In late October, I attended a dinner discussion in Shanghai with about 30 leaders of large companies involved in creating content, products, and the underlying infrastructure of digital entertainment in China. The presidents of the Chinese arms of Philips, Sony (SNE), Disney (DIS), Kodak (EK), and other advanced companies had come together because of a seismic shift in their industries. After considerable discussion, two themes emerged as major challenges for these businesses.
The first theme centered on coping with large-scale, rapid change. It seemed to the executives that, just as a development team would gain an understanding of the Chinese business and market conditions, these conditions would change -- and the team would have to change direction.
The second theme focused on the market. Several of the executives said that, unlike in the early stages of the digital entertainment industry, future success would depend upon a deeper understanding of people's daily lives and the role of entertainment. Although the word "design" never got a mention, the execs were outlining the path along which China would begin to use design in a more strategic way.
THE JAPAN COUP. The history of design in the U.S. somewhat mirrors that taking place in China now. In the first half of the 20th century, when U.S. business was in the early stage of developing mass markets, leading companies used design to help increase sales by styling products, developing brands, and giving consumers a sense of modernity. The designers had a sense of the colors, shapes, and details of products and communications that consumer would love.
In the 1960s and '70s, Americans grew more sophisticated, at a faster pace than manufacturers. The first sign: people's rapid acceptance of Japanese consumer-electronics products and automobiles. For example, in the early '60s, U.S. consumers expected their home-entertainment products to come encased in large dark-wood cabinets. They looked like pieces of furniture. U.S. brands controlled the mass market. And European brands, which also looked like furniture, represented the luxury segment.
Sony entered the market with products that looked like machines: small -- just big enough to do the job -- and made of aluminum and steel. They didn't fit into the decor of a living room. But they were modular, which consumers liked -- it enabled them to tailor their music system to their needs. They captured the hearts and wallets of consumers, and killed the home-electronics industry in the U.S. Probably the leading iconic product of this era was the Sony Walkman.
DESIGN REVOLUTION. What intrigues me about these new products is that consumers did not ask for them. No consumer focus group looking at home-entertainment equipment in 1960 said: "We no longer want the large wood-encased music equipment we have been buying. We now want modular metal products that are small and look nothing like the furniture." And 15 years later, focus groups who got a look at early versions of the Walkman said loudly and clearly that they did not want it.
What was going on? Sony execs had discovered new patterns in U.S. life, and designed products that fit these patterns before consumers could ask for them. After people actually tried them -- first the early adopters and then the majority -- they loved them.
Led by the changing patterns of U.S. consumers' daily lives -- which influenced what these consumers bought -- American companies slowly changed the way they developed products. This led to a domestic design revolution. Initially, design had focused only on the appearance of things. Now it pays equal attention to new methods of meeting consumer needs. These methods can not only lead to better products, communications, and services, but also help identify whole new categories of offerings, as exemplified by the Walkman.
SYSTEMS OF SOLUTIONS. For the last 10 years, the state of mainstream design in China has approximated the first stage of design in the U.S. Consumers in the emerging mass market are gravitating toward products and messages that represent a new and improved quality of life. In China, sometimes this means copying a successful design from Japan, Korea, or the U.S. At other times, a design would employ a feature more characteristic of China -- say, gluing a small diamond onto a mobile phone to give it a sense of luxury.
With few exceptions, Chinese designers, like early U.S. ones, focused exclusively on external appearance. Think of gluing chrome onto the side of a new car. But, like U.S. companies in the mid-20th century, Chinese companies will need to adopt a more sophisticated use of design if they expect to continue to grow.
The corporate presidents who met in Shanghai had the right idea: The future of digital entertainment in China hinges on gaining a deeper understanding of the way Chinese people live. This will not come from surveys about the things consumers want -- that would only lead to incremental changes in what they already have. It will derive from a serious look at the ways Chinese families entertain themselves, finding the patterns, and creating systems of solutions that go well beyond what the families could ask for.
A visit to homes, offices, and stores in China demonstrates that manufacturers are designing more products and services to meet the needs of Chinese users.
CATERING TO IDIOSYNCRASIES. In my last column (see BW Online, 3/13/06, "Mind-Reading Skills for Businesses"), I mentioned the brilliantly designed Lenovo keyboard, which has a large button that rotates, with each position immediately bringing up the content and software for an individual family member. Why? The manufacturer responded to a specific consumer circumstance: Chinese homes rarely own more than one computer.
The Beijing company Baidu.com (BIDU) -- which is often called the "Chinese Google" and had a highly successful IPO on Nasdaq last year -- created a similar innovation in service design. Baidu's first design may have appeared very similar to that of Google (GOOG), but it's rapidly designing the user experience to respond to the idiosyncratic nature of China.
For instance, every year, China welcomes 20 million new Internet users, many of whom do not know how to employ a URL or even how to type. To overcome this, Baidu early on made use of Hao123.com, a Web index that many people set as their home page, because it enables them to easily get to sites. Internet tracking service Alexa Traffic has ranked it as the 25th-most-popular site in the world, and it has made huge profits.
Also driven by the annual 20 million first-timers, Baidu has developed a "related search" feature. For example: According to Guo Yu, head of experience design at Baidu, "When users type in search term 'design,' in the search result page, Baidu also suggests...other terms, such as 'industrial design' [and] 'Web design.' All China search Web sites have copied this from Baidu," including Google China. (Want to try it? It works in both Chinese and English. Click here, then search in English for "design" -- or any other word -- and see the related results at the bottom of the page.)
UNPRECEDENTED SPEED. Of course, none of these 20 million new users would know to ask for an "indexed home page" or "related search" -- they just want to try the Internet. However, they certainly pay for Baidu's innovations that respond to their real needs.
Just as U.S. executives shifted their focus from "designing stylish products" to "designing what users need before they asked for it" 40 years ago, executives in Shanghai are beginning to design for the patterns of daily life in China. Chinese executives who want to create winning innovations do not have the same amount of time to make the transformation -- daily life in China is transforming at an unprecedented speed and scale. More about that challenge in my next column.