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Driven by Design

Modo used to be just another struggling manufacturer in a crowded niche. Now it's virtually untouchable. Its secret: design.
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Greta Garbo or Bob Costas? For Modo Inc. CEO Bob Marchant, it's a puzzler. Garbo exudes that dusky, mysterious sexuality, but the broadcaster's no-frills demeanor is solid, reassuring. Which of the two personas, wonders Mar-chant, would a medical technician prefer to sense animating his rolling cart?

It's not the kind of question that Marchant learned to ask as an M.B.A. candidate at Columbia University, nor in his tenure at PricewaterhouseCoopers. The queries that attend the birth of a product traditionally hew to the quantitative: How much will it cost to produce? How many can we sell? Will we earn a profit on it? And Marchant does ask those questions -- just not first thing.

First he wants to know about the end user. OK, that's not too tough. Modo, based in Beaverton, Oreg., manufactures carts that hold medical equipment and supplies, so the user will be a doctor, a nurse, an orderly, or a technician. But Marchant wants to know more. Is the user a man or a woman, for example? What kind of car would he or she like to drive? Where will the cart be used? A cart that's visible to patients in the ER might benefit from sleek curves and "warm" shapes that make it appear less clinical, more humane. And how should it feel? Under 30 pounds is too flimsy; over 80 pounds, too bulky. What is the precise weight at which the user will exclaim, "How easily this moves! How substantive it seems!"

Those are the sorts of questions that design professionals routinely ask, and Marchant has trained his 15 employees to ask them. All the time. And not just about products. Because Marchant understands that design -- the ultimate know-it-when-I-see-it ingredient that has been awarded competitive-weapon status by the likes of Tom Peters and Steve Jobs -- can be applied to almost everything a business does. You can design processes. You can design experiences. You can design interactions. You can design physical space. And if you design all those things, Marchant believes, you can create an organization that blends aesthetics and efficiency to build products that blend aesthetics and utility.

"Design is in everything we do," says Marchant, who at 50 has the easy good looks and glib delivery of a local newscaster. "From our fax forms to our office space, our company is driven by design."

Much of that design is of the visual variety. The company's Web site has a sleek, minimalist look and is arranged, in Marchant's words, so that "the product becomes the hero." Modo's sales-quote form has been refined, based on customer feedback, to such a state of clarity and simplicity that it is returned two to three days earlier than the previous iteration. Modo's industrial-chic office is an open, loftlike studio where employees sit side by side amid countless foam prototypes. And don't call Modo's brochure a brochure. It's "a portfolio, a two-dimensional visual mall," says Marchant, describing the embossed logo and large photos laid out on the sort of glossy, high-quality paper stock that an architectural firm might use.

"Have you ever seen a paper clip like that?" asks Marchant, holding up a brochure fastened with one of the ingenious metal curlicues he buys from Japan. "Everything you're looking at conveys a sense of purpose, a sense of deliberateness, a sense of precision, a sense that these guys get it."


THE LOVE OF LOOK: Bob Marchant knows that design is anything but superficial. Done right, it can enrich products, experiences, and entire organizations.


Predictably, Modo has earned numerous design awards and has collaborated on customers' products with design firms such as Ideo and Design Continuum. But design, says Marchant, is also responsible for the company's business success. The world's largest original-equipment manufacturer of medical carts, $6-million Modo has grown at a 20% clip since 1997. (Marchant projects annual revenues of $20 million within five years.) It is a key supplier of rolling carts for, among others, General Electric, Siemens, and Philips Electronics, which buy the carts to support medical devices they make. And those customers aren't exactly swooning over the product's Bauhaus-inspired handles or its carefully considered color palette. In Modo's brochure, Medtronic, for example, praises Modo for reducing its time to market; Tektronix, for helping to increase its sales and profits. Marchant is similarly prosaic, describing his company's goals as "providing product solutions that are profitable for our customers."

And design plays a part there as well, for Marchant has crafted his company's processes -- from developing products to manufacturing to marketing -- in such a way that the organization itself becomes the perfect machine. Modo, in other words, is not just designed, but designed to deliver the goods.


The integration of design and management that is practiced by Modo -- and by a growing number of companies in equally unglamorous industries -- is an outgrowth of changes in design itself. Richard Buchanan, a professor at Carnegie Mellon University's School of Design, in Pittsburgh, explains that 30 years ago the discipline shifted its focus "from images and artifacts to systems, organizations, and environments." Design, says Buchanan, is now about "how people relate to other people and the products that mediate that relationship."

