The Art of Strategy (AIGA Head Heart Hand)

THE ART OF STRATEGY

Nathan ShedroffCalifornia College of the Artsdesignmba.org

(or: What I learned in business school)

M A K E I T S O Interaction Design Lessons from Science Fiction

b y N AT H A N S H E DR OF F & C H R I S TOP H E R NOE S S E L

foreword by Bruce Sterling

Many designers enjoy the interfaces seen in science fiction films

and television shows. Freed from the rigorous constraints of designing

for real users, sci-fi production designers develop blue-sky interfaces

that are inspiring, humorous, and even instructive. By carefully studying

these “outsider” user interfaces, designers can derive lessons that make

their real-world designs more cutting edge and successful.

“Designers who love science fiction will go bananas over Shedroff and Noessel’s delightful and informative book on how interaction design in sci-fi movies informs interaction design in the real world. . . . You will find it as useful as any design textbook, but a whole lot more fun.”

ALAN COOPER“Father of Visual Basic” and author of The Inmates Are Running the Asylum

“Part futurist treatise, part design manual, and part cultural analysis, Make It So is a fascinatinginvestigation of an often-overlooked topic: how sci-fi influences the development of tomorrow’s machine interfaces.”

ANNALEE NEWITZEditor, io9 blog

“Shedroff and Noessel have created one of the most thorough and insightful studies ever made of this domain.”

MARK COLERANVisual designer of interfaces for movies (credits include The Bourne Identity, The Island, and Lara Croft: Tomb Raider)

“Every geek’s wet dream: a science fiction and interface design book rolled into one.”

MARIA GIUDICECEO and Founder, Hot Studio

www.rosenfeldmedia.com

MORE ON MAKE IT SOwww.rosenfeldmedia.com/books/science-fiction-interface/

MAK

E IT SO

by NATH

AN SH

EDR

OFF &

CHR

ISTOPH

ER N

OESSEL

Experience Design 1.1a manifesto for the design of experiences

by Nathan Shedroff

product taxonomies 16

user behavior 116

100 years 22

information 42

takeaways 28

data 36

knowledge 48

subjectivity 78

consistency 96

navigation 84

product taxonomies 16

user behavior 116

experiences 4

experience taxonomies 10

100 years 22

wisdom 54

information 42

takeaways 28

data 36

knowledge 48

subjectivity 78

consistency 96navigation 84

Design Strategy in ActionEdited by Nathan Shedroff

A publication from the MBA in Design Strategy programCalifornia College of the Arts

2011

2008 Edition

Dictionary ofSustainable Management

MBA IN DESIGN STRATEGYMBA IN STRATEGIC FORESIGHTMBA IN PUBLIC POLICY DESIGN

WHERE IS “DESIGN” ON THE BALANCE SHEET?

ASSET

LIABILITY

OWNER’S EQUITY

WHERE IS “DESIGN” ON THE BALANCE SHEET?

ASSET

LIABILITY

OWNER’S EQUITY

STRATEGY

Strategy

(Greek “στρατηγία”—stratēgia, “art of troop leader; office of general, command, generalship”[1])is a high level plan to achieve one or more goals under conditions of uncertainty.

Strategy is also about attaining and maintaining a position of advantage over adversaries through the successive exploitation of known or emergent possibilities rather than committing to any specific fixed plan designed at the outset.

—Wikipedia

“a pattern in a stream of decisions”

— Henry Mintzberg of McGill University

Strategic management analyzes the major initiatives taken by a company’s top management on behalf of owners, involving resources and performance in internal and external environments.[1] It entails specifying the organization’s mission, vision and objectives, developing policies and plans, often in terms of projects and programs, which are designed to achieve these objectives, and then allocating resources to implement the policies and plans, projects and programs. A balanced scorecard is often used to evaluate the overall performance of the business and its progress towards objectives. Recent studies and leading management theorists have advocated that strategy needs to start with stakeholders expectations and use a modified balanced scorecard which includes all stakeholders.

Strategic management analyzes the major initiatives taken by a company’s top management on behalf of owners, involving resources and performance in internal and external environments.[1] It entails specifying the organization’s mission, vision and objectives, developing policies and plans, often in terms of projects and programs, which are designed to achieve these objectives, and then allocating resources to implement the policies and plans, projects and programs.

