DESIGN MANAGEMENT INSTITUTE
Design Management Review
Vol. 20 No. 2, Spring 2009
Article Reprint
Managing Design as a
Core Competency:
Lessons from Korea
Brigitte Borja de Mozota, Parsons Paris School of Art and
Design
Bo Young Kim, Seoul School of Integrated Sciences and
Technologies
Design Management Institute
101 Tremont Street, Suite 300
Boston, MA 02108 USA
www.dmi.org
© Spring 2009 by the Design
Management InstituteNo part
of this publication may be
reproduced in any form
without written permission.
S T R AT E G Y
The companies profiled
here have built their
success on a new understanding of design, exploiting it as a dynamic,
proactive resource that
leverages knowledge
and research, human
capital, culture, and
technology.
Brigitte Borja de Mozota,
Director of Research,
Parsons Paris School of
Art and Design
Bo Young Kim, Assistant
Professor, Seoul School of
Integrated Sciences and
Technologies
Managing Design as a
Core Competency: Lessons
from Korea
by Brigitte Borja de Mozota and Bo Young Kim
The new IFRS (International Financial Reporting Standards) adopted
by the International Accounting
Standards Board to measure corporate “intangibles” have created a new
valuation framework for companies
and a unique opportunity for the
design profession and design managers. The intangibles to be measured
under IFRS include technology,
customer relationship, brand, and
human capital. Design reaches into
all of these. 1 Indeed, IFRS will mean
that design managers must understand design as an intangible asset for
their organizations.
1. http://www.iasb.org/home.htm.
Previous research has already
demonstrated that there are two ways
to build a company’s competitive
advantage through design. One way is
through design as an external competitive advantage, built on Porter’s
value chain model—that is, strategy
as “fit” (with the external environment
or market). This view of design is
reactive—the vision of the company’s
potential with regard to its competitive environment. Consequently, it is
a passive vision of design’s strategic
value. The other way is to consider
design as a core competency or as a
sustainable competitive advantage.
This approach built on another theo-
retical framework of strategy—the
resource-based view (RBV).
Our objective in this article is
to explain the RBV of design management using case studies of seven
Korean companies, defining the tools
and methods for the learning curve
from design strategy as fit to design
strategy as core competency.
A little background
The history of design management
can be summarized by five phases
(Figure 1 on next page). Since 2000,
most design-oriented companies have
transformed their view from design
as differentiation value to design as
67
Design as I ntegral to Business Success
transformation value. The strength
of this strategy emerges as companies
think of design processes as not only
project management tools but also
as organizational capabilities that
repeatedly provide superior customer
care. Design is now understood as
an activity, a profession, or a creative
industry that has a specific body of
knowledge and is based on research.
However, until now, most design
management programs in design
schools and design agencies have followed the vision of corporate strategy as fit, and refer to strategic tools
such as SWOT analysis and the
value chain model, thus interpreting
design management as project management. Of course, management at
many firms believe that designers’
skills help in selecting a company’s
strategic positioning through brand
differentiation and product strategy.
But this might actually hurt the
design profession, because design
strategy as fit tends to limit the
understanding of design knowledge
to one involving pretty artifacts and
emotional value. Such firms do not
manage design as a capability and
a process interwoven with process
management, decision management,
and knowledge management.
The resource-based view offers
another path for design strategy, one
that is better for designers. It requires
a proactive decision to understand
design knowledge in the company
as a strategic choice, and to understand that selecting design as a core
competency is a strength. Resourcebased management highlights how
the possession of valuable, rare, and
inimitable resources may result in
sustained superior performance. The
RBV of a firm’s competitive advantage
emphasizes the importance of the
invisible assets—the value of “design
you can’t see.”
oped by Wernerfelt in 1984, and was
elaborated by Helfat and Peteraf in
2003.2 A resource refers to an asset
or input to production (tangible
or intangible) that an organization
owns, controls, or has access to on
a semi-permanent basis. Prahalad
and Hamel3 argue that informationbased invisible assets, such as technology, customer trust, brand image,
corporate culture, and management
skills, are the real resources of competitive advantage, because they are
difficult and time-consuming to accumulate and difficult to imitate, and
they can be used in multiple ways
simultaneously.
For design managers, the RBV
means valuing design skills as rare,
inimitable, and non-substitutable—
and this is in addition to the value of
design outputs. Rare is the company
Strategic design or design capabilities as a resource
2. Helfat, C.E., and M.A. Peteraf, “The Dynamic
Resource-Based View: Capability Lifecycles,”
Strategic Management Journal, 24(10), 2003, pp.
997-1010.
