…On Communicating Strategy for Design

Before getting into how to communicate design strategy, let’s briefly look at what “strategy” is. A good place to start is Michael Porter’s landmark article “What Is Strategy.” He writes:

Competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value. The essence of strategy is in the activities–choosing to perform activities differently or to perform different activities than rivals. Otherwise, a strategy is nothing more than a marketing slogan that will not withstand competition.

Trade-offs are critical, in his opinion, for defining and maintaining a unique strategic position. A good strategy is given by what a company explicitly chooses NOT to do.

But even the best textbook definitions aren’t good enough to understand strategy as a living, breathing thing within an organization. Strategy is a veritable safari–or so believe Henry Mintzberg and colleagues. In their book Strategy Safari, the authors point to 10 different schools of thought. (See a list on Wikipedia). It’s a jungle out there, both in theory and in practice around “strategy.”

Still, there are common aspects across these schools that make up a strategy. Mintzberg et al. refer to the five Ps of strategy:

  • Plan – Of course a strategy is a type of plan. But not all plans are strategic. A strategy is an intentional guide or course of action into the future, a path to get from here to there. This includes the following four aspects.
  • Pattern – Frequently, there’s a gap between the intended strategy and the realized strategy. Even when creating a forward-looking plan, reviewing patterns of the past is important to see where you’ve been and how you got there.
  • Position – Strategy is about situating an offering in a particular market. To be strategic, the plan must involve a different set of activities than rivals to give you a unique position.
  • Perspective – What is your fundamental way of doing business? McDonald’s and a fine restaurant both essentially do that same thing–serve food to customers–but from a very different perspective. Your point of view greatly shapes your strategy.
  • Ploy – Strategy is also seen as out-witting a competitor. Timing, acquisitions, and locking competitors out, for instance, may all be part of a strategic ploy.

Mintzberg et al. also write: “It turns out that strategy is one of those words that we inevitably define in one way yet often also use in another.” For sure, the term “strategy” is amorphous and often misused. For instance, some people consider the act of making decisions as strategy.

But not all decision making is strategy. In addition to showing trade-offs and the five P’s, a strategy should also reflect causality–why it is you’re going in a certain direction. A strategy could even be expressed in a series of IF-THEN statements: “If we focus on customer experience, then we will beat the competition for customer loyalty.” Plans without showing causality are not strategies–they’re just glorified to-do lists.

COMMUNICATING STRATEGY

Ultimately, strategy should bring clarity to an organization. But, as IDEO’s Tim Brown points out in a Fast Company article called “Strategy by Design,” the opposite is often true. It turns out that communicating strategy isn’t always done well:

It’s remarkable how often business strategy, the purpose of which is to direct action toward a desired outcome, leads to just the opposite: stasis and confusion. Strategy should bring clarity to an organization; it should be a signpost for showing people where you, as their leader, are taking them — and what they need to do to get there. But the tools executives traditionally use to communicate strategy — spreadsheets and PowerPoint decks — are woefully inadequate for the task. You have to be a supremely engaging storyteller if you rely only on words, and there aren’t enough of those people out there. What’s more, words are highly open to interpretation — words mean different things to different people, especially when they’re sitting in different parts of the organization. The result: In an effort to be relevant to a large, complicated company, strategy often gets mired in abstractions.

Of course to be able to communicate a strategy, you have to first formulate one. A study by David J. Collis and Michael G. Rukstad reported in their article “Can You Say What Your Strategy Is?” (Harvard Business Review, 2008) showed this isn’t always the case. They write:

It’s a dirty little secret: Most executives cannot articulate the objective, scope, and advantage of their business in a simple statement. If they can’t, neither can anyone else.

[…]

Leaders of firms are mystified when what they thought was a beautifully crafted strategy is never implemented. They assume that the initiatives described in the voluminous documentation that emerges from an annual budget or a strategic-planning process will ensure competitive success. They fail to appreciate the necessity of having a simple, clear, succinct strategy statement that everyone can internalize and use as a guiding light for making difficult choices.