That change has affected companies in three ways. First, it has made them increasingly conscious of the need to understand how people use products, leading to a preference for field studies over focus groups in development efforts. Second, it has produced a new choreography of experience as companies strive to craft elegance and simplicity -- even delight -- into interactions as mundane as ordering a cheeseburger or depositing a check. The third, and least widely felt, effect is potentially the most important: it has influenced not just what a company does but what it is. "When you go down this path, there's a very small step to realizing that we can design organizations and how the parts relate to each other, how internal operations can be better organized to carry out tasks," says Buchanan. "You might design working processes, information flow, and a whole set of things that make a company work more effectively."


"Design is in everything we do. From our fax forms to our office space, our company is driven by design."


And who better to design a design-driven company than designers themselves -- or CEOs trained to think like designers? "Designers can facilitate strategic conversations better than anyone," says Buchanan, "because they have an ability to visualize issues and problems in a way that traditional business consultants can't." Currently, the entrepreneurial population isn't bristling with design sensibilities, but a growing appreciation of its importance could lead CEOs to seek at least a familiarity with the discipline. "I think the M.B.A. programs will make dramatic changes," says Buchanan. (See "Too Cool for School," below.)

Design schools, meanwhile, have beat them to it. Such renowned institutions as the Rhode Island School of Design and the Art Center College of Design, in Pasadena, Calif., already make business education a priority. Solitary art-school grads poring over esoteric fonts have given way to designers working in tandem with teams of mechanical engineers, M.B.A.'s, and cultural anthropologists. Those new-style professionals aren't positioning themselves for the corner office, but some do hope to end up in an executive suite. "We've moved from the studio to the boardrooms, becoming a major competitive weapon," says Darrel Rhea, a principal at the design-focused market-research firm Cheskin.

In fact, the two worlds have never been that far apart. Design firms and progressive companies rely on many of the same tools: rapid prototyping, observational research, creative thinking, collaborative work environments, and multidisciplinary teams. Design, says Clement Mok, chairman of Sapient Corp.'s innovation advisory board and president of the American Institute of Graphic Arts, is a process "of visualizing raw ideas, showing their potential as well as their flaws, facilitating a common understanding of a problem or challenge, and enabling the iterative refinement of ideas through auditing, editing, prototyping, and other methods." That's not so different from what many CEOs would call their core competencies.


Marchant could certainly list such design-related skills on his rÉsumÉ. But that wasn't always the case. He began his design odyssey in 1984, when he became CEO of Pro Form, a start-up selling a knockoff of the hot home-gym system Soloflex. Realizing that Pro Form "wouldn't succeed with a parity product against an established brand," he took the advice of a fellow CEO and looked up a talented young product designer named Sohrab Vossoughi. At the time, Vossoughi, a recent graduate of San Jose State University, was working for Hewlett-Packard, freelancing on the side, and dreaming of opening a design firm. In an early meeting, Vossoughi explained to Marchant that in the search for differentiation one can substitute thought for cost, and design is the medium to do so. Impressed, Marchant made Vossoughi an offer: If he would consult for Pro Form, he could draw on the company's resources to start his own business.

So Vossoughi became Pro Form's product Pygmalion. Believing the gym system should look like a home furnishing rather than a machine, the designer substituted fluid curves for clunky welds, bright colors for industry-standard chrome, and fabric seats for vinyl ones. As a result of the makeover, Pro Form won an account from Sharper Image and the interest of Nike, which acquired the company 14 months after it was launched.

It was the beginning of a beautiful friendship. Marchant advised Vossoughi on the fundamentals of growing his company, Ziba Design Inc. Vossoughi, in turn, acted as Marchant's guide through the world of design, teaching the CEO to recognize the elusive magic that turns a mundane tool into an object of desire. "He started to love design," says Vossoughi of his friend. "He was discovering the beauty of things that are just right."

Marchant was also coming to see design as a quality that can enrich experiences and organizations in the manner described by Buchanan. He recalls one particular moment of illumination: during a visit to Vossoughi's home, he stepped into the bathroom and was overwhelmed by the way every fixture, soap dish, toothbrush holder, and towel bar had been tweaked, machined, and reconfigured by the designer to produce "an extraordinary experience." Marchant began to ponder: If a bathroom could be made extraordinary through design, why not a company?


Vossoughi taught Marchant to recognize the elusive magic that turns a mundane tool into an object of desire.


Having followed Pro Form to Nike, Marchant continued his indoctrination under CEO Phil Knight. "The biggest lesson I learned," Marchant recalls, "is the strategic importance granted design, how Phil moved designers up the chain, from people who touched communications or products as they went out the door to people who dictated the process to begin with." At Nike, designers both created and communicated the brand, transforming a company that made shoes into a purveyor of athletic heroism.