3. Prahalad, C.K., and G. Hamel, The Core Competence of the Corporation (Heidelberg: Springer
Berlin, 1990).
The resource-based theory of competitive advantage was first devel-
Figure 1. Historical Development of Design Management
68
Period
Main Perspective
Design Role
Design Management
Focus
Cases
1940s to1950s
Design as function
Product quality
None
AEG, Olivetti
1960s to1970s
Design as style
Quality communication
Project management
Alessi, Braun
1980s to1990s
Design as process
Innovation
NPD Innovation
management
Philips, Sony
1990s to 2000s
Design as leadership
Creativity strategy
Brand
Apple
2000s to now
Design thinking
New business model
Creative organization
IDEO
Managing Design as a Core Competency: Lessons from Korea
that can claim both, because to do
so requires coherence with the firm’s
strategy leadership and culture, which
points toward a long-term perspective and the building of a sustainable
competitive advantage. Within such
a strategic long-term vision, design
management can be used as an efficient trigger by capitalizing on new
knowledge after each design project, and by taking a process view to
change management’s view of design
management (Figure 2).
Design managers, designers, and
design educators, when pleading for
strategic design, should think about
how they define strategy. Is it strategy
as fit, or strategy as RBV? As we see
now, design management has been
moving from considering design as
an external competitive advantage (fit
with the external environment) to
also thinking of design as an internal,
sustained competitive advantage (a resource or a core competency). Design
valuation has transitioned from an
economic view (increasing market
share and brand) to a process performance view (reducing cost or time to
market and improving innovation systems) to a strategic view of resources
(creating new markets and retaining
valued employees).
Figure 3 visualizes this shift, as
well as the learning curve of design
often referred to as the design ladder.
It also explains the importance of the
Figure 2. The resource-based view of a firm. (Adapted from John Fahy, The Role of Resources in Global
Competition, Routledge Publishers, 2000.)
Figure 3. From design as fit to design as resource.
Design as human capital: Human capital refers to the talents of designers as individuals and in design groups. This
core competency also values design as a way of improving talent and creativity in the workforce and fostering
the recruitment of talent in other functions.
Design as knowledge capital: Design as knowledge capital involves research and research tools, design ideas, and
design thinking. Design management is linked with knowledge management.
Design as cultural capital: The cultural capital of design involves the internalization of design culture within the
organization. To improve design culture, companies often use design awards, informal meetings, events, or communications networks. Cultural capital also grows from building unique brand value and customer relationships.
Design as technology capital: Design technology capital includes research skills, the technical skills used in
prototyping and advanced design technologies such as CAD, along with rendering, and programming that are
embedded in the organization’s technology and computer information systems management. Skills used in
developing patents and intellectual property through technology are another aspect of this kind of capital.
69
Design as I ntegral to Business Success
intermediary and tactical decision
level of design management as process
performance.
Design as competitive advantage
is often easily understood because of
its tangible and measurable outputs.
Design as core competency is more
difficult to understand for someone who is not used to thinking of
design as a profession or as a body of
knowledge (see Figure 4). However,
the current trend toward blue ocean
strategy (creating new market space
rather than competing in an existing
industry) and of creating innovation
through sustainable change have offered examples of the importance of
unique internal core competencies—
such as design—as a way of building
competitive advantage.
Unlike managing design as competitive advantage, managing it as a
core competency is high-risk, because
the ROI is not immediate in sales.
This is the reason that many companies have been reluctant to invest in
building design capabilities. How-
Figure 4. What Do We Mean by Design as Core Competency?
Design as Competitive Advantage
Design as Core Competency
Design
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Figure 5. Enhancing the Value of the Intangibles Through Design Management
Amore Pacific
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Cultural Capital
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70
Technology Capital
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Managing Design as a Core Competency: Lessons from Korea
ever, adopting a long-term resource
view of design management improves
the probability of achieving success
in change management in the present
chaotic business environment. Korean
companies are notoriously in favor of
design-driven management because
they believe that corporate design
capability is a key competency in the
Korean market, which is particularly
sensitive to new design trends.
We present seven companies—
Amore Pacific, Hankook Tire, Winia
Mando, KTF, Daewoo Electronics, LG Electronics, and Samsung
Electronics—all winners of the Korea Institute of Design Promotion’s
Design Management Award. They
were selected for our case studies
because they have all made the transition from design as fit to design as
core competency.
Each of these companies tends to
develop specific skills according to its
design management objective (Figure
5 on previous page). Consider Amore
Pacific, a health and beauty company
specializing in skin care (Figure 6).
In the past, Amore had not been
interested in product or packaging
design; its focus was entirely on developing new cosmetics. That attitude
changed after the huge success of one
of its products, the Laneige sliding
pact—which essentially found success because of its packaging design.
