in economy and design that I

had the chance to speak to throughout this short but intense endeavour. They allowed me, a complete outsider, to peer into their world and helped me to make sense of it. My talks with them have shown that design stakeholders in Quebec are determined to leverage our immense local design talent, and are equally committed to pull their weight in helping our province to prosper. With only modest means, Quebec’s design stakeholders work everyday miracles. Despite the important challenges that the stakeholders face, and insofar as design is concerned, this incursion leaves me with a very positive outlook on our province’s current and future ability to negotiate turns and curves in the world competitiveness landscape.

Specifically, I’d like to thank Alain Dufour of Mission Design, Béatrice Carabin of the Bureau du design (Ville de Montréal), and Pierre Cohendet, professor of economics at HEC Montréal. I dare hope that, in one way or another, my outsider’s perspective may shed new light on your day-to-day business. My warmest thanks also goes to Louis Hébert and Alain Pinsonneault. Much like the design stakeholders I met throughout my research, Louis and Alain choose to champion innovative ventures over historical antagonisms (Louis and Alain respectively represent HEC Montréal and McGill University in a unique joint EMBA program). I also owe a big thank-you to Pierre Balloffet for his trust and encouragements. Lastly, but by no means least, I’d like to thank my life partner, Maude Labelle, for her unconditional support and invaluable cheerleading throughout this adventure.

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Towards a Design Policy for Quebec

Introduction “The Obama presidential campaign was an innovation in American politics and American design. For the first time, a candidate used art and design to bring together the American people—capturing their voices in a visual way.”

This mention is found on the Designing Obama website, which promotes the book of the same name. The book chronicles the implementation of the design strategy that was devised for President Obama’s 2008 presidential campaign. The president’s strategists had apparently deemed fit to explicitly leverage the power of design—in this case graphic design—in order to achieve their electoral objectives. That designers would be commissioned to produce graphic design material for a political campaign is not in itself extraordinary. However, the fact that design played such an explicitly integral role points to a high-level acknowledgment of the power of design—or marketing aesthetics, as it is sometimes called—as a strategic tool. This is but one of several unexpected design-related findings that are chronicled in this paper. Indeed, Chapter 3 examines recent studies and research papers that have successfully demonstrated a surprising correlation between good design and such things as crime rate (Cozens et al., 1999) and businesses staff turnover (Backhaus and Tikoo). Moreover, it is not uncommon to witness sustainable design proponents and urban planners argue that good design is paramount to improving such broad measurements as quality of life. The impact of good design practices is nowhere as well documented as it is in business: “…there is a marked correlation between the use of design and the economic performance of companies and subsequent macroeconomic growth.” (Danish Business Authority, 2003). Using various methodologies and samples, numerous more studies conducted in the past fifteen years echo DBA’s conclusion, confirming a correlation between the use of design and markedly better business performance. Building on this diverse body of research and the latest reports, this paper proposes an up-to-date survey of the substantiated linkage between design, the economy, and business performance. It does so using available global and local data, as well as theoretical frameworks. Furthermore, it explores how the province of Quebec and its firms leverage design to increase their competitiveness.

Design is a broad term that is used very loosely. Because of this, it must be appropriately defined before delving into the subject. That is why Chapter 1 is entirely devoted to introducing the various angles from which design can be considered or defined. Amongst countless definitions that have been advanced left and right, we retain a sampling here and sort them according to whether they are sector-based or process-based definitions. Moreover, special attention is given to the broader problem-solving concept of design. These various definitions are later deployed throughout the paper, according to what the context best calls for. When relevant, we explicitly state to which definition we are referring.

Introduction

Philippe-Aubert Messier, Towards a Design Policy for Quebec

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Chapter 2 proposes an up-to-date survey of what we will call the design

economy. Data from various studies illustrate the importance of design at microeconomic and macroeconomic levels, and highlight the macroeconomic importance of design in Canada. The rest of the chapter explores how neo-classical economics accounts for design, with a specific focus on market failure theory. As we will see later, this is a critical concept to address, given that most existing design support programs—explicitly or not—rely on market failure-based arguments to justify their existence. The chapter opens with two of the most important methodological difficulties in collecting economic data on design, namely the entanglement of design with other activities, and its intangible quality.

While measuring design is clearly challenging, it is no less indispensable, if only to satisfy the business mantra that, “one manages what he can measure.1” Chapter 3 surveys the different frameworks and methods that are used to measure different aspects of design. It covers theoretical methods as well as ad hoc industry practices. These fall into two broad types of measurements, namely firm level, and national-level measurements.

Chapter 4 covers the relatively new concept of design policy. This concept has been gaining traction in the last decade: nearly half of the European Union countries today have an explicit design policy. We relate a brief history of such design policies and explore its most fundamental tool, the design system. The chapter then goes on to show how design policies especially benefit SMEs. We conclude with a concrete example: a mini case study of South Korea. Due to a certain confluence of factors, South Korea has been a world pioneer in establishing design as a national strategic goal—it drafted its first design policy in 1995—and is still to this day on the forefront of design policy thinking.

The fifth and last chapter is entitled Design Policy in the Province of Quebec. It attempts to build on all of the notions previously explored in this paper to paint a portrait of the situation in la belle province. It starts by mapping the Quebec design system in order to provide a clear view of all of the different stakeholders. It pursues by identifying the strengths and weaknesses of this system. The chapter concludes with a series of eight recommendations, some of which are moderately straightforward to implement while others are highly challenging. All the recommendations should be considered as the outcome of a survey of the available industry literature, both foreign and local.

1 From the Dutch “meten is weten,” attributed to Dutch Nobel laureate, Jan Tinbergen.

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Chapter 1 | What is design? “Certainly, without design, most goods and services would not exist or would fail to be differentiated in the market place.”

-Creative Economy Report, UNCTAD, 2008

Design as Sustainable Competitive Advantage

Before the 1990s, design was perceived in one of two ways. The first was to regard design as the process by which one addresses aesthetic considerations related to a product or a brand. This was understood to encompass typical design activities, such as graphic design, interior design and product packaging. The second conception of what conventionally constitutes design referred to the work of industrial designers, who deal with considerations of mass production as well as ease of use and ergonomics (Bitard et. al). In both instances, design was treated as an expense—a costly and risky one in the case of aesthetics-driven projects, moreover.

Beginning in the early 1990s, a number of practitioners and researchers began to link design to firms’ competitive advantage: "Recently, business has grown increasingly aware that design sells. U. S. companies, in particular, are rediscovering that good design translates into quality products, greater market share, and heftier profits." (Kotler and Rath, 1984). What was then often called "competitive aesthetics" was beginning to be seen by managers as more than just another expense. Throughout the 1990s and the first decade of the 2000s, a body of research work further substantiated this idea, among which the work of Nussbaum, 1988, 1997; Peters, 1989; Oakley, 1990; Veryzer, 1995; Page and Herr, 2002; Borja de Mozota, 2002; and Hertenstein et al., 2005. Gradually, aesthetics and design became recognized for their strategic importance as “unequivocal sources of differentiation” (Montana et al., 2007) and, therefore, as potent tools by which to gain a sustainable competitive advantage. The bulk of this work focuses on the various ways in which a firm can better compete through the use of design. Unsurprisingly, the power of design as a competitive tool is most widely recognized in the practices of product design and brand management.

For Products

Examples of design-driven products now abound and many ‘star’ products from the past 15 years immediately come to mind. In the automotive sector, critics overwhelmingly attribute the tremendous success of the New Beetle, the Mini Cooper, and more recently the Fiat 500, to the cars’ aesthetics and overall design (Page and Herr, 2002), (Bitard and Basset, 2008). In the consumer electronics industry, Apple has been consistently delivering groundbreaking new products. Here again, consumers and analysts alike hailed the aesthetic qualities of Apple products and directly credit design for their success. (Page and Herr, 2002), (Heskett, 2009). Here in Canada, real

Chapter 1 | What is Design?


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estate developer Freed Development has been enjoying tremendous success with their design-based strategy for the redevelopment of the west end of Toronto’s downtown core. The company’s motto, ‘Design-based development,’ encapsulates the firm’s commitment to design. Clearly, they have made a strategic choice to leverage design to increase their ability to compete, as is the case with all of the above-mentioned firms. The 2002 investigation by Page and Herr on the interaction between product design and brand strength further argues that design can be leveraged by weak brands that wish to compete effectively with strong brands. In other words, their experiments show that a design-conscious David has a shot at taking down design-lazy Goliath. This is an aspect that we will look into further when we discuss design and policy making.

For Brands

Design and brands interconnect in several ways. Consumers react to brands in ways that are largely conditioned by designers. Consumers will use design cues to evaluate brand and product categories, and an appealing design will lead to positive assessments of brands (Kreuzbauer and Malter 2005). While marketers in theory control a brand’s message, the language by which this message is conveyed is in large part the vocabulary of design. Given that visual symbols hold greater value than words in the marketplace (Borja de Mozota 2003), fluency in the language of design is the ability for a brand to speak to its consumers. Furthermore, with today’s ever-increasing media mix, design plays a crucial role as the coordinator of a brand’s image: “[…] design may serve as the cohesive factor for all elements that configure a brand experience. Consumers can better understand what a brand stands for and what it does for them when all of its brand elements are consistent. This consistency can be achieved through design (Montana et al., 2007).”

Granted, most technology firms still invest more in research and development than in design, and will use design primarily as a differentiator. However, in sectors such as the hotel and restaurant business (the largest sector within the tourism industry), “the intangible aspects of offerings are more important than the tangible ones.” (Montana et al. 2007). Thus, some industries are apt at leveraging design more than others. Yet, it is more often than not outstanding product design that receives the lion’s share of praise. Indeed, beyond product development, it is not well understood how design benefits firms. The sectors where intangibles play a greater role, such as services and retail, are perfect candidates for increased performance through design. We will return to this point later; in order to make such an argument convincingly, we must first define exactly what design is.

Defining Design

A logical prerequisite to an assessment of design’s role in the economic well being of societies is the capacity to define what design is. However, this is not such an



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obvious endeavour. Interpretations vary wildly, which partly explains why design is still such an exotic topic in economics and management. "Most business executives have no idea what design means if it doesn't involve the iPod," quips Jeanne Liedtka jokingly in her 2010 paper about strategy and design. How can one study, compare and correlate things that have not been properly defined? How can one manage and teach what one does not fully understand? The confusion surrounding the nature of design is great enough to have an impact on policy making, as Bitard and Basset remark in their 2008 Pan-European study, entitled “Design as a Tool for Innovation”. They state that, “in policy oriented documents, definitions are often too vague for measurement.” If ambiguity indeed hinders policy-making, achieving clarity about the nature of design should be treated as a strategic issue. Policymakers, like most people, are familiar with industrial or product design, but are often less well versed in the notions of service design and public sector design. If a policymaking effort is to be endeavoured for Quebec, first it will be necessary to tackle the challenge of defining design.

The UK Design Council offers these thoughts on defining design:

“Good design isn't simply about the surface. Aesthetics are important, but only a part of a bigger picture […]. (Design is) an activity that translates an idea into a blueprint for something useful, whether it's a car, a building, a graphic, a service or a process. The important part is the translation of the idea, though design's ability to spark the idea in the first place shouldn't be overlooked.” .

The aforementioned quote proposes a definition of design, but more

importantly, it serves as an apt introduction to the difficulty that defining design poses. The UK Design Council begins by defining design by what it is not (“not only about the surface”), and then moves on to suggest that we should not “overlook” anything when considering it. This dancing around the issue shows how design is inclined to evade definition. In laymen’s terms, design is an umbrella designation for a wide variety of things, which commonly includes certain commercial activities (industrial design, interior design, etc.), a set of processes (service design, software design, etc.), as well as objects that abide by certain aesthetics principles (a design lamp, designer jeans, etc.). To understand how designers themselves think about design, Michael E., Atwood, and W. McCain, compiled a list of designers’ own definitions in their 2002 paper, entitled “How Does the Design Community Think About Design?” Here is a sampling of some of the definitions advanced by designers: J. Christopher Jones ...initiating change in man-made things Christopher Alexander ...the process of inventing physical things which

display new physical order, organization, form, in response to function



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Horst Rittel ..structuring argumentation to solve “wicked” problems

Donald Schön ...a reflective conversation with the materials of a

design situation Pelle Ehn ...a democratic and participatory process Jens Rasmussen/Kim Vicente ...creating complex sociotechnical systems that

help workers adapt to the changing and uncertain demands of their job

We can see already that designers view their work as much more than mere

styling. In the context of this paper, we will limit ourselves to two families of definitions. On the one hand, we will consider those definitions that offer some relevance to the world of business. On the other, we wish to explore a broader reflection on the human capacity for altering our environment. With that in mind, we will review briefly what we shall refer to as the sectorial and process approaches, and then spend more time exploring what we shall designate design as problem-solving.

