Advantage By Design
The Art and Science of Business Difference
© 2014 Malcolm Ryder / archestra research

Every business wants to get ahead
by being special to its customers.
In the open market, the train of thought that goes
from Competition to “Advantage” to “Special”
runs at over 100mph to Design.
But if competitiveness is likely
to come from design that way,
why aren't more companies already good at it?

How to use this discussion
The following discussion compiles notes from frequently recurring direct
observations and is purely descriptive.
Note that no prescriptive intent should be anticipated, and none is implied.
Nonetheless, there could be convincing similarities between these notes and
your own observations, or an interesting strength of relevance to issues you
are noticing now.
The purpose of the discussion is to exhibit a line of thinking that can be used
for the purpose of comparisons with other observations, from different
sources or different times, that may be under interpretation.
There are no citations provided to any particular external works, as they are
unnecessary to the purpose. Furthermore, any publication of the content of
this discussion is subject to change, without warning, at any time, based on
continuing original observations and contributed inputs.

The Buzz
Most companies believe that being different is an important weapon
in gaining competitive advantage.
That belief is borne out by enormous coverage of success stories
emphasizing the exceptional prominence and momentum already
gained with innovation.
But, without a basis of statistical evidence, it seems that most
companies discuss getting different from a stance of unfamiliarity,
uncertainty, or unlikelihood – which makes the company hold back.
Getting past that resistance frequently features studying the moves
of “leader” businesses known for great design. Those companies
become role models. But what does design actually have to do with
business differentiation?

Why be different?
Without economic transactions, there is no “business” to talk about.
In that sense, it is obvious that the reason any differentiators of a
business will count is because they support, cause, or protect
transactions.
It may very well be that in business competition, conventional
economic advantages are necessary but now no longer sufficient to
get ahead and stay ahead. Efficiency, quality and price* are still go-
to-market strategies, but thanks largely to ubiquitous I.T., they may
no longer assure a distinctive presence that generates benefits that
are persistently superior to those of competitors.
*singled out by colleagues in a discussion group on a popular professional network

The new normal?
Instead, many arguments about what now counts the most have
focused on Brand; yet others have focused on Agility; and many more
have emphasized Foresight. The common denominator of those
three appears when we understand the following: Brand depends on
what the transaction partner knows; Agility depends on knowing
what is going on right now; and Foresight depends on knowing what
is coming next.
From that point of view, there is little surprise in the ascendancy and
primacy of the so-called "knowledge-based economy" - which at a
business-level of difference specifically refers to:
- the reliance on knowledge...
- to create the highest priorities in decision-making...
- about transactions that must have ...
- the highest worth to the provider and/or the receiver.

What’s new, or why not…
The new economy turns sources of knowledge into critical success
factors of strategic advantage. Given the importance, and the
consensus that the knowledge economy started over ten years ago, we
might generally assume that by now business would already be pretty
experienced in leveraging such sources.
Note: easier said than done. For example, as readily available sources,
Science and Art have numerous things in common. Most notably, both
of them aggressively explore, discover, model, and express knowledge.
Yet in general, businesses are not seen to have adequate experience or
practice with them except as atypical tools.
In the management world, there is a stubborn presumption that only
businesses in certain specialties should use them, or will know how to
use them effectively, or can “afford” to use them together.

Getting Different
The knowledge limitation represents a barrier or threshold behind which many a
business is prevented from accomplishing the differentiation that could propel it
ahead of its competition.

Problem states
A well-known and highly adopted source of knowledge is the
contingent workforce of expertise that provides teaching, training
and consulting to businesses.
In that workforce, many parties promote the idea that differentiation
now requires creative problem solving and innovative outcomes, a
position that creates demand for hybrid approaches to formulating
business production.
The emphasis in demand there is on "hybrid“ – mainly because
legacy and incumbent approaches that are not hybrids have not had
the results needed for the way the business now wants to compete.
Purely scientific, or purely artistic, have been inconclusive, expensive,
disappointing, or some mix of those deficiencies.

