SVA_SIPSD_Class1

Strategic Innovation in Product and Service DesignSchool of Visual Arts

MFA Interaction Design

Fall 2009

Class 1: Overview and Introduction

14 September 2009

Develop your understanding of strategy, innovation, and strategic decision-making generally

Investigate the specifics of strategy for designing interactive products and services

Train you to interrogate a larger set of considerations in developing design concepts, including economics, competition and industry dynamics, portfolio fit, finance, and politics

Challenge you to create rigorous and convincing arguments for why your design concepts are worth investing in (by people who may not care about “good design” per se)

Course Objectives

By default, grades are given as pass/fail

If you’d like to receive a letter grade in your evaluation file, you must make a written request to me now later than the start of the 3rd class (September 28, 2009)

Grades based on class participation, four shorter assignments, and a final project (33.33% each)

You will be required to complete self assessments and peer assessments as part of each exercise and the final project, which will be considered in determining your final grade

Grading

Contribution to class discussions, assignments, and exercises

Quality, timeliness, and completeness of your assignments

Quality and timeliness of your final project

Grading criteria

You will be to class on time, you will have prepared for class by completing the readings for that week, and you will participate actively during class

You will take responsibility for your own learning. I’m here to challenge and guide you, but you’ll get out whatever you put in

You will demonstrate an interest in helping your fellow students learn

You will commit to try things you may not have done before, and take some risks that you may be “wrong”

You will complete assignments and projects on time and to the best of your ability

You will contact me as far in advance as possible to discuss any questions or issues that affect your ability to meet any of these expectations

Expectations (mine)

Expectations (yours)From class discussion…

We will learn tools for developing strategies…. Including research to understand behaviors

We will learn how to distinguish between “real” answers from research and others

Learn how to communicate why design and design choices matter

How to be the person in an organization who holds the stake in both creative and business factors

How to communicate with business people

Dealing with constraints…when it has to be global, or within a certain budget, etc

How to communicate that design strategy is an important step in the overall process….both to clients and internally

Intro to Strategy

A definition of a firm’s competitive domain What business(es) are we in and what do we do?

A means of establishing an organization’s purpose in terms of its long-term objectivesWhy is it important to do what we do the way that we do?

A coherent, unifying, and integrative set of decisions designed to achieve a favorable outcomeHow must the things we do fit together in order to be uniquely successful in doing what we do?

Responses to external opportunities as a means of creating competitive advantageWhat’s our posture towards the world, what motivates us to act or not act?

What is strategy?

Planning, necessarily

Thinking big thoughts

The opposite of tactics

What only the more senior people do

Opposed to design

What strategy isn’t

Strategy = Why

All companies need a strategy so the employees will know what they don't do.

Dogbert’s reason

“The essence of strategy is choosing what not to do. There are choices to be made. Not all

good things go together. If you’re not saying no, you’re not doing

strategy. If you’re not saying no, you’re not acting strategically.”

Michael Porter

Functional specifications documents are “yes documents.” They’re political. They’re all about getting to “yes” and we think the goal up front should be getting to “no.”

Functional specs lead to scope creep from the very start. There’s very little cost in saying “yeah, ok, let’s add that,” to a Word document.

Strategy is mostly about making decisions about difficult choices.

Almost always, this means many people are involved in the decision

Almost always, this means there is no obvious “right” answer or standard to measure against

Therefore, doing strategy work usually requires the creation of shared understanding and rationale among many people who usually have diverse ideas, needs, interests, opinions, and standards

And this usually cannot be accomplished by deferring to a single “decider” unless that person can articulate a clear and consistent rationale and set of conditions for the decision

Why strategy is hard

I cannot understand nor

do I want to understand!

I want to believe!

Mauvaise foi

Strategy in practice: think systemically, but pick your spots

So how do you choose, then?

Choosing where to compete

Levels of strategy

Corporate strategy: choices about the scope of the company, which businesses & industries to be in

Business strategy: how you compete in a given market, usually through the products and services you offer

Functional strategy: operating activities at the department level (eg, marketing, product development, etc)

Great strategies unify these levels.

Example

Corporate strategy: Which types of goods won’t we sell? Which customer sets will we ignore? How will we serve each target? Which manufacturers will we carry?

Business strategy: What will draw people into the store? How should we price our products?

Functional strategy: How will we train employees? How will we measure performance? What projects won’t we do?

Finding a Blue Ocean“Red oceans represent all the industries in existence today. This is known market space. Blue oceans denote all the industries not in existence today. This is unknown market space…

[To] win in the future, companies must stop competing with each other. The only way to beat the competition is to stop trying to beat the competition.”

You mean I don’t have to say no?

Winning through scale of operation/volume Ability to win on price limits entrants

Can cut prices further to strong buyers

Lowest price means few attractive substitutes

Rivalry defined by the race to the bottom

Cost leadership as a strategy

Getting superior margins by getting customers to pay a premium Customer loyalty is the key to keeping out new entrants

Buyer power is limited because uniqueness of products = lack of alternatives

Suppliers’ power limited by need to access customers; pricing can be passed on to customers if need be

Substitutes not readily available because of uniqueness of product

Brands capture differentiation and protect against rivals

Differentiation as a strategy

Concentrating on a niche market or customer segment Develop better understanding of the market/segment, build channels to serve uniquely

Lock up the segment to keep new entrants out

Buyer power limited by lack of focused alternatives

Rivals can’t match the highly tailored product/service

Focus as a strategy

Business Business Business Business

Core Product

Capability Capability Capability

Product ProductProduct

ProductProduct

ProductProduct ProductProduct ProductProduct

Core competencies

local communications info services desktop

Search

algorithm engineering

beta rollout interface design

local search maps

GmailGroups

ChatNews

Toolbar Browser?Picasa DesktopFinance

Example:

We make our buildings, and thereafter they

make us.

We make our buildings products, and thereafter they

make us.