Sectorial Approach

As down-to-earth as it may sound, studying design as a sector is a thorny endeavour. The international classification of economic sectors does not provide a class that encompasses all design activity, because designers are employed, to a varying degree, in almost all economic sectors. The European Commission classification of sectors (NACE Rev2, 2008) thus limits its scope to activities that directly involve design:

74.10 Specialised design activities This class includes: - fashion design related to textiles, wearing apparel, shoes, jewellery, furniture and other interior decoration and other fashion goods as well as other personal or household goods - industrial design, i.e. creating and developing designs and specifications that optimise the use, value and appearance of products, including the determination of the materials, mechanism, shape, colour and surface finishes of the product, taking into consideration human characteristics and needs, safety, market appeal in distribution, use and maintenance - activities of graphic designers - activities of interior decorators

62.01 – Computer programming activities Covers design and programming of web pages

71.11 Architectural activities Covers architectural activities



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71.12 Engineering activities and related technical consultancy Covers engineering design, i.e. applying physical laws and principles of engineering in the design of machines, materials, instruments, structures, processes and systems (Bitard et. al)

Various reports and research papers use the so-called ‘creative industry’ as a proxy for design activities (Bitard and Basset). The British report “Creative Britain – New talents for the New economy” (DCMS, BERR and DIUS, 2008) defines the creative industry as follows: “The creative industries include advertising, architecture, the art and antiques market, crafts, design, designer fashion, film, interactive leisure software, music, the performing arts, publishing, software and computer services, television and radio.” The UNCTAD’s “Creative Economy Report” also uses a sectorial approach when assessing the economic importance of design, with the added subtlety that it places design in the ‘functional creations’ category. While we naturally recognize that such amalgamation can be relevant and useful at times, it fails to account for some of the essential properties of design.

Design as Process

Industrial design projects are typically conducted as a set of sequential tasks to be performed, along the lines of: “establishing requirements, defining alternatives, validating and selecting solutions” (Hatchuel et al., 2003). Engineers and industrial designers ascribe to this process-based concept of design. Although this adequately describes observable industrial design activities, this view of design does not account for the content input at each of the stages. The process is described as a series of events, independent of the designer’s intellect or any other form of cultural input. In reality, each of these steps must be fuelled by ideas, culture, and human interaction. There is thus an argument to be made in favour of admitting the concept of ‘Fuzzy Front End,’ broadly defined as the chaotic initial assessment phase of product development, as a helpful complement to such purely sequential depictions of the design process. Doing so would grant the process a notion of incertitude, which is fundamental to design, and upon which we now shall expand.

Design as Problem-solving

Aside from the word design, what do service design, software design, interior design, graphic design and architectural design have in common? One quickly sees the pitfalls of the sectorial approach in that these design practices do not have much in common in terms of required skills and knowledge. Though there is a hint of a common process in most of the activities above, this does not tell the whole story. In his 1986 “Report of the Research Briefing Panel on Decision Making and Problem Solving”, Herbert Simon, the 1978 Nobel laureate in economics, wrote: “…ambiguous goals and shifting problem formulations are typical characteristics of problems of design,” He further qualified design work as addressing ill-structured problems. We



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argue further here that the driving force of what we call design, as well as the creative economy, is a competency for solving such ill-structured or ill-defined problems, by leveraging information detained by a given collectivity. As we will see in chapter 5, policies that recognize design as a vector of economic growth will not aim to support strictly the design sector, but rather any initiative that aims to leverage abilities that help a given community to solve ill-structured problems. Take interior design as an example. A given project will present itself as “refreshing the office floor of Company X.” This project is collective, because solutions will leverage knowledge from a community of stakeholders: employees, managers, contractors, tradespeople, city officials, inspectors and building administrators. It is ill-defined; what is it that the collective really aims to do? Hide cracks in the walls, away from the view of clients? Boost employee morale? Convey a brand message? Improve employer attractiveness? Satisfy a manager’s vanity? Most of these questions will not be addressed explicitly in an offer of services. Yet it is these very issues that the interior designer will dig up, consciously or not, in order to execute his or her mandate. Choosing finishes and colours is merely the observable technical aspects of his or her work. The design challenge lies deeper: to understand the office floor occupants’ and managers’ ill-defined problem, and use collective and technical knowledge to address it.

In his 2008 book, The Power of Design, Richard Farson argues: “on a larger scale, design can potentially contribute to solutions to societal and economic problems.” We would add that this concept of design could enable us to view business managers and political leaders as designers. While this may sound a tad absurd, one could look at it this way: would it be so far-fetched to state that the Minister of Finance has just finished designing this year’s budget? Many already refer to the ‘designing’ of social programs. Isn’t there something that feels intuitively right in those arguably odd statements? Budget drafting obviously has nothing to do with aesthetics or what one commonly thinks of as creativity. Still, one could consider that budget planning on a national level is design because it is the mother of all ill-structured problems and it involves a collectivity. Simon made a similar argument in favour of a broad definition of design:

“Everyone designs who devises courses of action aimed at changing existing situations into preferred ones. The intellectual activity that produces material artefacts is no different fundamentally from the one that prescribes remedies for a sick patient or the one that devises a new sales plan for a company or a social welfare policy for a state. Design, so construed, is the core of all professional training; it is the principal mark that distinguishes the professions from the sciences,”(Simon, 1981).

Furthermore, we can link this definition of design to the recent interest the issue

has garnered. In urban centres, we have been witnessing an increasing need for design as problem-solving, in particular within the field of architecture: “The skills of fine-tuning a complex building and fitting it into a difficult site are going to be needed more in future, as pressures to build on urban brownfield sites, or adapt existing buildings, continue and increase. In such circumstances standardised forms of



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construction and formulaic design simply do not work” (Worpole, 2000). Once a design problem is well defined and remedied, it no longer requires a designer’s input. A solution is standardised and deployed, sometimes globally, until it is no longer useful. Yet, the architectural example above shows how standardized deployment is seldom achievable in urban settings. The more complex things get, the more we need designers to solve problems. The energy sector is on a similar path: now that the ecological impact of energy production has become obvious all around the globe, ‘standard’ ways of producing it are often considered unacceptable and new ‘designs’ must be put forward to accommodate this reality.

While these theoretical definitions somewhat succeed at getting to the core of what many authors think of as design, its broadness is yet another factor that complicates attempts at design policy-making. We have yet to witness a local operational definition of design that would allow us to collect statistics, address performance issues, and carry out effective industry-level monitoring and policy-making. While several research bodies have published studies with similar goals (the British Design Council, the Economic Research and Business Information, the City of Toronto, etc.), the resulting reports typically suffer from using other sectors, or aggregate data, as proxies, which arguably limits the effectiveness of any eventual intervention these studies might suggest. Bitard and Basset (2008) propose that we reconsider the very definition of research and development that is used in Europe when collecting statistics, in order to isolate the design component, thus avoiding overlapping and misleading data. If design is to be a vector for improving nations’ competitiveness, as many prescribe, this definitional hurdle should be recognized and, if not addressed by further research, its complexities should be taken into consideration. Hatchuel, Le Masson, and Weil (2003) expressed a need for a better understanding of design: “we need a framework coming from recent perspectives on design theory which define ““design” as the dual generation of concepts (innovations) and knowledge (competencies).” They further add that design “needs a complex learning process in uncertain contexts and some forms of “mapping”, “guiding patterns”, or “framing”.” Meanwhile, policy-making that focuses strictly on design as a set of economic sectors will miss the core competence of design, which we argue is the solving of ill-structured problems, and its modus operandi, the pooling and leveraging of human knowledge and resources. This construct of design is a research topic in itself: firstly, because it is the least understood; secondly, and paradoxically, because it is arguably the one in which resides the most value as a competitive tool.

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Chapter 2 | The Design Economy

In this chapter, we discuss the design economy. Readers will likely recall that several such new economies were recognized in recent decades. The so-called New Economy itself, but also the knowledge economy, and more recently the creative economy. These last two obviously overlap in countless ways. This paper argues that the design economy is a better-suited proxy by which to survey economic endeavours of a creative nature. The creative economy, through deliberate effort or not, has the arts at its semantic core (after all, art is the ultimate ‘creative’ act). However, art is not concerned with economic output, and most artists would argue that art is not market-oriented, primarily because “creative integrity requires the artist or artistic director to be essentially product-oriented”(Holbrook et al., 1985). Design, on the other hand, “fits into the “functional creations” category”(UNCTAD, 2008). It openly pursues “market objectives” (idem). Though the arts are an essential contribution to society and the economy, art’s lack of preoccupation with market demand makes it an odd choice for poster boy of a new economic growth engine. In terms of exports, design is the largest and fastest growing subgroup of all the creative industries. It is also one of the two subgroups 2 of the creative industries that are of greatest economic and social importance for developing countries (UNCTAD). For these reasons, design, or the solving of ill-structured problems—which includes creativity and art in its toolkit and is concerned with market output—is a far more promising core around which to structure yet another new economy.

Yet can we quantify design’s impact on firms and nations? How much value can it add to a product, or to society? Design supporters will naturally turn to economists for answers. Unfortunately, with remarkably few exceptions, the discipline of economics does not acknowledge design. Herbert Simon indicates why: “Economics […] works on three levels, those of the individual; the market; and the entire economy” (1981). Economics does not concern itself with what is going on at the firm level, nor does it model design as part of the production of the wealth of nations. This chapter surveys several means by which design nonetheless can be linked to economic output. It also addresses the various methodological difficulties inherent to doing so. The core of this chapter aims to sketch a portrait of design’s impact at micro and macro levels, with a particular spotlight on Canada. Lastly, this chapter will examine so-called market failures. This economics concept describes situations in which price determination fails to abide by classical economic market efficiency rules, and will therefore provide perspective on how the market values and rewards design.

Methodological Difficulties

2 The other one is Arts & Crafts



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There are several difficulties with assessing the value of design. These difficulties are possibly responsible for design’s relative absence in economic and management theory, despite its undeniable economic importance, as we shall see later.

Entanglement of Design

It is often challenging, if not impossible, to isolate the design factor from all other factors that affect market response and consumer quality judgments in reference to a brand or product. This entanglement of multiple perceptual stimuli renders design effectively impervious to quantitative studies. As North put it, “when integrated into product development processes it is virtually impossible to disentangle the precise contribution of design, or any other discipline, to the final outcome” (North, 1990). While we can easily find quantitative studies on the effectiveness of many management tools, we have yet to read convincing studies on the effect of design’s best practices on a firm’s profitability. Qualitative inquiries and case studies abound, but they often preach to the converted, and bear neither the appeal nor the explicitness found in quantitative studies. Granted, studies on many management tools suffer from the same entanglement with other factors that plagues design research. Thus, such studies easily could be subject to the same form of reader scepticism. However, proponents of most new management tools and frameworks will often manage to provide some quantitative data. While it rarely suffices to prove causality on its own, quantitative data has the power to apply a veneer of credibility that most qualitative studies on design seldom can offer.

The comprehensive 2002 study by Page and Herr is one of the few that succeeds at disentangling aesthetics, function and brand strength. They recognized at the outset that, “when both aspects of design are considered, it seems unlikely that consumers will respond to a product in a simple manner.” Their set of controlled experiments aimed specifically to disentangle consumer responses to function, aesthetics and brand strength. These experiments succeeded in improving understanding of this dynamic relationship, and provide several valuable insights. First, it blurred the lines that had previously been drawn by the affective-cognitive matching framework proposed by Fabrigar & Petty in 1999. This framework suggests that judgments about likability are affected by aesthetics, while quality is primarily affected by cognitive information such as product specifications and brand strength. Page and Herr’s experiments blur these lines by showing, for example, that aesthetics has a positive impact on both likability and quality judgments. In short, these findings further substantiated the ‘what is beautiful must be good’ inference process, described in 1972 by Dion et al.

Another valuable insight revealed by Page and Herr's experiments concerns the relationship between aesthetics judgments and brand strength. Their findings suggest that aesthetics influence quality judgments more for weak brands than for strong



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ones3. The results initially, and unsurprisingly, confirm the authors’ hypothesis that a “strong brand will positively affect the quality judgment of a product.” They go on to show that, because it lacks the positive ‘aura’ of a powerful brand, a weak brand’s product quality judgment will instead be qualified by its aesthetics. This simple insight has a wide range of implications for start-ups and small businesses that wish to compete with stronger brands. Indeed, without a known brand as a clue to gauge a product's quality, the experiments tell us that consumers will instead rely on aesthetics. Therefore, weak brands must leverage design in order to better compete; it is simply too powerful a lever to be ignored. Strong brands benefit from equity when it comes to quality perceptions, and therefore are more impermeable to the consequences of poor design. But herein too lies a warning for strong brands: when weak brands leverage aesthetics, not only are they able increase their competiveness in terms of consumer likeability judgments (which one intuitively might have guessed would be the case), but also in perceptions of quality. Returning to methodological difficulties, Page and Herr caution readers that they conducted their experiments on a “high symbolism” product category (laptop computers), which is likely to affect the weighting of the different variables in consumers’ responses. These experiments should therefore be re-conducted with a product that is low in symbolism in order to see if the results are consistent or not.

