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Getting Good Designs Built
 Victor Lombardi
 June 26, 2007




Sponsored by




http://www.ixda.org/
“The Promising Syllabus”

I promise to help you do something you probably couldn’t
do before, but…

We all need to take responsibility for our own learning

1. Explain what you want to know
2. Ask clarifying questions
3. Tell us about your experience

Agreed?

Great, let’s get started…
When design is the strategy

  quot;[the iPhone is pushing operators] to meet its design
  vision rather than the other way around and refuses to be
  tied to requirements that befuddle the UI and lead to an
  incoherent user experience. Stan Sigman (CEO of
  Cingular) revealed that Cingular had entered into a
  contractual agreement with Apple two years ago without
  ever seeing the product, based purely on the strength of
  the design vision.”
  http://visionmobile.com/blog/2007/01/iphone-delivers-a-genuinely-disruptive-ui/
For the rest of us…

  quot;I understand that we must compromise with the larger
  forces of business that buffet us, but that doesn't mean
  we have to become quislings. Just because they force ill-
  chosen compromises upon us does not mean that we are
  required to justify them as being necessary or even
  adequate.quot;
  – Alan Cooper, IxDA email discussion, not too long ago
My framework…

                            Discover the   Align your
Know           Understand
                            company’s      customer need
business       your
                            competitive    with company
fundamentals   context
                            advantage      priorities
Discover the   Align your
Know               Understand
                                company’s      customer need
business           your
                                competitive    with company
fundamentals       context
                                advantage      priorities

Concepts and
vocabulary

Financial basics

Scenarios
Meet Them More Than Halfway

“The better strategy for
designers would be to regard
the current effort to educate
the CEO about how designers
see the world as a lost cause,
and instead try to educate
themselves on how the CEO
sees the world.”
- Richard Farson, “Designers
as Leaders”
http://www.wbsi.org/farson/com_design_leaders.htm
Financials + Scenarios

Expected Return
Ignoring fees to calculate the expected return of loan interest and equity
                                                                                                                Outcomes
                                                                                                           Replay loan, no Replay loan, 50% Replay loan, 100% of    Replay loan,
                                         Fail after 3 years                  Fail after 4 years            equity          of equity        equity                  150% of equity

Percentage of loan repayment                                           60%                     80%                   100%              100%                  100%              100%
Average Investment                        $                      8,333,333 $             8,333,333 $            8,333,333 $       8,333,333 $           8,333,333 $       8,333,333

Loan repaid                               $                      5,000,000 $             6,666,667 $            8,333,333 $       8,333,333 $           8,333,333 $       8,333,333
Interest gained                           $                        990,000 $             1,320,000 $            1,650,000 $       1,650,000 $           1,650,000 $       1,650,000
Probability of outcome                                                  2%                      3%                     5%               15%                   65%               10%
Expected value of loan repayment          $                        119,800   $             239,600         $     499,167      $   1,497,500   $         6,489,167   $      998,333


Equity multiple                                                           0                            0                  0                 2                    4                 6
Potential equity                          $                             -   $                     -        $         -        $   16,666,667 $         33,333,333 $      50,000,000
Probability of outcome                                                   2%                           3%                 5%              15%                  65%               10%
Expected value of equity                  $                             -    $                    -        $         -        $   2,500,000   $        21,666,667   $     5,000,000


Expected value of loan and equity         $                        119,800   $             239,600         $     499,167      $   3,997,500   $        28,155,833   $     5,998,333

Expected return                           $                     39,010,233




    • Numbers can be sketches and prototypes
    • Financial models are based on assumptions about the
      future of the product
    • Scenarios can be written in Excel
Case Study of Corporate Strategy: Microsoft

  In 2005 an internal memo by Ray Ozzie, Microsoft CTO,
  was published publicly…
Summary of Ozzie’s Recommendation: Scenarios

1. Work with division presidents to assign “scenario
   owners”

2. Work with these individuals “to concretely map out
   scenarios and pragmatically assess changes needed in
   product and go-to-market plans related to services and
   service-based scenarios” both short- and long-term

3. “All Business Groups …develop their plans to embrace
   this mission and create new service offerings that deliver
   value …and… utilize the platform capabilities…”

4. A blog
Discover the   Align your
Know               Understand
                                   company’s      customer need
business           your
                                   competitive    with company
fundamentals       context
                                   advantage      priorities

Concepts and       Interpersonal
vocabulary         relationships

Financial basics   Dialog style

Scenarios
Abductive Reasoning

  When faced with:                                        Try:

  Negotiation                                             Collaboration

  Jump to obvious options                                 Generate new options, use a
                                                          process to narrow them down, then
                                                          decide
  Constraints                                             Question the constraints, and
                                                          generate options within the
                                                          constraints

 quot;We can't afford the new widget. Do you want to use existing widget A
 or B?quot;
 “What else do we have? How else can we use it? How else can we
 get the money for the new widget? Can the new widget do something
 additional to help the people making the financial decision? Let’s
 brainstorm more options…”

 For more on abductive thinking see Liedtke, http://www.rotman.utoronto.ca/pdf/rotman_mgmt_winter03.pdf
The Neuroscience of Leadership

    David Rock and Jeffrey Schwartz

•   Change is pain Organizational change is unexpectedly difficult
    because it provokes sensations of physiological discomfort.
•   Focus is power The act of paying attention creates chemical and
    physical changes in the brain.
•   Expectation shapes reality People’s preconceptions have a
    significant impact on what they perceive.


  So…
• Focus people on solutions instead of problems
• Let them generate their own insights
• Keep them focused on their insights

    http://www.strategy-business.com/press/article/06207?pg=all
Discover the     Align your
Know               Understand
                                   company’s        customer need
business           your
                                   competitive      with company
fundamentals       context
                                   advantage        priorities

Concepts and                       At each level:
                   Interpersonal
vocabulary         relationships
                                   Corporate
Financial basics   Dialog style
                                   Business unit
Scenarios
                                   Business model

                                   Product Line

                                   Product

                                   Operations
Example: Acme Publishing Company

Strategy:
“Change mix of business to keep up with evolving
consumers and advertisers; become more brand-centric
and expand market-leading brands; innovatively attract new
customers; and explore new revenue opportunities through
cross-selling and multi-platform sales.”

Implications for the designer:
Talk about new design team hires in terms of how it will
benefit marketing
Try to introduce features that also become ‘marketing
features’, e.g. Wow/viral features
Many paths to success…




                    •Coke
                                                             •Apple
                                   •General Motors
Customer Focus




                              •Time Inc.
                                                                 •Alessi
                 •AIG
                        Role that design plays in offering
Product Level Focus




                    •Kodiac
                                                              •Corvette
Customer Focus




                                       •Silverado


                 •Aveo
                         Role that design plays in offering
The Leverage School of Strategy…




            +                 =
Evolving Strategy

Google
  Google 1.0 search engine
  Google 2.0 sold its search capacity to AOL/Netscape,
  Yahoo…
  Google 3.0 sold simple text ads linked to search results
  Google 4.0 inserted relevant ads into any and all Web
  content
  Google 5.0 is an innovation factory that produces a
  torrent of new Web-based services, including Gmail,
  Google Desktop, and Google Base

  Gary Hamel, “Management à la Google”
  http://tinyurl.com/o4w7f
Buying strategic options…
Discover the     Align your
Know               Understand
                                   company’s        customer need
business           your
                                   competitive      with company
fundamentals       context
                                   advantage        priorities

Concepts and       Interpersonal   At each level:
                                                    Align with short-term
vocabulary         relationships                    priorities
                                   Corporate
Financial basics   Dialog style                     Align with strategy
                                   Business unit
Scenarios                                           Develop an
                                   Business model   approach for
                                                    building your
                                   Operations       capabilities
                                                    (e.g. bootstrapping)
A little about business strategy, and an exercise…
Business Strategy in One Slide: Porter’s Generic Strategies

  “Strategic management is the process of specifying an organization's objectives,
  developing policies and plans to achieve these objectives, and allocating resources so
  as to implement the plans. It is the highest level of managerial activity, usually
  performed by the company's Chief Executive Officer (CEO) and executive team. It
  provides overall direction to the whole enterprise. An organization’s strategy must be
  appropriate for its resources, circumstances, and objectives. ”


Porter’s Generic Strategies:
• Cost Leadership: sell at lower prices, usually by lower
  costs or by selling in volume

• Niche: focus on one audience type and satisfy their
  particular wants or needs

• Differentiation: offer a perceivably different brand,
  product, or service
                         http://www.quickmba.com/strategy/generic.shtml
Cost Leadership
Niche
Differentiation
Which is the Internet Best For?




