If you ask anyone to name a few innovative companies, chances are, you can pretty much predict what they are going to say. Many companies in this list, ranging from Airbnb to Netflix to Nike, invest heavily in design to obliterate the competition.
Why? Because ethics matter. Let me explain.
The expectations that consumers have of brands today are a lot different from the expectations they had 20 years ago, or even 10 years ago.
You’ve probably seen that yourself. There’s a lot of talk about brand authenticity today which is another way of saying how genuine a brand is about who they are and what they do.
Customers want the brands they do business with to have substance so that they’re about more than just selling them stuff. Be it privacy, security, or politics, many companies face backlash and/or gain a competitive advantage because they align their ethical positions to those of their customers.
Think about how the Business Roundtable, the most important association of American business executives, recently revised its mission statement for the first time since 1997. The new purpose statement emphasizes valuing customers, employees, suppliers, communities, and shareholders rather than only focusing on shareholder return.
Leading businesses today understand how important ethical impressions are, even if this action might be simply symbolic. Companies that launch a new product or service into a competitive market take strategic steps to stand out as the clear choice for at least one sort of customer.
Different customers want different things. Some may be more concerned with the convenience of payments, scheduling, ratings, or assistance while some value characteristics like pricing or availability. Business-savvy designers are uniquely prepared to show how these dynamics play out in actual settings as market competitiveness rises.
Over the past 25 years, businesses all over the world have produced products and services on a previously unheard-of scale, thanks to digitization. They need engineers and developers to translate these lofty goals into workable realities.
Due to the intense competition today, corporate executives in design-led companies are looking to designers for fresh ideas on how to add value.
In the current market, designers have several opportunities. Traditional for-profit businesses are shifting from putting only financial concerns first to putting customers first. Government and nonprofit organizations are changing from using economic models to ones that are community- and citizen-led. In addition, designers are being requested to take part in both big and small changes.
But how are design leaders generating value in such cutthroat competition?
Ryan Rumsey, a former design leader at Apple, offers some of the tactics he used to develop successful plans for some of the most coveted brands in the world in Invision's "Business Thinking for Designers.” He has honed these abilities over the past ten years while managing design and strategy at organizations like EA, Nestlé, and USAA.
Let us begin!
1. Laying the Groundwork
Before we begin finding solutions, it is important to establish the objectives of the strategy. These generic strategies were popularized by Michael Porter in his 1985 book, Competitive Advantage: Creating and Sustaining Superior Performance.
To gain a competitive advantage, there are three generic strategies companies use:
• Become a cost leader
• Create differentiation
• Target a niche customer base
A. Where does the company play? – Which customers, territories, and channels (e.g., box stores, online, phone, etc.) will the company target?
B. How does the company win? – What will the company do to create a competitive advantage for itself?
Where to focus?
The answers to these two strategic questions also inform whether a company or product is focused on growth or profit.
Growth focus: When a business aims to gain market share or diversify the products or services it offers, sometimes at the expense of short-term profits.
Profit focus: When a business aims to maintain profits over reinvesting in the production of new products.
Design led companies practice value-based decision making
Businesses survive when they create value for customers. Businesses thrive when they create more value for customers than their competitors. Business decisions are frequently influenced by financial considerations, but other variables, such as emotions, should also be taken into account.
From project roadmaps to branding decisions, intangible factors like ethics, morals, or emotions must be taken into consideration.
To distinguish the effects of these different types of values, let’s define them as “actual” or “perceived.”
• Actual value – Real values are involved when math is applied. These are the figures used to determine production costs, product prices, staff pay, the number of hours required to design a tool, etc.
• Perceived value – Although they are challenging to quantify, perceived values are just as important as actual values, if not more so. Perceived values are expressed when clients or executives utilize adjectives like excellence, usability, or beauty. These principles are harder to grasp and require a lot of explanation.
2. Visualising the Strategy
To get a high-level idea of where your company plays and how it wins, there are two diagrams you can use: The Business Model Innovation Framework and the Eco-System Map.
The Business Model Innovation Framework
Developed by Oliver Gassmann and his team at the University of St. Gallen, the Business Model Innovation Framework is a simple diagram to quickly capture a business model.
This diagram helps you answer four basic questions:
Who are the target customers of your company?
What does your company offer of value to those customers? (delivering value)
How does your company produce the offer? (creating value)
Why does that offer generate value for the company? (capturing value)
The Ecosystem Map - How value is created?
Now that you have a representation of the business model, the other diagramming tool depicts how the model works. Called an Ecosystem Map, this tool shows all the actors involved in a business and the flow of value between them. Think of it as a flow chart of the transactions between a business and its suppliers or customers.
3. Understanding the Persona
Empathy Map first walks through a step-by-step process to identify a specific person and their goal and then views the work ahead through their eyes. Doing so gives designers a better understanding of what the customers really think and feel about design work, processes, and approaches.
Best done as a team activity, the diagram is structured around seven basic questions:
WHO are we empathizing with?
What do they need to DO?
What do they SEE?
What do they SAY?
What do they DO?
What do they HEAR?
What do they THINK and FEEL?
3. Designing a Competitive Advantage
The old innovation framework followed the principle of Business+Engineering+Design=Innovation but it rules out the importance of design in all aspects of creating a competitive advantage.
Here is the new updated version of the Venn Diagram of innovation for competitive advantage by Ryan Rumsey (Apple, EA, and USAA)
The act of introducing something novel or distinctive is innovation. However, companies require more than this. Adoption is also required to prove a competitive advantage. It also has to be desirable because desirable solutions are adopted.
Consider this extrapolation of the updated diagram:
• A viable solution, one that’s good for our business
• A feasible solution, one that can be executed by our team
• A desirable solution, one that will be adopted by our customers
Parting Words
Designers are increasingly expected to be in charge of decisions that affect both the value of the consumer and the bottom line of the business as they advance into leadership positions. Managing finances, allocating resources, employing and firing personnel, and figuring out the return on investment (ROI). Regardless of the industry, these duties constitute the foundation of the company and need to be understood by the design leader.
Design leaders require the ability to participate intelligently in discussions about costs, operational planning, strategy, and other day-to-day issues of business leaders, even though they may not have to crunch numbers every day.
Of course, the way to design winning strategies does not end here. We can expand this article further with even more effective tactics but we would be missing the forest for the trees. All that this article aims to do is to give you a framework for thinking. Whether you are a designer or not, the fundamental takeaway is that we need to approach any strategy from as many perspectives as we can. This means talking to stakeholders, and customers and understanding their perspectives, hopes, fears, and pain points and extrapolate how it fits into the overall picture.