1 Design as a strategic resource: mapping design to the value chain and other strategy models John Stevens, Centre for Technology Management May 2007
2 Overview Design is increasingly recognised as strategically important, but not specifically addressed in established strategy models. Strategic design is a term used loosely. 3 types proposed: design as a position, design informing strategy, design used to implement a strategy. Strategic design hindered by silent design, partial design, and disparate design. Value chain representations of these practices are suggested.
3 Strategic design is using design to inform and maintain a valuable position in the market and a sustainable competitive advantage.
4 The aims of phase 1 of this study: establish context in literature of design management and business strategy; identify gaps or shortcomings in design management literature to inform further investigation; elicit concerns of senior design professionals regarding effective, strategic use of design, and the challenges therein.
5 Findings so far Interviews highlighted several areas of interest, prompting proposed descriptive terms and visual representations. Design professionals claim a unique strategic contribution not available from management or marketing (consultants). Clients agree, often contrary to expectations.
7 High-quality products and services are becoming plentiful and affordable, even commoditised. Competing on price is difficult and risky Discerning customers demand relevant, easy and pleasurable services and products... which means making a meaningful emotional connection with them.
8 Design's strategic contribution: three types 1. 'High design' positioning as a strategy 2. Design methods ('design thinking') can inform strategy formulation 3. An integrated, coherent design approach can help implement a strategy
9 Designing: a process that identifies and builds value based on deep understanding of human needs and practical possibilities. Ideological + Technological DESIRABLE + POSSIBLE
10 Strategic design Design is often overlooked in strategic concepts Effective design builds competitive advantage Quality, standards, meeting customer expectations NPD, idea generation, interpretation, integration, liaison Speed, efficiency, reducing cost and time-to-market Identity, personality, meaning, differentiation, branding
11 Adding Value Dimensions of value are Functional, Economic and Emotional. i.e. Performance, price, experience: "It works" "I can afford it" "I like it"
12 1: Competing by 'high design' can be a strategy in itself
14 2: Design methods can inform strategy formulation
15 "Developing a strategy is a creative activity, requiring 'strategic thinking': Seeing the 'whole picture' Creativity Scenario generation and evaluation - the consideration of many possible 'futures' for the organisation Dealing with ambiguity and uncertainty Identifying strategic issues." The OGC Successful Delivery Toolkit Office of Government Commerce accessed April 2007
16 So strategy and design have a lot in common Strategy is about trade-off, making tough choices, not simply operational optimisation. Much of the design process is the act of commitment to one option over all others. Porter, ME 1996, What is strategy? Harvard Business Review 74(6) p61-78
17 Designers must: Understand the artefact (First order) and also understand different users understanding of it (2nd order). Technological reasoning is founded on logic, analysis, objectivity and consistency. Simply not powerful enough to support user-centered design. But must treats humans not as mechanisms but as knowledgeable agents accountable for their actions and which does not presume commonalities and single truths. Krippendorf, K, The Semantic Turn - a New Foundation for Design (2005).
18 Design methods can inform strategic decisions, supplementing analytical tools Data and analysis are essential, but can miss the whole picture, leaving qualitative judgements to whims of those in control. 10% 90%
19 Product design consultants can be 1. strategy visualisers product 2. core competence prospectors 3. market exploiters 4. process providers 5. partnership brokers 6. perspective disruptors Seidel, V., 'Moving from Design to Strategy: The Four Roles of Design-Led Strategy Consulting', DMJ.11:2, 2000
20 3: An integrated, coherent design approach helps implement a strategy
21 The rise of design Historically (and still), design applied as late-stage 'window-dressing' Effective design is involved early, to shape develop products & services, but actual product already decided from on high (managers, marketing, CEO) Now increasingly recognised design should be holistic, integrated, connected to corporate level and beyond. Kotler, P, and Rath, G A, 'Design: A Powerful But Neglected Strategic Tool' (1984) 5 Journal of Business Strategy
22 Draws from and integrates many influences Aesthetics Form, feel & function Surface - Colour, texture, materials Style, character Human factors Ergonomics, usability Psychological & physiological response Technology Materials Production Supply chain Communication & representation 2D: sketches, renderings, plans, drawings, photographs 3D: models, prototypes Market & Operations Business strategy Product strategy Innovation process User insight Brand & emotion
23 Not just product Packaging Interface Experience Services Systems Environment - architecture, interior, workspace Marketing communications
27 Porter's Five Forces Potential Entrants 1 Industry competitors Suppliers Buyers Rivalry among existing firms 2 Substitutes Porter, M E, Competitive Advantage: Creating and Sustaining Superior Performance (1985).
