Design matters

Design Management Journal, Summer 2001 by Smith, Jeff, Ulrich, Karl

It's in the Web site that invites interaction and positions Nova Cruz as a leader in its industry. It's in the trade show booth and brochures that clearly distinguish Nova Cruz from competitors. And of course, it's in the Xootr, a "techno-chic" scooter developed specifically for adults. This is an insiders' look at a new company, and Jeff Smith and Karl Ulrich highlight the connections they forged between design and business success.

Ever wonder what would happen to your bottom line if your company used design everywhere? At Nova Cruz, we use design thinking, process, and creativity to define our market strategy, our products, our manufacturing supply chain, and our operational culture. We call this practicing design with a capital D.

So what has using design everywhere done for Nova Cruz? Within our first year, the annual revenue rate grew to $10 million and the company reached positive cash flow and profitability. The media has referred to our products as the Porsche and Rolls-Royce of their class. These facts make it clear that design matters not just to us, but also to the press and to the market. Never mind that our ultimate goal is to become the VW of our market rather than the Porsche or the Rolls-Roycebut more about that later.

Begun as a mostly boot-strapped joint venture, Nova Cruz was founded by Karl Ulrich, an associate professor at The Wharton School of Business, along with three consulting firms (Lunar Design, Cheskin Research, and Technique Applied Science) and a handful of angel investors. Our group had spent years either teaching future business entrepreneurs or consulting for one startup after another. Now we wanted to pool our resources and create our own company and products from scratch. We believed we could build a company that would succeed through compelling design aesthetics and performance, and that we could do it quickly and efficiently as a group of experts.

Kicks for grownups

We began our quest for a product with a series of creative brainstorming sessions. It was at one of these that the photo turned up.

The photo, from Fortune magazine, showed a Pixar Animation Studios executive tooling along a company hallway on a vintage scooter. It was an inspiration: Why not turn a traditional child's kick scooter into a hip toy for grownups?

As it happened, Nathan Ulrich, founder of Technique Applied Science, was developing polyurethane wheels and other engineering designs for an array of transportation products. In addition to already being part of the family (as Karl's brother), Nathan clearly had relevant experience to apply in the scooter category.

Our team had already determined that using design everywhere would be our approach, and this included selling ourselves on our own business and product ideas. So, after several more creative sessions, a summary business plan and a functional prototype were created for review. The plan outlined the design opportunity, and the prototype, built by Technique, let us experience the actual ride of a scooter built for adults.

In the end, no one could resist the feel of the prototype. Riding it was like being a kid again. We were also very psyched by the idea of designing a scooter so cool that when we were done, the Pixar executive would want ours instead of the scooter in that photograph.

As a result of designing the business plan and building the prototype, we raised $200,000 in angel seed funding and received commitments from Technique, Lunar, and Cheskin to do significant amounts of work for equity in Nova Cruz. Karl had begun an extended sabbatical from Wharton and, as the primary driver behind Nova Cruz, he was a natural for the job of CEO. We had a product idea, we had funding, we had world-class consulting resources, and we had a CEO-we were ready to go!

Product design: Reinterpreting a classic Transforming an old idea-the kick scooterinto a product that could compete in a fastmaturing, cost-sensitive category was a challenging task.

To effectively compete in the burgeoning scooter market, we had to establish a defensible market position for Nova Cruz. Razor and a proliferation of other scooter companies were beginning to gain momentum with small, compact, and inexpensive scooters. But considering the market opportunities and the sensibilities and skills of the members of our joint venture, we believed we could compete by focusing on design and performance. While Technique's engineers concentrated on performance characteristics, such as wheel rolling resistance, steering geometry, deck geometry, and braking, Lunar's industrial designers addressed the aesthetic design of the product.

The ultimate solution relied on a modular architecture, in which a basic frame and aluminum structure could be augmented with different wheels and decks. This would allow Nova Cruz to offer the scooters in three models to suit varying tastes, budgets, and performance levels. This strategy would also allow us to invent and easily experiment with other options at later dates-making, for instance, some small test runs for customized deck shapes and deck graphics.