Price/Cost          Niche         Differentiation
Generic Strategies on the Internet




Cost Leadership              Niche   Differentiation
Cost Leadership + Differentiation: Blue Oceans

• quot;Blue oceansquot; are untapped and uncontested markets.
  Blue ocean offerings cross conventional market
  segmentation while simultaneously achieving lower
  costs/price.




      http://business-model-design.blogspot.com/2007/01/nintendos-blue-ocean-strategy-wii.html
Strategy Canvas: Wines




                     http://tinyurl.com/yp2fzd
Blue Ocean Exercise: Online Diet & Fitness Programs

         High            Weight
                        Watchers




      Offering
                          RealAge


                       Daily Plate


                                     FitDay
          Low

                          Meal       Fitness   Tracking/
                                                           Style   Price   Community Offline
                          Plan        Plan     Reporting



Invent a blue ocean business concept that will offer something radically different and cost less than
competitors. Add additional criteria to this graph if you like.
What is the name of the product or service?
How is it better for customers?
How does that way of serving customers also help save money?

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Getting Good Designs Built

  • 1. http://smartexperience.org/ Getting Good Designs Built Victor Lombardi June 26, 2007 Sponsored by http://www.ixda.org/
  • 2. “The Promising Syllabus” I promise to help you do something you probably couldn’t do before, but… We all need to take responsibility for our own learning 1. Explain what you want to know 2. Ask clarifying questions 3. Tell us about your experience Agreed? Great, let’s get started…
  • 3. When design is the strategy quot;[the iPhone is pushing operators] to meet its design vision rather than the other way around and refuses to be tied to requirements that befuddle the UI and lead to an incoherent user experience. Stan Sigman (CEO of Cingular) revealed that Cingular had entered into a contractual agreement with Apple two years ago without ever seeing the product, based purely on the strength of the design vision.” http://visionmobile.com/blog/2007/01/iphone-delivers-a-genuinely-disruptive-ui/
  • 4. For the rest of us… quot;I understand that we must compromise with the larger forces of business that buffet us, but that doesn't mean we have to become quislings. Just because they force ill- chosen compromises upon us does not mean that we are required to justify them as being necessary or even adequate.quot; – Alan Cooper, IxDA email discussion, not too long ago
  • 5. My framework… Discover the Align your Know Understand company’s customer need business your competitive with company fundamentals context advantage priorities
  • 6. Discover the Align your Know Understand company’s customer need business your competitive with company fundamentals context advantage priorities Concepts and vocabulary Financial basics Scenarios
  • 7. Meet Them More Than Halfway “The better strategy for designers would be to regard the current effort to educate the CEO about how designers see the world as a lost cause, and instead try to educate themselves on how the CEO sees the world.” - Richard Farson, “Designers as Leaders” http://www.wbsi.org/farson/com_design_leaders.htm
  • 8. Financials + Scenarios Expected Return Ignoring fees to calculate the expected return of loan interest and equity Outcomes Replay loan, no Replay loan, 50% Replay loan, 100% of Replay loan, Fail after 3 years Fail after 4 years equity of equity equity 150% of equity Percentage of loan repayment 60% 80% 100% 100% 100% 100% Average Investment $ 8,333,333 $ 8,333,333 $ 8,333,333 $ 8,333,333 $ 8,333,333 $ 8,333,333 Loan repaid $ 5,000,000 $ 6,666,667 $ 8,333,333 $ 8,333,333 $ 8,333,333 $ 8,333,333 Interest gained $ 990,000 $ 1,320,000 $ 1,650,000 $ 1,650,000 $ 1,650,000 $ 1,650,000 Probability of outcome 2% 3% 5% 15% 65% 10% Expected value of loan repayment $ 119,800 $ 239,600 $ 499,167 $ 1,497,500 $ 6,489,167 $ 998,333 Equity multiple 0 0 0 2 4 6 Potential equity $ - $ - $ - $ 16,666,667 $ 33,333,333 $ 50,000,000 Probability of outcome 2% 3% 5% 15% 65% 10% Expected value of equity $ - $ - $ - $ 2,500,000 $ 21,666,667 $ 5,000,000 Expected value of loan and equity $ 119,800 $ 239,600 $ 499,167 $ 3,997,500 $ 28,155,833 $ 5,998,333 Expected return $ 39,010,233 • Numbers can be sketches and prototypes • Financial models are based on assumptions about the future of the product • Scenarios can be written in Excel
  • 9. Case Study of Corporate Strategy: Microsoft In 2005 an internal memo by Ray Ozzie, Microsoft CTO, was published publicly…
  • 10. Summary of Ozzie’s Recommendation: Scenarios 1. Work with division presidents to assign “scenario owners” 2. Work with these individuals “to concretely map out scenarios and pragmatically assess changes needed in product and go-to-market plans related to services and service-based scenarios” both short- and long-term 3. “All Business Groups …develop their plans to embrace this mission and create new service offerings that deliver value …and… utilize the platform capabilities…” 4. A blog