The study also correlates the ability of leaders to formulate a strategy in 35 words or less to overall success. Companies without a clear strategy statement see frustrated and confused employees. A concisely formulated strategy brings an organization together. The authors write:

Think of a major business as a mound of 10,000 iron filings, each one representing an employee. If you scoop up that many filings and drop them onto a piece of paper, they’ll be pointing in every direction. It will be a big mess: 10,000 smart people working hard and making what they think are the right decisions for the company, but with the net result of confusion. Engineers in the R&D department are creating a product with “must have” features for which (as the marketing group could have told them) customers will not pay; the sales force is selling customers on quick turnaround times and customized offerings even though the manufacturing group has just invested in equipment designed for long production runs; and so on.

If you pass a magnet over those filings, what happens? They line up. Similarly, a well-understood statement of strategy aligns behavior within the business. It allows everyone in the organization to make individual choices that reinforce one another, rendering those 10,000 employees exponentially more effective.

A successful strategy cannot be limited to the inhabitants of top-floor corner offices. It must be communicated so that EVERYONE can both understand and benefit from it. And, as Tim Brown points out, this doesn’t mean simply pushing out a document or presentation once a year that no one can understand. Strategy documents, emails and communications must be usable by those that have to implement it. Stating the obvious? Maybe. But often that’s not what you find.

So what goes into a strategy communication in general? The Collis and Rukstad point to three key elements:

  1. An objective – What is the goal you’re aiming for? It’s not enough to just say “grow profitable” or “maximize shareholder value.” The more specific, the better.
  2. Scope – This defines the customers, offerings, location and vertical integration.
  3. Advantage – This is most critical part of a strategy. It answers the question, Why would customers buy our product or service over another? A strategy statement should clearly outline the unique customer value proposition.
These three points can be summarized in a strategy statement. An example of one looks like the following, taken from Edward Jones brokerage firm as report in the Collis and Rukstad study:
To grow to 17,000 financial advisers by 2012 [from about 10,000 today] by offering trusted and convenient face-to-face financial advice to conservative individual investors who delegate their financial decisions, through a national network of one-financial-adviser offices.
Don’t let its simplicity fool you: this statement is the result of a lot of work and negotiation with a range of stakeholders. Every word is carefully selected and carries a wealth of implications. Figure 1 shows a partial analysis of the language used (click to enlarge):
Figure 1: Example of a strategy statement and word-by-word analysis
(taken from Collis & Rukstad, Harvard Business Review, 2008)
This single statement serves as a guiding light for anyone in the company, providing focus and orientation. This strategy statement isn’t necessarily the only artifact used to communicate strategy, but it sums it all up. And in creating it, leaders must make choices about the targets and directions of the company.
In addition to a strategy statement, Collis and Rukstad recommend creating a few choice diagrams to illustrate the strategy. These are discussed below (see DESIGN STRATEGY).

NESTING STRATEGIES

The above discussion is a brief overview of strategy communication for the overall business. Nested within the business strategy are other strategies, such as unit strategies, team strategies and even personal strategies. Ideally, all are aligned with the overall company objectives.

One important such nested strategy is the product strategy. This is related to a business strategy but differs from it. Marty Cagan, partner and founder of the Silicon Valley Product Group, describes these differences in a post entitled “Business Strategy v. Product Strategy.” Marty has found confusion between the two:

Many companies confuse or blur the two, and the result is easy to spot. The senior executives want to focus on the business strategy, but they find they are forced to make decisions at a level far below where they’re comfortable or usually even interested, such as which specific products, projects and even features to invest in, and what the interdependencies are between these features and projects, and often what is on the actual page and how to resolve conflicts.

He explains the difference between business strategy and product strategy:

Business strategy is about identifying your business objectives and deciding where to invest to best achieve those objectives. For example, moving from a direct sales model (your own sales force selling directly to customers) to an online sales model (your customers buy from your site) is a business strategy. Deciding whether to charge for your services with subscriptions or transactions fees or whether you have an advertising-based revenue model is a business strategy. Deciding to move into an adjacent market is a business strategy.

