For more than two decades, Jay Greene has written about some of the most important companies, business trends, and top executives in the world. From 2000 to 2009, he served as BusinessWeek’s Seattle bureau chief, overseeing the magazine’s coverage in the Pacific Northwest. His primary reporting responsibility was Microsoft. He frequently spoke with Bill Gates and Steve Ballmer, covering the company’s battles with antitrust regulators both domestically and abroad and chronicling the company’s transition from scrappy upstart to bureaucratic giant.

Writing about technology at BusinessWeek gave Greene the opportunity to cover design just as it was emerging as a one of the key business strategies of the 21st Century, a way for businesses to differentiate themselves from increasingly commoditized rivals.

He traveled to Europe to learn about the creative process at the high-end consumer electronics firm, Bang & Olufsen, and visited Nike’s Innovation Kitchen just outside of Portland, Oregon, to learn the recipe for making its much sought-after shoes. That reporting led Greene to write his first book, Design Is How It Works, a look at the innovation process at such companies as Virgin Atlantic, Nike and Lego. His reporting shows that the best design isn’t merely about style and form. It’s about the way products and services work. Greene explains how the smartest companies place a premium on design because it helps them intuit what customers want often before customers even know they want it.

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Morris: Before discussing your brilliant book, Design Is How It Works, a few general questions. Within the past 12-18 months, I have read and reviewed a number of other excellent books that also discuss the importance of design in business, notably Roger Martin’s The Design of Business, Tim Brown’s Change by Design, and Thomas Lockwood’s Design Thinking. Here’s my question. How do you explain the recent and substantial attention paid to business design in these and other books as well as in countless articles?

Greene: More and more, executives are recognizing design as a critical business strategy for the twenty-first century. As the world economy becomes truly global, commoditization of markets is happening on a broad scale. Companies are learning that competing merely on cost is a dangerous game. The ones that have instead tried to compete by creating better experiences for their customers are often able to avoid the commoditization trap. The smartest executives are trying to figure out how their companies can use design to compete.

Morris: What seem to be the most common misconceptions about what design is…and isn’t?

Greene: Too often, executives think of design as the sheen that a bunch of creative types gloss on a product just before it goes to market. That’s not how companies that do great design think. To them, design, as the title of my book says, is how it works. A product can look great. But if it doesn’t meet the customers’ needs, if it doesn’t function the way it’s supposed to, if it’s manufactured poorly, aesthetics won’t matter. Well-designed products often look good. But they also create experiences customers crave.

Morris: I agree that “creating experiences that consumers crave” is important but what if consumers have no idea what they crave? Will they “know it when it happens”?

Greene: Sure, and the book is full of those examples. Take Porsche, which believed its customers would want a sporty, high-powered, off-road capable SUV. The automotive press hammered Porsche, suggesting that it stick to its sports car roots. But when the Cayenne debuted in 2003, it quickly became the company’s best-selling model. Or consider Clif Bar, which pioneered a women-specific energy bar, even when naysayers suggested it’d cannibalize its flagship product. But its Luna bars – designed to meet the specific nutrition needs of women athletes – created a new market and really a new brand that Clif Bar continues to mine. And neither the Cayenne nor the Luna bar was a product about which customers specifically asked.

Morris: Please explain why design isn’t something that can be benchmarked.

Greene: This is really one of the great challenges for design as a business discipline. Business consultants have perfected benchmarking manufacturing processes, supply-chain operations and customer-service departments. It makes it much easier for CEOs, many of whom rose through the finance ranks at their companies, to analyze new strategies in those areas.

Though some folks have tried, design doesn’t really lend itself to metrics that can be measured. You could look at something like cost per designer and measure that against rivals. But it’s painfully imprecise.

And trust me, none of the companies that do design well try to benchmark it. They recognize that some design processes will cost more than others, and they roll with it, understanding that the best design pays off not just in great sales, but also in consumer loyalty. Those are things you can benchmark and the companies that do design well generally fare far better in those categories than their rivals.

Morris: What is “conceptual hallucination” and what is its relevance to the design process?

Greene: It’s a phrase that David Merkowski, executive creative director at frog design, uses to describe his design process. Too often, companies take measured steps as they develop new products. They look at existing market data and ask customers what they want. The results are incremental improvements over existing products at best. Conceptual hallucination is about challenging convention. Designers often talk about the epiphanies they had conjuring up great products. For my book, I chatted with David Mydans, a senior product designer at the outdoor goods retailer REI. He tinkered and tinkered at a new design for a tent until one day, he visualized a novel new structure for the company’s Quarter Dome tent. The structure is altogether different than anything that came before it, reducing weight and adding space inside the tent. Mydans didn’t use the phrase “conceptual hallucination” to describe his design process, but it’s absolutely what he did. It’s that process that often leads to the biggest breakthroughs and best-selling products. The new tent won awards from the outdoor industry media and nearly tripled sales over the tent it replaced in REI’s portfolio.

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To read the complete interview, please click here.

You are cordially invited to check out the resources at http://www.jaygreene.com

Bob Morris is an independent management consultant based in Dallas who specializes in high-impact knowledge management and accelerated executive development. He has also reviewed more than 2,200 business books for Amazon’s US, UK, and Canadian websites. To contact him directly: interllect@mindspring.com.

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