Sometimes being right gives one no satisfaction at all.

Sometimes it serves only to remind one how fragile and tenuous the world of commerce really is.

The article that follows is one we wrote in December of 2005 for NZBusiness magazine. It was based on our reading of the economic climate at the time and on the ever-increasing prevalence of opportunism – rather than sustainable delivery of value – seen in global economies.

We didn’t see the credit crisis coming, nor did we expect the housing market in the US to bring the world to its knees so dramatically and so quickly.

But we did see the ‘storm’ coming, and the inherent ‘unsustainability’ of many commercial activities.

The article is reproduced below in full, followed by our update on how design should now be used to respond to New Zealand’s fifth consecutive recessionary quarter.

How Can Design Cushion the Coming Economic Blow?

By Fraser Scott and Dorenda Britten

Business publications are currently falling over themselves to run articles on design, often more out of a sense of necessity than any real understanding of the issues (with the notable exception of this fine publication!).

This superficiality is unfortunate because after a sustained period of being force-fed a subject, we tend to shut off and ignore it from that point forward.

As the storm-clouds of economic recession gather on the horizon, being ignorant of design would be a risky move indeed.

As interest rates and inflation rise, business confidence is in freefall. We are hearing horror stories about the potential economic effects of an avian flu pandemic, and our high dollar continues to batter our exporters.

It is not just the paranoid or sensationalistic who are now saying that the road ahead may be rough.

Smart businesses will be now (or will have been for some time) preparing for what lies ahead. They will be gathering data, analysing social and economic trends and determining what they need to do to stay nimble and adaptable in changing times.

Although it is alarmist to compare our current global economic situation to the years immediately preceding the great depression, it is interesting to note that many notable companies, including Ford and Proctor and Gamble, weathered that storm and will almost certainly survive whatever faces us in the next decade.

Yet it is not just the big players that can continue to perform in economic recession, any organisation that understands design has a fighting chance of protecting itself, or even growing, when times get tough.

designindustry defines design as formulating the best-fit product, service or process that works both for the intended consumer, and for the producer.

Good design operates as a function of six quality principles:

• Contextuality Design considers internal contexts such as production cost and manufacturability and external contexts such as market environment and culture

• Simplicity Design is logical, restrained and focused on core purpose

• Functionality Design ensures appropriateness for getting the ‘job done right’

• Sustainability Design’s use of resources caters to present and future needs

• User-focus Design empathises with the user, and seeks to empower and make an emotional connection

• Prescience Design predicts and delivers on what will be demanded tomorrow, not just today

It is the last two principles that should be of particular interest to companies worried about the future.

A number of things are known about ‘typical’ consumers in a recessive economy: they tend to have lower disposable and discretionary income, they are required to carefully prioritise spending decisions and they, obviously, begin to avoid purchasing goods or services that are not necessities.

A design-focused company will be working to know as much about its consumers right now as it can. How will they react if a recession kicks in? Will they continue to purchase our products, or will they do without? Do we have a relationship with our customers whereby they will make cuts elsewhere so they can continue to buy our products?

There is a certain cynical satisfaction in knowing that those companies that have foisted bad service and lousy products on us will find that when consumer demand drops, they will be the first on the chopping block. Shonky tradesmen take note!

Companies that have invested in designing products and services that so enrich their customers’ lives that they have become ‘trusted friends’ will fare much better.

A recent article on American airline Southwest noted that when they were unable to fly customers after 9/11, many of their longer-term customers mailed back refund cheques as a sign of loyalty and commitment. Would your customers do that for you?

Design-led companies will also be projecting themselves into the future to ‘extrapolate’ what the market is going to look like.

Just as Howard Hughes predicted the coming jet age and Apple had the iPod ready for people just as they realised they would quite like a cool MP3 player, companies must now gaze into their business ‘crystal balls’ to determine their place in a slowing economy.

This is the time when rehashing the same old ideas simply won’t do. Nor will cutting prices in the hope that this alone will attract custom. Instead, smart companies must start to figure out how their expertise and market knowledge will serve them in two or five or ten years.

If the products and services offered by your company might be ‘squeezed’ in a recession, what alternatives could you provide that would not suffer to the same degree?

When money gets tight what are people going to demand? What emotional needs and concerns will become prominent and how could your company meet them? How can you change and adapt so that a tight economy results in a sideways, and not downwards, move for your company?

These are the sorts of design questions that need to be asked now.

Design, properly integrated into an organisation, offers a perspective that looks very deliberately and objectively at that organisation’s products and services. It draws on an eclectic variety of inputs to ensure that every angle is covered and every possibility considered.

A company that embraces design and adopts a ‘design culture’ will always be aware of what it can offer its customers, and how it can forge relationships of trust and loyalty.

When – not if – economic recession arrives, it will be those companies that have honoured their customers, thought carefully about their offerings and prepared intelligently for a changing future that will thrive and survive.

The design ignorant will perish.

Well, some of this seems a bit quaint now; do you remember avian flu, high interest rates and a soaring New Zealand dollar? My, how times have changed.

But the core message of this article remains exactly the same: know your customer. Know them better than they know themselves. Predict what they will require and be prepared to craft new strategy, products and services to meet changing demand.

Companies that can effectively use design to read the market and act accordingly can do well.

Take the real estate market for instance. In times of recession, people tend to sit on properties (if they can afford to) and stay out of the market rather than sell and risk losses. If you’re a real estate agent, that hurts.

But, on the other hand, when times are tough people tend to look to invest in the value of their homes and improve features such as energy efficiency. Organisations like EcoSmartHome (www.ecosmarthome.co.nz), which provides home energy efficiency assessments and products, have seen their sales skyrocket over the last few months as people look to sit tight on properties and reduce their powerbills. Increasing power prices also reinforce this trend.

Moving from real estate sales to energy efficiency assessments may be an unrealistic business move, but if the economy continues to shrink the rules of business will have to change for the sake of survival.

As we suggested three years ago: “When money gets tight what are people going to demand? What emotional needs and concerns will become prominent and how could your company meet them? How can you change and adapt so that a tight economy results in a sideways, and not downwards, move for your company?”

If you are not asking these questions now, you have good reason to worry.