OFFICE FURNITURE DESIGN AND GLOBALIZATION. OFFICE FURNITURE DESIGN AND GLOBALIZATION. Agency for Sustainable Design, Cologne

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1 FURNITURE DESIGN IN A GLOBALISED WORLD ass. Prof. Ursula Tischner Agency for Sustainable Design, Cologne Eco- and Sustainable Design of Products and Services Research and Dissemination Company Consulting Education and Training Core Group (6 experts), Network of freelancers and partner organisations 1

2 ECONCEPT Research => Publication ECONCEPT RESEARCH - Sustainable Office, - ecobiente, - MEPSS, - SusProNet, - ÖKIP, sustainable crafts, 2

3 - 8 bachelor programs - 3 master programs - Internationally one of the leading design educational institutes Sustainable Design Program since A LOT OF PEOPLE DO NOT LIKE GLOBALISATION, BUT DO WE HAVE AN OPTION? 3

4 YOU CANNOT THINK GLOBALISATION WITHOUT THINKING SUSTAINABILITY SUSTAINABLE DEVELOPMENT A paradigm formulated in 1987 by World Commission on Environment and Development (Brundtland Comission) signed in 1992 by more than 170 Countries. "Development that meets the needs of the present without compromising the ability of future generations to meet their own needs" (World Commission on Environment and Development 1987). 4

5 SUSTAINABLE DEVELOPMENT 3 Dimensions: PPP People Planet Profit SUSTAINABLE DEVELOPMENT If everybody wanted to live like we in the industrialised countries do we would need four planets! 5

6 THE GOAL Satisfy the demands of all people in the world, especially the world s poorer people by respecting the carrying capacity of the planet. ESSENTIAL QUESTION 1 Is there a need and a demand for your products? Or: Where do people demand what kind of furniture? 6

7 OUTSORCING AND OFFSHORING Some Facts: => Production leaves Europe towards low labour cost countries... => Around 70% of European GDPs are generated by SERVICES not production... => Made in Germany is not the high quality label any longer... => Germans are the world champions in export of employment OUTSORCING AND OFFSHORING Common Argument: => We do BRANDING in Europe but the rest goes to countries that are cheaper and easier because of less strict regulations. Sometimes true but there are a lot of cases where companies brought production back to Europe because of bad experiences with outsourcing... => Obviously the European market needs employment because otherwise no one will buy your products in Europe. It is not only about labour cost... 7

8 OUTSORCING AND OFFSHORING Negative aspects/ trends: => Quality control gets more difficult, high risk involved => Transportation cost is rising because of high oil prices = becomes cost factor => Cost for materials gets more important because of e.g. China s demand for raw materials = labour cost gets less important => Labour cost in EU go down, while they rise in emerging countries... OUTSORCING AND OFFSHORING Some Facts: => High quality instead of low price strategy gets also more and more difficult because low labour cost countries increase quality standards. => There used to be export of labour intensive production work but... =>... there is increasingly also export of knowledge intensive work, e.g. ICT, research and development and also design so what is left for good old Europe? 8

9 FORGET STYLING START DESIGNING DIFFERENT DESIGN PHILOSOPHIES European Designers are educated to critical thinking and innovation. Asian Designers are educated to imitate the master. => we innovate while they copy => we search for designing satisfaction for the user, while they search for best practice examples => we can be one step ahead 9

10 HOWEVER... Designers have to understand the culture for which they design. => So design for Asia in cooperation with Asian Designers, => for Africa in co-operation with African Designers etc. => Also called Diversity Management... e.g. Philips Medical for China, our suggestion: connect with Chinese Medicine. SO WHAT TO DO? Follow the trend? Or are there altenatives? - Labor costs: $14.24 per hour in the U.S. and $ 0.69 per hour in China. - China also is more affordable in terms of labour training and retention. - (Even) the US has environmental regulations that can equal more than 25 percent of total operating costs, including safety conditions for workers and production requirements for dust control, air and water treatment, etc. Furniture Brands International, the St. Louis-based company that owns North Carolina manufacturers such as Thomasville furniture, Broyhill, and Hickory Chair, announced it won t build any more furniture factories in the United States. What s more, rather than build other factories in Asia, it will buy and re-brand from manufacturers already there. Raleigh News and Observer, February 12,

11 THREE SUGGESTIONS => SUGGESTION 1: From products to services => SUGGESTION 2: Customer focussed innovation => SUGGESTION 3: Sustainability as USP FROM PRODUCTS TO SERVICES 11

12 SUGGESTION 1: FROM PRODUCTS TO SERVICES Services normally are consumed at the time and place where they are produced (hairdresser) are intangible and labour or ICT based (consulting service) cannot be stored... of course there are always exceptions... WHAT IS A PSS? Functional Sales Sustainable Services and Systems (3 S) Eco-efficient services Product Service System (PSS) Servicizing 12

