Case study - Morningstar online 1998

1. Institute of Design
Illinois Institute of Technology
Case Study #
#0598-001
Morningstar:
Using Design Strategically
to Deliver Usable Information

2. The Institute of Design
The Institute of Design (ID) is an international leader in teaching systemic,
human-centered design. Its curriculum focuses on advanced design methods
and theories.
Together, faculty and students draw upon many perspectives to identify current
and future needs affected by dramatic technological, social, and economic
changes in our society, and to humanize the technology needed to solve those
problems. The aim is innovative products, communications, and systems that
simultaneously reduce product development time and cost.
Two main approaches are used: Design Planning and Human-Centered Design.
Design Planning fuses analytical methods from business, observation and
evaluation methods from the social sciences, and design methods, to extend the
work typically done by business consultants and strategic planners. The aim is
to create design briefs that rigorously analyze business situations, propose and
simulate many possible new directions, and recommend the best paths to follow.
Human-centered design approaches focus on user-centered methods of designing
products, services, systems, environments, and software. The goal is to
understand how people comprehend and use the built environment, to evaluate
their expressed and latent needs, and to add value to users’ lives.
For more information on the Institute of Design, its philosophy, its mission,
and its programs,
call: 312 595 4900
write: Institute of Design
Illinois Institute of Technology
350 North LaSalle Street
Chicago, IL 60610-4726
USA
or visit our Website at:
http://www.id.iit.edu

3. Acknowledgments
This case study was prepared from interviews and analyses by MDes and PhD
students at the Institute of Design under the supervision of Professor John
Heskett. Initial groundwork and interviews were conducted during the fall
semester, 1997 as part of the course Case Study Development (ID571-052)
,
by participating students:
Izabel Falcão Barros Kyung Ran Choi
Martin Ebert Elizabeth Glenewinkel
Diane Jacobsen Jooyun Melanie Joh
Bill Kerr Ding Bang Luh
Abel Monametsi Luís Pereira
Guy Suesuntisook
Further work and analysis was conducted in spring semester, 1998, as part
of the course Case Studies of Advanced Design Projects (ID570-051) by
participating students:
Izabel Falcão Barros Elizabeth Glenewinkel
Diane Jacobsen Bill Kerr
Luís Pereira Guy Suesuntisook
Our grateful appreciation is due to the following people at Morningstar who gave
very generously of their time, and openly of their opinions. Since being
interviewed, some have changed position and title, but for the sake of continuity
their status at the time of being interviewed has been retained:
Joe Mansueto, Founder and CEO of Morningstar
Don Phillips, President
Gary Silverman, Director of Marketing
Catherine Gillis-Odelbo, Publisher at Morningstar
Susan Dziubinski, Editor of the Morningstar Investor
Professor Philip Burton, Design Consultant to Morningstar
Martha Boudos, Business Marketing Manager
John Tipton, Acting Director of Software
Sylvester Flood, Software Development Manager
Robert Soto, Production and Design Manager
David Williams, Director of Design

5. Contents
Introduction.......................................................................................................... 07
History.................................................................................................................. 09
Corporate Structure and Culture .......................................................................... 10
Markets and Products ...........................................................................................11
Competitors ......................................................................................................... 13
Design Organization ............................................................................................. 14
How Designers Work ........................................................................................... 16
Design Evaluation................................................................................................. 18
Design as Strategic Tool ....................................................................................... 20
Design as a Defining Feature of Morningstar ................................................ 20
Brand and Identity ......................................................................................... 20
Product Differentiation................................................................................... 21
Internal Integration ........................................................................................ 23
Product Development Driver ......................................................................... 24
Conclusions.......................................................................................................... 26

7. Introduction
Morningstar is the biggest mutual fund information service in the U.S. It was
described simply in USA Today in 1992: “What does Morningstar offer that has
fund investors so excited? Morningstar collects as much information on individual
funds as it can and then slices and dices and delivers it in packages that make it
easy for individual investors to understand and use.” 1 1. (need reference)
Just as a company evolves and changes, so to does the role of design within it.
Design has been an important part of Morningstar from its inception. In many
ways, it has become part of the fabric of the company, so tightly woven into how
they operate, that it is difficult to imagine Morningstar without it. Yet, it is only one
of many threads.
This case study attempts to examine how design has both consciously and
unconsciously affected different aspects of the firm. Set in the context of the
history of the company, and through the insights of people from a wide range of
disciplines who have helped it grow, this is a snapshot of the role of design at
Morningstar – how it is valued, and what potential it offers them as they attempt
to develop new products and services for emerging markets.
The name Morningstar was inspired by the last line
of Thoreau’s Walden: “The sun is but a morning star.”
Its visual interpretation is based also on this quotation.

9. Company History
A brief description of the background
Morningstar’s founder, Joe Mansueto
is necessary, since his beliefs and
the circumstances under which
he founded the company constitute
the main “legend” shaping the
company’s culture.
From early childhood, he showed
entrepreneurial initiative – once
ordering 1,000 crickets to sell to
neighbors as garden accessories.
This business did not succeed as the
crickets died before he could make
the healthy profit on which he had
planned. In a more successful, 6th-
grade venture, he made money buyin
and selling ham radios.
Joe was an outstanding student in hig
school, very interested in both math
and science. He went on to study
English at undergraduate level at the
University of Chicago. Even before
completing his bachelor’s degree, he
enrolled in an MBA course, after a
counselor convinced him that busines
could be very creative. After
completing the two degrees, he
and his roommate, Kurt Hanson,
established a firm, SSR, to do market
research for radio stations. Mansueto
left the company in 1982, selling his
half to Hanson in 1985. In an effort
to gain some experience working in
a “real” firm, he found a job at the
communications company Golder
Thoma, but left after only four months
Following his departure from Golder
Thoma, Mansueto worked for 14
months at Harris Associates, a money
management company.
The rest of Mansueto’s story is the
story of Morningstar.

