Evolutionary painter

What if your sketches would evolve and start their own life with algorithms inspired by biology? Try it out with our new evolutionary painter app on penccil. Click and drag to sketch, then try out different presets from the drop-down list on top. You can save your evolutionary paintings with the SAVE button on the bottom.

Korea’s bestselling luxury brand in China

Korean cosmetics brand Whoo  (后), conceived and designed by Mario Gagliardi and his team at LG Household and Health Care, has surpassed all competitors including Cartier, Louis Vuitton and Rolex for overseas luxury duty-free sales in Korea. It is the first time a Korean brand has become the bestselling luxury brand. Among the users of the Whoo series is first lady Peng Liyuan, the wife of Chinese president Xi Jinping, and Chinese actress Angelababy Yeung.


The beginnings of the brand reach back to 1997, when Mario Gagliardi, then chief designer and head of design strategy at LG, convinced executive director Lee Young Joo of the LG Chem Design Institute to start developing something which has not been done before: Cosmetics series with a genuinely Korean theme.

At the time, LG Household & Health Care produced several cosmetics brands with Western themes. The company increasingly lost ground with domestic customers, who preferred imported American and European products and perceived LG products as less convincing than the Western competition.

Mario’s strategy was to bring back domestic consumers with decidedly culture-specific brands and designs, and in the process create authentic brand identities which would stand up for themselves in international markets. After a successful presentation with the CEO of LG, the first series brought to market was Yin, followed by O Hui.

Yin was built on the idea of the complementary forces of Yin and Yang, a core theme in Korean and Asian philosophy. Depending on character and skin type, Yin cosmetic bottles came in different colors. Elaborate miniature sculptures on top symbolized Asian traditional elements. Its ingredients and scents, made from Korean herbal essences and ginseng root, emphasized its philosophy.

The idea was expanded further with O Hui (Five Hues, the five essential colors used in Korean traditional architecture, a concept comparable to the five elements). Also made with natural essences, it interpreted the aesthetics of ancient Korean courts, taking design cues from Korean and Chinese cultural artifacts. Yin then was modified by adding ideas of O Hui to create Whoo (Empress). The design language elements of the cosmetic bottles – characteristic round shapes, elaborate bases and finely crafted miniature sculptures on top – are suggestive of their precious content.

Before, the stories told in cosmetics marketing were all about Paris and New York. Yin, O Hui and Whoo changed this perception, telling genuinely Korean and Asian stories. Since the launch of the first designs in 1998, these cosmetic series have been enthusiastically received, first in Korea, then in China. The revenue of Whoo with Korean and Chinese consumers is continuously increasing, making it today Korea’s leading cosmetics brand.

The design team at LG H&H continues to develop design variants with finely crafted details in keeping with Mario’s concept and design language.



Chosun Ilbo Biz

LG Blog

Chinese shoppers in South Korea shunning luxury brands like Louis Vuitton in favour of local goods

Chinese tourists prefer Korean cosmetics brand Whoo, designed by Mario Gagliardi, to global luxury brands Louis Vuitton, Chanel and Cartier.

South China Morning Post, Friday, 05 February, 2016

Chinese visitors to South Korea are buying less from global luxury mainstays like Louis Vuitton and Chanel in favour of cheaper home-grown brands, as young, independent travellers make up a bigger share of tourists. Lured by the “Korean Wave” of culture exports, from soap operas and K-pop music to food and fashion, price-conscious younger Chinese visitors are seeking a more authentic and less expensive shopping experience.

South Korea trails only Thailand as an overseas destination for Chinese travellers, whose heavy retail spending has helped make South Korea the world’s largest duty free shopping market.
The emphasis on value will put further pressure on global luxury retailers already grappling with slowing sales in China after years of skyrocketing growth, as a government crackdown on graft and lavish spending bites.

“You can buy those big brands everywhere, and it is actually cheaper to buy those brands in other countries compared to the prices in South Korea,” said 21-year-old Zhu Xin, who was shopping at the Stylenanda store in Hongdae, a Seoul neighbourhood popular with young adults.

“Now that we are here, we should buy local brands,” she said. Average prices on best-selling items from global luxury brands in South Korea are cheaper than they are in mainland China, but still cost more than in Europe, Singapore and Dubai, according to HSBC data.