STRATEGY ISA HIGH-LEVEL PLAN

(FOR ACTION)

“DESIGN ISA PLAN FOR ACTION”

Charles Eames

STRATEGY ISABOUT CONTEXT

TACTIC

STRATEGY

TACTIC

Usability/LegibilityAesthetics

STRATEGY

TACTIC

Usability/LegibilityAesthetics

STRATEGY

Experience

TACTICOperational Effectiveness & Productivity

Products & Services (Offerings)Features/Performance

Price

STRATEGYIntent, Goals, Mission, Vision, & Culture

SystemsStakeholders (employees, investors, media,

communities, etc.)

TACTICHow to make, deliver, and support the best

<offering> possible

STRATEGYWhat we should be in the business of

(to begin with)

TACTICHow to make, deliver, and support the best

<offering> possible

STRATEGYWhat we should be in the business of

(to begin with)

THE ORGANIZATION

THE PRODUCTS

EXPERIENCE CREATES VALUE

EXPERIENCE CREATES VALUE

EXPERIENCE CREATES VALUE

EXPERIENCE CREATES VALUE

BUSINESS MODELS ARE DESIGNABLE

A B C

A B C

3 4 5

F F2 F8

D

6

G

1

2

E

101 44 89 10616

H1 H2 L NH

You’re holding a handbook for visionaries, game changers, and challengers striving to defy outmoded business models and design tomorrow’s enterprises. It’s a book for the…

written byAlexander Osterwalder & Yves Pigneur

co-created byAn amazing crowd of 470 practitioners from 45 countries

designed byAlan Smith, The Movement

} 44The Business Model Canvas

Cost Structure

Key Partners

Key Resources

Channels

Key Activities

Value Proposition

Customer Relationships

CustomerSegments

Revenue Streams

www.businessmodelgeneration.com

www.cca.edu/academics/graduate/design-mba/open

DELIVERYRESOURCES

OFFERPRODUCTIONORGANIZATIONDESIGN

NETWORK/STAKEHOLDERSFINANCE

INTENT

EXPERIENCE

BRAND

VALUE

VALUE

INTENT

EXPERIENCE

OFFER

DELIVERY

PRODUCTION

RESOURCES

NETWORK/STAKEHOLDERSFINANCE

ORGANIZATIONDESIGN

VALUE NEEDS

www.cca.edu/academics/graduate/design-mba/open

TACTICS/IMPLEMENTATION(INDUSTRY CONTEXT)

CUSTOMER(MARKET CONTEXT)

STRATEGY(VISION)

CUSTOMER (MARKET CONTEXT):

NEEDS• What are the customers unmet needs?• What are their challenges?• What do they find meaningful?• What are their values?• What affects their emotions?• What are their functional and performance requirements?• What are they willing to pay for?

:

NETWORK/STAKEHOLDERS• Who is in our network (Stakeholders: Supporters,

Suppliers, Partners, Customers—and theirCustomers, Media, Community, etc.)?

• How do we manage, maintain,and grow our networks?

• Who are our competitors?• Who will resist our success?

:

PRODUCTION• How do we produce it?• Where do we produce it?• Do we have unique production expertise?• What do we already produce?• What do others produce?• What are the strengths, weaknesses, and risks

in our supply chain?

:

RESOURCES• What are our key resources (materials,

processes, people, IP, policies)?• Which are we more reliant on?• Do we have the right mix?• Do we have access to key materials?

:

DELIVERY• Do we deliver our offer directly or through a

third party (retail, wholesale, private label)?• How do we sell to customers?• Are our channels competing or complementary?• How do we fulfilll orders?

ORGANIZATION DESIGN• How does the structure enhance the organization’s

business model?• How does information flow?• How does the culture support the business model,

offerings, and delivery?• How integral are various functions (marketing, sales,

internal and external communications, HR, research,governance, IT, QA, legal, etc.)?

• How do the rewards and incentives support thebusiness model?

• How are internal decisions made?

EXTERNAL(M

ARKETCO

NTEXT)

EMERGENT ATTRIBUTES:

VALUEValue emerges as a result of the activities andofferingss an organization provides to customersand partners in the context of its markets andindustries. It should be measured not only infinancial terms but also social and ecological.

:

BRANDAn organization’s brand emerges as a result ofthe sum of its activities. This includes theexperience it creates for customers and otherstakeholders as well as the strength andconsistency of its internal messaging toemployees and partners (who form the basis ofcontact with customers).

PATHWAYS:

RESEARCHResearch encompasses a variety of quantitativeand qualitative techniques to gather insight anddata from each area (in appropriate ways):• Who are our customers?• What are their needs?• How do we meet them?• What do they respond to?

:

COMMUNICATIONCommunication encompasses both internaland external messaging.• What are our communication channels?• Who needs to know (internally)?• Who needs to know (externally)?• What are our messages?

