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Design Management 3/16 "Where Design Fits"
 

Design Management 3/16 "Where Design Fits"

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Design Management 3/16 "Where Design Fits", by Michael Eckersley, PhD

Design Management 3/16 "Where Design Fits", by Michael Eckersley, PhD

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    Design Management 3/16 "Where Design Fits" Design Management 3/16 "Where Design Fits" Presentation Transcript

    • Elizabeth Armstrong Ashley Scheurman Karen Moore Kathryn Ward 03Sep 12, 2013 Design Management University of Kansas, Department of Design ADS 750 (3 credits) Fall Semester 2013 Thursday 6:00-9:00p, Edwards (BEST245), Lawrence (CDR, West Campus) Heba Alhadyian Amanda Boyd Daniel Chin Devinee Fitzgerald Iris Gandara Jessica Schomaker Wk 03 - Where Design Fits Economically, Organizationally
    • design management Week/ Date LECTURE & DISCUSSION Additional readings or exercises Wk 3 Sep 12 3. Management Overview Chapter 3. Management Overview: Economics, Process, Planning (70-105) “Design in Age of Accountability” Miller Wk4 Sep 19 4. Accounting & Finance 4. Accounting & Finance “What Do Great Managers Do?” HBR, Buckingham COURSE SCHEDULE TONITE NEXT WEEK Text Reading www.brainsbehavior anddesign.com http://vimeo.com/ 12370894
    • design management ECONOMICS FOR DESIGN: 11 general principles for designers to learn – Jeremy Alexis
    • Incentives matter © HumanCentered 2007, All Rights Reserved design management aligning incentives Economists look at the world through the lens of incentives. Most outcomes, good and bad, can be explained though the application (or misapplication) of incentives. And, they believe, if you want to change behavior (invest more, commit less crime), you can create a set of incentives to trigger this behavior change. As designers, our work is also concerned with behavior change (making things easier, trying something new). We rarely, if ever, consider how to apply an incentive strategy along with our new design, or how our new design may work/not work with an existing incentive strategy. Design of incentives is a powerful new frontier for our profession, and should be integrated into our everyday work.
    • Gravity works the same everywhere. Market forces do not. © HumanCentered 2007, All Rights Reserved design management Much of Western economic thought was developed with the belief that, like gravity, basic economics formulas will work in any culture and for most problems (this is a gross oversimplification, but true none the less). Unfortunately, while gravity relies on fairly stable naturally phenomenon, economics relies on the individual decisions of people (which have proven, over time, to be less stable). This is not to say that free markets and free market theory can’t be applied everywhere, only that the applications have to be tuned for each culture. Designers can play very important role in the new global economy. Innovations in logistics have made it possible to get new products and brands anywhere in world (as well as be produced anywhere in the world). Our role is to ensure that these products and services are appropriate for each culture and country. We can’t assume that markets and products will work the same other places as the do here (in North America), we need to design these markets, interactions, and offerings to and for each market.
    • Cash is king © HumanCentered 2007, All Rights Reserved design management If your great new idea cannot produce enough cash to pay for its own development, plus a little extra for you and your friends, it may not be such a good idea after all. It is critical for designers to understand that businesses run on cash (meaning earned profits above expenses, or EBITDA for the accountants). Our job (as a professional designer) is to make things that make cash.
    • People do not always make rational choices © HumanCentered 2007, All Rights Reserved design management But over time, markets appear to be rational and most things regress to the mean “bounded rationality” Quite a bit of recent economic research has focused on defining the “irrational” (irrational does not mean bad, just not driven by math) choices people make under ncertainty. There has been the dominant (although always challenged) thought in economics that people behave rationally and that this behavior can be quantified (game theory, the Nash equilibrium). But, we have come to learn, through the development of Prospect theory (as well as other advances in behavioral economics): people do not always make rational choices. For example, recent declines in the stock market have lead many to note that the market does overreact to current events. Wall street may be the only market where, when they put on a sale, all the shoppers leave. As designers, we should pay close attention to this convergence of psychology and economics; it can provide insight into the adoption and use of our offerings.
