Design Outsourcing

by Megan Dorn

As Director of Design for Cincinnati-based product development firm Kaleidoscope, Demetrius Romanos leads a team of multidisciplinary specialists in design, strategy and research. Over the past seven years his team has worked with clients that include Motorola, Procter & Gamble, International Trucks, Staples, Evenflo and Ethicon Endo-surgery.

Demetrius recently answered some questions for us on the process of working with a product development firm and on today’s consumer market.

Q: What kinds of details should your customers keep in mind when conceptualizing their products?

A: Different yet similar to the real estate world’s mantra of “location, location, location,” with a product it’s all about positioning, positioning, positioning. Even more basic than that is just being honest enough with yourself to look at your product idea and ask a very blunt “so what?” What’s so great about my product, and why would anyone spend hard earned money for it?

Q: Do you ever have to turn people down and say, “This will never work?”

A: Well, not so much turn down, but try to open their eyes a bit. As consultants we’d be doing our clients a disservice if we didn’t offer solutions to their problems, since that’s what we’re paid to do. A lot of time it’s getting back to the core question of what is their product trying to solve, which you could likely accomplish several different ways.

Q: What are today’s consumers looking for as opposed to consumers 10-15 years ago? How are they different and how should your customers’ product ideas adapt to their changing needs?

A: The biggest difference we’ve seen is that consumers are seeking to make a connection with their products. This makes designing products far more challenging because a gadget alone that does what it says is not good enough. Whether it’s an MP3 player or a toothbrush, a product now also needs a soul.

Q: What effect does a downturning economy have on consumers, and therefore also have on you as a product development firm and the number/type of customers you get?

A: With consumers it comes down to choices. If there is any money left after housing, energy and food costs are covered, what will people spend their money on? That’s a big part of why the connection with a product becomes so critical. As for us, the number of clients can remain the same but will vary in the type of work. The focus shifts to more recession-proof industries like consumer goods and medical equipment.

Q: Is there anything at all that you are doing differently to compensate for or adapt to the current economic situation, or is it business as usual?

A: It’s not quite business as usual for many companies right now so you have to be really focused on what your goals are as an organization. We’ll tend to focus on two areas to grow our business: 1) Recession-proof industries like medical equipment and consumer goods, and 2) development of our own intellectual properties.

Q: At what point in the process do your customers come to you? Do they already have a prototype, or are they just sitting on an idea?

A: Our clients span the range from one side, where they don’t even know what it is they need yet, all the way to other clients having an item that they may just need help getting manufactured. We’ll engage at any point in the process, which is why flexibility and adaptability are so critical in consulting.

Q: Once your customers come to you, where does the process go from there?

A: This depends on where we’re engaged, but the primary point of entry is that a client needs to enter a market with a product. We’ll do research and strategy to define the consumer needs, positioning and business opportunities, with the outcome driving design concepts. We’ll then start broad then focus in on the design and engineer of those concepts, working our way down to the direction for manufacturing. At that point we may even assist in selecting the appropriate vendors and may serve as a liaison during the manufacturing process to maintain design integrity.
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Outsourcing — the practice of using outside firms to handle work normally performed within a company — is a familiar concept to many entrepreneurs. Small companies routinely outsource their payroll processing, accounting, distribution, and many other important functions — often because they have no other choice. Many large companies turn to outsourcing to cut costs. In response, entire industries have evolved to serve companies’ outsourcing needs.

But not many businesses thoroughly understand the benefits of outsourcing. It’s true that outsourcing can save money, but that’s not the only (or even the most important) reason to do it. As many firms discovered during the outsourcing “mania” of the early 1990s, outsourcing too much can be an even bigger mistake than not outsourcing any work at all. The flat economy caused many companies into huge layoffs and subsequently outsourced functions that were better kept in-house. Wise outsourcing, however, can provide a number of long-term benefits:

Control capital costs. Cost-cutting may not be the only reason to outsource, but it’s certainly a major factor. Outsourcing converts fixed costs into variable costs, releases capital for investment elsewhere in your business, and allows you to avoid large expenditures in the early stages of your business. Outsourcing can also make your firm more attractive to investors, since you’re able to pump more capital directly into revenue-producing activities.

Increase efficiency. Companies that do everything themselves have much higher research, development, marketing, and distribution expenses, all of which must be passed on to customers. An outside provider’s cost structure and economy of scale can give your firm an important competitive advantage.