:

INTENT• What are our organizational goals & values?• How are these different in the market?• What’s our vision for the future?• What’s our mission?

:

OFFER• What is it we offer (Product, Service, Event,

Space, Policy)?• What customer insights define our offer?• What benefits do we offer customers?• Why do people value our offers?• What do our competitors offer?• What are the offer attributes (performance,

convenience, newness, customization etc.)?

:

EXPERIENCE• How, where, and when do customers want to be reached?• How do customer’s rate our offer’s experience?• What about those of our competitors?• What about others who experience it?• What is the customer delivery ecosystem like?• Is the experience customized or personalized?• Is the experience new or unique?• How are they served?• What communities are they a part of?• Are these adequate?• Do customers co-create the experience?

ORGANIZATION (INDUSTRY CONTEXT):

NEEDS• What are the customers unmet needs?• What are their challenges?• What do they find meaningful?• What are their values?• What affects their emotions?• What are their functional and performance requirements?• What are they willing to pay for?

FINANCE• How is the business funded?• Is it cost or value-driven?• Which costs are fixed and variable?• Are there economies of scale or scope?• What are the revenue streams?• How and where does money flow?• What is profit contingent upon?• Where is done with profit?• Is the organization supported via revenue,

investment, or other (like charity)?

© 2011 Bert Aldrigde, Susan Worthman, and Nathan ShedroffCCA LEADING BY DESIGN FELLOWS PROGRAM & SMALL BUT MIGHTY

DYNAMIC VALUE MODEL (BETA 4)

YourCompany

customers (end users)

NGOs

media

community (geographic)

partners

labor unions

retailerslocal government

wholesalers

the Environment

industrytrade

associations

employees

distributors

regional government

courts suppliers & manufacturers

insurers & reinsurers

shareholdersbanks

investorsinstitutional investors

competitors

YourCompany

customers (service

providers)

STRATEGY TOOLS

Strengths Weaknesses

Opportunities Threats

Strengths:• We’re us

• We’re great

• We know stuff

• We’re fast

• We’re easy to use!

Weaknesses:• We work too much

• We care too much

• We’re perfectionists

Opportunities:• Own the market

• Expand product lines

• Make more stuff

• License stuff

• Co-brand with Disney

• Create an “experience”

Threats:• Others can get fast

• Others can be easy to use

• Someone gets to

Disney before us

• We don’t have a “big

data” strategy!

Strengths:• We’re us

• We’re great

• We know stuff

• We’re fast

• We’re easy to use!

Weaknesses:• We work too much

• We care too much

• We’re perfectionists

Opportunities:• Own the market

• Expand product lines

• Make more stuff

• License stuff

• Co-brand with Disney

• Create an “experience”

Threats:• Others can get fast

• Others can be easy to use

• Someone gets to

Disney before us

• We don’t have a “big

data” strategy!

ENVIRONMENTALANALYSIS

Social Issues: Customer Needs and Wants

Political Issues: Legal, Regulations...

Tech. Issues: Technology trends, opps...

Economic Issues: Market trends, opps...

Industry-Specific Issues: shifts in resources, knowledge, practices, etc...

ENVIRONMENTALANALYSIS

• Customers seek clarity

• Customers are afraid of technology

• RIM is out, HTML5 is in

• Lending is slowing

• Customers worried about their future

• Mobile, social, global, local, etc.

COMPETITIVEANALYSIS

• Clarity

• Fear of technology

• HTML5

• Loan Help

• Reassuring

X

X

X

X

√

√√√X

X

X

X

X

√X

X

X

√X

X

√√X

X

X

Strengths Weaknesses

• Clarity • Fear of technology• HTML5• Loan Help• Reassuring

Strengths Weaknesses

Opportunities

(Biggest Strengths vs. Biggest Weaknesses)

Threats

(Biggest Weaknesses vs. Biggest Strengths)

• Clarity • Fear of technology• HTML5• Loan Help• Reassuring

Better

WorseSmaller Bigger

Better

WorseSmaller Bigger

Hey! A Blue Ocean

Strategy!

For <target customers> that <need/

care about> , our <product, service>,

company> is a solution that <benefit> .

Unlike, <our competitor> , our <product,

service>, company> is <unique

differentiator> .

POSITIONING STATEMENT

POSITIONING STATEMENT

For Professor Plum that needs to

kill someone , our noose

is a solution that is silent .

Unlike, Miss Scarlett’s , our noose

is purple

.

Our customers want the most

features possible in a fast ,

inexpensive application delivered

in the cloud .

MADLIBS OF DESIGN

Where to start:

• Who is your audience really?