Now, clearly there are some big product implications to each of these business strategies. But they are not one in the same. There are lots of ways to sell online, lots of ways to monetize value, and lots of ways to develop or acquire and integrate an adjacent offering. The product strategy speaks to how you hope to deliver on the business strategy.

DESIGN STRATEGY

Just as product strategy is a the child of the business strategy, so too is a design strategy nested within a product strategy (or at least alongside of it). Design strategy isn’t the act of designing, rather the application of design to help reach business objectives. In creating a design strategy we can assume the principles of creating a business strategy apply. We can talk about trade-offs in Porterian sense, for instance; or borrowing from Mintzberg a design strategy can have the five P’s.

This is reflected in Steve Baty’s definition of an experience strategy, which is related to design strategy. He writes in Johnny Holland magazine (See “What is an Experience Strategy?“):

An experience strategy is that collection of activities that an organization chooses to undertake to deliver a series of (positive, exceptional) interactions which, when taken together, constitute an (product or service) offering that is superior in some meaningful, hard-to-replicate way; that is unique, distinct & distinguishable from that available from a competitor.

This is indeed in line with what a “strategy” is in general.

It stands to reason that communicating a design strategy can also follow the advice of Collis and Rukstad. For one, you can start by write a design strategy statement in under 35 words, as they recommend. Of course this needs to be in line with the business strategy and product strategy. But a carefully defined design strategy should bring design activity and teams together.

Following Collis and Rukstad, design strategy defintion consists of these three elements:

  1. Design objectives
  2. Scope
  3. An advantage

1. DESIGN OBJECTIVES
Where do goals for design come from within an organization? They are nested within and derived from the company goals. This is why it’s so important for a business to state it’s strategy and goals: without them you can’t have a proper design strategy.

And that’s precisely what the designers at HP did: systematically align design goals with the company objectives. They reported their approach at the Design Management Europe 15 conference (May 2011) in Amsterdam. See the slides for “What Design Value model worked for HP? A Design Value Matrix” given by Debbie Mrazek (Design Practice Manager, Corporate Marketing, HP), Katherine Wakid (Senior Associate, Jump Associates) and Sam Lucente (Designer; Former Design Director, HP).

In a nutshell, they created a matrix. Along the one axis are high-level design targets that mirror the corporate strategy at HP. These were very broad things like “Design to Innovate.” Along the other axis are types of internal capabilities, such as processes, tools, and products. In each of the resulting squares in the grid they formulated an objective to achieve that design target. The design team could then work backwards from there to define all of the activities, resources and funding they’d need to achieve those design objectives. Figure 2 shows the high-level objectives in the HP design value matrix from their presentation:

Figure 2: Design value matrix for HP

This doesn’t mean the company has to address all of them at once. In fact, HP only selected a few at first. This was a strategic decision. And the resulting plan for achieving the selected objectives represents their design strategy.

2. SCOPE
Michael Porter suggests companies should use what he calls an “Activities System Map.” This diagram shows the cornerstones of strategic activities. Below is the example from his article “What Is Strategy?” for Southwest Airlines:

Figure 3: Activity System Map for Southwest Airlines
(from Michael Porter, “What Is Strategy?”, HBR, 1996).

The four darker circles represent the foundations of the overall business model at Southwest. All of the other activities support those points of the strategy. In a succinct overview, employees get a sense of what’s involved in the strategy and the relationship between its parts.

Below is an interesting example of an early activity system map created in 1957 by the Walt Disney corporation. This includes information about the relationship and direction between elements. It shows causality.

Figure 4: Activity System Map for Disney, ca. 1957.

It would be interesting to map design activity in an organization in the same way. I’ve never seen one though, so if you have seen something similar, let me know.

3. ADVANTAGE
What’s going to make your designs unique and better than others? Define the value proposition of design in your organization as part of your strategy.

