Great Process Leads to Great Products

That simple idea (hopefully obvious to anyone who has tried it) that great commercial products aren’t simply the result of great product ideas is one I’ve mentioned before in the context of company culture and improving capabilities over time. But compared to the concrete sexiness of topics like the iPod and Swiffer this argument isn’t quite as riveting.

So I’m happy to see the mainstream press pick up the theme, such as this Pascal Zachary article in the New York Times, The Unsung Heroes Who Move Products Forward.

“Process innovation, even more than most product innovations, also tends to realize its economic potential through a lengthy process of incremental improvement based on learning by doing and other types of learning,” [David C. Mowery, a business professor at the University of California, Berkeley] added. “So ‘breakthroughs’ in process engineering are, if anything, even rarer than in product innovation.”

One thing this has taught me is to not lead with innovation as a theme, as it’s an ambiguous topic that can frame matters the wrong way, as being only about great ideas or high-risk/high-return product bets. I think communities like Agile developers, by focusing on process in a compelling way, are making great progress innovating at the process level.

Business Model Diagrams

Inspired by Samuel Mockbee’s work helping architecture students make actual homes during their studies, I’m having my Business & Design class at the Pratt Institute do business design work on an actual business. We’ve studied business operation and finance, secondary and primary research, and business idea sketching. Monday we’re kicking off our project with a visit from the client.

A tool I’d like to use to capture the essence of the client’s business in a snapshot is a business model diagram. I’ve found two good examples:

  1. Peter Rip’s
  2. Alex Osterwalder’s and below…

What Makes a Good Job? Trust

Milton Moskowitz, who has co-authored “The 100 Best Companies to Work for in America” since 1984, disovered (not surprisingly) that to really learn what makes a good job you need more than surveys and secondary research, you need to talk to employees. In this article, We Love Our Jobs. Just Ask Us, he identifies several benefits that go into a good job, but one key characteristic:

A good workplace is one where management trusts the employees and where employees trust the management.

Which is illustrated in comments like…

“I feel I get a fair share of the profits of this organization,”
“I am proud to tell others I work here,” and
“There is a minimum of politicking and backstabbing here.”

Videos from Overlap 2007

The magical Overlap 2007 event happened this past summer in the woods north of Toronto, a weekend devoted to exploring the intersection of business and design. To keep it conversational and intimate the size is limited to about 40, but for the first time thanks to this year’s organizers there’s video from the event on the site.

A highlight for me was the presence and conversation with Jeanne Liedtke, as I think her research, teaching, and writing has done the most to define and disseminate the core ideas of business design. She focuses on practical outcomes, yet is comfortable spinning beautiful metaphors and embracing big ideas, so I recommend you start with her video.

I’d Like to See More Discussion of Emotion Among Business Designers

I was very frustrated at work yesterday thinking through a key business issue with a lot of variables in play, and the emotion was clouding my ability to think about the problem. Approaching the problem creatively was even harder, even though I was aware of this obstacle at the time. And of course this is not a novel problem, it happens to most of us in business.

I’ve written before about not denying our emotions, channeling anger at work, and seen evidence that managers need high emotional intelligence.

But I haven’t seen much discussion on the topic from people who are interested in business design. It’s a taboo in corporate life that won’t be discarded easily, because we associate calm, collected behavior with professionalism, and anything else can be scary. All the more reason to address the use of emotions at work head on and figure out how to summon and channel productive emotions that fuel creativity and motivation without making individuals upset with themselves or others.

The start of a list of ideas for doing this:

  • Identify what kind of work arouses each person on a team and try to focus them on it
  • Teach everyone on the team the concept of flow and when to recognize their own signs of anxiety or boredom, and to communicate these to others on the team so the work can be adjusted accordingly
  • Develop a trademark style or practice of the firm that has a positive emotional effect. Broadcast this so that others who respond to it naturally come to the firm (as employees, clients, etc).

Business Design Career Advice

I’ve gotten this question from students and others entering the field a few times, and frankly still ponder it for my own purposes, so I’m going to lay down some thoughts on it here.