Design as Intangible Value

"…the gross national product does not allow for the health of our children, the quality of their education, or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages; the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage; neither our wisdom nor our learning; neither our compassion nor our devotion to our country; it measures everything, in short, except that which makes life worthwhile. And it tells us everything about America except why we are proud that we are Americans.4"

- Robert Kennedy Jr., 1968

As Senator Kennedy wisely put it, gross domestic product and other such economic measures fail to account for all sorts of alternative sources of value that we typically refer to as ‘intangible value.’ Cultural value and historical or spiritual significance are hardly measurable, and therefore provide little comfort to the empirical analyst. The recent work of Dr. Zec and Jacob from the red dot institute aims to assign numerical values to what they dubbed design assets and design strength, but this proprietary method has yet to gain acceptance. While it may be of interest for

3 Strong and Weak brands are used broadly in the original text. They can be read respectively as recognizable brands and unkown brands. 4 Robert F. Kennedy Address, University of Kansas, Lawrence, Kansas, March 18, 1968.



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internal use, the Generally Accepted Accounting Principles currently limit its scope. Indeed, according to GAAP, investments in design will suffer the same treatment as the research part of R&D projects, where research will only be considered a tangible asset when it can be linked to a revenue stream. Because of design’s entanglement with technology in product development, it will hardly ever show up a by itself as a line item on a firm’s balance sheet. At best, disentanglement and recognition of design investments and assets by GAAP would be treated by readers of financial statements with the same form of scepticism that R&D investments and assets typically inspire, e.g. as highly subjective measures to be interpreted with caution. This aside, economists have realized since 1968 that economic growth tends to stem more and more from investments in intangibles. Research and development have long been the holy grail of investment in intangibles. For decades, these activities mobilized governments, who were told that support for R&D was the salvation of innovation-driven economies. As shown in Table 1, R&D has been supplanted by design in the United Kingdom, in terms of relative share of intangible investments.

Bias is the final methodological hurdle that hampers design research. Indeed, openly ‘pro design’ bodies finance most of the studies that the discipline relies on today. Bitard and Basset caution that, “...professional organisations are often key sources and disseminators of the relevant and up-to-date data on design. This can be considered as having a mixed effect on the measure; they provide the latest accurate assessment, but may not be objective.” While it would be hasty to reject any and all studies conducted by design professionals, independent studies would be welcome additions to the body of research, if only to bolster its credibility. As long as interested parties continue to emit the lion’s share of design studies, these will leave themselves open to scepticism and criticism.

SOURCE: NESTA Innovation Index 2009 (2009:11)

Table 1: NESTA Innovation Index 2009: UK investment in intangibles

Investment in intangibles (UK – 2009) £Billion

1 Training & skills development 32.1 24.1%

2 Organizational improvement 26.1 19.6%

3 Design 22.1 16.6%

4 Software development 20.2 15.1%

5 R&D 14.9 11.2%

6 Advertising & market research 14.5 10.9%

7 Other 3.5 2.6%

TOTAL 133.4 100



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Economic Importance

The 2009 crowning of Steve Jobs as ‘CEO of the decade’ by Fortune magazine reminds us that, however defined, design exerts a considerable impact on the world economy. The man who is credited for making the computer sexy was obsessed by design, down to the smallest detail of circuit board layouts inside the devices he built. Today, Apple is the largest company in the world, and aesthetics and design have been at the core of its competitive edge throughout this rise to dominance. Catchy headlines aside, many of the world’s largest firms place design at the core of their competitive strategy. Design’s economic clout is undisputable. We can get a glimpse of its importance simply by sampling the language used by some of today’s top firms in their annual reports:

Apple: “The Company’s business strategy leverages its unique ability to design and develop its own operating systems, hardware, application software, and services to provide its customers new products and solutions with superior ease-of-use, seamless integration, and innovative design.” (Apple)

Philips: “Philips taps teams of futurists, cultural anthropologists, designers and scientists to

develop user centered products and services.” (Philips , first sentence of the annual report, p. 2). ()

Proctor & Gamble: Report subtitled “Designed to grow,” in which key chapters are entitled “Designed to Grow,” “Designed to Win,” “Designed to Deliver” and “Designed to Lead.” (Proctor and Gamble)

As early as 1978, Herbert Simon pointed to design as a factor in economic theory. Further neglect of this subject can arguably be explained by the methodological difficulties that we explored earlier, in addition to the fact that economics is primarily interested in markets, and less by issues at the firm level. Despite this, many organizations have found ways to assess the economic importance of design.

The British Government has provided us with the largest quantity of studies and statistics on design and design-related topics, though they are not alone in such endeavours. Their New Talents for The New Economy study in 2001 (DCMS, BERR and DIUS) revealed that the creative industries in the UK generate revenues of around £112.5 billion and employ some 1.3 million people. Exports contribute around £10.3 billion to the balance of trade, and the industries account for over 5% of GDP. A more recent study conducted in 2008 further revealed that, “Two million people are employed in creative jobs and the sector contributes £60 billion a year – 7.3 per cent – to the British economy. Over the past decade, the creative sector has grown at twice the rate of the economy as a whole and is well placed for continued growth as



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demand for creative content – particularly in English – grows.”(DCMS, 2008). Since 2006, the Design Council in the UK has been compiling design-specific statistics in its annual “Design Industry Research”. The 2010 edition of the report states that, “the overall annual earnings of UK design businesses are estimated at £15bn– this includes design consultancy and freelance fee incomes as well as in-house design team budgets – an increase of approximately 15% since 2005, taking inflation into account.” This pegs the design-specific activities (design as a sector) in the UK at 2.5% of GDP, and broader creative industries at 7.3%. Table 2 compares design with various sectors of the British economy.

Sectors Contribution to

GDP (in billion of pounds)

% of GDP

Year of reference

Design as sector £15 2.5% 2010 Hotels and restaurants £33 4% 2004

Public administration and defense

£55 7% 2004

Creative industry £60 7.3% 2008

Financial and business services £86 10% 2004

Since 1995, studies on design have been conducted by the Design Innovation

Group, Britain’s Design Council, the UK Department for Culture, Media and Sports (DCMS) and Denmark’s National Agency for Enterprise and Housing. Together, these studies have long constituted the main body of empirical data on the design sector. Here are some of the most valuable insights from these studies:

• Where comparisons with previous, less design-oriented, products were possible, sales [of design-oriented product] increased by an average of 41 per cent. (Design Innovation Group, 1995)

• Every £100 a design alert business spends on design increases turnover by £225. (Design Council – UK, 2007)

Table 2: Relative Gross Value of the Design Sector and Creative Economy

Sources: United Kingdom National Accounts The Blue Book 2006., UK Government Department for Culture, Media and Sports (DCMS), 2001, Creative Industries Mapping Document, Foreword. Design Council (2010) Design Industry Research 2010.



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• So called ‘Gazelles5’ are nearly six times as likely as static businesses to see design as integral to their activities. (Design Council – UK, 2007)

Lately, Britain’s Design Council has been on the forefront of research and distribution of information about design at large, and is also a leader in empirical research on design’s importance in the economy. Here are more insights gleaned from a number of their studies currently published on their website:

• In businesses where design is integral to operations, over three quarters say they’ve increased their competitiveness and turnover through design.

• Businesses that see design as integral don’t need to compete on price as much as others. Where design is integral, less than half of businesses compete mainly on price, compared to two thirds of those who don’t use design.

• Businesses where design is integral to operations are twice as likely to have developed new products and services. In the past three years, four fifths of them have, compared to a UK average of 40%.

• Turnover growth is more likely for businesses that increase their investment in design. Conversely, those that decreased investment cut their chances of growth.

• Two thirds of UK businesses believe that design is integral to future economic performance.

• Rapidly growing business are three times more likely than the rest to consider design crucial to success.

• Rapidly growing businesses are twice as likely as the UK average to have increased investment in design. Over two thirds have done so recently.

• Businesses that add value through design see a greater impact on business performance than the rest. Source: Design Council, UK, from their website.

Micro Level Stock Market

The Design Council carried out a study of UK FTSE-listed companies between 1994 and 2003. In the ensuing report, entitled The Impact of Design on Stock Market Performance, the sixty-three companies that had been identified as effective users of design were shown to outperform the FTSE 100 index by 200% over the entire period of the stufy. A number of previous studies had shown similar results (Fitch, 1998; UK Design Council, 1999; and subsequent review by Hugh Aldersey-Williams), but this was the first study of the genre to cover a full decade, and to include both bear and bull markets. This was also the first study not to be subsequently challenged about its methodology, sample size or breath. The methodology of the study is based on the identification of ‘good performers’ in design, which is done by accounting for the 5 Gazelle is a term used to describe a small yet very high growth firm.



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various design awards for which FTSE-listed companies are laureates. As we will see in the next chapter, when attempting to correlate firms’ use of design and their financial performance, this approach is widely used. In this study, two portfolios were created with companies that had won at least one prize in the selected set of design-related awards shows. The ‘Design Portfolio’ and ‘Emerging Portfolio’ respectively represent higher scorers, and lower scorers, in terms of number of awards won. As Figure 1 shows, the study spans both the bull market of the 1990s and the bear market of the early 2000s. The Design index tends to outperform the FTSE indices in the bull market. Table 3 also clearly shows that both the Design Portfolio and the

Emerging Portfolio companies, despite the generalized slump, managed to preserve their value through the bear market of the 2000s much better than their peers.

Source: Design Council, February 2004

Figure 1: Design portfolios performance over ten years (1994-2003)



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Table 2: Highs and lows of portfolio performance

Portfolios & Indices Nb. of Companies Design Portfolio Emerging Portfolio Largest one-

week fall - Bear marke Low-

High-28 Feb, 2000* High-6 Mar 2000* 2012-09-10, 2001*

3 March 2003*

Absolute Performance

FTSE 100 100 +89.8% +92.2% +39.1% +2.1%

FTSE All-Share 700+ +85.3% +87.5% +26.5% +0.2%

Design Portfolio 63 +295.9% +292.4% + 168.7% + 135.6%

Emerging Portfolio 103 +235.0% +245.8% + 121.1% + 110.2%

Relative to FTSE 100


Emerging Portfolio 103 +145.2% + 153.6% +81.9% + 108.1%

Relative to FTSE All-Share


Emerging Portfolio 103 +149.8% + 158.2% +94.6% + 110.0%

Macro Level Given the impact that design has on individual firms, one would suspect that a

similar impact might exist for national economies. Yet despite design’s economic importance, very few studies have addressed macro-level design competitiveness. Starting in 2005, Designium6 in Finland compiled the Design Competitiveness Index as an attempt to assess macro-economical design competitiveness. For its most recent survey in 2010, researchers at Designium used the criteria below to compile it. Capacity for Innovation Companies obtain technology (1 = exclusively from licensing or imitating foreign companies, 7 = by conducting formal research and pioneering their own products

6 DESIGNIUM - Centre for Innovation in Design ®, Helsinki University and the New Zealand Institute of Economic Research (NZIER)

• All figures relative to 29 December 1993 • SOURCE: Design Council

SOURCE: Design Council February 2004



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and processes) Production Process Sophistication Production processes use (1 = labour-intensive methods or previous generations of process technology, 7 = the world’s best and most efficient process technology) Extent of Marketing The extent of marketing in your country is (1 = limited and primitive, 7 = extensive and employs the world’s most sophisticated tools and techniques) Degree of Customer Orientation Firms in your country (1 = generally treat their customers badly, 7 = are highly responsive to customers and customer retention) Extent of Branding Companies in your country that sell internationally (1 = sell into commodity markets or other companies that handle marketing, 7 = have well developed international brands and sales organizations) Source: Global Design Watch, DESIGNIUM - Centre for Innovation in Design ®

The results are published bi-annually in the report Global Design Watch. This report is a welcome complement to the wealth of competitiveness data, which the World Economic Forum has already been publishing for more than three decades in their Global Competitiveness Report. Figure 2 plots the Designium design ranking of developed nations against the Growth Competitiveness index published by the WEF. There is a clear correlation between the two indexes, which confirms the tendency observed at firm level, namely that nations that are apt at design are also more competitive.



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Sources: Global Design Watch 2006 and 2008, World Economic Forum, Global Competitiveness Report 2009/2010, 2007/2008 and 2005/2006.

According to these results, Canada is better at growth competitiveness than at design. This data supports the warning offered by Porter and Martin, when they addressed the manufacturing industry in 2000. The two scholars expressed concern about Canada’s trailing position in terms of innovation. They argued that the country’s competitiveness at the time was still due to elusive factors such as favourable exchange rates and the price of commodities. They further warned that a failure to drive innovation and entrepreneurship would hinder Canada’s transition into a knowledge economy. Individual country results from the Global Design Watch report, shown in Figure 3, supports Porter and Martin’s forewarning: Canada occupies an enviable 9th rank in growth competitiveness, but still ranks only 23rd in design, which suggests that innovation is trailing.