At downtown Seoul duty free shops run by Hotel Lotte’s Lotte Duty Free and the Samsung Group’s Hotel Shilla, LG Household & Healthcare’s Whoo and Amorepacific’s Sulwhasoo cosmetics were the top-selling brands in 2015, overtaking Louis Vuitton, Chanel and Richemont’s Cartier, store data shows.
“This doesn’t necessarily imply that luxury retailers have to launch cheaper stuff, but it does necessarily imply that they have to be more relevant at every price point,” said Erwan Rambourg, an analyst at HSBC in Hong Kong.

The number of Chinese tourists to South Korea dipped 2.3 per cent last year to about six million due to the deadly Middle East Respiratory Syndrome, or MERS, outbreak.
However, brokerage CLSA says Chinese inbound traffic growth rebounded from September and should jump by 28 per cent in 2016. The South Korean government expects a record eight million Chinese visitors this year.

Chinese tourists to South Korea are getting younger: the share of those in their 20s and 30s rose to 46.1 per cent last year, from 40.9 per cent in 2013, according to the government-run Korea Culture and Tourism Institute. While older Chinese tourists typically travel in groups where they are ferried between shops catering to them, Chinese millennials tend to be better-informed about what they want, travel independently and spend less on shopping.

“I use my mobile phone to research what products to buy in South Korea,” said 20-year-old Chinese tourist Liu Yuting. “Many Chinese girls like South Korean products because most of them are cheap and cute.” At Lotte Department Stores, a chain owned by Lotte Shopping Co, average spending per Chinese visitor fell to 500,000 won (HK$3,250) last year from 900,000 won in 2013, although the surge in overall visitors made up the difference, an official with the chain said.

“Whereas past generations blindly purchased luxury goods, the younger generations have a more price-conscious consumption pattern,” KB Investment & Securities analyst Yang Ji-hye said.



Form follows function: The most famous slogan in design. First formulated by Louis Sullivan in the late 19th century, it became a basic principle for rationalist design in the sixties of the last century.

With machine learning, ‘form follows function’ turns to ‘form learns function’.

How does it work? In the coded example below, simplified bike shapes are generated, then tested for performance in the form of a race on always changing roads. Bike designs which won a race are kept to run against newly generated bike designs in the next race. Over the course of several generations, performance becomes markedly better, and designs become more similar.

The code here is made to run on home computers. With more complex and processor-intensive apps, more complex designs can be tested in more complex environments, thus getting closer to simulate real world conditions.

Possible applications span from transportation design (cars, motorbikes, yachts) and product design -where product features can be optimized for scenarios involving users and environments – to architecture, where building surfaces can be optimized for environmental conditions. With the addition of crowd simulation algorithms, interior designs and layouts can be optimized for human perception and wayfinding; applications here include the optimization of walking distances, the improved arrangements of shops in shopping malls, or the improvement of layouts for emergency escape routes.


This article, in which I introduced the now widely accepted concept of contact points for brands, was first published in 2005 in Spain by Identico as: ”LA MARCA ES… CONCEPTUALIZANDO Y CREANDO ESTRATEGIA DE MARCAS: CÓMO INFLUYEN LAS METÁFORAS DE MARCA EN SU GESTIÓN”.

Four metaphors: The brand as property, projector, wrap, and specific

In the old German tale „The rat catcher of Hameln“, the rat catcher finds a way to lead all rats out of the city by playing a flute so seductively that they all follow him in streams. Advertisers often sell the brand as the magic flute, a hypnotic force which makes people go far for that one fabled product. So, is that the brand, the flute playing the right tune? It can be imagined as a sound, as a tune, driven by the feeling of the flute player and his knowledge to play the right notes. Thus, in a way, yes, it is.

But in other ways, no. People can be seduced by the brand tune only as long as the product experience holds its promise. But the tale from Hameln points to a crucial point in another important way: Conceptualizing and understanding something is an intrinsic metaphorical process. People conceptualize through metaphors all the time. „Success“, for instance, is always conceptualized as a dimension in space: „up“. Failure is the opposite, conceptualized as „down“. You might go „up the career ladder“ or „down the drain“, but you don´t escape the metaphoric conceptualization that the ups and downs of life are directions in space. Metaphors are, in fact, so pervasive in our daily lives that we do not realize how much they frame our thinking. Metaphors are deeply embedded, cultural concepts with a characteristic trait: They point out certain contexts just in order to obstruct others.

In an economic environment where the access to the means of production is open to everyone, one of the few remaining qualifiers for business is the value proposition for the customer, embodied in its brand. Building, successfully managing and sustaining brands are consequently of prime importance for management.