The question is:

I’m very passionate about pursuing design strategy and bridging the gap between developing engaging user experiences (product side) with the economics/marketing/strategy (business side).

The way the question is framed is telling. 99% of us still think of business and design as separate concepts. And all the Fast Company cover stories aren’t going to change managers’ attitudes for several years.

If we acknowledge these concepts have not been bridged already, we can expand this question to ask “In what kind of situation can I experience the sort of personal growth necessary to learn what I need” as well as “What kind of organizations will have greater success in bridging these concepts?”

To know where to work to experience personal fulfillment requires knowing what companies will have some success in this area. And that requires knowing what clients these companies are likely to have. Taking a client-centered approach I ask who is this client? Maybe it’s Steve Jobs, because although he already does it better than the rest of us he might want a staff that can do what he does. It’s not a manager at a conservative company, because he won’t experiment with new approaches. Probably the client is someone who has a need for a new approach, is open to learning on the job, but can’t do it herself.

So what sort of business designer will be more likely to service this client? Let’s go through the usual suspects:
Design firms: Have creativity credentials, but not necessarily the business rigor needed to help the client feel comfortable experimenting with her budget.
Management consultancies: Have business credentials, but aren’t positioned well to sell the more customer-focused, qualitative, creative approaches to the work.
21st Century firms: For lack of a better term, these are firms that are relatively new but started with this sort of challenge in mind. At MIG we attacked this problem head on, did some great work, but as a new, small firm faced a tough business development environment — if business and design are still two different concepts, selling them as one ain’t easy. Others like Jump Associates do great work and thrive, I suspect, because they emphasize a traditionally-valued competency, like customer research. Ditto for Katzenbach Partners with organizational development.

What does does that mean for the person wanting to learn and do business design? I’d say look for 1) a firm committed to developing this offering, and 2) a firm that emphasizes a competency that parallels your interests.

Meg Whitman on the Strategic Advantage of Design

Alex Kirtland blogged Whitman’s comments from eBay’s Q2 analyst conference call, where she said “making improvements to the user experience is one of our main strategic priorities.” See Alex’s post for the full quotes.

As I gather more examples I’m feeling more confident in my theory that strategic delivery points — gaining a sustainable competitive advantage in customer delivery — helps companies thrive on the Internet but offline as well, even in the absence of other strengths or compensating for other weaknesses.

Note to Self: Resist Accepting Millions of Dollars

Something to keep in mind just in case someone ever wants to throw several million my way…

I still don’t think you should raise as much as you can, for several reasons, but I’ll just highlight the most important. You will spend what you raise. If you raise $10 million, you will quickly ramp up to a burn rate of $800k a month, because the investors don’t want their money to sit in a bank account earning interest with 36 months of runway while you hire employees 2 and 3. The amount of money you raise sets you off on a course at a specific pace. Your board will want to know why you aren’t deploying capital. You will hire a marketing team because you can afford to hire a marketing team. You will hire a vp of sales before the product is ready because you can afford to hire a VP of sales. Companies that raise $10 million dollar A rounds don’t raise $5 million dollar B rounds, they raise $30 million dollar B rounds. If you have not accurately predicted how quickly you can grow the top line, you will quickly find that the cap table has gotten away from you, and you will have less flexibility to build the company the way you might like to if the market zigs when you thought it would zag. You want to give yourself the flexibility and room to react to market forces so that you can build the best company possible.

Launched!

The first SmartEx class was taught this week and went off without a hitch. While it’s a real working course from the students’ point of view, behind the scenes I’m using it as a prototype to quickly learn better ways of doing everything schools do. I was even planning to take a hit financially in the interest of testing, but enough people signed up to make it profitable too.

Incidentally, I love the local retail stores that proudly display the first cash they made, posting bills on the walls. Here’s my digital equivalent of that, a screen shot after the first students signed up…

First smartex signups

Back Home After Overlap 07

Overlap 07 event

I ventured up to “cottage country” north of Toronto this past weekend for Overlap 07, now in its second year of exploring the overlap of design and business in a small event format out in a beautiful, woodsy setting. Again, it was inspiring and useful, perhaps more so as the mix of design, business, media, and scientific perspectives was more even. Thanks go to the folks from Torch for making it a success.