Solution Ideas
We've noted that science and art are a natural influence on
knowledge. Additionally important is the huge overlap in their
influence: both drive serious efforts in exploration, discovery,
modeling and expression.
That suggests a compelling opportunity to recruit them as elements
of a hybrid production.
Yet some difference between them is so pronounced that reconciling
them appears only relatively recently as a business competency,
enabled mainly through special facilitation…
Given that "operations" are what actually defines an organization as
a business, perhaps the underlying nature of the "difference" and its
reconciliation is about predisposition.

Options
It seems safe to say that Science and Art have different priorities
when it comes to purpose. Oversimplified, the conventional view is
that science provides control, and art provides inventiveness.
More specifically, there is a difference in operational discipline.
The scientific method, famously (if somewhat mythically)
prescriptive, lends itself to maximum accountability of the path taken
to any discovery having acknowledged worth.
The artistic method, famously (if somewhat mythically) non-
prescriptive, lends itself to maximum leniency in the composition of
elements having expressed value.

Inhibitions
Among much of the business management community, the disparity
between "accountability for worth" and “leniency for value" is
reflected as anxiety.
Anxiety reflects undesirable risk.
And so, the deep question is, what risk has such high priority that its
undesirable aspects suppress interest in leveraging the natural
relationship (overlap) between science and art, to exploit its
influence on knowledge?

Danger zone: competition
One kind of risk, putting it bluntly, is losing while others are winning.
This becomes a competitive anxiety amplified by being either unable
(or unwilling) to identify or take advantage of gains produced during
efforts resulting in a loss.
The threat is that there may not be an opportunity to adequately
recover from a loss.
The feared damage is that at minimum, status and reputation suffer,
reducing attractiveness and influence.

Danger zone: production
Another kind of risk is incurring penalties from failure to meet
agreements.
This becomes a production anxiety largely stemming from uncertainty
about what controls must exist, at what level of intensity, in a chosen
environment of action.
The threat is that available resources might be overly committed to
something that is insufficient and, as it turns out, must change.
The feared damage is that at the least, change is distressing.
Meanwhile, sunk costs and opportunity costs both take a hit.

Mitigation
Notably, the disposition and capability to harvest gains from loss is
one of the essential lessons to be learned from artists.
And very notably, scientists continually focus on process quality
control within an explicit scope of significant impact.
Given those leads, it is not difficult to imagine the following "hybrid":
business managers, if allowed, would enjoy scientifically employing
artistic competency.
That amounts to an interesting inversion. To a results-oriented
business, science normally represents predictability of worth, and art
represents creativity in making discoveries having value. But in order
to minimize risks, managers would pursue the value of science, by
using its process to exploit the worth of art.

Resistance
Many businesses consider that combo effort to be "herding the cats"
and reject it as being likely wasteful or inconclusive.
That predisposition cannot be surprising from any organization that
either has not tried, or has already tried and failed.
But the actual distance from acceptance of the hybrid approach is far
less due to skepticism about whether it can work, and far more due
to a belief that it is inappropriate to the expectations externally
imposed on the business.

Compatibility
Obviously, operational propriety must be taken completely seriously
within the business.
That said, the fact is that large sectors of the economy run on the
efforts of companies that essentially get paid to be creative, rather
than those companies merely "using creativity" to reinforce the
chance of getting paid for some other reason.
The difference in mindset is very substantial. And the methods used by
successful companies that get paid to be creative are not mysteries,
nor unproven, nor (excepting massive exploitations of the evolving
internet) even a recent breakthrough or new idea. Ironically, while
many creative efforts have not succeeded as businesses, successful
creative businesses have long been celebrated and studied far more
than most other businesses. They’re just very difficult to copy.

Pay to play
For the most part, funding is the principal determinant of whether
exploratory research goes into controlled solution development.
If it goes in, products may be generated from solutions. This includes
services, which are simply, but importantly, a type of product.
The punchline is that the biggest barrier to successful adoption of
creatively differentiated production is not competency or production
technique; it is lack of investment in an appropriate culture.
Acknowledging that barrier can lead managers to consider the
problem of how to motivate growth of a relevant culture for creative
production.

What to play
The prevailing theory about getting that growth underway is simple.
It says that since transactions constitute the business, and since
"customers" now dominantly control the occurrence of transactions,
then the central tenet of business opportunity is to discover and
address the customers' idea of the customers' interests.
That tenet becomes the organizing “top-down” principle aligning
means, motives and opportunities that get recognized in operations.
Means, motives and opportunities are each allowed variability for
the purpose of discovering a collective alignment – an alignment that
is "good enough" and "sustainable enough“ for its scale and scope of
effort to be “worthwhile” to the business.