13 WHY PSS? More than 75% of GDP in US more than 50% of GDP in Europe are generated by services NOT products. Consumers choose products because of better service not because of product qualities as most are all the same. The ultimate goal is to design SATISFACTION or SOLUTIONS not products... Start with the need and develop the most efficient and elegant combination of products and services to fulfil the needs. 13

14 PSS DEFINITION value mainly in tangible product content Product-Service-System value mainly in intangible service content WHAT KIND OF PSS? A) Product oriented PSS product is owned by the user/consumer B) Use oriented PSS product is owned by the service provider, who sells functions instead of products C) Result oriented PSS/ System optimisation provider sells results instead of products or functions 14

15 WHAT KIND OF PSS? value mainly in tangible product content Product-Service-System value mainly in intangible service content pure product Category A product oriented Category B use oriented Category C result oriented pure service Buying an office chair Leasing a computer with a maintenance contract Pay per use concept for copy machines/ printers Using an office on demand like in a business centre Virtual office PSS CASES B2C: Mobility e.g. from car-sharing to mobile card 15

16 PSS CASES B2B: materials and chemicals e.g. Rent a solvent,, service offered by producers of chemicals,, e.g. Dow Chemical PSS CASES B2B: software support e.g. optimized carpet cutting 16

17 PSS CASES B2B/ B2C: ICT e.g. Virtual Answering Machine, Service offered by telecom providers, e.g. Deutsche Telekom PSS CASES B2B/ B2C: Offices Syskreis,, PSS offered by a group of companies: retailer of office equipment and consumables, office furniture producer, recycling company, leasing/finance institute providing a complete use- optimised office environment for rental. 17

18 PSS CASES B2C/ B2B: Food e.g. vegetable subscription, provided by a co-operation of (organic) farmers and food retailers, delivering a box of vegetables and/or fruits every week to the customer s home or place of work. PSS CASES B2C/ B2B: Households/ Offices e.g. heat and light contracting, selling heat and light not the equipment that produces it. Customer pays for the function/ result not for the equipment. Equipment/ infrastructure can be optimised by provider for most efficient use. 18

19 B2B: Offices PSS CASES VOFFICE.COM The Virtual Office The company group provides a wide range of services: Virtual Office / Telephone Reception Serviced Office Space Automated Call Handling Website Design and Development Business Centre Consultancy and Software Business Support and Corporate Concierge WHEN ARE PSS SUCCESSFULL? Compete with buying products: Price / added value Clever combination / diversification Right PSS target group? business to business (b2b) or business to consumer (b2c), different cultures and consumer groups. Their demands and openness for PSS concepts as well as their selection criteria might be completely different. Product type: consumable, durable, capital goods Speed of change: technological, regulatory 19

20 WHEN ARE PSS SUCCESSFULL? Use intensity, frequency of buying: daily, weekly, monthly Customer involvement: private or public consumption (prestige object) Inferior good, necessity, luxury goods High vs. low involvement Associated perceived risk (financial, social, etc.) and possible end-of-life problem Co-operation abilities, closer coordination with, and trust in partners. PSS CONCLUSIONS PSS have the potential => to be a new and profitable business model and a design challenge => to leapfrog to drastically reduced environmental impact, A field that is worth being explored by industry. 20

21 SUGGESTION 2: CUSTOMER CENTERED INNOVATION Although it seems so logical, still it is not done regularly: Really find out what your potential customers demand and offer SATISFACTION instead of products. CUSTOMER CENTERED INNOVATION 21

22 CUSTOMER CENTERED INNOVATION Demographic Changes: Shrinking workforce in developed countries increasing workforce in developing countries Migration and multicultural workforce Ageing Society, social insurance problematic, specific needs of the elderly have to be met Increasingly more Women than Men in office work CUSTOMER CENTERED INNOVATION New work models increasing share of office work more work at home (home office) more Internet, Tele-working, increasing working hours, combination of work and private life more self determination, more responsibility of employees, less control, flat hierarchies, problems to motivate empoyees 22

23 CUSTOMER CENTERED INNOVATION New work models Tele-home-work: the workplace at home Tele-satellite-work: the use of satellite offices and it s facilities. Work at the customer On the road : in cars, public transport or planes. Office hotels, Business Clubs where one can rent office space just for the time needed Non territorial offices, where a large number of employees share a smaller number of desks SUGGESTION 2: e.g. mass customization Examples from shoes via clothing to furniture e.g. NEWCRAFT: Reduce transportation and stock keeping by individualised production on demand and decentralised production 23

24 SUGGESTION 2: e.g. rent o box Mobile office on demand Autarkic small office building, mobile, sustainable, and adaptable to all user needs... SUGGESTION 3: SUSTAINABILITY AS YOUR USP => Green (public and private) purchasing, => Eco-labels and ergonomic/ safety standards, => Consumer awareness about sick building syndrome etc. => Product take back and recycling legislation... A lot of drivers for Eco- and Sustainable Design 24