But the real-life management of brands turns out to be governed and biased heavily by the way managers conceptualize and understand brands, often with harmful consequences for the corporation. So what are these ideas? By having a closer look at common expressions and actual behaviors, I have identified four commonly employed metaphors of brands which, all in their own way, produce detrimental effects on the management and utilization of brands.These are misconceptions which in their consequence often undermine the credibility and sustainability of the same brands they mean to support. I will also be contrasting these to another metaphor which should be more helpful for brand management.

In the metaphor „The brand is a property“, the brand is understood as a logo, mark and name. Here the brand is a prescribed space which is owned similar to land. With this view, companies often legally defend their mark, name and logo, also when the context in which the brand is defended has little to do with the consumer´s view of the brand. An example would be the affair of milka.fr: A French tailoress named Milka who ran a simple website promoting her service was sued by the chocolate brand Milka and finally had to hand over her web address by French court order. (In a similar court ruling in the US, a Mr. Gopi Mattel, although he had changed his previous name to Mattle a few years ago, could keep his web address mattel.org against Mattel, Inc.).

In the „The brand is a property“ metaphor, brand value is understood as the accrued value of the brand property. Much attention is given to tangible representations of the brand in heavy corporate identity manuals. Meticulous compliance with prescription-based brand manuals is seen as paramount, often to the detriment of the core brand idea.

In the metaphor „The brand is a projector“, the brand is conceptualized as a device projecting an image on a blank screen. This concept makes the brand appear as though it is able to project any image seen as appropriate by the brand owner. Managers employing this metaphor usually spend most of their brand budget on advertising and communication, reckoning if they just project long enough, then the brand image will over time become burnt in. The brand is essentially understood as being referred to by the image it represents. It is assumed, for instance, that a name and advertisement campaign with certain attributes will make people think that the company behind it also has these attributes. That is, however, not true in our everyday personal experience. People are apt in distinguishing between signifier and signified, discerning between name and perceived character trait. Just because, let´s say, Julia has a nice name and a pretty dress, does not necessarily mean that she is a nice person.

Brand changes often fail when they are built on the projector metaphor. The “blank screen” concept contained in the projector metaphor tends to make brand managers ignore existing, established values, and the “one-way” idea contained in the metaphor makes them underestimate public reactions – after all, screens usually don´t object. For instance, British Royal Mail´s brand change to „Consignia“ was met with wide public disapproval as it ignored the strong existing core values associated with Royal Mail, and consequently it had to be reversed. Where a blank screen was assumed, there was, in fact, a big picture with a long history. Similarly reversed was the brand projection of the famed consulting business of PriceWaterhouseCoopers as „Monday“.

A related common metaphorical conception of brands is „The brand is a wrap“. Here the brand is conceived as a mask, a device for appearing in a different way. This thinking is at work, for instance, whenever corporations change their brand name once the company runs into a public relations trouble. Examples are Philip Morris, the cigarette and food producer, who changed its name into Altria, or Jarvis, the contractor at the focus of the enquiry of the Potters bar rail accident, who changed its name to Engenda. Here the brand is built to hide the value problems of the previous brand and the company behind it. This tactics is often uncovered by critical consumer groups, which also quickly manage to bring the new brand in disrepute.

With the property, projector, and wrap metaphor, the brand is in different ways detached from the reality of the company, product, or customer, attached instead to a logo, an image, or the illusion of the company. Resulting are situations in which, for instance, the logo and advertisements communicate a dynamic and optimistic outlook, but the actual customer experience of the company is one of bureaucratic tediousness.

While in the above metaphors the brand is always detached from the actual behaviour of the company, in a fourth common metaphor the brand is seen as embedded, but the type of embeddedness is misunderstood. It is assumed that the brand essence is embedded in a specific type of product, in a particular way of looking at the market, or in a specific way of dealing with the competition.

In the metaphor „The brand is a specific“, the brand is understood as being embedded in particulars, as an indivisible part of laws guiding the cogs and wheels of the organisation and its products. This concept– the brand is in „what and how things are made around here“ – is inevitably unfavorable for innovation, making it difficult to rethink, restructure or redesign offerings to tap into new markets.

Pegging the brand at the wrong spots can severly impede the development of the organisation, essentialy depriving it of development. The example of Nokia in 2003 shows that this can be a costly misconception: After Samsung had introduced the exceedingly successful clam-shell mobile phone, the clam-shell design became a major trend for consumers. Yet Nokia refused to produce a clam-shell phone, with the result that customers switched to the competition and Nokia lost 6 billion dollars in equity.

What happend? I conclude that Nokia was seeing its brand embedded in the block-type phone. They clinged to it because it was the type of phone which initially created their own stunning success in the market. Vested with this view, Nokia conceptualized the clam-shell product type as the brand of the competition, and consequently had to see it as disadvantageous to produce the competitor´s brand with its own name on it.