  • 11. Discover the Align your Know Understand company’s customer need business your competitive with company fundamentals context advantage priorities Concepts and Interpersonal vocabulary relationships Financial basics Dialog style Scenarios
  • 12. Abductive Reasoning When faced with: Try: Negotiation Collaboration Jump to obvious options Generate new options, use a process to narrow them down, then decide Constraints Question the constraints, and generate options within the constraints quot;We can't afford the new widget. Do you want to use existing widget A or B?quot; “What else do we have? How else can we use it? How else can we get the money for the new widget? Can the new widget do something additional to help the people making the financial decision? Let’s brainstorm more options…” For more on abductive thinking see Liedtke, http://www.rotman.utoronto.ca/pdf/rotman_mgmt_winter03.pdf
  • 13. The Neuroscience of Leadership David Rock and Jeffrey Schwartz • Change is pain Organizational change is unexpectedly difficult because it provokes sensations of physiological discomfort. • Focus is power The act of paying attention creates chemical and physical changes in the brain. • Expectation shapes reality People’s preconceptions have a significant impact on what they perceive. So… • Focus people on solutions instead of problems • Let them generate their own insights • Keep them focused on their insights http://www.strategy-business.com/press/article/06207?pg=all
  • 14. Discover the Align your Know Understand company’s customer need business your competitive with company fundamentals context advantage priorities Concepts and At each level: Interpersonal vocabulary relationships Corporate Financial basics Dialog style Business unit Scenarios Business model Product Line Product Operations
  • 15. Example: Acme Publishing Company Strategy: “Change mix of business to keep up with evolving consumers and advertisers; become more brand-centric and expand market-leading brands; innovatively attract new customers; and explore new revenue opportunities through cross-selling and multi-platform sales.” Implications for the designer: Talk about new design team hires in terms of how it will benefit marketing Try to introduce features that also become ‘marketing features’, e.g. Wow/viral features
  • 16. Many paths to success… •Coke •Apple •General Motors Customer Focus •Time Inc. •Alessi •AIG Role that design plays in offering
  • 17. Product Level Focus •Kodiac •Corvette Customer Focus •Silverado •Aveo Role that design plays in offering
  • 18. The Leverage School of Strategy… + =
  • 19. Evolving Strategy Google Google 1.0 search engine Google 2.0 sold its search capacity to AOL/Netscape, Yahoo… Google 3.0 sold simple text ads linked to search results Google 4.0 inserted relevant ads into any and all Web content Google 5.0 is an innovation factory that produces a torrent of new Web-based services, including Gmail, Google Desktop, and Google Base Gary Hamel, “Management à la Google” http://tinyurl.com/o4w7f
  • 21. Discover the Align your Know Understand company’s customer need business your competitive with company fundamentals context advantage priorities Concepts and Interpersonal At each level: Align with short-term vocabulary relationships priorities Corporate Financial basics Dialog style Align with strategy Business unit Scenarios Develop an Business model approach for building your Operations capabilities (e.g. bootstrapping)
  • 22. A little about business strategy, and an exercise…
  • 23. Business Strategy in One Slide: Porter’s Generic Strategies “Strategic management is the process of specifying an organization's objectives, developing policies and plans to achieve these objectives, and allocating resources so as to implement the plans. It is the highest level of managerial activity, usually performed by the company's Chief Executive Officer (CEO) and executive team. It provides overall direction to the whole enterprise. An organization’s strategy must be appropriate for its resources, circumstances, and objectives. ” Porter’s Generic Strategies: • Cost Leadership: sell at lower prices, usually by lower costs or by selling in volume • Niche: focus on one audience type and satisfy their particular wants or needs • Differentiation: offer a perceivably different brand, product, or service http://www.quickmba.com/strategy/generic.shtml
  • 25. Niche
  • 27. Which is the Internet Best For? Price/Cost Niche Differentiation
  • 28. Generic Strategies on the Internet Cost Leadership Niche Differentiation
  • 29. Cost Leadership + Differentiation: Blue Oceans • quot;Blue oceansquot; are untapped and uncontested markets. Blue ocean offerings cross conventional market segmentation while simultaneously achieving lower costs/price. http://business-model-design.blogspot.com/2007/01/nintendos-blue-ocean-strategy-wii.html
  • 30. Strategy Canvas: Wines http://tinyurl.com/yp2fzd
  • 31. Blue Ocean Exercise: Online Diet & Fitness Programs High Weight Watchers Offering RealAge Daily Plate FitDay Low Meal Fitness Tracking/ Style Price Community Offline Plan Plan Reporting Invent a blue ocean business concept that will offer something radically different and cost less than competitors. Add additional criteria to this graph if you like. What is the name of the product or service? How is it better for customers? How does that way of serving customers also help save money?