John Stevens, Centre for Technology Management

May 2007

Design as a strategic resource: mapping design to the value chain and other strategy models

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.

Overview

Strategic design is using design to inform and maintain a valuable

position in the market and a sustainable competitive advantage.

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.

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.

Context

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.

High-quality products and services are becoming plentiful and affordable, even

commoditised.

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

Designing: a process that identifies and builds value based on deep understanding of human needs and

practical possibilities.

Ideological + Technological

POSSIBLEDESIRABLE +

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

Strategic design

Dimensions of value are Functional, Economic and Emotional.

i.e. Performance, price, experience:

★ "It works"

★ "I can afford it"

★ "I like it"

Adding Value

1: Competing by 'high design' can be a strategy in itself

2: Design methods can inform strategy formulation

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."

"Developing a strategy is a creative activity, requiring 'strategic thinking':

The OGC Successful Delivery Toolkit™ Office of Government Commerce www.ogc.gov.uk accessed April 2007

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.

So strategy and design have a lot in common

Porter, ME 1996, “What is strategy?” Harvard Business Review 74(6) p61-78

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).

Design methods can inform strategic decisions, supplementing analytical tools

90%

10%

Data and analysis are essential, but can miss the whole picture, leaving qualitative judgements to whims of those in control.

product

Product design consultants can be

1. strategy visualisers

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

3: An integrated, coherent design approach helps implement a

strategy

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.

The rise of design

Kotler, P, and Rath, G A, 'Design: A Powerful But Neglected Strategic Tool' (1984) 5 Journal of Business Strategy

Technology

• Materials

• Production

• Supply chain

Draws from and integrates many influences

Aesthetics

• Form, feel & function

• Surface - Colour, texture, materials

• Style, character

Human factors

• Ergonomics, usability

• Psychological & physiological response

Communication & representation

• 2D: sketches, renderings, plans, drawings, photographs

• 3D: models, prototypes

Market & Operations

• Business strategy

• Product strategy

• Innovation process

• User insight

• Brand & emotion

Packaging

Interface

Services

Systems

Environment - architecture, interior, workspace

Marketing communications

Not just product

Experience

BeautyUsabilityQualityAffordabilityUtilityManufactureDistribution...

Product integrity

iPod

+ Mac

+ iTunes

+ now...

Porter's Strategic Tools

Porter's Five Forces

Porter, M E, Competitive Advantage: Creating and Sustaining Superior Performance (1985).

Potential Entrants

Substitutes

Suppliers Buyers

Industry competitors

Rivalry among existing firms

1

2

34 5

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.†

Force 1: Threat of New Entrants

*Moultrie et al 2002, †Kim & Mauborgne 2004,

Differentiation, loyalty:

If many “products that can perform the same function”, design can make the experience feel very different.

Force 2: Threat of substitutes

Commoditisation of the product is prevented by design through differentiation and clear customer focus, on both technological and ideological grounds.

Force 3: Buyer bargaining power

Technological design choices can reduce dependence on particular suppliers or technologies.

Creating a pleasurable experience for the supplier can increase supplier loyalty.

Force 4: Supplier bargaining power

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.

Force 5: Rivalry within the market

Value Chain

Michael Porter, Competitive Advantage, Free Press, 1993.

Michael Porter, Competitive Advantage, Free Press, 1993. Lorenz, C, 'Harnessing Design as a Strategic Resource' (1994) 27 Long Range Planning 73-84.

Levels of activity - tactical to strategicBusiness

Communications, Brands, Culture, Environments, Innovation process

Meta ProductBrand, Business model, Strategy, Production system

Augmented productService & support, Finance and warranty, Delivery, Installation

Actual productIntangible attributes: subjective & opinion basedTangible attributes: quantifiable & measurable

Core benefits

ST

RA

TE

GIC

DE

SIG

N

Moultrie, 2006 unpublished

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 88-103.

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 88-103.Trueman, D M, and Jobber, P D, 'Competing Through Design' (1998) 31 Long Range Planning 594-605(12).

Pilot Study

AMarketing and Strategy Director, Product design and development consultancy.

BDirector of Product Strategy, London product design and development consultancy.

C Head of Design, Inter-continental airline company.

DDirector of Product Experience (mobile operations), Europe-wide wireless, mobile and broadband operator.

E Deputy Chief Executive, publicly-funded design research and advisory centre.

F Senior partner, product design and development consultancy.

GHead of Consumer Experience Design (mobile devices, Europe) for global phone & electronics manufacturer.

H Architect, multinational architecture and design practice.

Case interviews

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.

Partial Design

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.

Disparate Design

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

Silent Design

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.

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.