A brand, despite being mostly taken as such, is not a property, a projector, not a wrap, and not a specific. Brands cannot obtain or project their value by themselves; they are always existing in a context, obtaining value by the correlation they have with what they stand for. The brand is thus a learned association signified by a sign. The content of this sign consists of the meaning which is appropriated by consumers about a company and its products. The brand is a relationship formed by accumulated knowledge, where mouth-to-mouth promotion, rumours and myths are having at least as much impact as advertisements and targeted press releases.

The most influential source of brand knowledge for customers is the personal experience with the product itself, with the customer service, or the attitude of the salesperson in the shop. Large organizations have more stamina to launch and advertise brands. But once an organization grows beyond a certain size, a premier contact point enabler – the personal touch – is often lost in hierarchies. You might have a nice loyalty card, but when calling customer service, you mostly hear „hold the line“.

A brand is what economists call an externality, a common corporate asset available to all. As the possible benefits of the brand are available to everyone who uses it while the costs of building and developing it are only assigned to particular departments, the common incentives to invest in brand development in a large organization are, if not supported by special policies, innately insufficient.

Smaller companies, where people can afford lasting relationships to their customers, often deliver a better brand experience then large organisations simply by way of interacting in a genuine way. There the brand is a set of information which natually holds the whole organization together, a vision driven by action: An idea every employee can accept, ideally identify with, and communicate to customers. Douglas Nelson from the University of South Florida, researching on associative memory and adaptive network models, found that the strength of the association between a brand name and a benefit is constantly updated as knowledge of the brand is accrued, cues compete and interact. The more a brand name co-occurs with a benefit, the stronger the mental link between the brand and the benefit becomes in the mind of the consumer. Thus the brand is ultimately tested every time the consumer interacts with the product or service the brand refers to.

Yet often brands fail right there to establish a sustainable link to their consumers. Marketing departments often point to their CRM and loyalty programs. But it does not help to offer a loyalty program when the product experience was not satisfactory – after all, when something is disappointing, you don´t want to do it again, also when you get a discount for it. Therefore also even the strongest brands – Nokia was ranked worldwide number 6 in terms of brand value – cannot ignore it when customers want product types they find more satisfactory. The smaller, foldable clam-shell type obviously delivered better storage and an improved handling experience. Therefore, actual contact points between product and customer are of paramount importance.

Contact points do vary substantially between products – a mobile phone will be in contact with the customer several times a day, while that glass of Moet & Chandon will be in contact with the same customer only once in a while for a special event. The crucial elements of the brand, the time when the product or service is actually experienced, is often overlooked, although it should be the subject of great attention for brand value. The contact point perspective enables companies to focus on the occurrence and quality of interaction between customer and product.

The exploration of contact points can lead to insights into major strategic options for the brand: While for a mobile phone features such as ease of use, size, responsiveness and mental structure employed in the menu will be important, the contact points in the interaction between an airline and a customer are, to name just a few, the check-in process, waiting time, or seat comfort, all of which will be offset against product factors such as price or prestige.

Contact points are defined by type and degree of interaction between the embodiments of a brand (goods and services), and customers. They are intimately connected with product factors, either as an offset or as added value. By strategically altering product factors, new strategic contact points to initiate customer interaction can be established. For instance, customer esteem of a brand might be high, yet its products are not purchased, until a factor in the offering changes and customers do find the offer acceptable.

Designer outlets tap into the large market of customers who value designer fashion, yet only will or can buy when the price factor is lower. Or producers find that to attract a new pool of customers they have to change other product factors: Perhaps the volume of an offering, as it was done for convenience food in smaller packaging quantities for singles, or the packaging design to attract a different target group.

The brand, like a mental image or photograph freezing an image in memory, is not able to hide, or beautify, its subject, the company behind it, once the company itself is experienced. The brand, when well executed, is an image of concentrated values, a sign which refers to the essential values of a company. This mental image is a snaphot in time, which, as time passes, becomes less and less attached to its subject: It becomes memory. This leads me to offer another metaphor: „The brand is a memory device“.

This is to be understood as a mental image of an impression and an experience, always latently waiting to be updated. Advertisement can make a brand known and introduce new products, it also can give a primer for the brand experience, but the brand experience itself is ultimately formed by the interaction of product/service and consumer. A logo can only express only that much, the rest has to be accomplished in the interaction with the customer and verified each and every time a product is experienced.