One tool to make the advantage visible is a strategy canvas. A strategy canvas is a tool that came out of the “Blue Oceans” approach to strategy. The graph is easy to grasp: on one axis list the primary dimensions along which you compete in a marketplace; on the other rank how well you and a few others perform on each dimension.

Figure 5 shows an example of a strategy canvas for Southwest Airlines. You can see where Southwest is unique compared to other airlines as well as what they are trading off (namely, meals, lounges, seat selections and hubs).

Figure 5: Strategy canvas for Southwest Airlines

Notice Southwest also is competing along different dimensions than other airlines. They even compete with a car. This is at the heart of a blue oceans strategy, which advises: “don’t compete directly with rivals, make them irrelevant.” Southwest found a set of unique aspects to offer that rivals find hard to replicate.

There are other examples of strategy canvas on the web. (Try an image search for “strategy canvas”). The hard part is indentifying and isolating the key dimensions along which your competing. It’s not as easy as it looks. A word of caution: don’t compare more than 3 offerings or services at once–otherwise the graph becomes unreadable.

Here’s another example from the above-mentioned article “Can You Say What Your Strategy Is?” (Collis & Rukstad, Harvard Business Review, 2008). This one is for Wal Mart:

Strategy canvas for Wal Mart

I show this strategy canvas in my workshops and ask the question: “If you were designing the homepage for Wal Mart, what would you do differently than for the homepage for a mom-and-pop store (and vice-versa)?” The answers come immediately:”I’d highlight deals and low prices in the design of the homepage for Wal Mart.” From this graph it’s obvious what to do.

And that’s the point: a clearly communicated strategy makes subordinate decisions obvious. It gives reason to all of the activities needed to achieve the objective.

A design strategy can also make use of a strategy canvas. But note that when it comes to design “competitors” may not be other companies in a marketplace the business competes with. Instead, a “design competitor” may be another medium or things that compete for users’ attention. For example, online information services may compete with print in terms of readability or ease of making annotations (and other factors that continue to draw people to print). Or, online “meetings” with others may compete with face-to-face interaction or live events.

What’s more, when forming a position for a design team in a company you may have two separate strategy canvases: one for customer-facing design aspects of a product or service, and one for the internal design department and its position within the company.

CONCLUSION

A design strategy is nested within higher-order strategies of a company. It must be aligned with them. The formulation of the design strategy should include the same key elements as a business strategy. The most important to include in my opinion are:

  • Position: how design is positioned uniquely against competitors and other competing forces.
  • Perspective: some characterization of your overall design approach. For instance, are you going for a minimalistic design, good-enough, design, inductive design or some other idiom?
  • Trade-offs: in order to create a unique position and perspective, you must give something up.
Once formed, communicate the design strategy upward and downward in an organization. Three tools to use are:
  • An explicit design strategy statement of 35 words or less. This should encapsulate the objectives, as well as scope and advance to the degree possible.
  • An activity system map to show which unique set of activities you’ll undertake and their relationship with one another. This is a more detailed explanation of scope.
  • A strategy canvas (or two) to show design’s advantage and unique value–both to the organization and to customers.
Using diagrams will have a more direct impact on the audience they’re intended for. Don’t underestimate the power for visual communication, even if you have a well-formed strategy statement.
Formulate a sound design strategy and then communicate it. Otherwise, you may find yourself living in a Dilbert cartoon:

Dilbert.com

About Jim Kalbach

Head of Customer Success at MURAL

8 comments

  1. This is an outstanding article, James. As a design strategist (or someone who does design strategy as a part of a much larger set of tasks) I took keen interest in all the information you have curated here. I cannot remember the last time I spent an hour digesting something on the Web.

    Really good and important read. I have sent it to my circle of smart friends. Thanks for putting this together.

    • James Kalbach

      Thanks for the comment Steven. I’d be interested to hear more about your own experiences with design strategy.

      James

  2. Pingback: Обзор свежих материалов, июнь 2011 « Юрий Ветров. Проектирование интерфейсов и управление проектами

  3. Wieke Asselbergs

    Great article. One question: isn’t the activities system map from Ikea (instead of Southwest)?

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