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Getting Good Designs Built


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As we all know, there are more confounding alarm clocks than elegant iPods in the world. Despite our knowledge of design, companies continue to churn out bad products. How can we improve our chances of creating great products? I think it requires designers to understand a little about finance and strategy, and managers to know a little about design. It requires using design skills to communicate, selling your ideas, and patience.

During this event I'll introduce a few specific techniques for thinking about the business situation. Then when you're tired of listening to me we can do an exercise to create a product that fits a particular strategy, then talk about how this approach applies to your everyday work. Hopefully it'll be both useful and fun.

Published in: Business, Technology
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Getting Good Designs Built

  1. Getting Good Designs Built Victor Lombardi June 26, 2007 Sponsored by
  2. “The Promising Syllabus” I promise to help you do something you probably couldn’t do before, but… We all need to take responsibility for our own learning 1. Explain what you want to know 2. Ask clarifying questions 3. Tell us about your experience Agreed? Great, let’s get started…
  3. When design is the strategy quot;[the iPhone is pushing operators] to meet its design vision rather than the other way around and refuses to be tied to requirements that befuddle the UI and lead to an incoherent user experience. Stan Sigman (CEO of Cingular) revealed that Cingular had entered into a contractual agreement with Apple two years ago without ever seeing the product, based purely on the strength of the design vision.”
  4. For the rest of us… quot;I understand that we must compromise with the larger forces of business that buffet us, but that doesn't mean we have to become quislings. Just because they force ill- chosen compromises upon us does not mean that we are required to justify them as being necessary or even adequate.quot; – Alan Cooper, IxDA email discussion, not too long ago
  5. My framework… Discover the Align your Know Understand company’s customer need business your competitive with company fundamentals context advantage priorities
  6. Discover the Align your Know Understand company’s customer need business your competitive with company fundamentals context advantage priorities Concepts and vocabulary Financial basics Scenarios
  7. Meet Them More Than Halfway “The better strategy for designers would be to regard the current effort to educate the CEO about how designers see the world as a lost cause, and instead try to educate themselves on how the CEO sees the world.” - Richard Farson, “Designers as Leaders”
  8. Financials + Scenarios Expected Return Ignoring fees to calculate the expected return of loan interest and equity Outcomes Replay loan, no Replay loan, 50% Replay loan, 100% of Replay loan, Fail after 3 years Fail after 4 years equity of equity equity 150% of equity Percentage of loan repayment 60% 80% 100% 100% 100% 100% Average Investment $ 8,333,333 $ 8,333,333 $ 8,333,333 $ 8,333,333 $ 8,333,333 $ 8,333,333 Loan repaid $ 5,000,000 $ 6,666,667 $ 8,333,333 $ 8,333,333 $ 8,333,333 $ 8,333,333 Interest gained $ 990,000 $ 1,320,000 $ 1,650,000 $ 1,650,000 $ 1,650,000 $ 1,650,000 Probability of outcome 2% 3% 5% 15% 65% 10% Expected value of loan repayment $ 119,800 $ 239,600 $ 499,167 $ 1,497,500 $ 6,489,167 $ 998,333 Equity multiple 0 0 0 2 4 6 Potential equity $ - $ - $ - $ 16,666,667 $ 33,333,333 $ 50,000,000 Probability of outcome 2% 3% 5% 15% 65% 10% Expected value of equity $ - $ - $ - $ 2,500,000 $ 21,666,667 $ 5,000,000 Expected value of loan and equity $ 119,800 $ 239,600 $ 499,167 $ 3,997,500 $ 28,155,833 $ 5,998,333 Expected return $ 39,010,233 • Numbers can be sketches and prototypes • Financial models are based on assumptions about the future of the product • Scenarios can be written in Excel
  9. Case Study of Corporate Strategy: Microsoft In 2005 an internal memo by Ray Ozzie, Microsoft CTO, was published publicly…
  10. Summary of Ozzie’s Recommendation: Scenarios 1. Work with division presidents to assign “scenario owners” 2. Work with these individuals “to concretely map out scenarios and pragmatically assess changes needed in product and go-to-market plans related to services and service-based scenarios” both short- and long-term 3. “All Business Groups …develop their plans to embrace this mission and create new service offerings that deliver value …and… utilize the platform capabilities…” 4. A blog
  11. Discover the Align your Know Understand company’s customer need business your competitive with company fundamentals context advantage priorities Concepts and Interpersonal vocabulary relationships Financial basics Dialog style Scenarios