25 SUSTAINABILITY => to influence consumption and production => to reach improvements on system level => to go one step further beyond Ecodesign SUSTAINABILITY Examples from other sectors, e.g. car industry: German Car industry started design for recycling programs already in the 90ies, now they are way ahead of other companies in compliance with End-of- Life Vehicles Directive 25

26 SUSTAINABILITY Examples from other sectors, e.g. electronic industry: Japanese electronic industry started lead free soldering programs very early, now they are way ahead of other companies in compliance with WEEE and RoHS directives. DEFINITION SUSTAINABLE OFFICE Economic Criteria => cost per workplace (as low as possible) e.g. reduce the cost for the office building and infrastructure, increase the use time, longevity, flexibility and efficiency of office equipment and building, value stability and increase in value of building and infrastructure, return on investment, amortisation, etc. => work productivity (as high as possible) e.g. also work stability, low illness rates, good qualification of employees, productive infrastructure, e.g. ICT technology, information and knowledge-management systems => long term planning, risk minimization, risk management e.g. by multi-functionality of space and infrastructure enabling flexible uses, avoidance of mis-investment and -calculation, pro-active consideration of legislative and political conditions, longer term horizons for planning 26

27 DEFINITION SUSTAINABLE OFFICE Environmental Criteria => Material-efficiency, including Building, equipment, consumables over the whole life cycle => Energy-efficiency, including heating, light, ICT technology (excluding transport and mobility) => Space-efficiency, incl. building, interior, workplace... => Hazardous substances and emissions, include. indoor climate, noise pollution, Electrosmog (excluding transport, mobility) => Re-use, Recycling possibilities, Waste and Disposal, incl. Consumables, Building, Equipment => Transport and Mobility DEFINITION SUSTAINABLE OFFICE Social-ethical Criteria => healthy work environment, physical: equipment and infrastructure to work easy and comfortable, Ergonomics, Safety at workplace etc. => healthy work environment, psycho-social: work load adequate to qualification, adequate reward, avoidance of unhealthy stress and mobbing, motivation and satisfaction, self-determination => fair Wages, Quality of Jobs: Accessibility and Permeability for different qualifications => socially responsible corporate culture: Equity, barrierfree, respecting different ages/ different cultures, participation, innovative and creative climate... => social infrastructure and services: e.g. education and training opportunities, respect family background of employees (childcare opportunities), combination of job and private life, service offers at work place (food, shopping, laundry ) 27

28 SUSTAINABILITY Issues for the furniture industry: => Raw material consumption (efficient and renewable) => Production efficiency and health and safety standards. => Lifetime of furniture, maintenance, upgradability, ergonomics, emissions. => Take back programs: Re-use/ Recycling of furniture => End of life disposal... Intelligent life-cycle-design and -management SUSTAINABILITY Be aware that the image of Ecodesign has changed No more self-made, hand knitted, and 100 % recycled looks but professional attractive designs! out 28

29 SUSTAINABILITY Issues for the furniture industry: Intelligent furniture (ubiquitous electronics) improve facility management, life time and ergonomics... BUT take care for electronic component recycling, i.e. make it removable. SUSTAINABILITY Still one of the best ECODESIGN examples: PICTO office Chair by Wilkhahn 29

30 ALL THREE SUGGESTIONS ARE CONNECTED SUSTAINABLE PSS Must be more efficient than a product solution (planet) Must be better value for money (profit) Must be more convenient, better quality/function, increase quality of life, secure employment (people) ALL THREE SUGGESTIONS ARE CONNECTED 30

31 ALL THREE SUGGESTIONS ARE CONNECTED ALL THREE SUGGESTIONS ARE CONNECTED 31

32 CONCLUSIONS Existing Trend: From selling products to selling functions or performance (also called functional sales by Industry) to selling SATISFACTION. Understand: (Where) Can there be anything in it for your company? CONCLUSIONS PSS consist of products (mainly material plus software) and services (mainly immaterial, labour, information, organisation...) Understand: The ratio of material products versus immaterial services, are there any opportunities to increase efficiency and effectiveness? 32

33 CONCLUSIONS PSS involve multiple actors and sometimes even integrate the customer in co-production Understand: Which stakeholders have to be involved? Really put your customers in the centre of the innovation activities! CONCLUSIONS PSS is more common in B2B sector at the moment, e.g. office PSS for the office are nothing new and they offer high potentials on the level of market success and sustainability. As production of services is more connected to time and place of delivery, they can form a unique business opportunity for European companies. 33

34 CONCLUSIONS Globalisation and Outsourcing/ Offshoring yes, but be critical about it, be aware of risks and also check the other options. Design can help, e.g. scenario, trend forecasting, radical sustainable innovation, mass customization etc. THANK YOU 34