Figure 6. Amore Pacific
beauty products (left: Laneige’s sliding
pact; right: Lolita Lempicka perfume).
Now the firm invests in improving its
design-led product development process, as well as in developing its design
culture and thinking.
Hankook Tire concentrates on
service and promotional design skills
in its drive to improve customer service
and brand equity (Figure 7). In the
past, the company saw no need to interest itself in design, believing that as
an industrial firm, its product needed
design only to improve its product
patterns. Upon reflection, however,
Hankook considered that design
promotion might be an effective
way to improve its relationship with
customers. One of Hankook’s internal
designers suggested a tire design contest, which proved to be a great success, and now the firm is more open to
using design thinking to promote its
brand, improve its culture, and branch
out into new markets across the globe.
KTF has achieved steady growth
by communicating emotion and creative positive experiences. The company’s design services have created
a unique customer support system
Figure 7. Hankook Tire: a focus on strategic
innovative design (left, the Ventura V12 tire;
right, corporate advertising).
71
Design as I ntegral to Business Success
for its subscribers, allowing KTF to
improve customer service and launch
proactive marketing activities, thus
improving satisfaction rates. KTF is
trying to develop its design resources
toward establishing new services and
making design part of its culture and
business. 4
Winia Mando, a manufacturer of
industrial machinery, has adopted a
long-term strategy of developing skills
in design thinking and design trends
in order to create future markets—reinventing, for instance, the traditional
food refrigerator based on a designled product development process.
Daewoo Electronics (Figure 8)
emphasizes customer-centered design
and design research skills. Nine years
ago, Daewoo changed its management philosophy and began to use
the company’s design resources to
research customer behavior and to
meet the needs they discovered with
fresh ideas and pleasing designs.
Design management at LG Electronics focuses on future leadership
through design research and trend
development. In 2000, LG’s design
center built internal research teams
around mobile communications,
digital appliances, digital displays,
home networks, material and multimedia processing technologies, and
4. See “Designed by KTF: A Telecoms Case Study,”
in the Winter 2008 Design Management Review
for more details.
72
network home solutions (Figure 9
on previous page). In the past, the
company’s design center focused only
on developing design styling and
rendering. Now, however,
owever,, it concentrates on improving its design and
design-related research skills.
Samsung Electronics (Figure 10
on next page) is a design-driven company with worldwide ambitions. Its
design aims concentrate primarily on
creating new business and new markets. In 2005, Samsung’s global design
center announced a Second Design
Revolution and its hope that it would
lead, not follow, global design trends.
If design is to be thought of as
a resource rather than as an external competitive advantage, design
management leadership will entail
enhancing the value of the company’s
intangibles by improving the value of
its human capital, knowledge capi-
Figure 8. Products from Daewoo Electronics (left: Klasse kimchi refrigerator; right: Klasse refrigerator).
Figure 9. LG Electronics’s design management focuses on future leadership through design research
and trend development. This is the LG HS33S, an iPod-friendly home theater system.
Managing Design as a Core Competency: Lessons from Korea
tal, cultural capital, and technology
capital (Figure 11). All seven of our
companies are now functioning on an
RBV level.
Human capital: Educating,
motivating, and recruiting
Designers and design groups are a
company’s human capital. They must
be supported with further education and skill development, which
foster motivation and help to recruit
other team members. For example,
Amore Pacific’s design management
strategy focuses on knowledge-based
communities—forums and seminars,
for example—to enhance design
thinking within the corporation. Both
Figure 10. Samsung’s ZIPEL electronic products for the kitchen.
Amore and telecommunications provider KTF (Figure 12 on next page)
encourage their designers to attend
business, marketing, and language
courses. Winia Mando also supports
its designers’ skills and knowledge development through its coaching program and mentoring system. Daewoo
and LG have both focused on motivating designers through mentoring
and incentive systems. Samsung tries
to recruit the best designers available in order to improve its internal
human capital. The problem with the
educational programs we have studied
in our sample is that they are often
limited to questions around developing innovative new products rather
than on improving the skills and
creativity of the designers. Designers
Figure 11. A model for managing design as a core competency.
73
Design as I ntegral to Business Success
Figure 12. Telecommunications company KTF (top: a typical store; bottom: promotional products).
74
Managing Design as a Core Competency: Lessons from Korea
and design teams need more designspecific educational opportunities.
Knowledge capital: Improving
the quality of research work and
design thinking
All our sample companies share the
belief that design knowledge capital
is the competency most important
to their business success. Most of
them offer workshops in design
thinking and support seminars and
other programs aimed at improving
design research and development.