10. Corporate Structure & Culture
Joe Mansueto compares his company to a California start-up, on the model of
Silicon Valley. “It tends to be a young company, entrepreneurial, kind of fast
moving, which is atypical in our industry. This is indeed true; the financial
”
information business is predominantly composed of long-existing firms that are
formally structured and exude an atmosphere of reliability, expressed in a respect
for convention. In comparison, Morningstar has a very flat management structure,
evident in an informal, open environment with no private offices, and everybody
from the CEO to an entry-level employee sharing the same kind of desk. While
there continues to be an absence of any rigidly specified hierarchy, however, one
implicitly functions in practice. Major responsibilities at the executive level, are
clearly defined.
In what can perhaps be seen as an extension of his aversion to rigid definitions of
organization, Joe Mansueto similarly tends to sidestep questions about
Morningstar’s corporate culture. “The end of the company is not the culture, he ”
emphasizes. “The goal of the company is to create great products that help
people make better investment decisions, and, to me, that’s what the focus
should be on. The lack of structure can therefore be seen as a very deliberate
”
means of successfully fulfilling those aims. “I think that part of the goal is that
you need to attract great people here, world-class people. We need to have an
environment and a culture that, one, they’re going to want to stay at, and build a
career at; and, two, be a culture and environment that brings out the best in them
and supports producing world-class work. A key point in the company, therefore,
”
is a very strong emphasis on the individual. Don Phillips, the President, points out:
“We try to hire the person not the degree. He adds, “We try to create an
”
environment where people can do their best work. We try not to micromanage. ”
Many companies make impressive statements about their employees being their
greatest asset, but fine pronouncements are more frequent than the reality of
implementation. Nevertheless, when put into practice, such principles can be a
powerful competitive element. The advantage for employees is summed up by
one at Morningstar as: “I don’t get hassled. I used to have pretty long hair and
nobody cared. I was able to do whatever I wanted to do in my personal life, as
long as I got my job done. It’s a pretty loose atmosphere. But clearly, an effective
”
one, as another employee emphasized: “I think people are inspired to think big. ”
When asked how it feels to work for Morningstar, David Williams, Director of
Design, sums it up as: “Chaotic. There is not a whole lot of structure, which I
guess is something that attracts people here. People don’t think in terms of
organizational hierarchy; although there is one. I think one of the original things
that is still true here is: the company is young and there is a certain amount of
energy and liveliness. Unusual – considering the financial industry that way. I think
that always comes through in the products in some way. ”

11. Markets & Products
Morningstar sells its products and services to three major markets: individual
investors, intermediary investors, and institutional investors.
Individual Investor Market
The market for individual investor information is still very small, but growing
rapidly as baby boomers reach their 50s and look for advice on how to manage
their future finances and pay for children’s college educations. Morningstar serves
approximately 70,000 households – or just 1% of the investment market.
Individual investor customers are typically more affluent, with a base household
income of $127 ,000, and slightly older than the average investor (59 years).
The individual investor is primarily looking for information that:
• is timely
• detailed enough to allow them to make their own investment decisions
• comes in a single source
• comes from an unbiased source
• includes additional training
• offers easy-to-understand definition
Morningstar tends to attract investors who really enjoy spending time investing
their money and are not overly concerned with market fluctuations. They tend to
be well-educated and self-employed. They predominantly prefer print information
over electronic, although the majority of them own computers.
Intermediary Investor Market
There are a number of intermediary investors, from insurance brokers to banking
officers. Morningstar enjoys high brand awareness and usage rates of 60.7% of
the market. It sells half of its products through custom/direct data feeds and on-
line sales.
Morningstar’s primary customers are financial planners who are typically more
affluent investors, willing to pay more for information from a preferred vendor.
They are primarily interested in information that:
• is from a reputable source
• minimizes research time
• is easy to use
• gets to them before their clients

12. The Institutional Market
Institutions value Morningstar for the ability to repackage overwhelming amounts
of information in as many different ways as their needs require. Each institutional
investor needs to be educated and designed for in different ways.
Comparison of Markets
The two markets share some concerns and have distinctive differences.
Individuals are more concerned with price, report more problems with
services, and are more dissatisfied with timeliness of information they receive.
Intermediaries are willing to take more risks, are more concerned with
convenience and reputation, and use on-line products and services more
frequently. Both still use and prefer print-based information versus electronic,
which may have implications for Morningstar as they develop their Internet
products. Institutional investors tend to be less attracted to risk and require
a higher degree of customization.