Reduce labor costs. Hiring and training staff for short-term or peripheral projects can be very expensive, and temporary employees don’t always live up to your expectations. Outsourcing lets you focus your human resources where you need them most.

Start new projects quickly. A good outsourcing firm has the resources to start a project right away. Handling the same project in-house might involve taking weeks or months to hire the right people, train them, and provide the support they need. And if a project requires major capital investments (such as building a series of distribution centers), the startup process can be even more difficult.

Focus on your core business. Every business has limited resources, and every manager has limited time and attention. Outsourcing can help your business to shift its focus from peripheral activities toward work that serves the customer, and it can help managers set their priorities more clearly.

Level the playing field. Most small firms simply can’t afford to match the in-house support services that larger companies maintain. Outsourcing can help small firms act “big” by giving them access to the same economies of scale, efficiency, and expertise that large companies enjoy.

Reduce risk. Every business investment carries a certain amount of risk. Markets, competition, government regulations, financial conditions, and technologies all change very quickly. Outsourcing providers assume and manage this risk for you, and they generally are much better at deciding how to avoid risk in their areas of expertise.

Source: allbusiness.com

Here’s an old article from Wired magazine about the rise of Crowdsourcing.

Crowdsourcing is a neologism for the act of taking tasks traditionally performed by an employee or contractor, and outsourcing them to a group (crowd) of people or community in the form of an open call. For example, the public may be invited to develop a new technology, carry out a design task (also known as community-based design[1] and distributed participatory design), refine or carry out the steps of an algorithm (see Human-based computation), or help capture, systematize or analyze large amounts of data (see also citizen science).

The term has become popular with businesses, authors, and journalists as shorthand for the trend of leveraging the mass collaboration enabled by Web 2.0 technologies to achieve business goals. However, both the term and its underlying business models have attracted controversy and criticisms.

All the companies grew up in the Internet age and were designed to take advantage of the networked world. But now the productive potential of millions of plugged-in enthusiasts is attracting the attention of old-line businesses, too. For the last decade or so, companies have been looking overseas, to India or China, for cheap labor. But now it doesn’t matter where the laborers are – they might be down the block, they might be in Indonesia – as long as they are connected to the network.

Technological advances in everything from product design software to digital video cameras are breaking down the cost barriers that once separated amateurs from professionals. Hobbyists, part-timers, and dabblers suddenly have a market for their efforts, as smart companies in industries as disparate as pharmaceuticals and television discover ways to tap the latent talent of the crowd. The labor isn’t always free, but it costs a lot less than paying traditional employees. It’s not outsourcing; it’s crowdsourcing.
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A good article about Design Outsourcing, from Parametric Technology Corporation (makers of Pro/ENGINEER CAD software. You can visit their website for the full pdf link.

During the past decade, there has been rapid growth of design outsourcing as a key
operational driver for companies to compete globally, increase productivity, and improve
profitability. Manufacturers are transforming their product development models from
local cross-functional operations to highly collaborative global operations, where skilled
resources dispersed around the world are leveraged to optimize value-add and
reduce cost.

Definition of Design Outsourcing

Design outsourcing is a process that enables companies to engage with design partners to deliver a design activity, the design of a single component, a subsystem, or an entire system. The process
consists of communicating outsourcing requirements and contractual agreement on project scope. Project documentation and CAD model definitions are shared. Furthermore, a project plan is implemented,
regular project and acceptance review are conducted, and final project work products are delivered…Read the full report.

Here’s a video about the next major outsourcing destination. The Philippines is known to have good quality education, a multi-cultural ethnic mix, and sensitivity and understanding of the Western culture, having been a Spanish colony for more than 300 years, and an American ally since the end of the 19th century:

By Spencer Nugent

I’ve met alot of designers in my limited experience that complain about the “sketchers”. Sometimes designers with an aptitude for sketching get labeled as being shallow or non-creative. However, I see sketching as a means to and end rather than the end all. When all is said and done, regardless of how flashy the sketch may be or how killer it may look, the essence of why we sketch ideas as designers is seeded in effectively communicating those ideas to our clients. Sketching is our language of communication.

Sometimes we sketch for fun, but most of the time when working, we sketch for clients or other designers. The sketches that go into your sketchbook are of a different quality than those you would show to your fellow designers in a review or to a client in a meeting, but both sketches have their uses nonetheless. Take this for example, you’re in a restaurant on a lunch break and something comes to mind. You quickly jot it down on a scraggly napkin so that you don’t forget the idea. That sketch too has its purpose. Although it could be the killer idea of a lifetime, the communication may be lacking from you to the client and may be more of a self communication tool.