How to play
In effect, at the level of "Business process", the customer-centricity principle puts
the concepts of "viability" and "scale" front and center -- ahead of cost,
standardization, and "maturity". But how does this turn into superior competitive
advantage?

Who’s the boss
The customer profile has key factors that are the main indicators for
advantage.
Scale translates into the availability and accessibility that customers
want on demand. Viability translates into a perceived reliability that
the offering is sufficiently relevant to the customer's need.
Together the viability and scale must allow the customer to easily
obtain an offering that gives the customer an experience they prefer
to alternatives.
That is, the business challenge of being differentiated is to be met
within the scope of being "preferred on demand".

Practice over Product
Naturally, that challenge varies along with the nature and disposition
of the particular candidate customer.
Operationally, the challenge is the need to fit the offering to the
customer's ability to generate the preferred benefits. There is
nothing new about this challenge at all: it is, exactly, the fundamental
purpose of Design.
That purpose of design is the reason why design occurs in so many
aspects of production.
To create a fit with the profile of a target prospective customer, all
aspects of production and provision – across means, motives and
opportunities – can be subject to exploration for discovering viable
configurations of their alignment at necessary business scale.

Who plays
However, in business management, the "customer" is simply the
receiving party of benefits in a transaction, and this customer may
actually be a client, a partner, or a supplier.
Meanwhile, the production system may employ design in many ways
across different elements of the delivery system, for example
showing up as organizations, architecture, process, communications,
product, or other contributors to be aligned.
Result: customer types and production systems exist in a many-to-
many relationship. Differentiation requires choosing and navigating
the variety of associations and connections among them, in an
arrangement that distinguishes the presence of the business from
other businesses.

Business logic
Despite the potential variations or complexity of combining customer
types and production systems, one generic outline of efforts does
stand out persistently for all “for-profit” business competitors.
If the purpose of the business is to make money:
- make money by making transactions
- make transactions by making customers
- make customers by making “preferability”
- make preferability by making relevance and convenience
That amounts to a framework of requirements, presenting
“problems” that need to be solved in specific ways for each given
business. Some problems may be easy to solve; others, difficult. The
solutions need to be aligned with each other.

Design Logic
By definition, good solutions fit a response to the need at hand. The
“problem” of determining the best fit is the reason why the final
offering is called a “solution” for the Provider.
Some offerings, inevitably, are going to be better than others, and one
competitive goal of design is to generate not just an acceptable
solution but the better solution. This often comes with the
assumption that an unprecedented offering will be the best solution.
However, the responsibility of design is not to force innovation.
And innovation itself is not achieved exclusively through design.
Neither is differentiation an effect available only through innovation.
Rather, there are many opportunities for design to be valuable. One
of the most desirable values of design is the chance to find a solution
in a situation where none before has been found or attractive.

Market Logic
A generic outline of being competitively advantaged based on
differentiation focuses on practical production optimization:
- specific: define difference in terms of the impact on a customer's
intent
- exceptional: pursue the scope of impact that is sustainable and
unusual at scale
- obtainable: identify production values for generating that scope and
scale
- selective: promote conditions where available value (generated by
design) has high worth
Optimization challenges are ones that clearly lend themselves to the
efforts of design, which may discover, align and fit them to the
business need, for a meaningful “window of opportunity” (timespan).

End Note
The value of design – meaning, the importance of the difference it
makes – can be to generate a fit to a need that is exceptional in its
demands on capability of production and/or in its impact (when
fulfilled) as a catalyst of customer benefits.
That does not mean design automatically generates something
unprecedented, anywhere. The essence of design’s value is that the
fit created by design is highly appropriate to the situation hosting the
need. A need for something exceptional may require something new.
“Differentiating the business” makes sense to do primarily when the
difference also means being exceptional and the exception creates
privileged business opportunity. Actionable opportunities are the
basic business need. Exploiting a privileged opportunity is the
objective of the differentiation.

© 2014 Malcolm Ryder / archestra research
mryder@malcolmryder.com