In 1987, Marchant left Nike to start Modo, which trundled along for 10 years manufacturing "computer furniture for yuppies." Then, in 1997, Marchant's board of advisers suggested that the company narrow its focus, and the CEO chose carts. Earlier, Vossoughi had been forced by Ziba's burgeoning success to relinquish his role as Modo's de facto creative director. To Marchant, the time seemed right to bring design in-house and give it the prominence Vossoughi and Knight had taught him it deserved. "Hit 'em where they ain't," says Marchant, quoting baseball great Wee Willie Keeler. And in the manufacturing sector, they ain't in design.

As a favor to his friend, Vossoughi recruited and hired many of Modo's first staff designers. But he warned Marchant that the cultural impact on the company would be seismic. "You're going to lose hair and put on weight," he remembers telling Marchant. Bringing creative professionals into a traditional business "is like putting cats in a box." As he struggled to manage people whose work he had long admired from afar, Marchant discovered that designers are fantastic at creating value and bad at capturing it. But a bit of chaos, he had learned at Nike, is the cost of running a creative organization. The trick is to channel it. Having boosted the right side of his company's brain, Marchant now had to fit a design-driven culture within the parameters of a traditional manufacturer.


The transformation began with the physical environment. Shortly after hiring designers, Modo moved from a standard office into a wide-open space. The new employees brought their own identifying badges: Beetles overtook Saturns in the parking lot, Thai food replaced pizza at lunch, and the sound of world music and techno-pop pounding from radios at people's desks drowned out the noise of computer fans and keyboard chatter. Marchant wanted the designers' influence to be pervasive, so instead of creating a separate design department, he scattered his new hires around the organization in areas like product development and manufacturing. "You have only to spend a day or two in a studio setting to appreciate that design is a unique blend of business and school vacation," he says.

Working side by side, Modo's designers and engineers soon learned to complement one another, as engineers broke loose from their conservative moorings and designers became better educated about mechanics. Emulating what he had seen at Ziba and at other design firms, Marchant urged his teams to eschew analytical tools -- which Modo had relied on to evaluate a design -- in favor of a more spontaneous approach fired by rapid prototyping. ("Make it and break it. Try, fail, win," the company's new mantra went.) Adopting another design-firm tenet, the company shifted its emphasis from simply maximizing profit from proven successes to creating products that were wholly original.

Subjected to the scrutiny of a design-trained eye, even the company's processes assumed different shapes. Manufacturing, for example, which was originally conceived as a chain of individual suppliers, was reconfigured to be a "web" of multiple vendors, both specialized and general. The new configuration allows Modo to easily change production volume and gives designers a greater selection of materials.

Product design has also been dramatically affected, as Modo's teams fan out to hospitals, clinics, and doctor's offices to observe how their carts are used in the field. While researching a unit meant to hold a blood analyzer, for example, designers saw how important the machine's reliability was to emergency medical personnel. So they created a cart that makes it easy to see a blinking green light that indicates the analyzer is working. Customers' experiences with the product are also meticulously designed, from the sales presentation on. Gone are the days when Marchant and his top salesperson, Steve Mead, would simply roll a cart into a customer's conference room. Now when they call on a client, they park a block or two away because "unloading a cart isn't a pretty sight," says the CEO. They bring the cart in draped in a sheet; Marchant builds suspense by describing the difficulty of the project and the ingenuity it inspired before unveiling his masterwork with a flourish. "You're trying to do everything possible to make the product and the experience extraordinary," he says. "It takes a lot of effort and time and expertise to create what we do, and it should be a revelation, like the birth of a child."


Perhaps the most important adjustment at Modo, however, was a philosophical one: Marchant wanted his entire staff to think like designers. And if you boil down the way designers think, he says, in the end you're left with one word: "Why?" That's because design assumes a governing intelligence behind every decision. And while that intelligence may pursue any of a number of results -- aesthetics, utility, efficiency -- it must first accurately identify the need being fulfilled. Management's traditional troika -- How many? How fast? How much? -- just doesn't cut it.

To ensure that design thinking prevails, Marchant placed at the center of the organization a project-tracking tool called Modo Product Engineering and Design (MOPED). It reminds staffers to ask "Why?" at every stage and to focus on details. Among its mandates is the development of an exhaustive "user map" that accounts for the perspectives of everyone who might come into contact with Modo's carts. If a cart carries some type of monitoring device, for example, should patients be able to see the screen? Will visible cables and hoses frighten them? Does the cart convey quality and professionalism to the patient's family? Is it easy for salespeople to transport and demonstrate? MOPED forces staffers to ask those questions.