13. Competitors
Morningstar competitors can be divided into two different groups: direct
competitors and competitor-partners. The direct competitors are content
providers, publishing mutual fund rankings based on fund surveys and aimed at
investment advisors and financial professionals. Direct competitors include
ValueLine Publishing, Inc., Lipper Analytical Services, Micropal and Standard and
Poor’s. They produce a range of products that compete with Morningstar.
Competitor-partners are those information distributors and Web-based brokers
who, while competing with some Morningstar products, also use Morningstar
ratings. An example is Disclosure, Inc., an information gatherer and distributor-
provider of financial intelligence delivered via advanced on-line and CD-ROM-
based research tools. Subscribers have access to a full range of proprietary and
third-party company information, including company financial and management
information. Other major competitors in electronic trade commerce in this
category include Microsoft Investor, Charles Schwab, E*Trade, Fidelity funds,
Kaufmann, Motley Fool, InvestIn and Quicken.
Morningstar’s competitors in the market for individual investors have traditionally
been Value Line, Money Magazine, Standard & Poors, and the Wall Street Journal.
(With their launch of an on-line offering, Morningstar.net, Morningstar is facing a
new kind of competitor, e.g., the Microsoft Investor site.)
In this market, Morningstar faces several challenges:
• Delivering information in an even more timely fashion;
• Developing innovative ways for individual investors to make their
own decisions;
• Shifting target market’s preference for information from print-based to
electronic (timeliness factor may be a big influence here);
• Understanding how Morningstar.net can be developed to appeal to
younger investors;
• Maintaining a reputation as an unbiased source while accepting advertising
on Morningstar.net
In the intermediary investor market, Morningstar competes against Value Line,
CDA Weisenberger, and Lipper. As with the individual investment market, Value
Line appears to be their most serious competitor, but in this market Morningstar
appears to have a dominant lead. Although they are ahead of the pack, users have
made it clear that there is significant opportunity to make their products easier
and faster to use. Other areas in need of improvement include:
• understanding specific training benefits planners would like to see
• how Morningstar’s products integrate with other financial tools
Although competitors are launching more products to compete with Morningstar
product lines, real and dangerous competition may come from within. Several of
Morningstar.net features are similar to Morningstar paper based products – like
Morningstar Investor and Morningstar Mutual Fund Reports. When asked about
this dilemma in an interview for USA Today, Don Phillips replied: “You’ve got to
make a choice. Are we going to cannibalize ourselves or let someone else do it?”

14. Design Organization
The organization of design at Morningstar began in its early years with consultant
designers playing the main role, as with Philip Burton, a professor of design at the
University of Illinois at Chicago, who formerly taught at Yale under Paul Rand, one
of the preeminent designers of the post-war world, and later responsible for
Morningstar’s logo. Burton’s role continues to influential on several levels. He has
greatly influence the company’s designers in through educating them in the
course of projects, particularly in how to present their work to management and
to how to be aware of the value of their contribution. At the highest level of
management, he also sits on the strategy committee.
As the company has grown, the in-house group has assumed an increasing
proportion of responsibilities, particularly since the appointment of David Williams
as Director of Design in 1994. Design consultants continue to be used for
important supplemental work, as with packaging design by Fitch – a leading
design company based in Worthington, Ohio – and with Philip Burton continuing
to play a significant role as an éminence grise to ensure cohesiveness and
consistency.
As with other aspects of Morningstar, the organization of design can best be
described as loose, following the entrepreneurial pattern of the rest of the
company. There is an absence of defined departmental structure, little reliance on
formal processes, and minimal role definitions in how design functions within the
company, although, as Director of Design, David Williams’ overall responsibility is
clearly acknowledged.
Within this loose structure, different focal points of design work, can be identified:
Publications
Dealing with all paper media that leaves the company (except marketing-related
materials) and including the Internet Website.
Product Design
Very small groups responsible for 2D and 3D products, software and interface
design, such as data pages and the Morningstar report.
Marketing
Essentially writers and graphic designers set up to produce direct mail pieces,
posters at trade shows, promotional communications, advertising in magazines,
Web banners, etc. On the Website, they are responsible for the advertising
element.
The first three teams include a total of 12 designers and work in a close and
integrated pattern, reporting to David Williams. Marketing has five full-time
designers plus two interns and two writers, who report to the Head of Marketing.
In terms of qualifications and experience, the majority of designers have a
traditional design background – a grounding in the skills of developing two- and
three-dimensional forms. However, on the software development and Internet
teams, there are some designers with “interface and interactive media”
backgrounds.

15. Currently, design does not have a separate budget but is included in estimates
for products, services, and R&D. The total cost of design cannot therefore
be estimated.
Decisions on capital investment in design to enhance its capabilities are made
at the project level, with people responsible for projects making collective
decisions. Catherine Gillis-Odelbo observes that at the product level, “ design
...
is accounted for, and it’s a negotiation between the business marketing manager
and designer over how much time and money is going to be spent on design
effort for that particular product or for that particular time period. Decisions about
”
investment in design therefore have to be weighed against other needs
influencing the purchase of equipment. Another consequence is that staffing of
design functions fluctuates, depending at any point in time on the range of
projects being worked on.
“When someone wants to get something done,
they just find a way to get it done.”
– David Williams

16. How Designers Work
Given the loose structure of the company, the absence of cut-and-dried
procedures that can be simply described should not be surprising. David Williams
sums up the essence of how designers work at Morningstar: “There is almost
nothing built into the process here because we are so process weak. When
someone wants to get something done, they just find a way to get it done. In”
practice, therefore, design functions in serendipitous fashion in response to any
project in which designers are asked to be involved.
The division of design into two groups, one reporting to the design director, the
other to the marketing director, also mirrors two very different views in practice
of how design should function. They can be characterized as the strategic and the
subordinate. Design at the strategic level in involved in decisions about future
products, systems, and markets, indeed, how a corporation is to develop. The
flexible organization of Morningstar has enabled David Williams to increasingly
function at a strategic level, best exemplified by the Internet site project which
marked an important expansion of the role of design into product development.
The subordinate role refers to situations where design is used in executing
decisions that have already been made. The way design functions in the
marketing department, for example, is more on the level of a skill-based activity.
This is justified by members of the marketing department in terms of the close
integration it permits on their projects. The division of roles, however, is felt by
some to be an obstacle to developing a fully unified set of design standards.
For Gary Silverman, Director of Marketing, the arrangement is not problematic.
He observes that on the corporate level, no hard line separates design from
marketing; the relationship is close and integral. As an example, he cites the fact
that marketing designers report to him in the marketing department, and also
work with the design director to achieve appropriate standards.
What is obvious at Morningstar, as in most companies, is that design can
contribute on many levels, in many ways. In some cases, a valuable learning
process has resulted from cooperation across disciplinary boundaries, from
which designers also benefit. Gary Silverman feels the contribution of designers
is very important as an idea is being formed. Early involvement means designers
are often working on sketchy data, but he observes: “If the designers aren’t
involved in the original research with the customers to find out who is the
customer and how is it going to be used, it would be lot harder for them to design
a great product.”
What constitutes “a great product, however, in terms of market success is not
”
clear, as there seem to be no processes for evaluating success. The nature of the
company means there are no specific procedures for establishing basic standards
in product development, and products are still launched into the market without
criteria by which they could earlier have been screened. The absence of an
effective filtering procedure can be problematic on another level. Gary Silverman
astutely comments: “Saying no to a great product is as big a failure as saying yes
to something that failed in the marketplace. We probably have done that just
as often. ”