• What is their life life, what do they need, what do they want?

• What value is being provided to them and what kind of value can you realistically provide?

• How can you differentiate yourself based on this value?

• What’s it going to take to be successful?

• Are you ready? Is it worth doing?

• Do you have the right people (who do really need)? Do you have the right culture?

} 44The Business Model Canvas

Cost Structure

Key Partners

Key Resources

Channels

Key Activities

Value Proposition

Customer Relationships

CustomerSegments

Revenue Streams

} 44The Business Model Canvas

Cost Structure

Key Partners

Key Resources

Channels

Key Activities

Value Proposition

Customer Relationships

CustomerSegments

Revenue Streams

NEEDSOFFER

EXPERIENCE

INTENT

VALUE

NEEDSOFFER

EXPERIENCE

INTENT

VALUE

CUSTOMER’S EXPERIENCE

ORG.DESIGN RESOURCES

DELIVERYPRODUCTION

NETWORKFINANCE ORGANIZATION’S EXPERIENCE

RELATIONSHIP

EXPERIENCE

RELATIONSHIP

VALUE

EXPERIENCE

TOTAL VALUE

EXPERIENCE

TOTAL VALUE

FUNCTIONAL VALUE +FINANCIAL VALUE +

EMOTIONAL VALUE +IDENTITY VALUE +

MEANINGFUL VALUE =

FUNCTIONAL VALUE +FINANCIAL VALUE +

EMOTIONAL VALUE +IDENTITY VALUE +

MEANINGFUL VALUE =

QUANTITATIVE

TOTAL VALUE

FUNCTIONAL VALUE +FINANCIAL VALUE +

EMOTIONAL VALUE +IDENTITY VALUE +

MEANINGFUL VALUE =

QUANTITATIVE

QUALITATIVE

TOTAL VALUE

QUALITATIVEVS.

QUANTITATIVE

QUALITATIVEAND

QUANTITATIVE

CLV = GC • - M •∑i = 0

n

(1 + d) ir i ∑

i = 1

n

(1 + d) i - 0.5r i - 1

Lifetime Customer ValueGC = gross contribution per customer

M = (relevant) retention costs per customer per year

n = horizon (in years)

r = yearly retention rate

d = yearly discount rate.

EXPERIENCE CREATES VALUE

Brand Value = { (V/S)b - (V/S)g } * Sales(V/S)b = Enterprise Value / Sales ratio of the firm with the benefit of the brand name(V/S)g = Enterprise Value / Sales ratio of the firm with the generic productLet's use as an example branded cereals maker like Kellogg (K) against a generic provider like Ralcorp (RAH).Value of Kellogg brand name = (1.78 - 1.32)(13846) = $6,369 MillionThus, (6369/24200) or 26% of the value of the company is derived from brand equity.

EXPERIENCE CREATES VALUE

EXPERIENCE CREATES VALUE

“GOOD WILL”

From: The Experience Economy, Pine and Gilmore

Commodity Product Service Experience

Price/Value

EXPERIENCE CREATES VALUE

Commodity Product Service Event/Space

Price/Value

< EXPERIENCE >

EXPERIENCE CREATES VALUE

EXPERIENCE IS STRATEGIC

USABILITY/LEGIBILITY

Nokia 3650

EXPERIENCE BREADTHProduct

Service

Brand

Name(s)

Channel/Environment

(Space)

Promotion

Price

DURATIONInitiation

Immersion

Conclusion

Continuation

TRIGGERSSight

Sound

Smell

Taste

Touch

Concepts

Symbols

SIGNIFICANCEMeaning

Status/Identity

Emotion/Lifestyle

Price

Function

INTENSITYReflex

Habit

Engagement

INTERACTIONPassive

Active

Interactive

EXPERIENCE

MEANING

CORE MEANINGSVALUES/IDENTITYEMOTIONSPRICEFEATURES (PERF.)

CorporateMeaning Priorities

Team Meaning Priorities

CustomerMeaningPriorities

Competitors’ Meaning Priorities

Strategic Focus

AccomplishmentBeautyCreationCommunityDutyEnlightenmentFreedom

HarmonyJusticeOnenessRedemptionSecurityTruthValidationWonder

15 CORE MEANINGS:

Definitions: makingmeaning.org

TAKEAWAYS

TAKEAWAYS• Qualitative AND Quantitative• Strategy is derived from design research• Design can (and should) play a role• Designers need to leave the comfort of the studio (and learn more about business)• Leadership is communicating vision• Relationships and value are built through experience

QUESTIONS

THANK YOUnathan@nathan.com

designmba.org