But it isn't a giveaway to the pure designers on staff. The system requires constant input and checkoffs from engineers, business developers, project managers, and the like. Marchant remains foremost a businessman, and he is determined to keep the company profitable, as it has been since 1990.

Still, for the self-professed design junkie, temptation is never far off. Marchant admits that even after 20 years of studying what design can and cannot do, he is still occasionally lured by beauty into costly experimentation. "Just recently a designer convinced me to go with a cart modification that was visual, magical, and, sadly, a hell of lot less profitable," he says. "But that passion is never about numbers. Sometimes you just have to let go."


Tahl Raz is a reporter at Inc.


Too Cool for School

Design is the Zeppo Marx of management disciplines -- the one that everyone seems to forget. For nearly two decades Richard Boland and Fred Collopy understood that design -- along with intelligence and choice -- comprise the three fundamental pillars of business problem solving (an argument first made by Nobel laureate Herbert A. Simon in the 1970s). Yet for nearly two decades they kept design on the back burner.

Then Frank Gehry came along and gave their cause a boost.

Gehry, of course, is arguably the world's most famous contemporary architect, whose inspired, often controversial work includes the Guggenheim Museum in Bilbao, Spain. In 1996, Case Western Reserve University, in Cleveland, commissioned him to design a new home for the Weatherhead School of Management, where both Collopy and Boland teach. As the project progressed, faculty members with whom Gehry consulted discovered they weren't just getting a building; they were also getting a master class in good management.

What fascinated the professors was the architect's creatively destructive approach to design. "Gehry would present ideas, preliminary sketches, and models, and the faculty would think, 'That's the building," says Boland. "Then later he'd come back with a completely different model, and they would say, 'Oh, goodness, now we're doing something else.' It started to dawn on us that in management we've got this rush to closure, to put one idea out there and push it forward, define it, and work out all the details. Gehry would put an idea out there, get a reaction, then chuck it and do something else."

The $62-million Peter B. Lewis Building opened in June. The inaugural workshop taking place beneath its undulating stainless-steel roof was "Managing as Designing: Creating a New Vocabulary for Management Education and Research." The event -- organized by Boland and Collopy and attended by academics, designers, and managers from around the world -- explored ways of strengthening design thinking in business-school teaching and as an area of research.

"The problem with managers today is they do the first damn thing that pops into their heads," says Boland, who hopes to finally enshrine design in Weatherhead's curriculum. "There's a whole level of reflectiveness absent in traditional management that we can find in design."


The Leader of the Pack

In December 2000, during a meeting at the office of Smart Design, in Manhattan, Richard Krulik finally exploded. The CEO of luggage manufacturer Briggs & Riley was trying to explain his company's ethos to the design firm. But with Briggs & Riley's survival at stake, Krulik found himself failing to do what the company was failing to do in the marketplace: convey the superiority of its products. Grabbing a tote bag, Krulik threw it to the ground and began to stomp on it. "This thing can withstand 500 pounds of pressure," he yelled. "Really, this is a beautiful product! It's like nothing else out there!"

Krulik's company, U.S. Luggage, had acquired the bankrupt brand earlier that year, but the company was still in trouble. Nearly 1,000 travel stores once carried the line, but that number had dropped to 400. Krulik was banking on the International Travelgoods, Leather & Accessories Show in March 2001 to revive the company's reputation. Briggs & Riley was going to unveil something huge. But the CEO didn't know what.

The Smart Design team had three months to devise an answer. They prowled luggage stores, which graphic-design director Paul Hamburger recalls as dispiriting "seas of black leather." But he notes, "Here in this me-too environment was the real opportunity: frustrated consumers needed help navigating what they were buying."

So instead of designing new products, the Smart Design team created a point-of-sale system that sorted luggage into different categories (garment bags, totes, carry-ons), each with color-coded hangtags that corresponded to a reference chart placed invitingly nearby. "We asked, 'What if you could buy luggage the same way you buy dinner in a Chinese restaurant, where you can order different entrÉes to make a meal?" says Hamburger.

The designers devised a novel identity system of icons and photographs for the hangtags. The icons -- thumbnail drawings of a cube with a pull-out handle or a rectangle with a hook at the top, for example -- explain wordlessly how a piece of luggage will be used. The photos (see the examples below) suggest origins and destinations and all the points in between where traveling people come to rest.

Briggs & Riley's new labeling was a hit. Since the trade show, the number of stores carrying its products has nearly doubled, as has the average purchase per store visit. "If we convey the breadth of our line and how it works together, what was once a one-piece sale for $300 becomes a three-piece sale at $600," says Krulik.


Please E-mail your comments to editors@inc.com.

Last updated: Oct 1, 2002




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