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Pankhurst Design & Development (now known as the PDD Group) was started by Paul Pankhurst in 1980 when he was ‘fresh out of college’. He has since built the company into the largest product innovation consultancy in the UK. PDD is a fees for services consultancy specialising in consumer, industrial and commercial products for the telecomms, medical and consumer markets.
At the end of 2002, Paul handed over the role of PDD managing director to Helen Gray in order to concentrate on the formation of a spinout company called Carbonate. The focus of Carbonate is to source ideas and emerging technologies and add value to them through application-specific design, with the aim of licensing the application to Brand Holders in return for royalties. Paul’s role is to develop the strategic direction of the company and to engage with potential licensees.
Paul explained that he had a lucky break when PDD was first established: “At my degree show a gentleman showed interest in some of the degree work I had done, gave me his card and asked me to go and see him,” he began. “He turned out to be the chief executive of a large, privately-owned group of companies and he asked me to be part of their organisation. I declined, but then they volunteered to fund me in my own company, with a ready-made client base from all their group companies that needed design advice. That gave PDD the traction to get started.”
Paul recognised that his agency needed to stand out and he knew that his competition was focused on styling products, not engineering them. “The first thing we did was invest the share capital into equipment that would allow us to prototype products in-house, and that was our differentiator in the 1980s - nearly all the large design consultancies do this now.”
Different Questions
“At first companies used to come to us and say ‘Our product has been on the market for X years, its looking dated and costs too much, can you redesign it for me please’ and for a fee we would go and restyle the product around their latest hardware - that is what design consultants usually do. But as we have developed the innovation side of the consultancy business, the client now comes to us and says ‘we have this technology capability - what should it do, how should it be used and who will use it’, which are very different questions and to answer them we have a team of behavioural researchers that spend their time travelling the world, looking at how people use and interface with equipment, what they are looking for from that equipment, and what would make their lives easier or better. That information is integrated into the design process allowing the design and engineering teams to create better solutions.
“A classic example is a Client that had additional microprocessor power available and was thinking of adding more wash cycles to a washing machine and was requesting us to consider the user interface and product styling. We sent our researchers to live with families and built a profile of what is really happening in the process of washing clothes, and as a result we recommended they didn’t add more cycles but in fact reduce them. We found that the majority of users in the UK behave in a similar manner when washing – they separate the clothes into colours and whites, maybe delicates (they are only prepared to break their clothes into two or three groups, so more washing cycles are irrelevant). Furthermore, they typically get down on their hands and knees to put the washing in, press one or two buttons and leave it to wash. Then they go back to take out the damp washing (on their hands and knees again) and then finally everyone puts their hand into the drum and rotates it to get the stray socks that are still stuck at the top and out of sight.
“We asked why the UK population is spending this time on their hands and knees with their hands inside the washing machine? Clearly this isn’t a good design solution yet users have worked out a solution to the problem so it doesn’t show up as a problem in conventional research. So we, as product innovators, designed a washing machine that is more like a dishwasher - the door opens from the top and you are standing looking into it. It has a light that comes on like in the fridge so you can see the clothes, and you don’t need to kneel in front of it. Moreover the visual style changed dramatically so consumers could see and understand the benefits compared to the plethora of look-a-like products. These are low tech suggestions but make life easier for the customers and that is what innovation is all about.”
Paul has now taken a chairmanship position in PDD and his predominant role is CEO of Carbonate, the spin-off company mentioned earlier. I asked him why PDD invested in this new venture.
“We have seen some really clever ideas come and go, some poorly executed by the client and some completely ignored and not recognised for their value. Within PDD we tried to develop and commercialise them piecemeal, but it never really fitted in with the fees-based consultancy model.
“We set out accepting that Carbonate would not earn fees, but would make money from the successful products it developed. The business mission for Carbonate is to take an idea or technology that can come from a number of sources such as in-house, from one of PDD’s clients or from an external inventor or academia, and we add value to it through market understanding and business planning. We want to develop the idea to be application specific, so when we take it to a target customer (usually a global Brand Holder) it is a complete solution to a real need and waiting to be used. Therefore it is a much easier decision for the Brand Holder to take it on when the idea is substantiated by complete business proposition.