  12. Abductive Reasoning When faced with: Try: Negotiation Collaboration Jump to obvious options Generate new options, use a process to narrow them down, then decide Constraints Question the constraints, and generate options within the constraints quot;We can't afford the new widget. Do you want to use existing widget A or B?quot; “What else do we have? How else can we use it? How else can we get the money for the new widget? Can the new widget do something additional to help the people making the financial decision? Let’s brainstorm more options…” For more on abductive thinking see Liedtke,
  13. The Neuroscience of Leadership David Rock and Jeffrey Schwartz • Change is pain Organizational change is unexpectedly difficult because it provokes sensations of physiological discomfort. • Focus is power The act of paying attention creates chemical and physical changes in the brain. • Expectation shapes reality People’s preconceptions have a significant impact on what they perceive. So… • Focus people on solutions instead of problems • Let them generate their own insights • Keep them focused on their insights
  14. Discover the Align your Know Understand company’s customer need business your competitive with company fundamentals context advantage priorities Concepts and At each level: Interpersonal vocabulary relationships Corporate Financial basics Dialog style Business unit Scenarios Business model Product Line Product Operations
  15. Example: Acme Publishing Company Strategy: “Change mix of business to keep up with evolving consumers and advertisers; become more brand-centric and expand market-leading brands; innovatively attract new customers; and explore new revenue opportunities through cross-selling and multi-platform sales.” Implications for the designer: Talk about new design team hires in terms of how it will benefit marketing Try to introduce features that also become ‘marketing features’, e.g. Wow/viral features
  16. Many paths to success… •Coke •Apple •General Motors Customer Focus •Time Inc. •Alessi •AIG Role that design plays in offering
  17. Product Level Focus •Kodiac •Corvette Customer Focus •Silverado •Aveo Role that design plays in offering
  18. The Leverage School of Strategy… + =
  19. Evolving Strategy Google Google 1.0 search engine Google 2.0 sold its search capacity to AOL/Netscape, Yahoo… Google 3.0 sold simple text ads linked to search results Google 4.0 inserted relevant ads into any and all Web content Google 5.0 is an innovation factory that produces a torrent of new Web-based services, including Gmail, Google Desktop, and Google Base Gary Hamel, “Management à la Google”
  20. Buying strategic options…
  21. Discover the Align your Know Understand company’s customer need business your competitive with company fundamentals context advantage priorities Concepts and Interpersonal At each level: Align with short-term vocabulary relationships priorities Corporate Financial basics Dialog style Align with strategy Business unit Scenarios Develop an Business model approach for building your Operations capabilities (e.g. bootstrapping)
  22. A little about business strategy, and an exercise…
  23. Business Strategy in One Slide: Porter’s Generic Strategies “Strategic management is the process of specifying an organization's objectives, developing policies and plans to achieve these objectives, and allocating resources so as to implement the plans. It is the highest level of managerial activity, usually performed by the company's Chief Executive Officer (CEO) and executive team. It provides overall direction to the whole enterprise. An organization’s strategy must be appropriate for its resources, circumstances, and objectives. ” Porter’s Generic Strategies: • Cost Leadership: sell at lower prices, usually by lower costs or by selling in volume • Niche: focus on one audience type and satisfy their particular wants or needs • Differentiation: offer a perceivably different brand, product, or service
  24. Cost Leadership
  25. Niche
  26. Differentiation
  27. Which is the Internet Best For? Price/Cost Niche Differentiation
  28. Generic Strategies on the Internet Cost Leadership Niche Differentiation
  29. Cost Leadership + Differentiation: Blue Oceans • quot;Blue oceansquot; are untapped and uncontested markets. Blue ocean offerings cross conventional market segmentation while simultaneously achieving lower costs/price.
  30. Strategy Canvas: Wines
  31. Blue Ocean Exercise: Online Diet & Fitness Programs High Weight Watchers Offering RealAge Daily Plate FitDay Low Meal Fitness Tracking/ Style Price Community Offline Plan Plan Reporting Invent a blue ocean business concept that will offer something radically different and cost less than competitors. Add additional criteria to this graph if you like. What is the name of the product or service? How is it better for customers? How does that way of serving customers also help save money?