Alan Webber and the cost of the status quo

This week I am up in Boston attending the 34th Annual Design Management Institute conference titled, Design Complexity and Change. And will be trying to blog at least once a day from the conference.

Alan Webber, the Founder of Fast Company magazine and former Managing Editor of the Harvard Business Review, was one of the first speakers on Sunday, and he talked eloquently for much of his time about the 3 reasons he saw as current the role of design, and the unique ability of design thinking to identify not just the issues of the marketplace but also the wider social issues of our time,

1. To solve problems

2. To initiate change

3. To announce innovation

But what was really compelling was his conclusion on the future role of design. He felt designers, and inherently our design thinking, must help identify the costs of the status quo. And he used what he called a business equation to demonstrate the point.

He maintains that “Change happens when the cost of the status quo becomes more expensive than the risk of change.” Fascinating.

His example was General Motors who relentlessly sought solutions based on what it thought was the unchanging status quo of cheap gas and cheap money. When the cost of both skyrocketed they did not have the tools to change quickly enough. They did not accurately measure the cost of the status quo vs. the risk of change. They had no way, or no interest, in measuring the real cost of the status quo.

Let me give you a very simple example of how fundamental this cost analysis could be for designers and our consumer product clients.

I have a client who is struggling with the next step in our project. We have completed a strategic analysis of their brand design issues, as well as a Phase I design exploration for the packaging of their lead product based on this analysis. The client is a small family owned manufacturer with a leading share in a niche consumer product category. Much of the success, or implied failure, of the company is tied to this one brand. While being very comfortable with our work, he expressed a deep reservation to change. In other words he felt the cost of the status quo was not higher than the risk of change.

Intuitively I think he is wrong, but as a designer I have no current tools to suggest, let alone prove, otherwise. We can do exhaustive consumer research, we can point to the hugely beneficial results of other specific examples of change for our clients, we can review how the competition is moving relentlessly ahead, but we simply can’t quantitatively prove the cost of the status quo.

Some of my design colleagues are struggling with what they think is the holy grail for design, finding a formula to measure return on investment in design. That is all well and good, and I encourage their quest. But I think Alan’s equation might be even more powerful.

Imagine the day when designers can point to their ideas and not just say, we think this is the right direction for all of the appropriate strategic and creative reasons, but just as importantly, this is what it will cost you if you don’t change!

Accountants beware. Today there is no line item measuring the depreciated value of inaction on any balance sheet, or the cost of the status quo on any P&L statement. But imagine the day when designers can identify those costs along with each of their strategic design recommendations.

I will call this new index ROC or Return On Change, and think it may be more interesting than just measuring the ROI of design. Lets see if we can find a way to measure it.