17. The situation for designers often tends to be fluid, however, due to the rapid pace
at which new products are continually developing, requiring them to adapt to very
different work. Few designers are specifically trained for the full range of products
at Morningstar, and once they have become competent in a particular area, their
loss for any reason can be a problem.
If the contribution of design varies in its level of application, it is equally
characterized by fluctuating inputs across the phases of product cycles. The
design of products from scratch is a long process, requiring substantial time and
resources. When completed, however, an on-going maintenance function is
required that can be more intermittent and fragmented in the level of
commitment. In addition, it often happens that a point is reached where a
complete re-design becomes necessary, again requiring extensive input.
Ideas for projects originate from various sources. For the most part, marketing
managers are responsible for managing products, configuring them in a way
appropriate for the audience, budgeting and developing the product to meet those
expectations, deciding on distribution and circulation issues, and on how to
support the product. Most ideas are generated in-house. Although market
research is undertaken for the information it yields on trends in what is wanted,
“Truly breakthrough product ideas, according to Martha Boudos, Business
”
Marketing Manager, “come from us. They don’t come from market research; they
come from inside. They happen because of a chat in the hallway. That’s how that
kind of stuff happens. ”
Some managers, such as John Tipton, appreciate the participation of designers
from the beginning of projects. Commenting on the value of an interface designer
knowing what works and what the pitfalls are, he pinpoints one of the major
reasons for including design as an integral element from the beginning of
projects: “They keep us informed and allow us to make things right from the
start, rather than having to battle out changes later in the process.
”
Other people observed, in contrast, that due to the lack of formal structures and
processes, including design up-front as an equal partner in development
processes does not happen evenly across the company.
Clearly, the growth and evolution of relationships has not always been easy, but
there is evidence of a substantial learning curve in understanding the levels at
which design can contribute at Morningstar, which is confirmed by the reactions
of numerous managers within the company.
“Truly breakthrough product ideas, come from us.
They don’t come from market research;
they come from inside...”
– Martha Boudos

18. Design Evaluation
Evaluation of design can take place both externally and internally. In terms of the
former, research played little role in the early history of Morningstar. As founder
Joe Mansueto says, “It was pretty much intuition. Today, however, there is
”
growing use of a variety of market research techniques. More resources are
devoted to both quantitative and qualitative research, with an emphasis on its
being market led.
A variety of means are used to gain feedback, from quarterly meetings of the
User Advisory Committee to formal market research and very informal personal
contacts. Joe Mansueto admits that the connection between all the research
undertaken and its use for improvement is not as strong as it could be. He also
feels, however, that survey results should not automatically be used for change
“without feeling some affirmation with your own thought processes that this is a
good thing to do.”
Design is not a specific topic in such research, although it might feature
incidentally through questions to customers on such factors as usability and
navigation of software which obviously have design implications. Comments on
how easy products are to use, or on how well materials are presented are taken
as signs that design is doing the job.
David Williams particularly values an industry conference for mutual fund
managers organized annually by Morningstar, which provides a big audience and
a good opportunity for market research.
There is an argument, however, for design to be featured more in external
research, in terms of product evaluation, to know more precisely how customers
are using information and what they want from it.
Internally, the primary means of evaluation are design reviews. For the most part,
therefore, reviews remain informal and vary in pattern. In terms of when they take
place and who is involved in them, the process is typically, loosely structured.
Here too, there is a case for a more formalized approach in order to maintain
consistency in overall design. This is a difficulty characteristic of a decentralized
rather than a centralized design department.

19. Exhibit 1: Visual Review of Products
Mutual Fund Documents On Disc is a CD-
A visual review of ROM, the design of which seems to be based
on the design of the original paper product –
Morningstar products with as few changes as possible. The content
is a replication of the information and format
used in the paper version and shipped in the
reveals discontinuity same binder only on CD.
and lack of a clear
message as to the
intended user of
Principa is a Windows-based CD-ROM version
the product; paper- of the complete Mutual Funds On Disc
collection that targets the professional market.
based products are The CD offers information in a layered format,
allowing the user to choose the data for review
through a search engine and to choose a
the exception. specific layout. This makes the product more
interactive and requires the user to posses
more computer skills than does the Basic DOS
based Mutual Fund Documents On Disc.
The design of the graphics expresses the
heightened understanding required: red and
black pixel abstractions cover the CD’s
reference manuals and companion pieces.
Ascent targets the personal investor or “retail”
market. Direct mail pieces offer, “software
helping you to uncover invisible risks that may
be lurking in your portfolio.
”
Product identity is of a computer key with an
arrow pointing up, as if to imply that one butto
will get you there. The message is intended to
be simplicity, however it is unclear as to exactl
what the user will be getting for $23.75. The
cover of the users guide has images of time
(watch), money (dollar bill), a sharpened pencil,
a photo of a family.... This collage of items
seems to try to frame customers’ ideals.