The metaphor “The brand it is a memory device” contains that the brand is made of associations and knowledge shortcuts, encoded in signs and names, and embodied in products. It should also be, through shared understandings, encultured in the organization, embedded in its routines, and become embrained in the mind of the consumer. For the consumer, the brand, as a memory device, is a mind marker which is primed by advertisements, but experienced only through contact with the actual product or service. It is a signifier which only in the mind of the consumer becomes attached and contextualized in the conflicting fields of expectations and actual experiences.

The brand is a constant, while a company evolves, if it’s for the better or worse. It must be regularly updated to reflect its signified, not as an accurate picture, but as an impression which at least does not contradict its own subject. In order to update this picture, brand associations have to be evaluated, contact points and product factors of the offering have to be explored, and the way the brand connects to the company, the product, or the service has to be managed to build and maintain meaning.

As a mental image of an interconnection, it can assume a name which stands for that connection: Starbucks, for instance, is synonymous for „coffeshop“ in the US. In evoking the picture of a place for coffee, the brand is able to occupy a spot in consumers mind. Some brands even replace spoken language: Duct tape, for instance, is commonly referred to as „Scotch tape“ in the US, „Tesafilm“ in Germany, and „Tixoband“ in Austria. This mental picture is the brand essence, the gist of a brand, not to be confused with its attributes.

A Porsche does not have to be a sleek sports car, it can also be an SUV. The brand essence is a unique, entirely mental composition of promise and experience which managed to stick in the brain of consumers. The best brands appear as a natural consequence of the essence of the whole corporation, its strategic direction, its ways of managerial execution. A well-working brand is the result of a well-working company and excellent products. Lots of badly designed and executed brands every day do ill to actually good products. But the best brand cannot cover up a messed-up company, and the brand also won´t help when the company fails to deliver on its promise. Just the opposite, it will, in everyday wear and use, expose what isn´t right. A brand does not replace real products, real prices, real people and real business processes.

The conclusion: Once your company – in its strategy, managerial execution, communication and products – is set right, get a good branding company to do its work. Before that – don´t even bother.


Company structures changed dramatically over the course of the last century. The structures and processes behind the production of goods evolved, and with these also the relationships of products and their users.

In the craft guilds, the skilled human was the originator of the product, and the focus was on skilled execution, made-to measure for the customer. The powerful guilds owned the monopoly on produced goods, heavily opposed the adoption of the newly available production machines and finally lost their power to mass-production.

In the mass production plants of the early 20th century, the machine – and the mechanically acting, unskilled worker – was the originator of the product. The customer focus of the craft guilds disappeared, and Henry Ford famously said that people can have any car they want as long as it is a black model T. Ford profited from a radical innovation, the assembly line, to create economies of scale.

But already 1927 Alfred P Sloane of GM introduced a different viewpoint and introduced the “Art and Color Section”, a predecessor of the modern design department. Production was still monolithic, but parallel, customers had a choice, and design was used to differentiate.

After the line organisation evolved into a parallel line organisation, the next revolution was to switch lines: Lean manufacturing, pioneered by Taiichi Ohno of Toyota in the eighties, shifted industry focus further to the customer by offering wide product choices, enabled by quick changeover times in production. As the complexity of markets increased, so did the design of organizations. Organizations with a tight coupling between parts – the Fordist assembly line – gave way to loosely coupled organizations with organizational designs fitting better to complex and uncertain market environments: The matrix and networked organization.

Customer focus, after having been lost with Fordism, has since Alfred P Sloane reentered organizations. In today’s most developed, loosely coupled, but densely networked companies, the focus on the customer has progressed so much to the core of business that it has gone beyond the focus on the product: The product is now a mediator rather than an end in itself, the final product is the customer experience. Design, in the understanding of an industrial phase, is fixated on the product.

In the global economic landscape at the beginning of 21st century, design must take on a new role. Responding to a global market which is characterised by uncertainty, high speed, high complexity and extreme competition, the design of organisations has again evolved. Some advanced companies are again a new, informational form of craft workshops, others are creating experiences through every part of the business. These companies become directors of flows – material, information, and knowledge flows. In the stage of informational capitalism, design is utilised to initiate and manage conversations with the market and should be understood as the art of weaving together business processes, services, products, expectations and visions.

This most contemporary form of design integration is what I call the metteur-en-scène, the company as stage director. In this type of organisation, design is not a separate factor. It is completely diffused in the company and radiating into the market. Tangible goods are only a part of the final offering. Products, brands and services are interwoven through design as elements to achieve the final goal: the branded, holistic customer experience.