Switzerland

United States

Singapore

Sweden

Denmark

Finland

Germany Japan

Canada

Netherlands

Hong Kong SAR

Taiwan, China United Kingdom

Norway

Australia

France Austria

Belgium

Korea, Rep

New Zealand

4

4.5

5

5.5

6

6.5

0 5 10 15 20

Design average 2010

Growth CompeBBveness Index ranking 2010

Figure 2: The relationship between design performance and growth competitiveness

Table 6: Growth Competitiveness Index



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We also see that Canada underperforms on the ‘nature of competitive

advantage’ criteria. According to Porter and Martin, this poor performance is due to “a weakness in strategy,” where Canada “has pursued replication, not distinctiveness.” In 1990, Korea became one of the first countries to directly invest in design to improve its national competitiveness. At the time, the Korean government felt it needed to compensate for the drop in demand for their goods (Diamond, 2008). As we will see in Chapter 4, Korea is also a world leader in design policy and design research. The Korean Institute of Design Promotion (KIDP) has improved on previous design research methods. It audaciously proposed “the first-ever framework to evaluate countries’ design competitiveness.” KIDP revealed the framework’s first results in 2008. Seventeen major countries were assessed under the heading National Design Competitiveness Report 2008. The report proudly indicates on its front page that Korea ranked 8th in design competitiveness, compared with 9th in 2007 and 15th in 2010 (according the Designium’s studies). Otherwise, results are difficult to compare since the Korean so-called NDCP methodology relies on a three dimensional framework. The framework’s three axes represent public goods level (design policy); design industry level (design industry), and consumers level (design culture) (KIDP).

Growth'Competitiveness'

Index'ranking

Company'spending'on'

R&D

Nature'of'competitive'

advantage

Value'chain'breadth

Capacity'for'innovation

Production'process'

sophistication

Extent'of'marketing

Degree'of'custom

er'

orientation

Design'Average

Design'Ranking

Canada 9 4.2 3.6 4.1 4.4 5.3 5.6 5.5 4.67 23 rrr

USA 2 5.6 5.5 5.4 5.5 5.9 6.4 5.7 5.71 5

Germany 7 5.8 6.4 6.2 5.9 6.4 5.8 5.6 6.01 3

Source: Global Design Watch, DESIGNIUM - Centre for Innovation in Design ®, Helsinki University and the New Zealand Institute of Economic Research (NZIER) and World Economic Forum, The Global Competitiveness Report 2010-2011.



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One could question the communication effectiveness of this three-dimensional model (it is difficult to read and interpret). Altogether, the NDCP methodology does mark a step forward in design research, if only by the fact that it includes input from both the public and consumer sectors in its assessment.

Although research on the macroeconomic impact of design started as early as

1990, data is still relatively sparse, especially when compared to other sectors of similar economic importance. With the recent quasi-universal recognition of the creative economy as a powerful growth engine, it is likely that we will see more studies in the years to come. Methodological hurdles will remain, however. The entanglement of design within larger existing data sets, such as R&D investments, will still prevent convenient in-depth analysis. As Bitard and Basset put in in their 2008 study, “Measurement is the crux of the matter: without a clear operational definition of design activity, which translates into an effective official statistic system (such as the European Community Innovation Survey, CIS), policies in support of design lack fundamentals.” Therefore, research on the macroeconomic impact of design should not only aim to collect and analyse new data, but also to refine existing sources by untangling elements like R&D.

Figure 3. Three-dimensional analysis of design competitiveness by country

Source: KIDP, 2008



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Economic Importance in Canada

Data on design in Canada is, unsurprisingly, nearly inexistent. A 2006 joint study by Concordia University and the University of Toronto paints a historical portrait of design policy in Montreal, but it does not provide any numerical data on design’s economic importance for the city of Montreal, the province of Quebec, or the country as a whole. The same year, the City of Toronto’s Economic Research and Business Information program published a report that argues for an increased leveraging of Toronto design capabilities. While the report does not directly address the economic importance of design in the Canadian or Torontonian economies, it does put forward compelling statistics on design as a discipline that permeates every sector of the economy.

Industry (NAICS name)

All Designers

Architects

Landscape Architects

Industrial Designers

Graphic Designers

Interior Designers

Other Designers

Mining and Oil & Gas Extraction 0.0% 0.0% 0.0% 0.0% 0.1% 0.0% 0.0%

Utilities 0.2% 0.7% 1.8% 0.4% 0.1% 0.0% 0.0%

Construction 1.8% 2.2% 3.5% 3.1% 0.2% 7.0% 0.6%

Manufacturing 14.8% 2.3% 1.8% 51.3% 13.4% 3.2% 20.4%

Wholesale Trade 2.2% 0.3% 1.8% 5.7% 2.0% 2.2% 3.0%

Retail Trade 6.0% 0.5% 1.8% 3.3% 2.8% 13.5% 23.0%

Transportation & Warehousing 0.3% 0.0% 0.0% 0.8% 0.4% 0.3% 0.0%

Information &Cultural Industries 7.5% 0.3% 0.0% 1.5% 12.5% 0.3% 10.9%

Finance & Insurance 1.2% 0.8% 0.0% 0.0% 1.9% 1.0% 0.0%

Real Estate & Rental & Leasing 0.4% 0.7% 0.0% 0.0% 0.3% 0.9% 0.9%

Professional, Scientific & Technical Services 58.6% 88.6% 60.2% 29.7% 59.6% 68.8% 28.1%

Administrative & Support, Waste Management & Remediation Services

2.2% 0.4% 21.2% 1.5% 2.1% 1.0% 3.3%

Educational Services 0.6% 0.7% 0.0% 0.0% 0.8% 0.0% 0.7%

Health Care & Social Assistance 0.2% 0.0% 0.0% 0.0% 0.4% 0.3% 0.0%

Arts, Entertainment & Recreation 2.2% 0.3% 1.8% 0.8% 2.4% 0.4% 7.6%

Accommodation & Food Services 0.2% 0.0% 0.0% 0.0% 0.1% 0.7% 0.0%

Other Services (Except Public Administration) 0.9% 1.2% 0.0% 0.8% 0.9% 0.3% 1.1%

Public Administration 0.9% 1.9% 7.1% 0.8% 0.6% 0.6% 0.4%

TORONTO(%) 100.4% 100.8% 100.9% 99.6% 100.4% 100.6% 100.0%

Table 4: Employment by Industry and Design Occupation in Toronto CMA, 2001 (°/>)27

Source: ERBIC, Making The Link, 2008.



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While many consider cities like Toronto and Montreal to be design clusters in their own right, the statistics also clearly reveal that design is a key component of many other industries too. Table 4 shows how design pops up in almost every sector. This pattern resembles what we would observe if looking at information technology, e.g. a distinct cluster in itself, yet also as an “enabling service” (ERBIC) across the entire economy. Design and Non-Design Sectors

Table 4 also shows that design is not particularly prevalent in many sectors. Indeed, it is not surprising that the mining and oil industries do not make extensive use of design. One can act on this discrepancy in one of two ways. First, it could be used to orient design policy toward sectors that make extensive use of it. Alternatively, it can be used to identify opportunities for improvement—for gaining a competitive advantage—where it is under-utilized. While infusing raw materials with design attributes may seem like an amusing idea, let us be reminded of the many product categories that have gone from a very low degree of differentiation to an extraordinarily high degree, sometimes within a remarkably short timeframe. Before the 1990s, blue jeans bore a straight leg and were sold in denim blue, light blue, and black. Levis sold them for around $40, and its classic design dominated the market. In the early 1990s, companies such as Guess Jeans decided that jeans were not just jeans anymore, but could now be considered a fashionable clothing item. They produced a steady stream of models throughout the 1990s and 2000s that totally awakened the denim category from its commodity slumber, transforming it into the extremely differentiated, high fashion behemoth of a category that it is today. Jeans can still be bought at Wal-Mart for low prices, but the price range extends well into the thousands of dollar for custom-order jeans, with every possible option between these two extremes. In a similar fashion, two unlikely bedfellows turned the accommodations industry on its head: Ex-Studio 54 club promoter Ian Schrager and French designer Philip Starck are together credited for launching the boutique hotel concept that transformed hotel rooms and lobbies into fashion statements and lifestyle experiences. This created a whole new playing field on which to compete. Whereas hotels previously were selected based on their amenities and proximity to services and attractions, etc., ever since Morgans opened up in New York City, a new category of travellers now chooses their accommodations based on design. Condominium developers have recently borrowed from this model and created the so-called condotel. This concept is mostly found in city centres and brings hotel-style services to condo living; and, more importantly, it offers a design-infused, modern citizen lifestyle modeled on the boutique hotel ethos. Returning to the subject of raw materials, Swedish furniture giant IKEA used design processes and aesthetics to leverage its considerable forestry resources. In that sense, it is not such a far cry to submit that the province of Quebec could use ingenious design in a similar fashion to leverage its own forestry or aluminum industries. In 2000, Michael Porter and Roger Martin argued that the road to Canada’s competitiveness and economic prosperity can only be maintained and improved through an innovation-based strategy. Indeed, it has been said so many times that it has almost become a cliché: Quebec’s primary sector



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industries must convert to more value-added offerings. What is scantily acknowledged though, at least at the political level, is that design—both in a narrow sectorial sense, and in a broader ‘solving of ill-structured problems” way—can contribute to meeting that goal.

Market Failures

To promote government intervention in support of R&D and innovation, its advocates often rely on the market failure economic theory. Its core idea is that, when left to its own devices—for various reasons—the market fails to reward firms that invest in innovative projects. This concept certainly applies to design. Indeed, we can observe the market failing to value design in many ways. The most prominent causes of market failure in design are asymmetry in information, spillover of knowledge, positive externalities, and failure of the system. (EU, 2006), (Bitard et al. 2008), (EBRIC, 2006).

Information Asymmetry

Information asymmetry refers to the absence of information necessary to properly value a product, service, client, etc. This leads to pricing being affected—whether positively or negatively—in a manner that does not reflect the true value of the goods being exchanged. Hence, a “bad used car” will often be bought for more than it is worth, because of the lack of available information about it. (Borooah) Conversely, someone selling a “good used car” might have trouble getting a fair price for it because of asymmetric information between himself and the buyer. Such examples illustrate how prices can become distorted in an entire sector. Much like the case of the “good used car,” in nations that have little knowledge about the benefits of good design for their economy, the market won’t be able to appreciate design’s true value. As we have seen, at both the firm and national level, the strong relationship between design and overall performance is well established. Yet results suggest that Canadians at both levels—and possibly many designers too—underappreciate this fact. This partly explains why neither firms nor governments (with the exceptions of the municipal governments of Toronto and Montreal) have shown significant commitment to incorporating design into their growth strategies.

Knowledge Spillovers

In most nations, intellectual property law protects innovations through elaborate measures for patent filing and enforcement. While this approach has been successful at protecting countless scientific and technological innovations, most ideas stemming from design are not eligible for patent registration. Aside from the occasional patented industrial design breakthrough, firms rarely pay compensation or give credit when replicating a designer's idea. Many garment chains proud themselves in being able to



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source new ideas from elite fashion or furniture shows in New York, Paris or Milan, only to reproduce the design in a matter of weeks. Copyright law requires some minor changes in the design, but the styles themselves are notoriously un-copyrightable. Hence, “innumerable companies around the world specialize in being "fast-followers," adept at rapidly producing imitations of successful innovations at low cost.” (Heskett, 2009).

Positive Externalities ‘The faces of buildings which are turned outwards towards the world are obviously of interest to the public, and all citizens have a property in them. The spectator is in fact part owner. No man builds to himself alone. Let the proprietor do as he likes inside his building, for we need not call on him. Bad plays need not be seen, books need not be read, but nothing but blindness or the numbing of our faculty of observation can protect us from buildings in the street. It is to be feared that we are learning to protect ourselves by the habit of not observing, that is by sacrificing a faculty.’ - W.R. Lethaby, Architect, 1922

Architects were early to recognize that the impact of their work goes far beyond the utilitarian aspects of the roofs they design for us under which to work and live. The cultural value of architecture to society is now relatively well acknowledged. We understand, for example, that competitiveness in the tourism industry often relies on the number of architectural artefacts that a city possesses and can proudly showcase to visitors. Economists use the word externality to describe unintended or corollary effects of an economic activity, for which the economic impact is unforeseen, or at the very least, not initially taken into account. For example, the cost of reconditioning contaminated soil after a quarry’s ore has been exhausted is an externality. Throsby (2003) argues that designers and artists support a dual market: “(a) a physical market for the good which determines its economic price and (b) a market for ideas which determines the good’s cultural value.” Countless authors credit design, architecture and art with the generation of extraordinary amounts of cultural worth, as well as many other such side benefits, or positive externalities. On Well-Being and Crime

The notion that ill-designed housing complexes in many ways favour alienation and crime has been the subject of many studies, dating as far back as the 1970s. Today, architects and urban planners carefully optimize spatial layout and use traffic and lighting as tools to reduce criminal incidents and procure a sense of security for tenants. The impact of design on crime is so well established that it has become a responsibility for developers and landlords to manage these issues: “The design-affects-crime debate may well become increasingly important. Indeed, the courts in America are increasingly holding landlords and others liable



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for failing to take sufficient security precautions to prevent criminal attacks on their tenants and guests. Third parties are being increasingly sued for premises liability, especially if a criminal attack can be partially attributed to poor design (Cozens et al., 1999).

