Working with management consultants in cross functional teams has convinced me that designers need to learn more about business. Designers are generally seen as not having a clue about business or numbers. This is a gross generalization, I know, I mention it here because I’ve heard people say this first-hand.
But this is an opportunity – learning about business is a great way for designers be more influential when it comes to product decisions. Designers work with both tech teams and marketing. In product teams designers are usually closer to the tech teams. Because marketing folks are often not co-located it takes more effort to collaborate with them. But it makes sense for designers to be closer to marketing and the business side because this is where product decisions are made that directly impact customers and end-users.
The business concept at the top of list that we need to learn about is strategy. Strategy means different things to different people which is why we need a clear model that can be applied across different scenarios. For example, there is corporate, business, and product strategy. This is important because a company’s corporate, business and product strategy determines what we work on. But for the most part we are not involved in any strategy talks at all. This makes sense because designers are not trained in strategic thinking, but this needs to change.
Kernel of good strategy
In Good Strategy, Bad Strategy Richard Rumelt writes that the kernel of good strategy contains three elements:
- Diagnosis: break down the complexity of reality by identifying the critical aspects and obstacles of the situation.
- Guiding policy: overall approach to overcome the obstacles identified in the diagnosis.
- Coherent actions: coordinated steps to accomplish the guiding policy.
This model helps to simplify strategy because it applies to all levels of strategy: corporate, business, and product.
Ultimately strategy is about trade-offs to get a competitive advantage. Trade-offs because people and organizations have limited capacity. Strategy is as much about what you are doing as it is about what you are not doing.
But the truth is that many large companies, especially large complex companies, don’t really have strategies. At the core, strategy is about focus, and most complex organizations don’t focus their resources. Instead, they pursue multiple goals at once, not concentrating enough resources to achieve a breakthrough in any of them.
Blue Ocean Strategy
In Blue Ocean Strategy the authors take a different approach. A lot of traditional strategy is about gaining competitive advantage in red oceans, that is markets that are filled with competition. In contrast blue ocean strategy takes a different approach. The basis of blue ocean strategy is value innovation. Value innovation is where entrepreneurs don’t use the competition as their benchmark:
Value innovation is the cornerstone of blue ocean strategy. We call it value innovation because instead of focusing on beating the competition, you focus on making the competition irrelevant by creating a leap in value for buyers and your company, thereby opening up new and uncontested market space.
Three practical strategy making tools
- The blue ocean strategy canvas. This links nicely with Rumelt’s kernel of good strategy by acting as a diagnostic and a coordinated action framework for building a blue ocean strategy. The visual nature of a blue ocean canvas is also a great way to get alignment and share strategy.
- The four actions framework. Get clarity on trade-offs when designing new value or strategy.
- The eliminate-reduce-raise-create grid. Scrutinise the factors your company is competing on and decide what to do more of vs less.
Overall strategy is about structuring a problem, and once having looked at all the pieces, you plan your next move from a solid basis of decision making by focusing efforts on high value initiatives. But you need to keep iterating based on market feedback. Beyond business schools strategy is not something that is widely and explicitly taught, but I think it should be.
For more on Blue Ocean Strategy check out Blue Ocean Studio.