20. Design as a Strategic Tool
Design as a Defining Feature of Morningstar
Joe Mansueto sums up his views on the strategic value of design as: “ ...design
permeates everything, not just the products; it’s the environment; it’s the coffee
cups, it’s the purchase order forms. Seen in that light, it is clear that the role of
”
design is not accidental, but is a fundamental and vital expression of the whole
nature and identity of Morningstar – of what it is and what it represents as
a company.
Brand and Identity
On a more dramatic level, signalling a commitment to employing professional
designers of the highest standards, the commissioning of the Morningstar logo
was a defining moment, and a major design contribution that has become part of
the company’s mythology. In 1991, Mansueto, spent $50,000 for a corporate logo
created by the doyen of American corporate identity designers, Paul Rand,
responsible for the logos of such established corporations as IBM, Westinghouse,
and ABC. The payment of this considerable sum to a designer of Rand’s stature,
rather than a much smaller amount to a local design shop, is not typical of a small,
relatively unknown company.
The continuing presence of Rand’s logo has enormous potency within the
company, one of the stories employees constantly refer to when asked about the
role of design. It also symbolizes, in a way many people repeating the story
clearly do not comprehend, an important insight into how design is practiced and
understood within the company. The influence of Joe Mansueto’s belief in, and
commitment to, design is enormous, and in the absence of any precisely defined
corporate role or structure for design, his personal influence must be seen as a
crucial influence in its positioning. Sylvester Flood emphasizes: “There is a design
element to all the projects that we work on. Then, consciously or unconsciously,
”
he makes a comment that sums up the effectiveness of such championing of
design: “It starts at the top and goes all the way to the bottom.”
Beyond the distinctive Morningstar logo, however, a body of standards has not
evolved. David Williams observes that some standards for the applications of the
logo exist, but nothing is written down. “Four years ago, we talked about it, and
decided, firstly, that it probably would be a waste of time, because as soon you
are finished it is out of date. And secondly, we produce almost all our work
“. . . design permeates everything, not just the
products; it’s the environment; it’s the coffee cups;
it’s the purchase order forms.”
– Joe Mansueto

21. internally. That means people have to realize there has to be some sort of
consistency. It is on the level of implicit understanding between the major
”
designers at Morningstar, Philip Burton and David Williams, that consistency and
compatibility of approach has been maintained, rather than being embodied in a
manual. Williams points out that written standards become more important when
working with outside firms, when a clear framework for standards becomes
imperative.
The company has therefore never had a corporate identity manual or set of
guidelines. In fact, according to Joe Mansueto, they consciously resisted having
one, feeling it might stifle creativity. He now feels, however, that it will be a
necessary project in the near future. Don Phillips also feels the time is ripe for a
change, particularly with a need to digitize standards. As Morningstar grows and
the range of products expands, there is a feeling in some quarters that times have
changed and greater definition of design standards would be beneficial. From the
point of view of software development, Sylvester Flood comments that if
standards exist, they are “in the designers’ heads, and that it would be useful for
”
him as a project manager to have them specified.
Product Differentiation
From the beginning of Morningstar’s existence, a major objective has been to
make complex financial information more accessible and easier to understand.
Setting a page of Morningstar information next to a competitor’s immediately
demonstrates the immediacy with which information can be understood when
detailed attention has been paid to information design.
The notion of making products that take complexity and translate it into simple,
accessible information is inherent in all the products that Morningstar offers. How
can design aid this process of clarification? Susan Dziubinski, Editor of
Morningstar Investor gives some important clues in stating the most important
insight she has derived from design is that people don’t always read the full text,
but sometimes only skim the titles or browse the graphics. Realizing that stories
could be told through words, pictures and graphics completely changed the
approach to the publication. All stories are now told through different and
complementary means: text, graphics, headlines and subtitles. “No matter how
people ‘read’ their publication, she says, “they will get the information they want
”
from it in a clean, clear and representative form. Design is helping us to make all
this overwhelming information easier to understand. ”
The company goes to great lengths in emphasizing design and utility in its
products. The Morningstar binders, for example, that carry hundreds of sheets of
information are patented. They were specially designed to protect the papers, but
more importantly, to make them easier for people to access and use.
Clarity of information is therefore a crucial element in differentiating Morningstar’s
products from its competitors, and design has a vital role in making this tangible.
Integrity and accuracy are essential qualities in any financial business, as is the
foundation of trust between companies and clients. Careful attention to design
can be an important factor generating this sense of respect.