“The differentiator for Carbonate compared to other licensing organisations is its access to the massive resources available at PDD, which helps it to take an idea or technology and actually develop it into a real solution. The solution is then what we licence to manufacturers.”
Carbonate is now in its second trading year, and already has two products licensed, one of which is already in the market. Paul gave details on this product: “This was an idea that came from a university that specialised in sports science. The idea itself was based on sound scientific learning but the manifestation in terms of the product was pretty basic in that it was constructed from bits of wood and angle iron! It was a fitness platform that allowed you to do different types of aerobic and anaerobic exercise.
“We recognised the potential of the idea but it couldn’t be taken to a manufacturer in its existing form. So we invested sufficient design resource to take it from a piece of wood into something that looked like a production product and then built a business case for why it would be a commercial proposition for a manufacturer. We looked at the biggest people in sport and fitness – Nike, Reebok, Adidas – and approached them with our new prototype which resulted in a successful license it to Reebok.
“This is a perfect business model for us – take an idea from a university that is grounded in good thinking, add value through design, and license it to a global brand. Everybody is a winner as the originator of the idea gets a royalty, we get some percentage of that, and Reebok gets a great new product with the Reebok Deck.”
As Paul pioneered PDD’s commercial exploitation of intellectual property, he acquired an intuitive feel for product ideas that have the capability to fly. Nevertheless, there is a stringent process in place comprising of several gates that each idea has to go through before Carbonate will consider investing in it and further gates that control its development.
Paul explained: “You do get an instinctive feel for ideas that you think have potential, or an idea you can associate with because you have a similar problem, and sometimes you can make an intuitive judgement on it, but using a process provides objectivity and different skill sets and experiences to be tapped. We need to test the ideas to see how they can be made commercial, if they strategically fit with PDD’s capabilities and client base and to determine the launch strategy.
“We have people in Carbonate that specialise in intellectual property to make sure the idea is genuinely unique, that there is space to create new intellectual property and to check there aren’t other products that might not be patented but basically do the same job. We are very aggressive in not letting anything go through the process that doesn’t meet all the gate criteria.”
Paul has always made a point of being a trendsetter and market leader and this has required significant foresight and investment. “We started by integrating our workshop and design functions, and then in the beginning of 1990 when everyone else was still working on a drawing board or in 2D CAD, we went straight into 3D Solids. To give you an idea of the investment at the time, it cost £50,000 per seat of software, (which you can now buy for less than £2000). That was a big differentiator for us as it is a very powerful enabling tool and meant we could design better quality products, faster.
“I see technology as an enabler – with it you can be more efficient but it doesn’t help you be more creative. Technology is a great way of prototyping ideas very quickly, but doesn’t help us originate the component in the first place. It is imperative to use the most up-to-date solutions to stay at the front of the market.
“In truth, we are selling grey matter really and that only comes from people so alongside technology finding the right people and creating the team environment and working methodologies is critical. We use all the available recruitment methods to find the right people - because PDD is the largest innovation consultancy in the UK we get a lot of applications from graduates, plus people from other consultancies and sometimes clients who want to jump ship. If we are seeking a particular type of person we might go to a recruitment agent – for example, although PDD has been doing it for a while now, innovation planning is a relatively new service elsewhere and there aren’t many people around who practice it, so there is no-one to directly headhunt. We have to create a profile of the person we are looking for and then get an agency to track them down.
“PDD’s innovation planning process captures a number of activities that anyone involved in serial innovation needs to be doing. If a client comes to us and says ‘we have this technology platform what should the product be’, our solution might be so different to anything that already exists that it needs a completely new plan to get it to market. This can involve product mapping and planning brand planning, business modelling, market research and the specification of product portfolio and rollout strategy to support the client.