However, this model, in which design is suffusing the in- and outside of the organization, occurs only in the most advanced corporations in an advanced state of market economy. So why is it that only a few companies have adopted this form of using design as a genuinely strategic factor? It can be assumed that businesses must have an interest in the optimal organisational utilization of design. In the current phase of informational capitalism, one of design’s strengths becomes important: Its ability to deal with complex situations, uncertainty and “wicked problems” can be vital for succeeding.

Yet business managers still often understand design as a business function on the periphery of the organization. The main reasons for this are, firstly, that designers and managers speak different languages, have different worldviews and outlooks. Secondly, design is generally happening in an implicit way, while management needs explicitness. The third reason is the classical, industrial-phase understanding of design, which unfortunately also many designers themselves still advocate: That it is a discipline focused on products, thus being a part of product development and marketing, but not of strategy.

This are typical characteristics of the “design as commodity” stage which I will explain further below. Design can be of great value if integrated into business strategy in complex markets. Managers however often perceive it as part of the problem rather than part of the solution – design is regarded as something difficult to understand, difficult to deal with, and at the periphery of the organisation. While a select range of successful companies are “breathing” design, many companies do not. The reason is that predominant paradigms are shaped by history, resulting in beliefs and education systems creating a considerable time lapse between reality and actual approach.

While the evolution of companies, formed by rapidly changing market environments, can be a matter of years, time lapses in education take much longer. In many design school curricula, design is still taught as defined by an early 20th century understanding with divisions according to materials or paradigms focused on ideologies of function. But the realities of a globalized economy -what Manuel Castells calls “informational capitalism”- are far ahead of these historical paradigms. In line with the economic development of different global regions, market realities have shaped new models of design integration.

It is not sufficient to acknowledge only organisational models which are obviously geared towards design. For a realistic description, every type of relationship, contact and overlap between design and an organisation has to be considered.

The two main models for design integration are Fairhead’s design integration steps from 1988 and Boisot’s model from 1995, based on contextual complexity and design constraints: Boisot proposed a matrix with 4 quadrants defined by contextual complexity and design constraints: 1) Where contextual complexity is low and design constraints are few, design is “self-expression”. 2) Where contextual complexity is low and design constraints are many, design is described as “routine”. 3) Where complexity is high and constraints are few, design is seen as a “political process”. 4) And finally, where complexity is high and constraints are many, design is “technical problem solving”.

Fairhead’s model proposed 4 steps of design integration: 1) Design is seen as “styling” and aesthetic “wrap around”. 2) Design is about “better products”, the focus is on industrial design, engineering, and market research. 3) Design shares an interface between the company and audiences, it is part of marketing and communications with a focus on human factors. 4) Design is integration, a “whole process” with a multi-functional team, which is considered to be central for corporate success.

I suggest that, in step with the development of the market economy, design integration progresses through five organisational states which link design and economic development through specific types of design adoption in companies. Fairhead’s design as “styling” evolved into “design as consumption”. Fairhead’s “design for better products” and “design for communication and marketing” collapsed into a type which I call “design as commodity”. “Design as a process”, the top end of Fairhead’s scale, is, in the meanwhile, appearing in a form of business I call auteurs.

Two other types have until now been left out in design integration models: One is the metteur-en-scène on the top end of the scale, an advanced organisational design which only emerged in the last years. Since China’s ascent to a global economic power, another type has become important: “Imitator” companies are now responsible for up to 7% of goods produced globally.

By plotting down significant changes of organisational designs as they impact design integration, the result is a timeline of economic state changes. A significant feature of this model is the realisation that the progression of design occurs from an element outside the boundaries of the firm via steps of partial integration to finally a fully dispersed and emanating state which transgresses the boundaries of the firm. This progression happens in the most advanced companies more or less parallel to changes in economic development through an increase in knowledge (of management, strategy, processes, customers, markets etc.) and a simultaneous decrease in the degree of separation between design and the organisation. In other words, once the knowledge in an organisation accumulates so that it successfully copes with the pressures of advancing economic stages, design, if integrated strategically, becomes gradually more important, taking center stage at an advanced level, and even further increasing in importance by finally transgressing the firm and its market.

Changes in economic systems do not happen overnight. New, better adapted organisational designs are achieved as states of punctuated equilibrium with phases of disruptions in between states. Thus, when economic change suggests a new organizational structure, it will at first be adopted only by a couple of companies having suitable capabilities. Only after a phase of trial and error and a considerable delay, the fittest stage of design integration will emerge and over time become widely accepted. Thus until recently the most adopted stage in Europe and the US was the “design as commodity” stage which was firstly adopted in the nineteen-seventies.