Most police forces in England and Wales now have an ‘architectural liaison officer.’ This agent can be called upon to consult with the police force on addressing crime problems through design solutions. This relationship between arguably odd partners has been remarkably fruitful. This suggests that design could be put to use as part of other such counterintuitive tandems, and provide similar benefits. Worpole further suggests that positive externalities of design may already include such hidden benefits as a reduction in demand for health care provision, and possibly even an increase in education attainment.

On Human Resources

Office buildings are the largest capital asset in the developed world. This is also where half of the workforce is employed (Bole et al., 2006). The role of designers has long been to cram as many cubicles as possible into an office floor plan, but this is showing signs of changing. Indeed, the priorities in office design have shifted towards creating efficient, employee-friendly spaces that encourage informality and communication. Human resources academics publish studies with titles such as “The Impact the Physical Work Environment Has on the Professional Performance and Psychological Well-Being of Employees” (Earle, 2003). While human resources professionals link the quality of the office environment with employee performance, office design is also becoming a key differentiating factor when trying to attract employees in the first place, a fact that is confirmed by Jeffrey Taylor, Chief Executive Officer of the Internet-based career centre Monster.com: "Our office design is a perk to clearly differentiate us from other companies." On Quality of Life

Robert W. Veryzer has published several studies that together demystify the relationship between product aesthetics and consumers’ affective judgments. In a 1993 article entitled "Aesthetic responses and the influence of design principles on product preferences," he concludes that, “Aesthetics/design has the capacity to influence the very quality of life itself by literally shaping the products that make up so much of the "world" in which we live” (Veryzer, 1993). Design can improve access for the disabled and elderly; it can simplify complex operations, make optimal use of space, and minimize maintenance; it can improve civic pride and sense of identity. Design can act on countless little things that make up the wider notion of “quality of life.” On Tourism



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We erect buildings to fulfill a function, such as housing families, businesses, or sporting events. These serve their function, but some of them, old and new, fulfill an entirely different purpose: to elicit gazes and awe from locals and foreigners alike. If there is one common element in the activities of any type of tourist--whether it be young backpackers, retirees, or lovebirds—is that they will visit architectural landmarks. Not only that, many will choose their destination based on one landmark, or an abundance of landmarks. Cities like Rome, Paris, and Florence support their tourism industry through their established architectural heritage, while Barcelona, Berlin and Chicago distinguish themselves by regularly proposing radical new designs. One of the most striking examples of an architectural project stimulating the tourism industry is Frank Ghery's spectacular design for the Guggenheim Museum in Bilbao, Spain. This previously run-down patch of industrial riverside now attracts 3 million visitors a year and has become one of the richest cities in the country. In the words of Herbert Muschamp, the architecture critic for the New York Times: “Bilbao has lately become a pilgrimage town. The word is out that miracles still occur, and that a major one has happened here. The city's new Guggenheim Museum, a satellite of the Solomon R; Guggenheim Foundation in New York, opens on Oct. 19. But people have been flocking to Bilbao for nearly two years, just to watch the building's skeleton take shape.” (Muschamp, 1997)

Tourists’ spending power has changed the fate of Bilbao in this impressive example, but the same phenomenon is at play, to varying degrees, in cities throughout the world. Other prominent examples include Beijing ‘bird’s nest’ Olympic stadium by Herzog & Meuron, the Burj Kalifa in Dubai, and lastly the Millau Viaduct. This extraordinary countryside bridge is yet another stunning example. Sitting there alone in the valley of the river Tarn in southern France, the bridge alone attracts over 600,000 tourists annually, on top of its 4-million strong automotive traffic (AFP, 2011).

System Failure

The final aspect that can produce market breakdown when it comes to design is the failure of any component of a so-called design system to function properly, thus possibly affecting otherwise working components of the system. For example, a nation might have considerable innovation skills, yet insufficient venture capital to properly fund go-to-market strategies. The market would thus diminish the design output of this nation because its products fail to make it to market. We will examine each component of a design system in Chapter 5, but for now let us understand system failures as either missing links, or coordination failures, between collaborating partners in design, thus preventing design from expressing its value.

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Chapter 3 | Measuring Design

Getting accurate measurements of R&D investments and returns has been crucial in raising its importance. In the late 1980s in the United Kingdom, the House of Lords science and technology select committee urged increases in R&D. The ensuing influx of new investments required new accounting procedures, customized financial reporting, and results measurements. This eventually led to the creation in 1992 of the first R&D scoreboard, which unleashed R&D policy (Design Council’s website). R&D, which had often been viewed as "too creative to measure" (Design Council), was now understood sufficiently enough that firms and nations could invest in it. Design is at this stage today, where R&D was in the early 1980s; there is growing awareness of design’s ability to increase competitiveness, yet substantiating the design discourse with significant empirical evidence is still challenging. This begs the question: where are we when it comes to the measurement of design? This chapter will address different attempts at quantifying design, at the firm level and national level.

Firm Level

In keeping with the current gospel that managers should manage what they can measure, design managers look to implement performance indicators. Academics in the field have promoted the use of the balanced score card to integrate notions of design value into regular business performance monitoring. The vision-based, holistic approach of the BSC is easy to appropriate for designers (Borja de Mozota, 2006).

Another potential contribution to firm-level design measurement is the Design Value methodology, put forward by Dr. Peter Zec and Jacob Burkhard for the Red Dot Institute. The guiding principles of this proprietary method, the full details of which have not been released to the public, were the subject of the eponymous book, Design Value (2010). The aim of the authors was to devise a rigorous framework for quantifying a firm’s design value. As part of this framework, they devised a formula that combines new concepts that they put forward, such as design assets and design strength, and which together can be used to calculate a firm’s design value:

Design value = Design revenue x (Design strength + Design continuity) + Design Assets

The method used to generate the terms of the equation remains unpublished for now, though it can be bought as a consultancy service by firms in need of such valuation.

National Level



33

The Danish Design Ladder is a tremendously useful tool for conveying a nation’s use of design. This model originally stemmed from a study that aimed to benchmark Danish companies on their investment in design. The study surveyed 1,000 companies and tracked various metrics including revenue, employment, and exports. The survey’s report concluded that firms that use design have an additional growth of 250% compared to others. Using the survey data, firms could be categorized into four stages of “design maturity” that characterize each stage’s use of design. In 2011, the SEE used the Danish Design Ladder model to categorize nations using maturity stages, albeit slightly different ones than in the original Danish model, as shown in Figure 8.

Other initiatives include the “International Design Scoreboard” produced by the University of Cambridge. Measurement of design can also be found in the Global Design Watch report 2010, which offerds qualitative benchmarking of national design policies. The World Economic Forum (Global Competitiveness Report 2012-2013) ranks nations according to a number indicators, including a few that are design-related. The United Nations Conference on Trade and Development (UNCTAD) publishes The

Sources: Design Creates Value, National Agency for Enterprise, Copenhagen, 2007 & SEE 2011.

Figure 8: Danish Design Laddder (2007) & Design Policy Ladder (2011)

STAGE&4:DESIGN&AS&STRATEGY

Design'is'a'key'strategic'means'ofencouraginginnova3on'

Design'is'integralto'the'developmentprocess

Design'is'onlyrelevant'in'termsof'style

Design'plays'no'role'in'product/servicedevelopment

STAGE&3:DESIGN&AS&PROCESS

STAGE&2:DESIGN&AS&STYLING

STAGE&12:NO&DESIGN

STAGE&4:POLICY&VISION&FOR&STARTEGIC&DESIGN

STAGE&4:POLICY&VISION&FOR&SERVICE&DESIGN

STAGE&4:POLICY&VISION&FOR&INDUSTRIAL&DESIGN

STAGE&4:NO&POLICY&VISION&FOR&DESIGN

DK&/&FI&/&UK&/&EU

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BE&/&CZ&/&FR&/&IE&/&IT&/LV&/&PL&/&PT&/&RO&/&SK

AT&/&BG&/&CY&/&DE&/EL&/&HU&/&LT&/&LU&/&MT&/&NL

Design&Policy&Ladder&2011

DanishDesign&Ladder&2007



34

Creative Economy Report every two years, which measures the economic importance of different creative sectors, including many design-related sectors. Both the data from UNCTAD and the WEF studies rely on very narrow sectorial definitions of design. The data will show, for example, total revenues generated by a country’s architecture and interior design firms. These studies therefore fail to account for increased tourism, human resources benefits and other externalities that are generated by design projects, nor do they account for the design-related revenues of the designers’ clients. These two notable omissions from such seminal publications demonstrate that we are not yet able to provide quantitative data that captures the full scope of the economic impact of design on a national level.

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Chapter 4 | Design Policy

In the previous chapters, we established design’s importance to the economy, as well as how it can procure competitive advantage for firms as well as nations. We also identified the ways in which classical economic theory fails to account for design’s true value to society. From positive externalities that procure tremendous value to society, to systems that fail to deliver economic value, we are seeing that leveraging design’s potential can be a tricky task. Yet we know that innovation-driven economies must rely on “Business Sophistication” and “Innovation,” both of which already depend heavily on design, to further their competitiveness. (World Economic Forum, 2012 Global Competitiveness Report). In light of these facts, a question remains: how are we to overcome the challenges in valuing design, in order to harness its power to deliver competitiveness and growth? Several nations have run into the same challenges, and most have responded with what we now refer to as a national design policy. In this sense, design is following in the footsteps of R&D, which had sustained the same market failures as we now see for design. The overbearing evidence of the importance of R&D for nations’ competitiveness spurred governments to step in with innovation policies that aim to correct market failures, often by subsidising R&D. We should note that R&D, on its path to universal acknowledgement as a growth tool, suffered the same methodological difficulties that plague design research today. Indeed, before R&D funding became widespread in the developed world, R&D investment advocates had to overcome the challenges posed by vague definitions, scarce data, and difficulties establishing causal links.

A Brief History of Design Policy

Charles and Ray Eames are the designers behind many iconic chairs and objects that we still see around in both museums and living rooms today. In 1958, the Indian government asked Eames to visit India and write what was later to be called The Indian Report. The Indian government wanted the designer to “recommend a program in the area of design that would serve as an aid to small industries.” (Eames, Charles and Ray, 1958). The Indian government sensed that its population did not possess the design skills (the report would confirm that) that would enable them to address the poor quality of the consumer goods that the country produced. While modest, this initiative likely was nonetheless the world’s first attempt at a national design policy.

At that time, there were virtually no trained professional designers in Japan either. Just like India, Japan had judged that design professions were key to their competitiveness and took on the task of creating a design workforce. By 1992, Japan had 21,000 industrial designers as a result of the policies introduced by the Ministry of International Trade and Industry. Just as Japanese designers were acquiring these new skills, the semiconductors industry was exploding. Those two trends dovetailed and



36

gave rise to the Japanese consumer electronics industry that would take soon take the world by storm.

In 1993, the Design Management Institute dedicated an entire issue of the Design Management Review to design policy (Design and National Policy). The following year, a new issue of the same journal tackled the question of measuring design. By then, the impact of design on micro and macro economics had been identified and several nations were actively creating policy to better leverage design’s potential. In 1993, Korea launched its first five-year national design policy, which it has updated every five years since. By 2011, 17 of the 27 EU member states (SEE, 2011) had explicitly included design in national policy, with prominent regional design policy initiatives in Catalonia, Flanders, Lapland, Silesia and Wales. (Whitcher et al., 2012). A 2010 report entitled Global Design Watch by Finland’s DESIGNIUM, the New Centre for Innovation in Design, compared different national design policies and programs. These policies range in scope and depth. In Korea, for example, the national policy favours design promotion over direct investment in firms (Raulik et al., 2010), while the US devotes more energy to education in design at managerial levels and the creation of multidisciplinary courses (Designium, 2010). Most countries that have a design policy also will have a formal body to coordinate the different stakeholders.