“We do have some very interesting methods for helping clients’ think out of the box, for example we have adapted some of Edward de Bono’s lateral thinking techniques to product innovation. We have built our own processes for creating new ideas and conduct brainstorming sessions where a client may come in for two days during which time we conduct a number of different sessions to try and create a substantial number of new ideas. These ideas are supported by video footage showing real user issues from our behavioural researchers and we will have illustrators available to instantly draw an idea in a way that can be instantly understood. Literally the output of two days of brainstorming with a client can result in 50 ideas.”
PDD also introduced a big change to the business at the end of 1990s, when it adopted the principles of behavioural research - this hadn’t been used as a design tool before. “We are now leading that field in product design,” said Paul. This extensive behavioural research expertise coupled with innovation planning skills means PDD can also help with branding issues. For example, the company is currently involved with a client based in the UK that has acquired a number of other smaller companies and is now the dominant player in its market. Paul explained a little more about the project. “As a result of buying all the small companies that had a well known domestic brand, they have ended up with a large number of different brands all competing for the same market,” he said. “However, these are all being sold through a small number of similar retail outlets such as Homebase and B&Q. This company has a big brand rationalisation programme to go through and we can help them understand more about their customers and then help them specify the product ranges and pricing and then design products that meet particular customer needs. Ultimately the customer is less confused as they are presented with a choice of brands that are readily differentiated by lifestyle, cost and feature sets.
“You have to first understand the customer base, so we undertake a lot of acquisition of customer understanding which we integrate into the design process so that the designers and engineers actually produce work that is appropriate to the various target segments. Our brand planning people work out which product lines should fall under which brand name, and which distribution channels those particular brands should go through. The customer must be able to associate with the brand and be able to rationalise why it is more or less expensive in terms of quality of materials used, features, performance and styling. Choosing the right distribution channels helps reinforce brand expectations.”
Innovation is still the raison d’etre of both Carbonate and PDD and is one area where all companies are now trying to excel – Paul believes it is the differentiator of the future. “Twenty years ago product design was a differentiator at the point of sale,” he said. “If you bought a kettle your choice was predominantly based on what it looked like. Therefore that was the differentiator. As design developed there was more styling choice it stopped being such a powerful differentiator, and in the 1990s choices became based on manufacturing quality which was often reflected through the brand. That became the differentiator. But nowadays most products are equally well designed and of similar quality, so the differentiator of the future will be innovation - that is offering something with easily understood benefits compared with the status quo.
“At the same time 20 years ago, people were starting to berate the fact that a lot of toolmaking was beginning to be exported to the Far East, followed by the moulding of the components and, more recently, the relocation of design engineering to India.
“The result of this is that many companies in low-cost areas around the world are now quite capable of iterating their own products and therefore if you are in what I would call a commodity market, unless you can be truly innovative you have no chance of competing with these Far Eastern products as they are built to a good quality standard, well designed and less expensive. This means that UK companies have to think ‘well let’s make this kettle do something really useful’ if they want it to stand out. In this sort of area we are still ahead of the game, because we operate in the Western market and are very close to our consumers in Europe and the US. We can innovate for them and deliver solutions through brands, which is still difficult for companies based in mainland China where the desirable brands are still Western.
“I think that a lot of businesses are already suffering,” he continued. “For example Raleigh bikes had great designs and demonstrated real innovation with the Chopper, but now they are just a well known bike brand with nothing unique - you can buy a Taiwanese bike for considerably less money and equally well made.
“I think UK companies have to become highly innovative and recognise the manufacturing base isn’t going to be in this country, it is going to be conducted in a low cost manufacturing area, so accept that and work out where their real value lies.
“Companies will be required to differentiate by showing good use of innovation in the product itself. This means exploring customers unmet needs. Needs that customers can’t articulate, but once presented with it they can’t manage without it. I believe this is how the industry is moving and that is why an innovation process is such an important tool for the future,” Paul concluded. VTR
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