    • How a company finances itself shapes its options and strategy (and how it approaches design) © HumanCentered 2007, All Rights Reserved design management Designers are not often interested in how the companies they work for are financed. However, financing choices lead to how willing (and able) a company is to take risks and spend money. We would prefer to work for companies that have plenty of available cash and are willing to take calculated risks. We have all worked for companies that seem stuck in the past, and are unwilling to innovate. It is important for us to know the financial condition and financial structure of the companies we work for. Too often, we propose design solutions that have no chance of being developed, not due to interest, but due to available investment money. We should adapt our design solutions to be compatible with the financial context of the company
    • Design both creates and mitigates risk © HumanCentered 2007, All Rights Reserved design management Design is seen as a risk for companies. Moreover, it seems like a risk that the company cannot manage (compared to changes in exchange rates). As designers, we need to recognize that we are seen as a risk, and them demonstrate how our work can actually mitigate certain types of risk. In fact, the most potentially devastating risks a company faces (changes in customer preference, market forces, and technological change) can all be managed within the scope of a design project. We need to shift our position from creating risk to managing it.
    • Design creates and destroys value © HumanCentered 2007, All Rights Reserved design management Every time we put pen to paper, we are either creating or destroying value for customers and businesses. We destroy value by designing things that can never be implemented, or do not solve for real user needs. We also destroy value by creating “shelfware”, or design briefs that only serve to weigh down file cabinets. We create value by identifying opportunity spaces, and then providing real options for taking advantage of those opportunity spaces. We also create value by energizing and inspiring the organizations we work for. Designers should be obsessed with creating value; this frame of reference should guide everything we do.
    • Accountants have a hard time accounting for design © HumanCentered 2007, All Rights Reserved design management There are two reasons that accountants have a hard time thinking about design. First, like most R&D dollars, design is an expense, and as such, needs to be shown as a cost on the balance sheet in the year it was incurred. Compare this to a new machine for a factory, which can be “depreciated” over time, so a percentage of the cost is taken each year of the life of the machine. So, even though your design project may create insights and a product that has a life of ten years, the entire expense needs to be taken in the year the work was originally done. Second, accountants do not recognize value creation until a product has been ordered or shipped. Usually, by that time, design is long gone from the equation
    • © HumanCentered 2007, All Rights Reserved design management
    • There is an investment curve for design © HumanCentered 2007, All Rights Reserved design management Most design firms that I know of are trying to get into the “strategy” game. This means they want to have more input into product definition, not just product design. This trend results from a shift in economics – design development and production/ construction drawings are not as lucrative (or time consuming) as they once were. Faster software and global competition are driving this change. So, in order to continue to remain in business, firms have had to shift the bulk of their billings to strategy work, which requires less “horsepower”, and more knowledge and domain expertise.
    • Design: the economic context © HumanCentered 2007, All Rights Reserved design management
    • © HumanCentered 2007, All Rights Reserved design management We have been navigating this economic contraction.  We are holding our own.  We have sadly, however, had to reduce the size of our company about 10%.  It appears we are now the size that the market wants us to be.  
    • a. As a net cost of doing business? b. As a net source of profit? © HumanCentered 2007, All Rights Reserved design management As a designer how does your employer see you?: (-) (+)
    • Supply & demand © HumanCentered 2007, All Rights Reserved design management needing to earn more than your costs in time and expenses
    • Ascribed value vs actual cost © HumanCentered 2007, All Rights Reserved design management what’s your work worth?
    • Who feeds Paris? © HumanCentered 2007, All Rights Reserved design management (who feeds you?)
    • Design in a free market Polish economy © HumanCentered 2007, All Rights Reserved design management “official colors for spring”
    • Finite supply of physical resources © HumanCentered 2007, All Rights Reserved design management time, food, shelter, water, expertise (how do we allocate them to make the most out of life?) But there is a virtually infinite supply of intellectual and creative resources ][
    • Scarcity vs. abundance © HumanCentered 2007, All Rights Reserved design management design targeted to alleviate scarcity
    • Marketing asks “what’s the demand?” © HumanCentered 2007, All Rights Reserved design management Design asks, “what’s the supply?”
    • Maximizing our options © HumanCentered 2007, All Rights Reserved design management Getting the most “bang for the buck” (Selfishness?)
    • Important decisions involve trade-offs © HumanCentered 2007, All Rights Reserved design management Consume now or later?
    • Raising the cost of design © HumanCentered 2007, All Rights Reserved design management What’s the value proposition? Who’s buying it?