So then what are the different types of sketches you ask? Well fortunately you are in the right place, at the right time, reading the right blog.

1. Personal Communication Sketches aka the Doodle:

These are the scraggliest of the scraggers. The dirtiest of the dirty. They sketches that tend to live in the sketchbook or on discarded pieces of paper. The purpose of doodling and sketching so roughly is for you the designer to work out the issues with form or function, but in a looser more empathic way. These sketches tend to be most present at the genesis of the product concept. For me, these are the doodles I do when preoccupied in thought on the bus or train as I try to fiddle around with new ideas or sketch techniques.

2. The Thinking Sketch:

Al little more focused and refined, these sketches are usually alot cleaner than the scraggly doodles you find in a sketchbook. You may find yourself showing these to other designers, so you can make certain assumptions as you sketch and use cues that your colleagues would pick up on suck as hatching and contour lines. Simple gestural sketches could also fall into this category. . .

3. The Technical Sketch

Designers bridge the gap between art and engineering. (you can decide for yourself what your role or mantra is) As such, sometimes it’s necessary when sitting and working with an engineer or clay modeler to then speak on their terms. That means pulling out the ol’ exploded views, cutaway views, and cross sections to help communicate your vision for the product your designing.

4. The Presentation Sketch:

This is where you bring out the big guns. These sketches tend to be a little more refined and thought out. you can think of them as being a little technical yet a little emotive. They serve to captivate the viewers interest while then explaining the concept visually. For a client that does not have the visual thinking skills of you fellow designers, it may be necessary to be a bit more explicit in how you explain things in your sketches (hence the technical aspect). Notes, callouts, different views – this is where you’ll want to be overt in how you express the idea.

5. The Emotive Sketch:

The gushy, over the top, killer sketch whose soul purpose is to make your viewer stare in awe at the killer sketch/render in front of them. Yes this is what tends to be the automotive sketch. Descriptive yet very emotional. I rarely do these much as I tend to work in 3-d once I get past the presentation sketch phase, but don’t get me wrong, I totally dig these and love a good emotionally and visually captivating sketch.

Source: ID Sketching

Another interesting video that gives you a snapshot of the effects of outsourcing on one country, particularly India.

Have a look and let me know what you think:

No one could argue the success of a man like Steve Jobs who has become one of the most successful entrepreneurs of our time. He started with nothing and went on to create Apple computers with Steve Wozniak. At one point Steve Jobs was the CEO of Pixar Animation Studios. I really enjoyed reading Steve Jobs’ 12 rules of success and I hope you find them as inspiring as I did.

Here are Steve Jobs’ 12 rules of success for your reading pleasure. Steve Jobs has certainly proved how effective these rules can be and he is a man worth listening to when it comes to success.

1 Do what you love to do. Find your true passion. Do what you love to do a make a difference! The only way to do great work is to love what you do.

2 Be different. Think different. “Better be a pirate than to join the navy.”

3 Do your best. Do your best at every job. No sleep! Success generates more success. So be hungry for it. Hire good people with passion for excellence.

4 Make SWOT analysis. As soon as you join/start a company, make a list of strengths and weaknesses of yourself and your company on a piece of paper. Don’t hesitate in throwing bad apples out of the company.

5 Be entrepreneurial. Look for the next big thing. Find a set of ideas that need to be quickly and decisively acted upon and jump through that window. Sometimes the first step is the hardest one. Just take it! Have the courage to follow your heart and intuition.

6 Start small, think big. Don’t worry about too many things at once. Take a handful of simple things to begin with, and then progress to more complex ones. Think about not just tomorrow, but the future. “I want to put a ding in the universe,” reveal Steve Jobs his dream.

7 Strive to become a market leader. Own and control the primary technology in everything you do. If there’s a better technology available, use it no matter if anyone else is not using it. Be the first, and make it an industry standard.

8 Focus on the outcome. People judge you by your performance, so focus on the outcome. Be a yardstick of quality. Some people aren’t used to an environment where excellence is expected.
Advertise. If they don’t know it, they won’t buy your product.

9 Ask for feedback. Ask for feedback from people with diverse backgrounds. Each one will tell you one useful thing. If you’re at the top of the chain, sometimes people won’t give you honest feedback because they’re afraid. In this case, disguise yourself, or get feedback from other sources. Focus on those who will use your product – listen to your customers first.