22. It is possible, however, to discern an even more fundamental differentiating role
of design. It signals a clean break with all the pre-existing practices and
conventions of presenting financial information, and presents a new, young and
entrepreneurial image to the public and competitors.
Joe Mansueto points out that historically, Morningstar’s competitors have paid no
attention to design, so he now tends to look beyond a narrow set of competitors
within the financial information area, to companies outside the field, like Crate &
Barrel, Esprit or Nike. His competitors’ reactions to Morningstar’s emphasis on
design, he believes, is mixed: “I think some of them think it’s unnecessary, that
we’re spending money needlessly. And I think others perceive that we do a really
good job of marketing and packaging our stuff and they might not articulate it as
design, but they perceive us as doing a really good job of that without knowing
exactly how or how that came to be. Don Phillips’ comment on the competition
”
is much more succinct: “It seems that firms either get it or they don’t. ”
In standards of design, Morningstar has a clear advantage over early competitors
such as Value Line and Lipper, according to Philip Burton, who describes their
work as “terrible and ugly. Contrasting their products with Morningstar’s, he
”
comments: “You can compare the quality of editorial design, typography,
logotype, layout, contents, etc. They cannot compete with us.”
Some try to do so by copying. David Williams sees many attempts by competitors
to imitate Morningstar, both in general look and even to the extent of directly
imitating specific details such as typographic elements. He attributes this to
Morningstar’s perceived position as the best of its class.
Although their competitors’ use of design might not measure up to Morningstar’s,
it cannot be assumed that design alone will create competitive supremacy.
Indeed, many users still value functionality over aesthetics. Sylvester Flood
comments: “One of our main competitors right now has a really ugly graphic user
interface, but, his product does something that ours does not do. That is what the
users really care about in that case. Overall, though, I think they have realized that
our products are much more user friendly than our competitors. I do not think our
competitors think design is that important. Otherwise, they would have copied us
more. ”
However, the competitive scene is changing, and if its former competitors provide
poor benchmarks for Morningstar to assess its performance, it needs to adjust its
sights to compete on a higher level. Don Phillips points out: “We’re going up
against big firms. Increasingly we’re facing firms that do take design more
seriously than some of the smaller challengers we’ve had historically. He cites
”
Microsoft as a company that does pay attention to design, with a distinct
advantage in technology that Morningstar will have difficulty matching. Phillips
stresses three elements as the core competencies of any company in the
business of financial information: investment knowledge, technology and design,
and it is necessary to be very good at all of them to compete effectively. He
believes Morningstar’s strong suit can be investment knowledge. “That can be
our strength relative to them. But Morningstar cannot afford to be deficient in
”
either design or technology.

23. “Information that would have put you at an
advantage two years ago is now widely available.”
– Barron’s October 17, 1997
Internal Integration
In addition to being a key differentiator in distinguishing Morningstar from its
competitors, design has another, equally important role as a means of integrating
employees into the company. It is not always easy to maintain a sense of what in
fact constitutes a corporate culture – a living bond of unifying values, rather than
pretentious mission statements. With the rapid growth of the company in recent
years, from 100 to 400, many new employees bring to Morningstar different
levels of experience with, and understandings of design (or a lack of them). Their
experiences do not necessarily correspond with the role design plays in the
company, and a common understanding among the expanded workforce is
therefore neither universal nor automatic. Robert Soto, Production and Design
Manager, comments: “All those people coming from different cultures are hard to
integrate. There is a clash of new and old values that influences the culture and
promotes knowledge loss. John Tipton, Acting Director of Software, points out
”
that although Morningstar is much more design-conscious than similar
companies, he thinks “the big design fans” in the company are a minority, and
that can be a problem. Maintaining and adapting a vision through the shifts of
emphasis and culture resulting from growth, is perhaps one of the most difficult
stages to negotiate in the evolution of a company.
From the standpoint of designers, there is a constant need to demonstrate the
value and the importance of design inside the company, particularly as numbers
and turnover increase. An interesting feature of Morningstar is that given the
enormous emphasis placed on design, the cost of integrating it into all aspects of
corporate activities, and the few structured means of evaluating its performance,
there is a general vagueness about exactly why design is important and how it
contributes. Joe Mansueto highlights a very real problem in evaluating the
contribution of design to any company, when he states that design essentially
defies quantitative measurement. The benefit of design in a product being one
part of a combination of many factors, it becomes self-defeating to try and
disaggregate it. “I think the cost/benefit payoff is very, very high, he comments,
”
“but I can’t give you a specific number or way to measure it. ”
Other managers similarly found difficulty in answering specifically and tended to
fall back on the factor of intuitive feel or the intangible nature of design, despite
the fact that its function is precisely identified by some in terms of its capacity to
make products tangible. Don Phillips makes the point that any company placing
major emphasis on what can be measured will inevitably underestimate design
since it is not easy to measure. John Tipton gives another slant to this point,
equating design with quality: “The cost of design is the cost of quality, the cost of
doing something right. ”
Design is therefore valued in a variety of ways, but still more on the level of belief,
rather than as something that can be clearly articulated or calculated.

24. “The cost of design is the cost of quality,
the cost of doing something right.”
– John Tipton
Product Development Driver
Design is important to Morningstar, but in the past its functional placement in
product creation and development processes has been in the later stages, rather
than in helping to initiate projects. Joe Mansueto recalls that editors used to
get together and map out what they wanted to do and then, toward the tail end
of the process, bring in designers. The development of the company’s Website,
however, marks a substantial break with that pattern. Design was not only
involved from the beginning, but provided much of the driving expertise
and energy.
David Williams points to the development of the Internet site as an example of
how design and marketing are intermeshed. Joe Mansueto was interested in
developing a site and a team formed around him, including members from
marketing, editorial, programming/technical and design. Together they decided
what Morningstar.net was going to be. Designers then began to produce
sketches and pages, handing them off to programmers. Marketing worked in
close cooperation to coordinate the three main contributory components of
content, design and technology.
Williams sees this integral team approach on the Internet project as a new model
for development, which he contrasts with the more typical procedure: “What
often happens here is that people come to design with solutions. They feel it is
their job to come up with a solution and then it is design’s job to implement it. The
problem with that is, sometimes you don’t know what the solution is until you
start working with the content. You have no idea until you start working with it
and realizing where the content meets the technical constraints. ”
The shift in consciousness resulting from the Internet project is confirmed by Joe
Mansueto, who was closely involved with the project. Morningstar.net is
considered an important experiment for development processes and design
integration and is being watched carefully. Its success is critical both internally
and externally. It reaches out to new customer segments and acts as a primary
communication link between Morningstar and its public.
The experience of successfully working with designers has, in Mansueto’s
opinion, changed the notion of design among managers. “It’s a much broader idea
of design that exists today than existed five years ago. This does not mean that
”
design will not continue to contribute on other, previously existing levels in the
same way, but that a product development role and a deeper strategic
involvement has been added to design’s range of activities at Morningstar.
In terms of design’s role, it is clear that it is still ultimately viewed as a strength in
Morningstar’s future competitiveness, but what is perhaps most interesting is the
manner in which it has emerged as a crucial strategic element that is growing in
importance, precisely at the point where Morningstar is beginning to compete in
more complex and sophisticated ways at the top of the market.

