INSIDE BUSINESS: The grand design

British manufacturing may seem to be in decline but innovation still flourishes, says Roger Trapp

The latest figures from the Confederation of British Industry confirm the picture of Britain as a manufacturing nation in decline.

But while the manufacturing sector's continuing loss of jobs might appear to sit oddly with efforts to promote the country as a centre of creativity, all is not lost in the innovation arena.

The Design Council's Millennium Products initiative involves the selection of products for display in the Millennium Dome. The latest list includes the Ford Focus, Pfizer's Viagra drug and the Co-operative Bank's biodegradeable Greenpeace Card.

The council - which next month is co-sponsoring a London conference under the title "What's the Big Idea?" with the aim of helping companies design and market "world-beating products" - also acknowledges the role of design in services. For example, one of the Dome's exhibits will be Hairnet, an internet training service for the over-fifties.

Few organisations seem more convinced of the potential role for design in this area than Ideo, the product design consultancy that has developed products as varied as Nike sunglasses and Yamaha interactive keyboards.

Tim Brown, who runs the London operation of a company that now has 350 people spread between six offices in the US, Japan and Europe, sees opportunities. "Hardly any service companies are doing what I would describe as R&D," he says, adding that they should be spending about a 10th of their turnover in this area.

When Mr Brown returned to the UK from California, where Ideo has offices in San Francisco and in Silicon Valley, he was at first worried that there were not very many technology companies with which to work.

"Then it became more and more obvious that the real opportunity was to work with service companies," he says.

A significant part of what he describes as "a huge space to work in" is creating links between technology and service through what is being called "information appliance".

An early effort in this area was a series of radios designed for BBC digital radio. What Ideo came up with was a variety of set designs catering for a range of listening needs. One of them was a flying-saucer-shaped set.

In the US, Mr Brown adds, there are increasing numbers of information appliance products, including the Softbook, an electronic book that Ideo helped develop, and HealthBuddy, a service that enables doctors to deliver much better care for sufferers from Parkinson's Disease and other elderly people.

But the notion is starting to take hold on this side of the Atlantic. Suspicious of the "technology push" approach to innovation, Ideo is seeking to match technology to people's needs. And for service companies, this often requires executives to make "a leap of faith" about appropriate routes to market. This is one reason why Ideo has bought a 25 per cent stake in a recently established consultancy called the Fourth Room. It sees this collection of designers, communications specialists and advertising and marketing people as bringing expertise that even its broad-based organisation does not possess and as aiming to influence the executives that can seek the services of an organisation like Ideo.

Even though service companies are more apt to see themselves as "knowledge organisations" than the manufacturers they are usurping in the new economy, they can still have trouble when it comes to creating the right conditions for innovation, suggests Mr Brown.

"Innovation is a catalytic process. It's about creating the right environment," he says. "The job of CEOs is to create the space. They are architects and they need to create the space for people to fill." As he acknowledges, creativity is also messy. This is apparent from a film about Ideo aired on US television earlier this year. Itappears to be one firm where teamwork genuinely works and hierarchies are largely ignored.

There is a sort of organised chaos as people are assigned to groups working on projects, often with tight deadlines. It appears to be a free-for-all but there are rules designed to ensure that, for example, as many ideas as possible come out of brainstorming sessions.

It might appear easy for an organisation like Ideo. But it is hard for more traditional organisations to move over to that way of operating, no matter how much they may see the need to. Which is a need that events like next month's conference seek to address.