managing up
DESCRIPTION
TRANSCRIPT
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Management Innovation Group
Managing Up Business Strategy and Information Architecture
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The Management Innovation Group (MIG) is a research group and strategic consultancy. We are dedicated to improving our clients’ ability to identify, plan for, and adapt to strategic change by enabling them to more effectively collaborate across functional units, understand and engage their customers, and
envision the future. At the heart of our approach is a belief that design offers a rich set of tools useful not just for creating physical products, but as a means for clarifying intentions, understanding options, organizing processes, and motivating action.
About our firm
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Who do you want to be when you grow UP?
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CEO?
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“We will never make progress as long we are resources and not leaders. Resources don't discuss the business plan, the marketing strategy. Resources don't help decide what the product or service will be in the first place. Resources are called in when the leaders think they are needed. They do their job and then get out of the way.”
- Don Norman
A quote
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“The core competencies of design facilitate specific and tangible ways of engaging with problems. These competencies bring new value to the way in which business teams work. To foster the broad application of design competence, designers will need to feel confident in leaving the designer label behind and accepting the label of business manager, strategist, or vice president. Of course, this is no big leap for the best in any discipline; one will find engineers, accountants, and human resources professionals at the helms of organizations around the world. However, at that point, they are simply called leaders.
- Chris Conley, “Leveraging Design’s Core Competencies”
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Why bother?
• Problems– They don’t understand what I do– We get called in too late– I don’t want to be a colorist
• Desires– I want real influence– I want to change how business is done– I want to get promoted (and don’t want to get fired)
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What does it take to be a leader?
• Business skills
• People skills
• Will
• Lucky Accidents
We’ll help you with the first two.
On Will…
The most required aspects necessary to succeed as a CEO are: on, tenacity; two, perseverance; three, the ability to come back on your own behalf; four, the conviction you know you are right no matter what; and five, the commitment to make things happen
Leonard AbramsonCEO and President
U.S. Healthcare
From “How to think like a CEO” by D.A. Benton
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Speak the language
Or quit saying “people would take me seriously if I could prove my ROI”
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Everything You Need to Know About ROI
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The Dilemma of “Value”
Cost Justifying Usability
• Questionable Value: CJU based on productivity calculations (e.g. time on task); does this deliver measurable value?
• Questionable Indicators: A web site can be entirely usable and still not deliver business value
Traditional ROI analysis
ROI = (returns – expenses) / total costs
• Used to assign a dollar value to a capital expenditure based on expected returns over its useful life
• Capital expenditures are hard assets … things like equipment, stores, IT, etc.
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ROIReturn
Investment
This formula is NOT on the test: NPV =Σ((Cash flow in t)/(1+i)t )
Everything You Need to Know About ROI (in one slide)
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User Experience Return on Investment
All your CEO cares about …
Returns (measurable changes)– Increased sales
– Reduced costs
– Achieving the mission (for a non-profit)
Investments (cost of making change happen)– Keeping headcount low
– Using resources more effectively
– Only bringing in consultants if necessary
“ROI” is just a fancy estimate accountants use to make decisions
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The Importance of User Behavior
User Needs:• UCD process - research, intuition, high-level vision • Design affects what the tool does -> user tasks• But we don’t control user needs, right?
How do we measure the effectiveness of the UCD process?
User Behavior:• Valuation process - data mining, project finance, accountability• Business measures how well the tool does it -> metrics• This is the litmus test for what the business can control
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Why Traditional ROI is a Red Herring• ROI is a method for comparing BIG investments• Small incremental user experience improvements can be just as
valuable as “big” projects• “Useful life” doesn’t apply to user experience• Website is not a tangible asset, like equipment or property• Investment is fixed in the short term (usually by headcount)
How Valuation Methodology is Helpful
• Reconciling user needs and business goals • Prioritizing possible user experience projects• Assessing baseline financial performance of your website• Determining accountability / Evangelizing success
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About Business
Things you should know to have a conversation
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The Five Questions
• What does it means to be responsible for profit & loss?
• What is the difference between expense and investment?
• What are the key metrics for your business unit?
• What market are you in?• What is your unique value proposition?
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Profit and Loss
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Investment vs. expense
Location Location Location
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The MarketStock
Location
Advertising
Differentiation
Diversifying
Pricing
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Got Metrics?
Do you know what matters?
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Web Experience MetricsDevelopment: Reduce
Costs
• Development Costs
• Development Time
• Maintenance Costs
• Redesign Costs
Sales: Increase Revenue
• Transactions/purchases
• Product sales
• Traffic, audience size
• Customer retention
• Appeal
• Market Share
Use: Improve Effectiveness
• Success rate/user error
• Efficiency/productivity
• User Satisfaction
• Job Satisfaction
• Ease of use
• Ease of learning
• Trust
• Support costs
• Training/documentation
Return on Investment for Usable User-Interface Design, Aaron Marcus
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User Experience Also Influences…
Web Metrics• Total page views• Page views per session• Click paths• Unique visitors• Return visitors• Conversion rate (sales,
reservations, applications, etc.)
Business Metrics• Leads• Sales• Retention• Length of sales cycle• Productivity• Development costs• Customer Satisfaction
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What market are you in?