This role is now slowly being taken over by a new form of OEMs, integrated production companies which offer design as an additional service. As a consequence, many corporations are now gradually leaving the commodity stage and evolving towards metteurs-en-scène – the creators of ecosystems – at the top end of the scale.

At the bottom of organisational evolution is a state without any design involvement: OEMs are by definition completely foregoing design knowledge, producing design without reaping the added value of design themselves. The largest part of the profit goes to the OEM’s customer, the brand which invests in design, while the surplus remaining with the OEM results solely from cheap labor and economies of scale.

But the step from OEM to the first stage of imitator is small: Firms that produce designs for global brands in their function as OEMs often at the same time imitate these products for the domestic market. Imitation goods manufacturers attribute their profit to the fame of the imitated goods. That way, the imitation stage is a first step of learning that what adds value is consisting to a large part of brands and design. There is no shortage of companies engaged in imitation: The World Customs Organisation states that up to 412 billion Euros annually are made with imitated goods, amounting to 5 to 7 percent of global trade in merchandise. The US alone attributes 20 billion annual costs to copyright infringement by imitated goods, 65 percent of which are made in China. Others estimate a full third of Chinese product output to be imitations.

Imitation businesses accrue profit by mimicry, counterfeiting well-known brands without building up a sustainable brand themselves. As building brands is a time-consuming process in which companies are also forced to deliver increasing quality, imitation is an attractive tactic for businesses without the willingness, patience and knowledge required to build up their own value proposition.

H&M, the Swedish fashion company, is an example of a company which started as an imitator. With the refinement of its business strategy and the building of its brand, H&M is now steering towards becoming a metteur-en-scéne. Also in larger economic terms, the examples of Japan and Korea suggest that the imitation model is a beginner stage of organisations. Organisational learning and the development of brands and design go hand in hand: Once an organisation has achieved a sustainable brand and accrued the market knowledge coming with it, it will unlikely go back to imitation – the value added by the brand reinforces business forms built on brands.

It is thus to be expected that in several years, once Chinese companies have succeeded in building global brands, the current imitation model will cease in popularity.

The production as consumption model is at work whenever design is utilised in a superficial, random fashion. The design decision process, defined largely by hints and hunches, has few strategic merits. By definition, this model is detached from the individual characteristics and capabilities of a corporation, foregoing the development of an own value proposition which can crystallise in a distinctive design language and ultimately a branded experience. This model is in Europe mostly found in SMEs with little knowledge of design.

A special form of the “production as consumption” model is currently thriving in China. There, specialised design firms put together large catalogues of styles for different product groups, selling pre-made product design templates, often through local intermediaries, right out of the catalogue to large manufacturers. In choosing designs out of catalogues, these companies are acting as “amateur” consumers, similar to hobby tailors sewing a dress out of a pattern. This model is an adaptation of the model found in the West. While there it is mostly found in smaller companies with little strategic skill, it is adapted to the larger Chinese companies by multiplying the designs on choice. So the size of the company does not contribute to an improvement of the design process, the analogy is more basic: Large companies get a larger choice of – still random – designs. Reasons are historic – many Chinese companies, while being large, have not yet accrued sufficient knowledge. The design studios engaged in the “catalogue-design” business are mostly based in Asian countries which years ago have gone through similar economic boom years themselves and thus already have experience with companies at that stage. In large markets, this model works only as long as the target market is still undersaturated, consumers are, in comparison, less sophisticated in their demands, and production costs are low enough to absorb the profit offset incurred by the weak link between design and company.

In the classical line organisation, design is not an integral force but a separate sub-part. These companies are characterised by functional divisions and clear lines of authority, and design is seen as a fragment, located separately, a component of either engineering or marketing. For companies at this stage, a product is essentially an engineering challenge, and design is seen as one component towards optimised products. Value is created by efficiency and optimisation. This role is challenged by advanced OEMs or service-producers. Quanta Computer is the world’s largest notebook producer, manufacturing laptops for Sony, Apple, IBM, Sharp, HP, and Dell. It excels by providing a highly efficient production service through flexible manufacturing lines. For Quanta, which itself is increasingly contracting out to lower-end OEMs in mainland China, an order takes 2 days to manufacture. Yet, every production optimisation inevitably hits a limit: Due to shrinking profit margins, advanced OEMs now also offer engineering and design services. To compete at this end, US-based Flextronics, an advanced OEM specialising in electronic devices, has purchased the product design firm Frog. With advanced OEMs moving into the territory of line organisations, line organisations have a choice of either moving down or up the scale: Dell, as a distribution- and price-focused company, is outsourcing most design work for notebooks and electronics. It is essentially an OEM distributor with added brand value in an advanced “production as consumption” stage.