25. Exhibit 2: Morningstar Website
Morningstar.Net Reviewing the Design
Joe Mansueto, the company founder and CEO, investors need, and presenting the information Morningstar.Net does a nice job of avoiding
describes his foray into publishing mutual in more useful and compelling ways. many of the typical Website gimmicks such
fund reports in 1984 as an attempt to meet Morningstar.Net appears to be off to a good as meaningless animations and confusing
the needs of individual investors: “A lot of start with positive reviews from the business frames. The pages load fairly quickly and do no
information on mutual funds was available to media, and 100,000 registered users as of require any obscure plug-ins. The newspaper-
institutional investors, but nothing for the August 1997 Yet the competition is fierce and
. like layout of the pages contributes to the
general public. With Morningstar.Net, the
” highly diverse – from college kids posting sense that visitors are getting the latest
firm’s free Website, they face the opposite financial tips from their dorm rooms to financial information.
problem – a positive glut of financial Microsoft’s Investor site. Morningstar is well
According to Williams, the firm made a
information. Anyone with a modem connection aware of the changing landscape. According to
strategic decision to “divide the content into
and a free Web browser can access, 24 hours Design Director David Williams, “We find
six steps that define the investment process. ”
a day, the world’s stock, bond, and futures ourselves competing with Microsoft now. It is
The resulting categories include: Learn, Plan,
markets, corporate profiles, government filings, up to the editorial content to communicate
Research, Invest, Monitor, and Socialize.
historical charts, the latest financial news, and what Morningstar is and why somebody would
Structuring the content in this fashion not only
personal investment advice. pick Morningstar over Microsoft. ”
makes sense, it offers a refreshing alternative
Critical tasks for Morningstar’s Website The competition is soon to get even tougher as to other investment sites that stick to business
designers include attracting attention in the the firm launches a subscription-based section terminology or worse, the over use of catchy
crowd, integrating the essential resources of the site in addition to their free content. Internet jargon.
One of the most interesting sections of the
site is the Socialize area. It is a relatively simple
and straightforward chat area that is easy to
use and equipped with a secret weapon, Jenni
Barrie. Although her title isn’t immediately clea
she seems to be the site’s “Webmaster, ”
charged with responding to user queries. As
the “voice” of Morningstar.Net, she does a
great job of striking a friendly and helpful tone.
One quibble with this area is its name. While
“Socialize” is better than “Chat, it still does
”
not quite sum up the power of the section.
Something along the lines of “Brainstorm” or
“Share Ideas” might get closer to what this
section really offers. In addition, this area could
be an excellent venue for testing new additions
to the site. Morningstar.Net could more activel
engage visitors in helping to build and
customize the site and its services to their
needs, thereby establishing deeper loyalty.
The site has definitely evolved for the better,
but the placement of banner advertising on
the page is still extremely awkward – especiall
when compared to Microsoft Investor’s elegan
solution. Figuring out how to meet the visibility
demands of site advertisers while still making
the Morningstar brand the dominant presence
“The design of the site is consciously responding to the Internet itself.” will continue to be a major challenge – and
a significant place for design to play a strategic
role. Morningstar’s presence on the Internet
– David Williams, Design Director should continue to give them a leg up on
the competition.

26. Conclusions
There are many features of Morningstar’s use of design that command respect
and admiration. Clearly, design competence has been an important element in the
company’s success due to the top-down commitment of founder Joe Mansueto,
and it has resulted in products that are in many respects distinctive and superior.
A feature of the rapid expansion of Morningstar, however, is that many new
people have been drawn into the company who do not readily understand
design. Until a clear understanding of its role and potential become embedded
into procedures and attitudes, there is always a danger that design will slip
back into a minor service role. Indeed, the relationship of design with marketing
indicates that there are still problems in accepting design as a significant
contributor to corporate success. In this respect, the problem is not just
Morningstar’s but one that is evident across a wider spectrum of business,
especially service companies.
Morningstar is structured as an entrepreneurial company, and although this
approach has affected the organization of design, the way design functions is still
based on the model of a studio company, with Philip Burton and David Williams
playing the role of masters to apprentices. This seems to work very well at the
project level. The role of design in the company’s strategy is unclear, however, and
there seems to be no mentorship to allow designers to function at this level,
where the only substantial voice is that of Philip Burton. He points out that while,
in his view, the strategic role of design is important, designers in general are not
trained to regard it as part of their responsibility. Again, a problem of wider origins
and implications impinges upon Morningstar.
Exhibit 3: Forces of Change Affecting Morningstar
FINANCIAL
Systemic financial deregulation Mutual fund explosion Globalization of investing
(cultural barriers)
New rules for banking changes the Morningstar caught the first wave
landscape of the marketplace. in the early 1980s, which grew into US citizens can invest in just about
Most notable is the merger-mania larger ones throughout the 1990s anything, anywhere. As Morningstar
among large financial institutions. with the growth of the Asian moves into new countries, the
Bigger banks are offering more market. Another wave is coming critical issues of culture and habit
services to become “one-stop- as further deregulation in foreign must be carefully studied,
shops” for any financial need. This markets makes investing understood and integrated into
often includes investing and more viable. any new international product.
investment information. Small
banks are enjoying a renaissance
as well. Using the distrust of large
banks as a competitive advantage,
smaller institutions are focusing
on relationships and educating
customers in managing their money
and making investments.