To enhance their efforts, most of
our seven companies have developed
design research systems or programs.
In large part, they concentrate on
data collection schemes and design
knowledge networks and on finding ways to integrate them into the
company. Amore and LG focus on
improving creative design thinking
through regular workshops, seminars,
and trips abroad to explore other
cultures. Winia Mando, KTF, and
Daewoo have improved design research skills based on new market and
customer research projects. One of
Winia’s design management strategies
is to enhance the company’s design
network through connections with
other Korean designers and design
professionals. Winia encourages its
designers to attend design festivals,
exhibitions, and other social events.
The company believes this informal
network will cross-fertilize its designers with new ideas, and will turn up
good outsourcing partners, as well.
Cultural capital: Sharing design
mind and information
Our case companies run special
programs to improve the understanding of design processes and thinking
throughout the organization. Amore,
for instance, has its Fun Community,
a design-based workshop meant to
develop the creative and emotional
minds of its employees, who are thus
able to closely communicate with designers. Samsung Electronics believes
that nondesign team members must
be well-educated in design knowledge
and process; the company runs design
education programs for engineers,
as well as for marketers. Daewoo
Electronics also manages programs to
enhance the design ideation process.
Winia and LG are building designled processes and systems to improve
their design competencies. KTF’s design support team, the Orange Dream
Team (orange being KTF’s signature
brand color), aims to increase design
communication and design thinking within internal groups. The team
rotates frequently in order to provide
design information and knowledge to
the wider organization.
Technology capital: Developing
design process and collaboration
In order to develop design skills and
technologies, our case companies work
with external research groups with
new ideas and innovative technologies. Winia concentrates on creating
designs for cultural lifestyles. Its main
research partner, Kodas (a design
firm), sends its researchers all over
the world to report on global design
trends and to return with information from which Winia gleans ideas
for new products. LG is also building
design-led processes within the design
center, focusing especially on design
motivation with training programs
and incentive systems. Samsung is
reinforcing its design technologies
with new mock-up and mold tools.
KTF networks with professional experts and is providing design support
programs to build design-centered
processes. For its part, Daewoo manages a regular design workshop and
a D-camp; it also collaborates with
academic research centers.
Conclusion
Many companies are going through
a learning curve that leads from an
economic view of design to a more
strategic and resource-based view. The
danger is that in adopting this view
of design, companies may miss its
relevance at a managerial and tactical-
75
Design as I ntegral to Business Success
process level. The design-driven
companies lionized in the design
management community, in contrast,
understand design as a resource and
a way in which to build sustainable
competitive advantage. In such companies, the scope of design management is broader and more processdriven than it would be if it were used
on a project-by-project basis. Our
seven Korean companies exemplify
the shift from a project-based view to
a process-and-knowledge view.
Returning to the discussion of
the new IFRS norms with which we
began, we must consider that there
is a strategic correlation between the
resource-based view of design and the
value of corporations from the perspective of finance and auditors, stock
markets, and national competitive
advantage. How many design educators and design directors are aware of
the new IFRSs norms for evaluation
and the fantastic opportunities they
represent for the design profession?
Adopting a resource-based view
of strategic design will be fundamental to linking design management to
the new IFRS norms of international
accounting. Design managers should
turn their focus toward rewriting
76
their design strategy to reflect the
resource-based view and the longterm evaluation system of IFRS and
intangibles.
Suggested Reading
Borja de Mozota, Brigitte. Design
Management: Using Design to Build
Brand Value and Corporate Innovation (New York: Allworth Press,
2003).
Borja de Mozota, Brigitte. “Design
and Competitive Edge: A Model
for Design Management Excellence in European SMEs.” Design
Management Journal, 2002,
pp. 88-104.
Foss, Nicolai J. Resources, Firms, and
Strategies: A Reader in the ResourceBased Perspective (Oxford, UK:
Oxford University Press, 1998).
Lee, J. W., and B. Y. Kim, Design Marketing (Korea: 21Century Press,
2007).
Lee, W. S., and B. Y. Kim, “Designed
by KTF: A Telecoms Case Study.”
Design Management Review, vol.
19, no. 1 (Winter 2008).
Porter, Michael E., Competitive
Advantage: Creating and Sustaining
Superior Performance (New York:
Free Press, 1998).
Acknowledgment
Our special thanks to design manager
Ho-Kyung Oh in Hankook Tire’s
design team, to design director Hee-In
Shin in Winia Mando’s design department, to Ji-Youn Lee at LG Electronics Design Centre, to design manager
Hyun-Sun Shin at Amore Pacific,
to Professor Sung-Wook Hwang in
Seoul Digital University, and to everyone who supported this paper.
Reprint #09202MOZ66