There’s a lot to say about it. But one of the big topics of conversation was our growing discomfort with field’s myopia with innovation: discomfort with the word as well as the focus on the high-risk/high-return sort of innovation. We talked and heard research about organic growth and risk profiles that allowed companies to thrive in the long term with less risk and pretty good returns. The highlight IMHO was Jeanne Liedtke‘s overview of their research in this area and the profile of individuals who tend to succeed, which I summarized:

  • Personality of ambidextrous entrepreneurs is shaped by their work experience, usually changing roles often to build their repertoire.
  • They exert great influence in their environment.
  • Some are assholes, but some simply practice pragmatic leadership — setting goals, expecting performance, being tough but still loved as leaders (not just touch-feely counselors).
  • They have a true interest in customers instead of the usual market research.
  • They have a senior boss run cover for them as they ignore organizational constraints to pursue revenue.

Along the way she mentioned the work of Carol Dweck who I need to read up on.

There’s some Overlap07 photos on Flickr.

Is Design the New Management Consultancy? Not Exactly.

Some folks are asking this question. I’ve spent the past two years making the transition from designer to business consultant, jumping a lot of hurdles along the way. Here’s a little of what I learned:

  • Highlight opportunities instead of bitching. As designers, we walk around in the world and feel overly sensitive to everything that isn’t designed well. We watch customers struggle when using poorly designed products. There’s an inclination to highlight these faults to executives whom we think should know about these faults. And maybe they should, but mostly they need help seeing the big opportunities. It might sound like product faults and market opportunities are simply the flip side of the same coin, but it’s the difference between being perceived as a whiny designer and a valued business advisor.
  • Know your limits. When I hear a designer say, “We were doing the same kind of work McKinsey would do” I think “You really have no fucking idea what McKinsey does.” I used to work at BCG (in the IT dept) and I have yet to meet a designer with thinking, methods, and tools nearly as sophisticated as those consultants. Just consider the career path at these firms: they take the top students from the top business schools who in turn have taken the top undergrads, and so on. Then the consultants work in a demanding up-or-out environment where excellence is necessary. This culture breeds great execution much more effectively than the best design studio cultures.

    And I’ve beat the design thinking drum as much as anyone, but it’s naive to believe only designers think this way.

  • Invest in new hammers. Not every business problem is best solved by a product/service design or redesign. Sometimes an acquisition is the answer, or a divestiture, or hedging the financial markets. Business leaders have a lot of tools in their toolbox: marketing, sales, operations, finance, IT, HR, strategy, customer service, etc., and each of these in turn has a deep toolbox, with practitioners who all want more strategic influence. Understanding them — and knowing when product or service design is not the best approach — makes for a more well-rounded management consultant.
  • See the big picture. Sometimes design does have direct influence on business strategy. But describing that influence in terms of customer experience alone can lack the information that executives want to hear. Learning how to describe design’s benefits in financial and strategic language is key.
  • Be realistic about the influence of design. The current barrage of Fast Company and BusinessWeek stories on design can lull us into the impression that design is now king. In my experience, this isn’t anywhere near the case. Sure, there are great changes happening: I see more companies doing field research and more realization of the power of customer experience. But it’ll take years for the generations of business people to change their thinking and practices.
  • Know what you mean when you use the word strategy. Unfortunately, strategy has become a muddled word, the meaning even traditional management consultants don’t agree on (see Strategy Bites Back for an amusing look at the situation). But this is no excuse for us to practice muddled thinking. Here’s a simple way I’ve been clarifying it in conversation:
    • Product/service design: decide how to create something
    • Design strategy: decide what to create, with a perspective beyond the current cycle (e.g. 3-5 years)
    • Business strategy: decide what a business should do, with a perspective beyond the current cycle (e.g. 3-5 years)