10 Innovate. Innovation distinguishes a leader from a follower. Delegate, let other top executives do 50% of your routine work to be able to spend 50% your time on the new stuff. Say no to 1,000 things to make sure you don’t get on the wrong track or try to do too much. Concentrate on really important creations and radical innovation. Hire people who want to make the best things in the world. You need a very product-oriented culture, even in a technology company. Lots of companies have tons of great engineers and smart people. But ultimately, there needs to be some gravitational force that pulls it all together.

11 Learn from failures. Sometimes when you innovate, you make mistakes. It is best to admit them quickly, and get on with improving your other innovations.

12 Learn continually. There’s always “one more thing” to learn! Cross-pollinate ideas with others both within and outside your company. Learn from customers, competitors and partners. If you partner with someone whom you don’t like, learn to like them – praise them and benefit from them. Learn to criticize your enemies openly, but honestly.

Recession slowed growth of design outsourcing in 2008
According to a Gartner survey of 40 vendors offering IC design services, the number of outsourced projects grew more slowly in 2008 compared with the previous year, with survey respondents reporting rapid growth in designs at lagging-edge process nodes.
By Suzanne Deffree, Managing Editor, News — Electronic News, 8/17/2009

The recession had an adverse impact on the third-party chip design service market in 2008, slowing outsourcing growth for the year, Gartner has reported.

According to a Gartner survey of 40 vendors offering IC design services, the number of outsourced projects grew more slowly in 2008 compared with the previous year, with survey respondents reporting rapid growth in designs at lagging-edge process nodes.

Indeed, the total number of design starts captured by survey respondents grew at about 6.5% in 2008, compared with 34% in 2007, according to a report made in the research house’s Semiconductor DQ Monday Report issued this morning.

The survey found that during 2008, growth in full-chip and partial design and back-end physical design outsourcing slowed to about 20%, 24%, and 3%, down from 27%, 38%, and 52%, respectively, in 2007.

The survey also found that outsourcing of back-end physical design starts at lagging-edge nodes (130-nm and above) grew significantly in 2008.

Growth in chip design outsourcing by Asia/Pacific-based chip design service customers grew the fastest, Gartner said, noting that Asia/Pacific-based survey respondents reported the fastest growth in the number of outsourced design starts captured by them.

“The survey findings confirm Gartner’s belief that the recessionary market conditions that prevailed during the third and fourth quarters of 2008 had an adverse impact on the third-party chip design service market,” Gartner Analysts Ganesh Ramamoorthy wrote in the Semiconductor DQ report.

“A deteriorating business climate following the financial crisis, and the onset of a recession and uncertain market conditions, started taking its toll on chip vendors’ plans for new chip designs in the third and fourth quarters of 2008,” he continued. “Consequently, chip design service providers and semiconductor intellectual property (IP) vendors had to face delays, cancellations or push-outs of design projects into 2009. This, in turn, had a clear impact on the number of chip design projects outsourced by chip vendors to third-party chip design service providers during 2008.”

According to Gartner, 2009 will be a “make or break” year for chip design service providers as they try to “wriggle out” of the economic recession. “With ASIC design starts expected to be down almost 22% in 2009, it is imperative that chip design service providers align their cost structure and sales and marketing strategies to the prevailing ASIC design start trends,” Ramamoorthy wrote. “This will enable them to maximize their revenue-earning potential in these uncertain times and weak market conditions.”

Gartner further advised that with a recovery in chip design activity expected starting in the Q4, design service providers should prepare now to invest, especially in engineering resources, to meet a likely surge in demand for design services and support activity.

Source: Electronics Design News

Prevent Disasters in Design Outsourcing
by Jason Amaral and Geoffrey Parker

Firms that pursue product platform strategies—by leveraging a common set of development, production, and support resources—have been able to outmaneuver competitors by cost-effectively delivering a greater variety of distinctive products. Having succeeded in outsourcing manufacturing, these firms are now also working to outsource the design of new platform-based products.

Unfortunately, design outsourcing often fails to generate desired cost savings and can even tear profitable platforms apart. Of the nearly 100 outsourced design projects we have studied at Fortune 1,000 companies, approximately one-third worked seamlessly, owing to modular designs, effective management, or both. The other two-thirds struggled or failed, for three main reasons:

To read more, please click here: Prevent Disasters in Design Outsourcing

Source: Harvard Business Review