    • Profit opportunities attract © HumanCentered 2007, All Rights Reserved design management Cost threats repel
    • Perceived value rises and falls © HumanCentered 2007, All Rights Reserved design management What commodifies design?
    • Network effect © HumanCentered 2007, All Rights Reserved design management The value of a good rises with the number of people using it
    • Leveling © HumanCentered 2007, All Rights Reserved design management supply = demand supply > demand supply < demand
    • In a free market system © HumanCentered 2007, All Rights Reserved design management •Market economy is a force for making life better, raising the standard of living •Markets are amoral •Price allocates resources •Most markets are self-correcting •If prices are fixed, some upstart will find another way to compete
    • Designers can’t afford to be naive economically © HumanCentered 2007, All Rights Reserved design management
    • Expertise is portable © HumanCentered 2007, All Rights Reserved design management who owns your labor power?
    • © HumanCentered 2007, All Rights Reserved All we have is us to produce the futures we desire Creating the conditions for organic growth and prosperity. Business 3.0: Social innovation, Integrative thinking, Creative behavior
    • © HumanCentered 2007, All Rights Reserved management as an art: a systematic practice, intellectual and practical –Richard Buchanan, Case Western
    • © HumanCentered 2007, All Rights Reserved The corporate imagination amounts to an organization’s capacity for seizing opportunities, managing risks, creating new intellectual property and turning it into new value Human imagination is the ability to look at noisy, ambiguous situations, spot the critical dynamics, and visualize a more interesting, promising future than others are willing or able to see. The corporate imagination is the collective ability of it's people channeled to supply new ideas and systems.
    • What creativity is •Creativity is not a characteristic of individuals; it is a class of activity. •Ideation is not creativity. Uninformed ideas have no value. •Creativity changes the systems that give objects meaning. •Though there may be accidental discoveries, there is no unintentional creativity. –from R. Robinson & J. Hackett, “Creating the Conditions for Creativity”, DMI Journal “Creativity is an inspired riff on something understood deeply”. It is not making something up out of nothing. The value of creativity to an organization is in the solutions, the actionable ideas, the differentiated intelligence and advantages that provides. (and isn’t)
    • © HumanCentered 2007, All Rights Reserved Design and integrative approaches to management offer a way to change how companies think about risk and opportunity, and act in adaptive ways to define the future on favorable terms
    • (abductive) © HumanCentered 2007, All Rights Reserved products services brands communications systems experiences etc. conceived programmed organized developed built crafted engineered fashioned etc. functionality reliability beauty elegance profitability efficiency viability etc. so what is design? (deductive) (inductive) “Design is a complex problem solving process whereby artifacts are structured to attain goals” –Herbert Simon
    • © HumanCentered 2007, All Rights Reserved In most people's vocabularies, design means veneer. It's interior decorating. It's the fabric of the curtains of the sofa. But to me, nothing could be further from the meaning of design. Design is the fundamental soul of a human-made creation that ends up expressing itself in successive outer layers of the product or service. – Steve Jobs so what is design?
    • "Design is only secondarily about pretty lumpy objects, and primarily about a whole approach to doing business, serving customers, and providing value." "Design... has become central to enterprise strategy." –Tom Peters so what is design?
    • Tim Brown, IDEO What is design? It can be material or conceptual, and is experienced as beauty, value and meaning. Unlike the fine arts, design has an everyday use, so it must excel at both form and function. It's also intellectual property and cultural capital, which is why it ladders the entire economic value chain. Patrick Whitney
    • design thinking combines characteristics of empathy, integrative thinking, optimism, experimentalism, and collaboration (Brown, 2008). To think like a designer, one must demonstrate these characteristics in order to create for others within parameters, given a specific deadline.
    • 1. The ability to understand the context of circumstances of a design problem and frame them in an insightful way 2. The ability to work at a level of abstraction appropriate to the situation at hand 3. The ability to model and visualize solutions even with imperfect information – Chris Conley, IIT Design thinking is design activity embraced by a broader group.
    • 4. An approach to problem solving that involves the simultaneous creation and evaluation of multiple alternatives 5. The ability to add or maintain value as pieces are integrated into a whole – Chris Conley, IIT Design thinking is design activity embraced by a broader group.