27. Some evidence of the inevitable dilemmas accompanying growth are already
evident. With the expansion of the company and its product range, the subject
of corporate identity standards is a source of tension. On one hand there is a
belief that new circumstances require some definition of standards, and on the
other hand, an unwillingness to lose procedures and principles that have proven
intensely valuable. Standards can be regarded as the negation of creative
possibility. They need not be an all-encompassing straightjacket requiring “design
police” for enforcement, but can instead be a flexible framework providing basic
consistency and preventing designers from having to reinvent the wheel on
each project.
On the level of product development procedures, there is evident a great diversity
of approaches, with a strong emphasis on individual initiative. It might also be
necessary to implement basic criteria for development procedures to ensure
that the flow of projects satisfies strategic goals appropriate to their markets
and establishes a basis for evaluation. Again, it is possible to introduce a degree
of structure without imposing unnecessary and unwanted constraints on
individual initiative.
The need for some greater clarity of the role of design and its potential at the
strategic level would also seem to be highly relevant, given recent developments
at Morningstar. The company is having to evolve rapidly to meet new competitive
conditions at higher levels of its markets. In an effort to anticipate some of these
problems, Morningstar has recently been reorganized into four strategic business
units: retail, professional, institutional and international. This is, in part, an
LIFESTYLE
Demographic shifts Legal changes Wired America Do-it-yourselfing
(IRA, Roth, 401k, etc.)
The US adult population is Building on the notion of ubiquitous We are accepting more
getting older. The market is Changes in tax codes and technology, more personal responsibility and empowering
offering a bevy of new products investment options have fueled computers are going into homes. ourselves more than ever.
and services tailored to this the growth of our trading markets. Where homes once shared one Witness the rise of Home Depot,
population. Morningstar should computer as a luxury item, now dad Martha Stewart. The most popula
pay attention to this factor in has a laptop and a PC at work; there computer software titles are
the design of its products. At the is a computer for the kids, one for programs that simplify CAD for
same time, younger people are the college-bound senior, and one would-be home architects to desi
being drawn into investing. for the home... their dream homes, and Barbie
Does Morningstar have specific fashion designer for the kids.
products that fit the diverse Do-it-yourself investing is already
needs of these groups? on the move with the infamous
Beardstown Ladies and even an
entry from MTV for Gen Xers.

28. acknowledgment of problems in addressing such issues as: What products are
appropriate for various audiences? To what extent can there be standards across
the spectrum of products or to what extent is customization necessary? What
brand identity is appropriate for each category? New developments need new
arguments and new concepts.
In using design capability at the strategic level it becomes possible to conceive of
its having a broader role than hitherto evident. Design seems to have been
extensively used in a problem-solving role at various levels, but its potential as
problem finder, or problem framer, does not yet seem to be generally understood.
The mstar.net Website development process exemplifies a breakthrough in terms
of how design can move into a role of facilitator, helping to create an
understanding of how things can be done better. The lessons, however, do not
seem to have yet been widely absorbed. There remains considerable opportunity
for design’s role in defining various characteristics across different product lines
and markets; in making sense of product lines by testing new products at the
conceptual stage in terms of user understanding; and in being a crucial element in
the communication chain, involved up-front on all projects as a means of
maintaining consistency of standards within whatever degree of flexibility is
desired across the SBUs.
Exhibit 3: Forces of Change Affecting Morningstar
TECHNOLOGY
Online/electronic Ubiquitous technologies
trading/commerce
Moore’s Law tells us that computers
30% of stock transactions are now will inevitably get cheaper and faster
electronic. That could grow to 50% with time. They will also be
by the millennium. Mstar.net everywhere. Stock trades on
represents a foothold in a rapidly cellphones, real-time market data
growing market. Mstar’s business is relayed through pagers, and financial
no longer just about investment portfolios dynamically updated on a
information. It now includes PalmPilot are technologies all
anything online. E-commerce and available now. Morningstar should
online advertising is projected to be a part of this revolution.
grow to $41.2 billion by 2002.

29. In suggesting additional roles for design at the strategic level, it must be
emphasized that this is not in any sense a suggestion that existing design
practices and procedures are inadequate or should be replaced. Rather, innovation
will continue to drive Morningstar as it explores new horizons, and the
contribution of design should be extended to include involvement at the strategic
level to further enhance Morningstar’s innovative capability. This could also help
enhance the role of design at other levels of competence and responsibility –
which will continue to be necessary – with the aim of making them even more
effective in contributing to innovative thought and practice, not just in adding
value, but above all, in helping create new value.
MARKET CONTEXT
Speed and the 24/7 marketplace Branding Competitive shift(s)
Morningstar is in the business of The Morningstar name has strong Morningstar has recognized that
information. The way that investors brand cache. But, it’s reach is it competes with many other
work today has changed. Have limited to investing. Other entities. In its early life, its major
Morningstar’s products changed companies are using their names to competition was Value Line and
to reflect the speed of change promote new kinds of products and Lipper. It now faces Microsoft and
and transactions? services. Coca-Cola sells clothing, Intuit in new markets everywhere
and clock radios as easily as its soft As Morningstar grows, the marke
drinks and stock. in which it competes grows as
well, becoming increasingly
interconnected to other markets.
New, broader criteria are needed
to identify and assess competitive
threats.