28 Force 1: Threat of New Entrants Radical new entrant can pose threat without much technological differentiator. A distinctive and appealing design can elevate a latecomer above competitors. Beware of low 'design ambition'*. "Styling" infinitely variable, might seem easily copied but identity is not. If an offering is the perceived definitive in its class, imitators will be perceived as inferior. *Moultrie et al 2002, Kim & Mauborgne 2004,
29 Force 2: Threat of substitutes Differentiation, loyalty: If many products that can perform the same function, design can make the experience feel very different.
30 Force 3: Buyer bargaining power Commoditisation of the product is prevented by design through differentiation and clear customer focus, on both technological and ideological grounds.
31 Force 4: Supplier bargaining power Technological design choices can reduce dependence on particular suppliers or technologies. Creating a pleasurable experience for the supplier can increase supplier loyalty.
32 Force 5: Rivalry within the market Design enables a manufacturer to rise above competitive price wars and other profit-cutting practices. Customers switching brands can be reduced by building brand loyalty through an identity, image and experience which are compelling and appealing. Niche marketing aims for smaller but more easily targeted groups with whom to forge these links.
33 Michael Porter, Competitive Advantage, Free Press, Value Chain
34 Michael Porter, Competitive Advantage, Free Press, Lorenz, C, 'Harnessing Design as a Strategic Resource' (1994) 27 Long Range Planning
35 Levels of activity - tactical to strategic Business Communications, Brands, Culture, Environments, Innovation process Meta Product Brand, Business model, Strategy, Production system Augmented product Service & support, Finance and warranty, Delivery, Installation Actual product Intangible attributes: subjective & opinion based Tangible attributes: quantifiable & measurable Core benefits STRATEGIC DESIGN Moultrie, 2006 unpublished
36 Design is simultaneously a differentiator, co-ordinator, and transformational process... Design can create value at different levels of the value chain: By optimizing the primary activities: design action on the consumer perceived value. By optimizing the coordination among functions and the support activities of the firm: design as a new function in the structure that transforms the management process. By optimizing the external coordination of the firm in its environment: design generating a new vision of the industry. [Borja de Morzota 2003] Borja de Mozota, B, 'Design and Competitive Edge: A Model for Design Management Excellence in European SMEs' (2003) 2 Design Management Journal Academic Review
37 Integrated Design vision Borja de Mozota, B, 'Design and Competitive Edge: A Model for Design Management Excellence in European SMEs' (2003) 2 Design Management Journal Academic Review Trueman, D M, and Jobber, P D, 'Competing Through Design' (1998) 31 Long Range Planning (12).
38 Pilot Study
39 Case interviews A B C D E F G H Marketing and Strategy Director, Product design and development consultancy. Director of Product Strategy, London product design and development consultancy. Head of Design, Inter-continental airline company. Director of Product Experience (mobile operations), Europe-wide wireless, mobile and broadband operator. Deputy Chief Executive, publicly-funded design research and advisory centre. Senior partner, product design and development consultancy. Head of Consumer Experience Design (mobile devices, Europe) for global phone & electronics manufacturer. Architect, multinational architecture and design practice.
40 Partial Design In design-aware organisations multiple design disciplines are used in many operational areas. Partial design is where design is only applied in some of these areas. Design may still be used extensively, consistently and expertly in these areas.
41 Partial Design
42 Disparate Design Benefits are not fully realised unless design efforts are fully integrated consistently with one-another and with other operational areas. Design may be applied appropriately in the whole operation chain, in keeping with an ambition towards integrated design, but without full co-ordination and integration with other operational areas, between geographic regions, or indeed between these design activities.
43 Disparate Design
44 Silent design Design by people who are not designers and are not aware that they are participating in design activity. [Gorb & Dumas 1987] Design by default, by omission Design by committee, by edict (eg Boss s Wife syndrome) Gorb, P, and Dumas, A, 'Silent Design' (1987) 8 Design Studies
45 Silent Design
46 Summary 3 ways design can be strategic: as a position, as a tool in strategy formulation, and in strategic implementation. Integrated, holistic design can be represented explicitly in the Value Chain. Where it is not achieved can be termed silent, partial and disparate design. Design consultancies can inform and shape strategy, but also provide secondary benefits. Both are often unanticipated by client.
47 Next steps Further descriptive studies, interviews and field observations in 4-8 companies using or providing design services to understand how a firm can integrate design up, down and across the organisation. Further define key factors in selected design-client cases Identify attitudes and practices that influence these And possibly Develop a tool or method for other organisations to better understand how design services can contribute strategic advantage.
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