37

Design Systems Proposed by academics, design systems are arguably the most powerful tool available to those creating design policy. This structural model delineates the different components that interact to eventually output design. Beyond simply mapping the sector, design systems help to “emphasise the complex and dynamic nature of design activity which involves many stakeholders in an interrelated network”(Raulik, 2009). Proponents of the design system suggest that governments use this analysis framework to identify which component(s) of the system might be underperforming. This information can in turn be used to develop policy instruments that address those weak links, thus enabling the system to maximise its output. In short, this tool can be used to address all types of market failures that we identified earlier: Information asymmetry: by spotting where knowledge is absent;

Knowledge spillovers: by spotting weaknesses in intellectual property

protection;

Positive externalities: by integrating them into planning;

System failure: by spotting where communication is blocked. As initially defined by University of Wales professor Gisele Raulik-Murphy et al, (2009), design systems should comprise a minimum of 4 components, e.g.: design promotion, design support, design education and design policy (see figure 4.). Design promotion refers to any initiative that aims to increase public awareness of design, such as award shows, exhibitions, etc. Some cities, including the city of Toronto, endowed themselves with design museums as a means to promote design. Design support is usually provided through government programs that assist businesses in leveraging design to increase their competitiveness. Design education obviously refers to the training of designers; however, more and more we also see design education showing up in management education curriculum. Design education is therefore not seen strictly as sectorial education, but rather as something that spans various disciplines. For example, The Australian Governement Public Sector Innovation website reports that some of its staff members recently enrolled in an eight-week design course that will teach them about designers’ methods and processes (2012). Lastly, at the centre of a

DESIGN'POLICY

PROMOTIONED

UCATION

SUPPORT

designers'+'managers

public

businesses

Source: Raulik-Murphy et al. (2009)

Figure 4. Generic representation of a National Design System in 2009



38

design system is a design policy that provides governance and coordinates the system’s various components.

Of course, such design systems representations serve only as a basic framework to which nations or regions add various components, based on their specifics needs, issues, and priorities (see Figure 6.). A more recent generic design system put forward by Whicher et al., (See Figure 5) adds a further level of detail. It identifies—and thereby highlights the importance of—components such as the design sector itself, regulations,

and design clusters. This model also dissociates design funding (public and private) from design support. Regardless of the specific components of the system, the goal remains the same, namely to identify the components of a system so that one may in turn ensure that these work cohesively. There are also design support and policy initiatives that go beyond national borders. One of the main actors in the European Union is the SEE project. SEE stands for Sharing Experience Europe –Policy, Innovation & Design and is “a network of 11 design organisations sharing knowledge and experience in order to develop new thinking, disseminate good practices and influence local, regional and national policies for design and innovation.” SEE started in 2005, and has been at the forefront of research and publication about design ever since. In the first few years following its inception, SEE identified design programs throughout Europe that were working in isolation and set out to remedy this. In particular, communication gaps were revealed between design organisations and

governments that undermined the proper functioning of the different design systems. The SEE project’s various publications and networking contributed to EU-wide awareness of design issues amongst all stakeholders. While speaking at the SEE conference in 2011, Peter Dröll of the European Commission proposed the following vision: “by 2020, design is a fully acknowledged, well-known, well-recognised element of innovation policy across Europe.” Another noteworthy, Europe-wide, initiative from the now-defunct INNO-GRIPS (Global Review of Intelligence and Policy Studies), is the 2008 research conducted by Pierre Bitard and Julie Basset entitled “Design as a Tool for Innovation.” This ‘outsider’ inquiry is still one of the most comprehensive surveys to date of issues surrounding design in the competitive landscape. More recently in 2011,

Source: Whitcher et al., 2012

Figure 5. A more elaborate representation of a generic National Design System in 2012.

DESIGN'CENTRES,'ASSOCIATIONS'&'CLUSTERS DESIGN'

INVESTMENT'

(PRIVATE'

&'PUBLIC)

DESIGN

'SU

PPORT

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'CENTRE

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ATIONS'

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NAL

DESIG

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DESIGN'FUNDING

SUPPLY''''''''''DEMAND



39

and presumably following Bitard and Basset’s findings, the commission awarded funding of €4.8 million to six projects that proposed to advance the European Design Innovation Initiative,’s mission, which is “to exploit the full potential of design for innovation and to reinforce the link between design, innovation and competitiveness 7.” The projects are:

EuroDesign – Measuring Design Value

SEE Platform: Sharing Experience Europe – Policy Innovation Design

IDeALL – Integrating Design for All in Living Labs

DeEP – Design in European Policies

EHDM – European House of Design Management

REDI: When Regions Support Entrepreneurs and Designers to Innovate

Source: EC’s website, Projects supporting the take-up of the Design in Innovation Policy

7 From EDII’s website, 2012.



40

For SMEs Design policy is not in itself targeted towards one sector or another. It aims to

make better use of design across all company sectors and sizes. That being said, there is reason to believe that design policy is of greatest benefit to SMEs. As we stated in Chapter 1, research by Page and Herr shows that weak brands may be able to compete effectively against strong brands, as long as the weaker brand’s offering exudes superior design. In other words, while strong brands provide some protection from the disadvantages of poorly designed products, SMEs with weak brands do not have that luxury. In the high symbolism product categories that Page and Herr studied, SMEs are in a sense compelled to produce good design, because otherwise they risk being crushed by stronger brands.

However, there is a long list of reasons SMEs fail to invest in innovation and design. Raulik et al. in their 2009 paper entitled “National Design Systems” compiled, from various research, the following hurdles that SMEs face with regards to using design. First, SMEs are not able to absorb the risk inherent to design and innovation

Source: “National Design Systems”, (Raulik-Murphy et al. 2009)

ministry'of'educaNon

ministry'of'trade'

and'industrycity

councils

designforumfinland

designstart

programtekes

diges

design2005

(research)

design'round'table

academy'of'finland

int.'designbusiness

mgmt.'prog.polyV

technicsgraffia

nat.'assoc.of'g.'

designers

ministry'of'foreign'affairs

insNtuefor

designresearch

researchinsNtute'ofthe'finisheconomy

university'of'lapland

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university'ofart'

and'design

design2005

(technology)

FUNDING'SOURCES

DESIGN'POLICY DESIGN'PROMOTION

DESIGN'EDUCATION

PROFESSIONAL'ASSOCIATIONS

DESIGN'SUPPORT

RESERACH'&'DEVELOPMENT

NaNonal'Design'SystemFINLAND'(as'of'2007)

private'&'non'profit'sector

Figure 6: National Design System in Finland, as of 2007.



41

projects; their size makes them more conservative. Second, SMEs often do not have internal design resources and rely on consultants. The difficulty in managing design consultants is said to be a key reason for the failure of design projects (Roy, 1994). Such design management problems are “much more likely to occur in companies with under 100 employees, and especially affected the smallest companies with under ten employees.”(Roy, 1994). Third, SMEs are not connected to the rest of the system. They might not take advantage of all available grants, support projects, or new markets, because the manager hours needed to do so are often simply not available (Johnson et al., 1990). Fourth, SMEs tend to foster “efficiency, cost cutting, incremental changes and a focus on day-to-day business. Innovation is not likely to flourish in such a culture.” (von Stamm, 2004). Lastly, SMEs generally rely on simple organizational structures. “Typically, they are managed in a personalised way that directly reflects the knowledge, skills and attitudes of their owners or managers.” (Bruce et al., 1999).



42

Mini Case Study: South Korea

By all accounts, Korea is considered as a leader in design policy. The Korea Institute of Design Promotion (KIDP) was established in 1970 by the Korean government to promote design exports and the design industry in general. Its focus is not “to meet the demands of the digital design era of the 21st century, KIDP particularly focuses on leading Korea’s economic development and enhancing the quality of life by promoting [a] cutting-edge design industry.” (International Council of Industrial Design’s website). In 1993, KIDP produced the first design policy that was labelled as such, and has been renewing it in 5-year cycles since then. Theses policies were reportedly a strategic response to the country’s decline in exports. The goal was to bring the country on par with developed nations in terms of innovation. (Diamond 2008). Ranked 19th in global competitiveness, up from the 24th place in 2011-2012, Korea is now not far behind Canada, which ranked 14th in 2012-2013 (WEF, 2012). Korea particular excels at design-related indicators, namely patent applications and R&D company spending, for which Korea respectively ranked 9th and 11th globally in 2012-2013. Another noteworthy component of Korea’s competitiveness ranking is its favourable macroeconomic environment, which ranked 17th among the 35 economies identified as being innovation-driven. Korea “has presented the most noticeable advancement in its use of design resources. South Korea has been able to progressively improve its design policies and, consequently, also take greater advantage of those policies’ impact on Korean economic development.” (Raulik-Murphy et al. 2010)

While some countries choose to support design by supporting individual companies, Korea’s ambitious policy focused its substantial investment on design promotion (Raulik-Murphy et al. 2010) and building design capabilities (Moultrie, Livesey, 2009). One of its often-noted feats is to increase the numbers of design graduates from 15,000 to 36,000 between 1993 and 2002. This strategy coincided with a low employment rate of 3%, in the context of which the best design graduates were able to find jobs in design sectors, while others could leverage their design skills in other sectors (Raulik-Murphy et al. 2010). In Korea, the design services sector is still well supported and has become internationally competitive (Moultrie, Livesey, 2009).

The “International Design Scoreboard : Initial indicators of international design capabilities”, a 2009 study by the University of Cambridge, ranked Korea 2nd in both absolute and relative measures of design capabilities. The report highlights the significant level of public investment in design, in both absolute and relative figures, and the high numbers of design graduates, as two means by which Korea achieves these design capabilities. A 2003 Finnish report, entitled Design Policy and Promotion Programmes in Selected Countries and Regions, compared various design policies across the globe and describes one of the results that stem from sustained investment in design: “With the support of Korean government, Samsung’s focus has changed to quality design within its own walls. In 2001, Samsung was ranked fifth in the world in generating new patents, behind IBM and Canon, and ahead of Sony, Hitachi and



43

Mitsubishi Electronics” (Hytönen et al., 2003). The table below contains highlights from the Korean design policy.

Source: Global Design Watch, Design Policy and Promotion Programs in Selected Countries and Regions

Country Focus Funding National design program 1993-2007 Government

Main Actors “The government’s Committee for Globalization Policy develops [a] design agenda (starting with the first of three five-year plans; 1993–1997, 1998–2002 and 2003–2007). These initiatives were the remit of the Ministry of Commerce, Industry and Energy, administered through the Design and Brand Policy Division. An underlying ambition has been to improve ‘brand Korea’ and the reputation of Korean goods in export markets and raise design awareness in the general public. “(Global Design Watch, 2010)

Main Objectives Increase the number of firms with in-house designers from 20,000 to 100,000

To strengthen local capability for design innovation

Treble the value of the design To strengthen the capability of design research and product development

To train world-class designers To develop international design ex-change and strengthen co-operation in North-East Asia

Implementation To establish, maintain and finance design infrastructure e-Design Academy

International Design School for Advanced Studies 16 Design Innovation Centers and 3 Regional Design Centers

The KIDP Centre opened in 2006 3rd Five Year Plan designdb.com portal - GD Award (Good Design) - 2008 KIDP Framework

Related Facts & Figures Public investment in design: *Total investment 68.80$ M (USD, 2007 prices)

Number of design firms 2,500 (2006)

WIPO design registrations 27,235 (2002) Employment in the design services sector 112,000 (2006)

WIPO trademark registrations 69,359 (2007)

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Chapter 5 | Design Policy in Quebec and Canada

Why a Design Policy?

Countless observers of economic growth and competitiveness have argued that Stage 3 Innovation-driven economies must leverage all aspects of innovation to ensure their national economic growth. The latest Global Competitiveness Report from the World Economic Forum warned that these nations “must design and develop cutting-edge products and processes to maintain a competitive edge and move toward higher-value-added activities. This progression requires an environment that is conductive to innovative activity and supported by both the public and the private sectors” (WEF, 2012). Canada fell two positions to 14th place in this year’s general competitiveness ranking. This worthy ranking is mainly due to Canada’s healthy goods, financial, and labour sectors, which ranked 13th, 11th, and 4th, respectively. However, in the “business sophistication” pillar—the most adequate proxy for design—Canada holds the inferior rank of 21st place, down from 15th in last year’s report. The WEF survey further shows that the two most problematic factors for doing business in Canada are inefficient government bureaucracy (16.4 % of respondents) and insufficient capacity to innovate (15.1% of respondents).

During the past two decades, the worldwide response to global competitiveness

challenges has been to invest in research and development, and Canada and its provinces have followed down that path. In 2009, Canada’s R&D spending as a percentage of GDP ranked 15th in the world (Statistics Canada, 2009). These colossal investments haven not been sufficient to further—or even maintain—Canada’s ranking. This difficulty in transforming capital into innovative products and services has been the subject of many studies over the past few years, and falls outside the scope of this paper. Let us simply cite a recent Globe and Mail investigation that boldly concludes that “a significant chunk of the nearly $5-billion that Ottawa and the provinces give to companies in refundable R&D tax credits goes to dubious research and unscrupulous consultants.”