Others are opting for the higher end only: the auteurs. Auteur design Several companies, especially in Europe, have adopted a model of design integration which I call the “auteur” model. It shows characteristics of craft shops before the first industrial revolution, transferred into informational capitalism. The “auteur” company is design-driven, focusing on concept and skill. There is an attitude to see the product as an art form driven by craftsmanship, quality, spirit and inventiveness. The designed product takes center stage. At the outset, these companies are hardly present in the mass market, doing well within niches among specially defined target consumers who are ready to pay for skilled craftsmanship, a special origin, or a special story, as tokens for prestige value understood only by adepts.

If successful, these brands develop into well-regarded specialty brands with a larger market coverage such as the fashion company Zegna, the tableware producer Alessi, or the coffee producer Illy, all of which are also distinctively Italian. The country of origin, as a culturally charged factor for distinction, is an important component for “auteur” products. This value will for the foreseeable time be a major advantage for countries with a strongly positive image such as Italy, Germany, or France. The Italian senate even discussed the introduction of a brand “Fully made in Italy” to indicate that a product was designed and made in Italy.

In the fifth stage, design becomes a systemic capability, and the company, just as a movie director, plans, conducts, and delivers a thoroughly design-driven, branded experience. Mise-en-scène, an expression from French movie and stage directing, means to put up a scene on stage. It is a network of relationships between actors, objects on stage, and the audience. Organisations at this stage are more likely loosely coupled and densely networked than strictly divisionalized, perceiving business essentially as a design problem – open-ended, multi- dimensional, multi-sensory, and weakly defined.

Focused on situations of use, their aim is to create representations of future reality. Thus the boundaries of the firm are constantly transgressed and customers and markets are part of the company rather than outside entities. There is a script going through the organization, carrying a message which is read and unified in the consumer, just as in this passage from Roland Barthes: “A text is made of multiple writings, drawn from many cultures and entering into mutual relations, but there is one place where this multiplicity is focused. That place is the reader, not the author. A text’s unity lies not in its origin but in its destination.”

Take for instance Porsche: The company, formerly an “auteur”, is producing only 10 percent of every Porsche delivered. Porsche’s focus is the “Gesamteindruck”, the holistic impression of its products. To reach this end, it undertakes only the last 10 percent of the production job itself – it assembles its Porsches from individual parts, all made by OEMs. Every assembled Porsche is then test-driven by an experienced driver who knows – through his ears, his nose, and his bottom – how a Porsche should feel. Only when the Porsche-to-be passes the ‘Porsche feel test’, it is delivered to the customer. Of course, there is top-of-the-range technology and engineering in it, but also other car brands have access to that. Porsche’s real asset is the Porsche feel, embodied in its brand.

And Apple: The iPod and iTunes have reaped 70% of the online music market within 2 years from its entry into the market. Before Apple’s entry, music production companies struggled for years with the changes brought about by the Internet, putting efforts into all sorts of defence against music downloading and file-sharing tools. Instead of seeing that the Internet opens up new avenues for delivering music which are happily embraced by consumers, the music production companies pinned their strategy on refusal. Electronic hardware, on the other hand, was overloaded with buttons and functions. Companies in the electronics industry, mostly set up as divisionalised organisations, commonly believed that electronic products are essentially differentiated by functions: The more there are, the higher the price. This led to a mind-lock in which electronic hardware with less functions would inevitably only be able to be sold for a lower price, a frightening idea in an industry beleaguered by constantly dropping profits. This was an opportunity, Apple saw it and redesigned the experience of acquiring and listening to music.

More than a hardware or software product together, it is interwoven to deliver a consumer-oriented, design-driven, and branded experience. Companies at that stage have realised that design is about complimentarity. They are orchestrating relationships, excelling in the complex and uncertain market conditions brought about by informational capitalism. Value is created by integration, effectiveness, knowledge, adaptation and constant learning. By collaboration and the combination of product, service, delivery, and brand, holistic experiences are created from a multitude of parts. Yet the result is more than the sum of its parts and hence difficult to imitate, let alone surpass.

This paper was first published in Fall 2005 in ‘Designmatters’ by Danish Design Center (DDC) with the title: ‘Imiteret, kommercialiseret, oplevet: Sammenkædningen af design, virksomheder og denverdensøkonomiske udvikling’.