    • 6. The ability to establish purposeful relationships among elements of a solution and between the solution and its context 7. The ability to use form to embody ideas and to communicate their value – Chris Conley, IIT Design thinking is design activity embraced by a broader group.
    • © HumanCentered 2007, All Rights Reserved “Our interest now is in how to use design thinking, the methods and concepts of design practice, in the art of management to shape the organizations in which we live and work.” –Richard Buchanan, Case Western Smart firms are using design to reshape not just their management practices, but to transform the marketplace
    • physical/biological socio-cultural psychological spiritual Deep Search: human factors global macro economic market/industry organizational High Search: environmental & market factors Learning Cycle 0 Learning Cycle 1(time) 0 -1 -2 -3 - 4 +4 +3 +2 +1 “street-level” issues & operations bottom-up innovations top-down innovations Sources of design innovation
    • Social innovation: Contributor archetypes the warrior the explorer the saint the artist Inspired by challenge, individually and/ or with a team, it is all about winning. Inspired by exposure to new and different worlds, imagining something that has never been. Inspired by connecting with and helping others; making the world a better place.” Inspired by self- expression, making meaning through art, music, acting, writing, etc. adapted from “Cultivating organizational creativity in an age of complexity.” IBM 2010 Chief Human Resource Officer Study
    • design management WHERE DESIGNERS LIVE AND PRACTICE
    • design management
    • design management
    • design management
    • design management
    • design management We have moved from traditional design - Bauhaus, Loewy, and people fascinated by the object - to the explosion in the last fifteen years of narcissistic design, made by designers for other designers, a masturbatory exhibition of their know-how, of their panache. Designers like me and everyone else! It is a type of design that cannot be innocent that always ends up with excess. The product is created for the media. What we need to do today is to replace aesthetic objects with semantic objects, which results in replacing the beautiful with eh good. We must start again from scratch so that these objects and machines serve us, so that the object is good for us, in order to live better. Philippe Starck design management
    • design management Organizational Functions (where’s design?)
    • design management Human Resources Sales and Marketing Research and Development Production/Operations Customer Service Finance and Accounts Administration and IT
    • design management Human Resources • Recruitment and retention • Job descriptions • Person Specifications • Dismissal • Redundancy • Motivation • Professional development and training • Health and safety and conditions at work • Liaison with trade unions
    • design management Sales and Marketing • Market research • Promotion strategies • Pricing strategies • Sales strategies • The sales team • Product – advice on new product development, product improvement, extension strategies, target markets
    • design management Research & Development • New product development • Product improvements • Competitive advantage • Value added • Product testing • Efficiency gains • Cost savings
    • design management Production/Operations • Acquiring resources • Planning output – labour, capital, land • Monitoring costs • Projections on future output • Production methods • Batch • Flow • Job • Cell • Efficiency
    • design management Finance & Accounts • Cash flow • Monitoring income/revenue • Monitoring expenditure • Preparing accounts • Raising finance • Shares • Loans • Links with all other functional areas
    • design management Customer Service • Monitoring distribution • After-sales service • Handling consumer enquiries • Offering advice to consumers • Dealing with customer complaints • Publicity and public relations
    • © HumanCentered 2004, All Rights Reserved design management DESIGN DOMAIN/ APPLICATION AREAS PRODUCT OFFERINGS SERVICE OFFERINGS MEDIA/ COMMUNICATIONS ENTERTAINMENTS ENVIRONMENTS industrial design service design visual comm design information design brand design marketing communications interaction design fashion design engineering design ux design ... CROSS-MATRIXED ORGANIZATION: Design Disciplines / Application Domains Application Domains DesignDisciplines
    • design management Where does design fit organizationally?
    • © HumanCentered 2007, All Rights Reserved design management http://www.coroflot.com/designsalaryguide/
    • Elizabeth Armstrong Ashley Scheurman Karen Moore Kathryn Ward 03Sep 12, 2013 Design Management University of Kansas, Department of Design ADS 750 (3 credits) Fall Semester 2013 Thursday 6:00-9:00p, Edwards (BEST245), Lawrence (CDR, West Campus) Heba Alhadyian Amanda Boyd Daniel Chin Devinee Fitzgerald Iris Gandara Jessica Schomaker Wk 03 - Where Design Fits Economically, Organizationally