That Canada has been shown to have an “insufficient capacity to innovate” is a

tragedy in itself. This recent WEF observation sadly reiterates Michael Porter and Roger Martin’s observation in 2000 that Canada “has pursued replication, not distinctiveness.” The widespread model of government investment in R&D, typically reserved for scientific and technological activities, addresses the failure of the free market to provide private investment in scientific and technological innovation. Innovation, as we have shown in chapter 2, is not restricted to technology. Market-driven innovation of a non-technological nature, which is the purview of design, is subject to many more market failures and receives scant political attention. While enormous sums are being spent to support R&D, Canada fails to leverage design’s competitive potential, which is comparatively cheap to develop and promote. The argument against design funding is that design is often a replicable competitive

Chapter 5 | Towards a Design Policy in Quebec and Canada


45

advantage. Indeed, it is an inconvenient reality for design advocates that most design innovations will never lead to the issuing of a defendable patent. Many critical design innovations will never show on a balance sheet or be measured in other ways. This pervasive perspective, dictated by how accountants view things, leaves the competitive playing field open to those firms who see past such difficulties and are able to grab market share through design-driven innovation. Moreover, the power of design is not limited to design’s contribution to a product (like the appearance of the new Beetle), but largely resides in the capacity of design-minded firms or individuals to improve any product or service over the course of a career or product lifespan. In this way, it acts as an economy-wide enabler, much like education. While it remains debatable whether one can adequately measure design culture, design aptitudes and design assets, decidedly these are all vectors in a nation’s capacity to innovate.

The WEF’s 2012-2013 report also points to Canada’s inefficient government

bureaucracy as a deterrent for doing business with Canadian firms. Bureaucracy is the mother of all service design problems. Indeed, “…consumers have become more demanding; this is as true for consumers of private goods and services as it is for citizens using public services.” (Whitcher et al., 2012). To address this new reality, the Australian Public Sector Centre for Excellence currently offers design training to its staff. Meanwhile, the United Kingdom has explicitly recognized the strategic aspect of an efficient bureaucracy, proposing a “transformational programme to support public service innovation,” as part of its design policy (Global Design Watch 2010).

As early as 1995, the Ontario Ministry of Economic Development and Trade

published a study that concluded the province needed a coordinated design policy (ERBIC). Indeed, tackling the nation-wide issues regarding competitiveness, innovation and bureaucracy requires a national mobilization of all stakeholders, if only to provide institution-endorsed national targets. Furthermore, to meet the challenges of an innovation-driven economy, i.e. competing with sophisticated products and services rather than raw materials or labour cost advantages, Canadian officials must develop a clear stance on every component of innovation, which of course includes design. To do so, they must disentangle design from other innovation activities, in order to have a segmentation of innovation metrics reflected in the various existing or new programs. Beyond discussions on who—government or private sector—should foot the bill for design funding and support, a national design policy can engender small tactical nudges within the sector, so that design can be leveraged effectively to meet national competitiveness goals. Overall, a national policy can provide the institutional leadership that will in turn mobilize new stakeholders, who are often unaware that they are participants in a strategic sector. After decades of expensive—and arguably inefficient—investments in R&D, a national design policy can contribute to leveraging innovation in a cost-effective manner, all while delivering immense positive externalities to society.

Mapping the Design System in Quebec



46

Most design policies are drafted as nation-wide orientations. After all, political borders are what constrain the effect of a policy. Nonetheless, some regions, such as Wales in the United Kingdom and Catalonia in Spain, have deemed fit to draft design policies for themselves. These regions have something in common: they use a different language that the rest of the country. Most of the Quebec workforce uses French as a working language, whereas the vast majority of workers in the rest of Canada use English. Though language considerations themselves are unrelated to design policy, other nations’ examples in similar circumstances suggest that Canadian provincial borders might be used as scopes for future design policies. Indeed, it would be appropriated to ask ourselves the following: should any design policy efforts be destined to cover all of Canada, or should one be drafted specifically for Quebec’s ‘distinct society’? Again, language would not be an issue per se. Enough Quebecers speak English on a daily basis to allow for cross-Canada design policy efforts and implementation. Ensuring bilingual access to policy and services is, after all, the daily duty of federal government officials. What is a trickier problem is to determine who takes the leadership of such a policy. Ottawa, the federal capital, out of which one would expect national policies to emanate, is by no means a cultural capital. It’s unlikely, then, that design stakeholders in either Toronto or Montreal would accept Ottawa officials’ leadership in the matter. Both Toronto and Montreal could arguably claim the title of Canada’s design capital. UNESCO endorsed Montreal’s wish to become a ‘design city’ in 2007. Meanwhile, fuelled by its recent significant real estate boom, Toronto is quietly becoming a world-class destination for modern architecture enthusiasts8. Although both cities have a lot to offer in terms of creativity and design achievements, they have very little history of combining efforts to further a common design agenda. Although we could in theory map a truly national design system, overlaps would be abundant, and the differences in strategy are so numerous that simply achieving alignment would be a colossal challenge in itself. Beatrice Carabin of Montreal’s municipal Bureau du design confirms this: “the challenges in Toronto and Montreal are very different. It’s not that it’s impossible to build bridges but our everyday work tends to flow through existing partnerships, such as the UNESCO Creative Cities Network of which Montreal is already part of.” Divergent challenges, and the fact that the pernicious ‘two solitudes’ paradigm continues to represent a divide between these two metropolitan centres, are sufficient to hinder nation-wide collaborative efforts. Therefore, given that this paper focuses on issues in Quebec, it is most practical to use this Province’s borders as the working definition for a nation, in the context of an overarching design strategy that addresses Quebeckers.

Figure 7 details Quebec’s design system. Much like Finland’s, it shows all organizations that have a stake in design. This map draws from various data sources, including:

• Provincial and municipal government grant programs; • Mission statements of various non-profit organizations; • Mission statements of professional associations;

8 In 2000, opentravel.com users ranked it the 7th-best destination in the world for modern architecture.



47

• Undergraduate and graduate programs at all universities in Quebec; • Research chairs at universities in Quebec; • Other research groups.

Several of theses bodies, especially the funding sources, are not entirely dedicated to design; they include ministries for which design funding or promotion is only a very small part of their mandate. Still, this map is a striking illustration of the sheer number of bodies that, directly or indirectly, have a stake in design. All three levels of government—federal, provincial, and municipal—are represented. Not only are they represented, but also each level of government has a body that, at least in theory, is concerned with design funding and design support. Moreover, all three levels have policies that cover design, in one way or another, though only the city of Montreal addresses it explicitly through its Bureau du design. The federal government’s design-related policy is the weakest for constitutional reasons: “While there is a national government, many of the sectors which play an important role in innovation are under the control of the ten provincial governments.” 9 Still, the Canadian Intellectual Property Office’s legal framework arguably contributes to the shaping of design policy

9 Pro-Inno Europe’s website, Innovation and Innovation Policy in Canada.

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Figure 7: Quebec’s Design System



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in Quebec. The province of Quebec does not yet have an explicit design policy. Its Strategy for Research and Innovation is shaping, if only indirectly, the way design is supported in the province, notably through programs like the Ministry of Finance and Economy’s tax credits for manufactured products. Alain Dufour of Mission design says that, “Although design is not explicitly mentioned in many of Quebec’s programs, there is an understanding of the value of design within both of the ministries that we regularly speak to.” This endorsement of the value of coordinating design stakeholders is substantiated by the financial support from two provincial ministries that Mission design has been receiving since its inception in 2010.

The design system map shows that the ministries have a stake in design, but programs themselves are not specifically mapped. Other programs that overlap various organizational and ministries are not mapped either. The federal Youth Employment Strategy, for example, involves eleven different ministries, and supports youth employment in various high-demand sectors, including design10 .

The most important research and education organization concerned with design is, by far, the Faculté d’aménagement at Université de Montréal. The faculty proposes programs in most design disciplines, and hosts over twenty research chairs and research groups. Mosaic, also at Université de Montréal, is a multidisciplinary group interested in creativity and management, which overlaps in many ways with design studies. Université du Québec à Montréal has an undergraduate fashion design program and also houses the impressive Centre du Design, while McGill University has an undergraduate architecture program. Outside of the universities, the Institut de développement de produits promotes best practices in product development and funds different projects. The Academy of art and design offers curriculums in graphic design, fashion design and interior design.

Mission design rounds out Quebec’s design system. This non-profit organization is

the result of an industry-wide consultation and ensuing 2008 report entitled A Common Vision for Design in Quebec. Mission design is the main design coordination and advocacy body in Quebec. Its projects and activities are focused on three main areas:

• Coordinating the design industry and developing partnerships among various actors; • Promoting the economic value of design in the public and private sectors, and

stimulating demand; • Positioning Quebec design internationally and anticipating needs and global trends11.

While Mission design is not responsible for policy drafting, it coordinates most

design-related professional associations and influences policy. Since its inception in 2010, it has been playing a role akin to that of a central nervous system at the core of

10 Service Canada website, Youth Employment Strategy. 11 From Mission design’s activities report 2011-2012



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Quebec’s design sector, similar to that of its counterparts Designium and the Korean Institute of Design Promotion in Finland and South Korea, respectively.

Towards a Design Policy In a 2010 Globe and Mail article, Linda Lewis, founding president of the Toronto Design Exchange, declared: “Unlike most nations in the world who promote their country's designs and designers, Canada doesn't have a design policy. Other countries like Italy, Korea and Japan have major governmental organizations that go around the globe advertising the products of their design industries or their businesses that invest in design. That's not true in Canada. We're it." Ms. Lewis founded Design Exchange, Canada’s design Museum, in 1994 in part to counteract the lack of support from government and institutions. Housed in the old Toronto Stock Exchange building, the museum serves as an exhibition place but also as a hub for the design community. Ms. Lewis’s rather pessimistic statement about the support for design in Canada is echoed in the 2006 report “Making the Link - Advancing Design as a Vehicle for Innovation and Economic Development”, which concluded. “…there is a strong sentiment expressed in interviews and written materials that Toronto’s ‘expertly trained, highly creative’ design workforce and supporting institutions are not sufficiently valued nor being put to use effectively. Stakeholders believe this is because the information needed to persuade governments and firms to make design investment is neither sufficiently developed nor disseminated and because the public spillovers of these investments are not being adequately considered.”

In the province of Quebec, both provincial and municipal levels of government have shown more recognition of the value of design than both the federal government and other Canadian provinces. The 1986 Rapport Picard identified design as one of seven vectors of economic development for the city of Montreal, and several measures at both municipal and provincial levels ensued. The Salon International de Design de Montréal was founded in 1989 and is still going today. Moreover, the Quebec government funded the Institute of Design Montreal over several decades, is now funding Mission design, and has granted tax credits that cover some industrial and fashion design activities (ERBIC, MFE). Meanwhile, acting upon the Rapport Picard’s recommendations, the city of Montreal created the position of Design Commissioner in 1991. This led to the creation of the Bureau du design in 2006, which today embodies the city’s dedication to valuing its design assets.

Eleni Stavridou directed the Quebec-funded Montreal Design Institute from 1993

to 2007. A passionate advocate of both design and the city of Montreal, she spent those years trying to convince government officials of the importance of design. The



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institute did not survive the departure of Ms. Stavridou. Despite the many successes of the institute, in an interview with Le Devoir newspaper that preceded her leave, she deplored the fact that no Quebec government has put forward a national design policy: “A national design policy clearly indicates the political will to support design. It is always easier to get financial support for projects when, initially, there is moral support from politicians and the government.” The testimonies above point to the fundamental role of government in establishing design as a vector for strategic growth. Despite the fact that many programs are available, the provincial government has yet to acknowledge design’s importance through explicit policy.

The recent election of Pauline Marois and the Parti Québécois could precipitate

the drafting of a design policy for Quebec. Indeed, the province’s latest budget (2013-14) once again confirmed the PQ’s traditional eagerness to promote Quebec’s cultural assets—and this despite challenging economic conditions.

As observed in the previous chapter, Quebec’s design system contains a healthy

number of stakeholders. The recent founding of Mission design in 2010 shows additional promise, given that it has been the most active coordinator of the system to date. Its not-for-profit mandate is ambitious, and the number and quality of its administrators and supporters are a clear indication of increased momentum in efforts to leverage Quebec’s design assets. Mission design’s communications platform states its desire to “raise awareness among public authorities and businesses of the economic value of design.” This is the most concrete step taken in Quebec towards a validation of design’s value through a national design policy. While this is a positive course of action, Mission design is a non-profit that currently counts on a small permanent staff of only five. As ambitious as they are, it is conceivable that the policy orientation mandate might come second to their greatly important design promotion and coordination activities. Moreover, Mission design’s financial dependence on two provincial ministries suggests that the non-profit might be more focused on maintaining its funding than advocating for policy changes.



