[Design is] the accelerator for the company car, the power train for sustainable profits: design drives innovation; innovation powers brand; brand builds loyalty; and loyalty sustains profits. If you want long-term profits, don’t start with technology, start with design.
The statement struck me quite hard because I love both technology and design. I had not given much thought as to which one takes precedence in driving business value.
Synchronicity. In this week’s RE:RnD Radio show, I ended up debating with Benn Rosales of AgentGenius about innovation in real estate. One of the sub-themes was that we had not seen true innovation in the real estate industry in a couple of years, ever since Web 2.0 exploded onto the scene with Trulia. (And I would argue before then with HousingMaps.com.) We discussed Roost‘s redesign, and I had dismissed it as “cosmetic changes” with no real fundamental innovation.
Perhaps I need to rethink that position.
Value of Design
- Millenials are willing to pay more for an appealing product design, whether it’s a car (67 %), furniture (60%) or a video game system (31%).
- They give serious thought to public spaces (66%), beauty and architecture (42%) when considering relocation to a new city.
Almost seven in ten respondents said that the last time they saw a product in a store that they “just had to have,” it was because of its design. In addition:
- A majority of those surveyed (55%) believe that good design can actually improve a product’s functionality while also making it look better.
That’s evidence of real value. And then there’s this:
In Great Britain, a recent survey commissioned by The Design Council found that 16% of British businesses say that design tops their list of key success factors. Among “rapidly growing” businesses, a whopping 47% rank it first.
Some Apple consumers have a rabid love for all things Apple that would scare gamer fanboys. Why? Quite a few marketers love to talk about Apple’s innovative marketing campaigns. But I personally never found Apple’s marketing to be all that amazing. The iconic dancing iPod ad, for example, was cool… but it wasn’t the Sprint Twitter ad. What is, however, unquestionable is Apple’s prowess in design: industrial design, packaging design, graphic design, all design. The MacBook I now own is simply a thing of beauty.
Other companies or products that people simply love — whether fashion labels like Armani and Prada or cars like the Mini or Ferrari or appliances like Sub-Zero — have compelling design. More I consider it, more I believe that there is something to the notion that the ROI of good design is incredibly high.
But More than Technology?
It gets interesting, and perhaps a bit questionable, when one considers the claim that design provides more longterm value than technology does.
If the iPod were a truly crummy MP3 player, would people really love it as they do? If the MacBooks were clearly inferior from a core technology standpoint than non-Mac laptops — slower CPU, crappy DRAM, antiquated frontside bus speeds, horrid graphics, etc. — would people continue to be as passionate about them?
Is the success of Google, for example, based on its core technology or on the clean design of the interface? At the time Google first came out, it was the fastest and the most accurate search engine thanks to its authority algorithms. Its design — the single text search box on a white empty background — was also truly novel.
The counter example might be something like the NEC Packard Bell Z1 computer, which won the IDSA Excellence in Design Award in 2000. I bet you don’t even remember this machine. Or the 2002 Ford Thunderbird, which won the Excellence in Design Award, but got tepid reviews by car people:
We weren’t nearly as impressed with the transmission. Many editors noted a lack of smoothness during the 1-2 upshift and/or felt that most of the shifts were mushy. Editor Sessions wrote, “The tight torque converter makes lurch-free getaways difficult to achieve.” The ZF six-speed automatic currently used by Jaguar would mate to this engine and be a worthwhile upgrade.
For the most part, our T-Bird tooled around town minus its hardtop. Although we loved the look of the porthole top, we found it too much of a group-gathering effort to put it on or take it off. At least two people are needed to lift it, and it helps to have a third person to aid with positioning and scratch prevention as the top is lowered onto the car.
The result? Sales dropped off significantly after the first model year, as consumers realized what a crappy car the Thunderbird was, albeit striking and beautiful.
On the other hand, you have cars like the Toyota Prius. Now, I know there are some folks who think the Prius is a cute, well-designed car. I happen to think it’s one of the ugliest cars ever to hit the roads, at least the first versions. Here’s a picture of the 2001 Prius:
But the hybrid engine technology in the Prius was so compelling, so ahead of its time, that the car basically flew off the shelf and started a whole trend. It remains the best selling hybrid car in the U.S. so far.
Did Toyota earn more money, get more value, from its design of the Prius or from the technology of the Toyota Hybrid System (THS) engine? I think it’s safe to say that the technology delivered greater longterm value.
Back to Real Estate
Trying to apply these principles to the issue of innovation in real estate, it isn’t all that clear to me which is more valuable: design or technology. There aren’t any clear examples in real estate technology. The closest one I could think of is Trulia vs. Zillow.
Trulia made an enormous splash when it launched in 2005. I wish I had a screenshot of the first Trulia pages, but I remember seeing it for the first time while at Realogy, and going, “Ooo, nice!” Here was the clean, modern real estate search site based on what were then “best practices” — like putting properties on top of a Google Maps (idea first shown the world by Housingmaps.com). Trulia was enormously influential at the time for the impact of its clean, modern UI and design. Almost overnight, every other real estate website looked dated and old.
Zillow had built up so much anticipation by its launch in 2006 that its arrival on the scene was greeted with enormous interest. In only two days, Zillow had its 1 millionth visitor. From a UI/design standpoint, I always felt Zillow was pretty poor. I remember seeing the first map on Zillow.com (a tiny windowed affair) and thinking, “After Trulia, this is the best you can do?” But what made Zillow special wasn’t the design, which was kinda crappy. No, what made Zillow interesting was Zestimates, the online automated home valuation system.
The comparison isn’t 100% on point, because Trulia had and has and continues to produce technological innovations, like Trulia API’s and widgets. Zillow’s design got much better over time as well, such that it is no longer one of the ugliest sites on the Web (though I still wouldn’t call it elegant).
Nonetheless, I do think one can make the case that Trulia was more about design and Zillow more about technology. What’s the result today?
Since no one knows how much money either company makes, it’s impossible to say which one will be more valuable in the long run. Nonetheless, can we draw any fair inferences from the growing gap between Trulia (Design) and Zillow (Technology)?
It’s hard to say. Part of Zillow’s growth is surely because of its Mortgage Marketplace (another technology innovation). And maybe Zillow’s spent more money on advertising. I don’t know the details, so it’s hard to say.
At the same time, second-wave sites such as Roost simply have not been able to contend. And Roost, when it was released, was hailed as one of the best designed websites around. Beautiful designs, interesting UI elements, and… not-much-new technology. Can we read anything into Roost, Estately, and other websites’s failure to breakthrough?
So which brings greater value for real estate operation, design or technology? Having both is preferable, obviously, but I’m going to go out on a limb and side with technology. Design is important, but truly novel technological innovation changes how people work, live, and play. Design can inspire love, but technology can change your life.