expensive
Now, after many years of collaboration, I can say for sure that he’s truly favorably impressed: by design, and by designers. I would even assume that he secretly admires us, the designers.
His initially reserved and rejective stance against any member of the ‘design-species’ was resulting from, what I believe, the awareness that he could never do what designers do, but designers might be able to do, what he’s doing – at least if they wanted to… and luckily enough, they didn’t!
My first acquaintance with him took place when I was already a seasoned designer, as the owner of a platinum frequent-flyer card, so to speak. Along with this came the experience and serenity not to panic if it’s getting bumpy – you just buckle up a bit more. Another advantage of having ‘status miles’ was that I came in the benefit of receiving additional training hours and further education, some on rather obscure topics – for a designer that is. One of them was to be introduced to the world of financials by a Scotsman – truly an experience. Then I didn’t know what to do with this new knowledge I had obtained: why, as a designer, I needed to know what a gross margin is, or a balance sheet – but on that day, meeting him, the many hours in the air, and all the training did pay off, and I could counter-attack!
After we’d exchanged the usual formalities (I was his newly assigned chief designer), he casually set a small headphone on the table in front of him. And immediately, he continued by stating that he would buy-in that product for a Euro ‘off the shelf’ (from an unknown manufacturer in the Far East) in order to sell it on to the trade with a considerable margin (after applying the brand’s logo, that is).
“And – he wanted to know – what is your contribution to my income? Because for every Euro I spend on you designers, I have to sell more products. You guys are way too expensive!” He then continued to state that the financials were far from healthy and that he had to fill the holes left by other businesses, which was actually true. It was also true that he saw design as a cost, and that all costs had to go down to optimize the end result.
He leaned back, awaiting what he thought to be the usual reaction from a designer: that the quality of the product wasn’t good, that design is not a cost, or that I would escape the situation altogether. What he couldn’t know was that I had been trained by a Scottish accountant!
Instead of complaining about that horrific product he’d put on the table, I did ask, as serene and controlled as I possibly could, for the gross margin of that ugly thing. “Well, let me see – he replied, noticeably surprised – roundabout 26%.” Because I had prepared myself, sensitized by the Scottish accountant, and therefore knew what competitors made in his business, I could reply that others made 30% and more, with even higher going prices, talking about real income!
I could catch a sparkle in his eyes when he leaned forward and asked me how I would imagine generating such margins. Full of disgust, I lifted the headphones and replied that there was no chance to get more out of this kind of crap, even if you would lower the cost to 1 cent – you can’t sell everything to consumers. “And, what would you do?” he asked me in return, finally. “Well, – I tried to reply business-like – such products I would not sell. Who really wants to own such a thing? How about a bit more design, and less of-the-shelf …?”
Our meeting turned into a conversation about how we could recover the ‘cost’ of design and the resulting costs, like new tooling, improved packaging, and better materials, by increasing margins and going to market prices, and creating more value for users, customers, and ourselves. Luckily, both of us knew that we needed to balance this ‘value-distribution’ carefully between all stakeholders…
It was the start of a long-lasting collaboration, in which he multiplied his turnover and EBIT (and, with that, could fill the holes), and I could multiply my budget as well. The Scotsman would have been proud of both of us.
What I enjoyed most was that the managers, in pursuit of this development, saw design less as a cost and more as a means of generating value. And that, without any doubt, they secretly admired the designers: if they just wouldn’t be so frikkin expensive…!