How Hyundai's design strategy has paid off

Hyundai has been deploying design strategically in recent years to create sleeker, sexier cars. It's part of a larger push for "quality" over the past decade. Now, sales and brand visibility are up.
Written by Reena Jana, Contributor

Focusing on design as a vital part of a business strategy can lead to more desirable products and can pay off, big time. So go the many analyses of the poster-company for design--Apple, of course. But it's not the only example. An article by John Reed, published on May 7 in The Financial Times, titled "Hyundai reaps rewards of quality push," presents a new case study on the successful strategic deployment of design by a corporation. It illustrates how Hyundai Motor reaped industry accolades, brand visibility, and sales by doing so.

The story begins like this: Hyundai Motor felt it needed to update the look of its Elantra compact car in 2007. The company's designers, being designers, wanted to make a more streamlined, beautiful version--and they got permission to. They were bolstered by a nearly decade-long push for better "quality" by the company's chairman, Chung Mong-koo. The mandate was introduced in 2000.

The redesigned Elantra, which made its debut in 2011, featured windows that were more narrow than those of previous versions and a streamlined silhouette. It won America's Car of the Year award. And overall Hyundai sales (including those of its affiliate, Kia) were more than double what they were in the early 2000s, when Chung first declared that the company needed to pursue "quality."

“Sometimes engineers hesitate to take risky decisions but we decided to do it,” Oh Suk-geun, Hyundai's head of design, told the Financial Times.

“Hyundai was a fast follower, now we are becoming a leader in the industry,” Oh continued. “People are feeling confident, proud of this organization. It’s a dramatic change.”

Oh's Seoul design studio is described as "a white space lined with books on art, fashion and architecture"--as hip, sleek, and chic. And very conscious of the power of beauty.

Auto-world analysts believe Hyundai's recent focus on design has really made a difference. “They are the perfect symbol of getting a lot of car for your money while still looking stylish,” Jesse Toprak, an analyst with U.S. website Truecar.com, told the Financial Times. “If Hyundai hadn’t taken chances with their design, they would be nowhere near where they are in terms of sales.”

Still, as Reed reports, Hyundai's business leaders believe that its internal supply resources--such as Hyundai Steel--offer the automaker type of efficiency that leads to well-priced, and therefore popular, products. And this, say some of Hyundai's executives, could be what truly gives the company an competitive advantage in the marketplace.

If you're of the camp that believes that design really can be wielded as a vital part of a successful product-improvement strategy, it's worth it to distill how Hyundai succeeded in doing so. Here are some key moves that the company made:

  • In 2000, Hyundai Motor put in place an initiative to promote "quality" among its managers
  • Its chairman held monthly meetings in which he was "relentless about quality, the same way Steve Jobs was relentless," Finbarr O’Neill, who headed Hyundai Motor America from 1998 to 2003 and today heads market research firm J.D. Power, told the Financial Times.
  • The company uses a consistent design language across its product range
  • It uses a "top-down" management structure, which leads to quicker decision making on design (similar to Apple's approach during the Jobs years)
  • It learned from competitors that making growth its top priority--over quality, presumably--can backfire

After reading the Financial Times story, it's clear that the Hyundai example is particularly interesting because although it might seem to follow Apple's lead, it runs nearly parallel. For it wasn't until around the very early 2000s, when Hyundai's chairman first emphasized quality, that Jobs and his team were hitting their groove in terms of focusing deeply on design in the highly innovative and aesthetic way the company is known for today. Apple released its groundbreaking blue iMac computers in 1998; and it didn't introduce its first game-changing iPod until 2001.

In this context, the Hyundai example is even more powerful. It's about following the idea that focusing on quality design will result in excellent products that will appeal to consumers--and isn't just a story of following Apple's approach.

Image: Hyundai

[Via Financial Times]

This post was originally published on Smartplanet.com

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