Aesthetic design and decommoditization

As was mentioned in the Introduction, the issue of the relationship between aesthetic design and performance is the key question addressed by this research.

Answering the other research questions, about prevalence, roles and organization, are pre-requisites for addressing this final question. The research was motivated by the idea that aesthetic design can contribute to performance, and the purpose of the research was to find out if this is supported empirically and gain an understanding of the nature of such relationships. Based on the research findings, the nature of the aesthetic design’s contribution to performance seems to be that aesthetic design can contribute to decommoditization.

Christensen (1997) suggests an interesting model in his paper about patterns in the evolution of competition using the disk drive industry as an example. The model is further developed in later work (e.g. Christensen & Raynor 2003).

According to Christensen’s model, the first phase of competition is the technological innovation phase during which a new technology is developed, which may at first under-perform existing technologies. In the disk drive industry, where storage capacity is of primary concern, this phase involves

competition based on capacity. When a new technology gets to the point where it meets market needs for functionality, the basis of competition shifts to the issue of reliability. From this point the technology may continue to improve, and indeed is likely to continue to improve, but the basis of competition has shifted.

The same thing happens with reliability; once the market’s requirements for reliability have been met, the competition shifts to the issue of convenience and/or flexibility. Finally, when the market’s needs for functionality, reliability and convenience have been met, the next phase of competition is about price. At this point the stage commonly referred to as commoditization has been reached.

The commoditization phase tends to be an undesirable phase in which to compete because the pressure to reduce prices can erode profits unless ever more efficient means to reduce costs can be implemented. Of course, this pressure to reduce costs can lead to new technological innovations.

As was described above, the findings of my research are that aesthetic design is positively related with competitive advantage under conditions of commoditization and provided aesthetic design itself has not become commoditized. Reflecting these findings onto Christensen’s model suggests that aesthetic design can play an increasing role as the basis for competition evolves along the slippery slope to commoditization. This is depicted in Figure 6.1, which shows a rendition of Christensen’s model with an added phase of competition labeled the symbolism phase. In the first phase, where technological innovation is the basis for competition, it is functional design, or engineering design, that contributes to competitive advantage. In this phase it is unlikely that aesthetic design will make a difference since competition is based primarily on functionality. In the improvement phase, when the market’s requirements for functionality have been met, the basis for competitive advantage, or differentiation, shifts to reliability and consistency. These are still mostly issues of technology and so functional design continues to be most important. When reliability and consistency have surpassed market requirements, the issue becomes one of convenience in the maturation phase. It is at this point that aesthetic design can begin to contribute. As more and more providers offer solutions that are technologically adequate and sufficiently reliable, customers are likely to prefer solutions that are also user friendly, attractive to the human senses, intuitively documented and for which inherent value or quality is

convincingly communicated. This is where aesthetic design, particularly visceral design, can make important contributions.

The downward drag of commoditization continues and eventually providers have either fallen out of the competition or have surpassed the market’s expectations for convenience. In Christensen’s model, the next phase is the commoditized phase, where price is the only differentiator. It is in, or before, this phase that aesthetic design can again come into play, this time by creating symbolic value. Symbolic value is created when an offering fulfills customers’

values (Aburdene 2005), their requirements for self-expression (Gilmore & Pine 2007) and social significance (Crilly et al. 2004). Aesthetic design, particularly experiential design, can contribute to creating symbolic value. Hence, Christensen’s model could incorporate an additional phase, before the commoditized phase, where competitive advantage is based on symbolic value.

If aesthetic design is a capability that can be learned and disseminated in the same ways as other knowledge, aesthetic design can itself become commoditized.

At such a point, all providers can fulfill the market’s requirements for symbolic value, and price becomes the only basis for competition. There are, however, examples of products that can be said to have competed on the basis of aesthetic design for decades, if not longer. The Volkswagen Beetle is a well known example of such a classic design.

Figure 6.1: The phases of competition as developed by Christensen (1997) with the suggested addition of a Symbolism phase and the corresponding roles of functional and aesthetic design.

Gemser and Leenders (2001) studied the impact of industrial design on new product development in two industries, the furniture industry and the precision instruments industry. The findings of this research were positive relationships between industrial design and performance in the instruments industry. The fact that no relationship was found between industrial design and performance in the furniture industry may indicate that in this industry industrial design had become commoditized, and was a baseline requirement for competition rather than a source of competitive advantage. Arguing based on Christensen’s model, the instruments sector had not reached this stage yet and therefore industrial design could make a difference.

Figure 6.1 also resonates with the research by Berry and Taggart (1998) who found that high-tech firms’ strategic orientation evolves from being technology oriented at the early stages to being market oriented, with a focus on commercialization and customer acceptance, as the firms grow and the technology matures.

Before continuing it is necessary to clarify that firms can enter the market in any of the phases of competition. Furthermore, the representation in Figure 6.1 is highly simplified since it does not show all the loops back and dead-ends that are possible. For example, a technology can become out-dated before reaching the symbolism phase even if it surpassed earlier market requirements.