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On the whole, Quebec’s situation with regards to leveraging design is neither ideal nor bleak. While the province does not benefit from the nation-wide mobilization enjoyed in Korea or Denmark, it is not devoid of institutional interest. Plotting Quebec design on the Danish Design Ladder (See Figure 8) would position it at Stage 2 with a foot in Stage 4. This means that Quebec has a vision for industrial design (Stage 2), but does not have a vision for service design (Stage 3). Since the Rapport Picard, Montreal—with endorsement from provincial officials—has included design as part of

the city’s strategy, which would position Montreal at Stage 4 in the ladder. Considering the conclusions of the latest WEF and UNCTAD reports, the newly-elected government, and the coordination strength of Mission design, it is conceivable that the province could soon be leaning towards a nation-wide recognition of the competitive potential of design, in which case a national design policy would likely be drafted by the Ministry of Finance and the Economy.

Recommendations The following recommendations are aimed at Quebec’s various design

stakeholders. While some of the recommendations might align naturally with existing sectorial preoccupations, they do not necessarily echo the priorities of these stakeholders. The underlying question that they aim to address can be stated as

Figure 8: Quebec Design Ladder

STAGE&4:

STAGE&3:

STAGE&2:

STAGE&1:

QUEBEC'S&STRATEGY&FOR&RESEARCH&ANDINNOVATION

QuebecDesign&Ladder&QUEBEC'S&FIRMS&USE&

DESIGN&IN&THEIR&PRODUCTS&

NO&VISION&FOR&SERVICE&DESIGNPOLICY

MONTREAL'S&DESIGN&STRATEGY



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follows: how can Quebec best leverage design to increase its global competitiveness? While the resulting recommendations vary from fairly simple program tweaks to profound cultural shifts, they share common traits of being based on research and fact, and are all drafted from a systems optimization perspective. It is the author’s hope that anyone concerned with design in Quebec will find these insightful, and that they will trigger new reflection on the subject.

1. Include service design in all aspects of the design system

The service sector accounts for 63% of the world economy, and for more than 70% of high-income countries’ economies (est. 2011, C.I.A. World Factbook). Services represent most of the growth of the developed world. In order to advance a competitive service offering, Quebec’s design stakeholders should explicitly include service design as part of their programs. Over the last two decades, service design experts have developed a set of best practices. This body of knowledge still receives little to no attention in Quebec’s design and business curricula. To date, there is not a single course in the province that is devoted specifically to service design in either business or design schools. The service design successes of FedEx and 1-800-Got Junk are still studied under logistics and operations management programs, which appeal traditionally to students who wish to operate large firms. Therefore, this opportunity for training is lost to small design firms, along with the two thirds of the SMEs that work within the services sector.

2. Address design in business training curriculum

If we are to embrace our previous definition of design as the solving of ill-structured problems, design should finds its way into business training programs. Indeed, managers (and politicians) toil daily to solve such ill-structured problems. Management schools typically include innovation as part of their programs but largely steer clear of foreign notions such as aesthetics, problem-solving, and design processes. In much the same way business scholars have come to acknowledge the importance of information technology and psychology 12 to a manager’s training, design should be taught through a skill-based approach—or as a set of skills to acquire. Failure to do so is to concede an advantage to those nations who choose to leverage this potential, and to those who already benefit from a strong design culture (such as Germany or Denmark). Considering the immense creative talent pool in Quebec, especially in the Montreal area, this would be an extraordinary loss.

3. Clarify definitions

12 Typically, through human resources training



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Design stakeholders should work toward a consensus on what constitutes design. This is not merely an intellectual endeavour. As Ana Serrano, director of the CFC (Canadian Film Centre) Media Lab, says: “If we're going to develop a national design policy, more rigour is needed around what is meant by design and what elements a national design policy would cover” (Jermyn, 2010). It should also be determined where stakeholders stand on the gamut that one can draw from a skills-based definition, versus a sector-based one. The sector-based approach, which is implicitly embraced by the Ministry of Finance and the Economy, has the advantage of providing clear-cut limits to the scope of programs, but arguably fails to account for design innovations that are new, undefined or adjacent to recognized activities. For example, today’s sectorial approach does not support, promote or leverage design activities such as service design, public sector innovation, or managers’ industrial design education. Additionally, and more particularly, stakeholders should clarify their stance on the current situation for fashion design activities, which are excluded from several design programs, or given separate treatment. Indeed, Mission design does not currently represent the Conseil de créateurs de mode du Québec. Likewise, the Québec Research and Innovation Strategy does not include its support for fashion design within its broader support of industrial innovation activities. Though the fashion industry undoubtedly faces its own set of challenges, it is nonetheless likely that many of these challenges are common to the other design sectors.

This clarifying of definitions should also see a significant change in the scope of any future editions of the Québec Research and Innovation Strategy (SQRI, 2010-2013): non-technological innovation should be specifically included. The current bias, namely that innovation is necessarily technological, creates a blind spot in Quebec’s innovation policy. Indeed, this definition discards, de facto, a whole segment of our innovation economy. To address this blind spot, innovation plans should mimic the shift adopted in 2009 by the European Innovation Plan, and “include all forms of innovation in both the public and the private sector, including non-technological innovation, research-based innovation, innovation in services, design and eco-innovation (Council of the EU, 2009).”

4. Embed a national design policy in the Québec Research and Innovation Strategy

As we established in the previous chapter, while a national design policy cannot be expected in itself to propel Quebec’s competitiveness, it nonetheless has the potential to coordinate the stakeholders upon which society relies to leverage design for greater competitiveness. A design policy will also provide invaluable institutional backing for Quebec’s design innovation endeavours. Representatives of the Ministry of Economy and Finance therefore need to consult with Quebec’s design stakeholders, which at a minimum should include Mission design, the Bureau du design of the city of Montreal, the Faculté d’aménagement of the University of Montreal, and the Fédération des chambres de commerce du Québec, in order to elaborate strategic goals for the province. The result of this consultation should be embedded in a new Québec



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Research and Innovation Strategy (or its successor) after the expiry of the current one in 2013.

5. Raise awareness among academics in business and economics

Regular exchanges between design stakeholders and business academia should occur for three reasons. Firstly, university research groups, chairs, and professors can provide credible, unbiased 13 information to support and influence policymaking. Secondly, academia, through its business courses, has the power to put national competitiveness issues in the spotlight, and to prepare its alumni to meet the related challenges. Thirdly, government-funded organizations like Mission design may be torn between conflicting interests—e.g. maintaining their funding versus advocating for policy changes. Business academia, though not entirely free of such ties, has a neutral stance on the topic. Its involvement, through attention given to the subject in curricula and scientific publications, conceivably could contribute to raising awareness of the need for a government-endorsed design strategy.

6. Pursue local design research

Quebec-focused literature on design economics is virtually non-existent. The 1986 Rapport Picard is still cited as a game-changer for Montreal, but its data are from another era. The latest industry survey was led by the Conférence interprofessionnelle du design du Québec (which eventually led to the creation of Mission design), but it had no quantitative ambitions. Neither Quebec nor Montreal has produced a comprehensive survey of the economic importance and competitiveness of the design sectors, or any other attempt at collecting empirical data as pertains to design. It would be methodologically challenging to conduct studies that link stock market performance and design excellence simply because the sample size would be too small. Still, conceivably there is a way to track various metrics in firms that are recipients of the various design awards in Quebec. At the firm level, the impact of design on local firm performance would contribute greatly to the field, as Robin Roy proposed in 1994: “at the strategic level, changes in product strategy could be related to whole-company business performance; at the organizational level, we might want to relate the appointment of design directors to business performance at company or division level; and at project level, changes in the nature of design briefing documents could be related to the commercial performance of the product concerned” (Roy, 1994). If one buys into the old adage that one manages what one can measure, putting some numbers on design would be without a doubt enlightening.

7. Refocus tax credits on design excellence

13 While academia might have its own biases, they are not de facto ‘pro design.’



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The 2008 CIDQ synthesized discussions of its members regarding the orientations of the sector. The designers had expressed that “it is not design that needs promoting, but rather design excellence” (CDIQ, 2008). This sentiment is coherent with any strategy that aims at increasing competitiveness through design. Favouring excellence could be easily achieved by linking tax credit programs with existing design excellence awards. There is a peer-assessed award for most, if not all, of the design sectors (Grafika for graphic design, Boomerang for interactive design, Prix d'excellence en architecture for architecture, et cetera). Linking tax credits to the hiring of design laureates is a way of channelling government funds to best-in-class designers and design firms. This would provide an extra incentive for designers to outdo themselves, with the overall effect of stimulating design excellence.

8. Create a strategy for design literacy

As with all systems, the weakest link in the design system will determine its output performance. On its path to competitiveness through design, Quebec may run into a design culture deficiency. Design culture works in two ways. First, it is what allows consumers, firms, and the public sector to distinguish between good and bad design, and subsequently to reward the good and let go of the bad. In economic terms (and as seen in Chapter 3), lack of a design culture is information asymmetry at play: it leads to an adverse selection of products. When impaired by a weak design culture, consumers, firms, and the public sector reward poorly-designed products, which hinders the competitiveness of the nation’s design output. Secondly, a design culture permeates all economic sectors and breeds design-conscious managers and entrepreneurs, which in turn shapes national product and service output. In an inquiry into why managers leverage design within their organizations, Borja de Mozota finds that: “design is incorporated into corporate management because their top managers have integrated it into corporate culture” (Montana, Guzman, Moll, 2007). As powerful as education is in spreading ideas and methods, culture is the absolute undercurrent. While it is outside of the scope of this paper to explore which nations are home to the strongest of design cultures, it is not too presumptuous to state that strong design culture is not prevalent in Quebec or in Canada. To improve a design system so that it efficiently makes use of all available resources, Quebec must nurture a strong design culture. As a way to develop this, the CDIQ report had suggested the introduction of design notions at primary school (CDIQ, 2008). The lack of widespread design culture is, ironically, the reason why it is unlikely that such a program is adopted. An alternative way to promote design culture is to introduce a tax credit for the production and local distribution of media content that addresses design. The rationale for such new fiscal incentives can be found in the failure of the market to adequately reward the producers of this content for the national competitive benefits and the externalities that they deliver to society. Culture is intangible, it takes generations to alter, and investment in it regularly lends itself to attacks from proponents of minimal state intervention in the economy. For these reasons, fostering design culture is arguably the biggest challenge on the path to improving Quebec’s competitiveness through design.



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Concluding Thoughts

The stagnant economy of late has stalled consumer spending and thereby the growth of many firms, putting considerable pressure on marketing departments to create growth. This, coupled with the ever-increasing media mix, means marketers and advertisers are leaving no stone unturned in the search for new (and ideally cheap) ways to promote products, services and brands. All of which partly explains the corporate world’s renewed interest in creativity, which is embodied in ‘corporate creativity’ summits and workshops such as C2 Montreal and Circus Festival in Australia. This nascent, seemingly insatiable, need for corporate creativity is crystallized in a new creative labour force, nowhere as prevalent as in advertising agencies. Agency ‘creatives’ are expected to turn out creative material in enormous quantity and quality for long hours, five to seven days a week. They work under tremendous pressure to generate new ‘out-of-the-box-yet-market-friendly’ ideas every day. Creative output is by all accounts much greater than it was fifteen years ago. This intense creative workflow spills over into all sectors involved in advertising and marketing content production: film production, music, design, photography, event planning, print media, etc. While it is not new for these sectors to outsource creative work, this practice is slowly incorporating new crowdsourcing arrangements. Creative ideas can be sourced cheaply now from anywhere in the world, which further increases pressure on creative fees and turnaround time. This observation begs the question: can and will ideas become commoditized? Can and will ideas be bought at nominal prices, and sourced from distant anonymous providers? Could this be a blind spot that the creative community conveniently is ignoring? While these are far-reaching questions that will be left unanswered here, it is relevant to raise them because ideas, creativity, art and design still benefit today from commercial barriers that are gradually being torn down. It is unlikely that an entire architectural project will be outsourced to a foreign architect on Elance anytime soon14. Still, simple design work, and some phases of more complex work, conceivably can be crowdsourced, with little regard to who produced them. With the gradual lifting of geographic, technological and administrative barriers to commerce, qualitative differentiation may be the only remaining obstacle to the commoditization of design. This brings us back to the notion of excellence. To effectively leverage design in order to gain a global competitive edge, Quebec must not only fine-tune its design system to ensure efficiency, but effectively succeed in having it output excellence in design. Catching up with design-savvy nations is a valid objective in itself, yet design leadership is not out of reach and should be the goal. Quebec firms must regularly collect international product design awards. They must light up catwalks in New York, Paris and Milan, and lead the way in 21st century urban planning. Montreal must become an awe-inspiring architectural destination. The province of Quebec in general, and Montreal in particular, must be internationally recognized for leveraging design talents, assets, and resources, thus providing citizens with the very best in quality of life.

14 Elance is a prominent site for the crowdsourcing of freelance talent from all sectors.



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