Media
•Advertising
•Subscription
•Single purchase
Commerce
•Profit margin
•Customer retention
Broker
•Transactions
•Users
•Liquidity
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Direct IA Metrics
?
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1. Convert browsers to customers and increase client base
Prospective customer (i.e. Browser)
2. Increase retention rate
3. Deepen existing customer relationships
4. Increase productivity inside firm
Existing Customer
Existing Customer
Employee inside of firm
Relationship-establishing activity
Relationship-retaining behavior
Relationship-deepening activity
Creation of usable data about profitable and cost-efficient transactions
Researching firm, requesting information and follow-up
Increasing frequency of engagement, level of membership
Increase number of points of contact with customer
Action based on understanding and analysis of transaction and data usage
Business Goals User Online Experience Must Drive…
Desired User Behaviors…
Karen Donoghue’s Framework from Built for Use
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Parts of Design (arguably)
Identity
User research
Interface design
IA
Interaction Design
Graphic design
design
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Parts of Business (arguably)
InnovationManagement
Strategy
HR Finance
Accounting
Operations
Marketing
Business
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Clement says…
IPA
rtifa
cts
Strategy
Design
ROIProducts
Managing
EnvisioningHow
What
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Moving value
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The Origins of Strategy
“That general is skillful in attack whose opponent does not know what to defend; and he is skillful in defense whose opponent does not know what to attack.” circa 500 BC
-Sun Tzu, The Art of War
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Strategy
“Strategy is the creation of a unique and valuable positioning, involving a different set of activities.”
Strategy is in making tradeoffs in competing. The essence of strategy is deciding what not to do.”
Strategy is making fit among a companies’ activities”
Michael Porter “What is Strategy”
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A Strategy isa unified, comprehensive and integrated plan designed to ensure that the basic objectives of the organization are achieved
Strategic Planning isthat set of decisions and actions which leads to the development of an effective strategy
-- Colin Boyd, Professor of Management, University of Saskatchewan
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Porter's Generic Strategies
Niche Positioning
Product Differentiation
Cost Leadership
It is probably easier to establish a niche position when the market is growing = PRODUCT MANAGEMENT + DESIGN SKILLS
When the pie is growing, no one is fighting too hard for market share, and hence differentiation is possible in the growth stages of the life cycle = MARKETING SKILLS + DESIGN SKILLS
A mature market means a fight for market share via price competition, which in turns puts all the attention on product costs = MANUFACTURING SKILLS + DESIGN SKILLS
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IA– hard to copy
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Know your value
• Why are you valuable to the business that is unique to your role?– Why can Design help– Why can IA help– Why can User Research help
Do you know the answer?
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Exercise
• List your strengths.. All of them• Cross out those that aren’t relevant to
business• Cross out those that others can offer
Now you have your core value
(Note: great to do in a weekly staff meeting!)
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Three Stories on IA Value
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The Sales Argument
Once there were people with cows
And people without cows
The people with no cows were hungry
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They took to the road
And met at the market
And the people with no cows bought cows
The people with cows had fewer cows, but money for other things
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Now there are people with information
And people with no information
The road is the computer
And the market is the web
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But the market is really big
And the people can’t find each other
So we have ignorant people
And people with no money
The cows are okay with this
Business is not.
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The Goal The players
– Users, seeking information (cowless)– Businesses with information (with cows)– Intermediaries such as search engines and
directories, profiting on the exchange (marketplaces)
The goal is to get the users seeking the data to the businesses offering the data
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Missing information is expensive
“The Fortune 1000 stands to waste at least $2.5 billion per year due to an inability to locate and retrieve information.”
“While the costs of not finding information are enormous, they are hidden within the enterprise, and…are rarely perceived as having an impact on the bottom line.”
The High Cost of Not Finding InformationAn IDC White Paper, July 2001.
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The Brand Argument
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Branding in 10 seconds
brand promises
brand experiences
create
fullfilled by
Brand managers
Brian Collins’ Model of Brand
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Brand and the User Experience
Hugh Dubberly’s Model of Brand
Creating a good customer experience is the essence of good branding
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IA Realizes Brand
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Product Quality = Brand LoyaltyI get asked a lot why Apple's customers are so loyal. It's not because they belong to the Church of Mac! That's ridiculous.It's because when you buy our products, and three months later you get stuck on something, you quickly figure out [how to get past it].
And you think, "Wow, someone over there at Apple actually thought of this!" And then three months later you try to do something you hadn't tried before, and it works, and you think "Hey, they thought of that, too." And then
six months later it happens again. There's almost no product in the world that you have that experience with, but you have it with a Mac.
And you have it with an iPod.
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Argument three: IA and Trust
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Dewey Decimal System
• 200-299 – Religion Categories
• 40+ categories related to Christianity
• 1 for Judaism
• 1 for Islam (& related)
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Who Cares?
• Religious Scholars
• Librarians
• Information Architects
• Jews and Muslims
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• Classification reflects social and cultural organization
• Information Architect must understand this context
• We can change how people think via classification and labeling
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Frames
• Voter revolt
• Tax Relief
• War on terror
• Free Market
• Poison free
George Lakoff, author of “Don’t Think of an Elephant
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Business reframes
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1. Design Look 46.1%2. Information Design/Structure 28.5%3. Information Focus 25.1%4. Company Motive 15.5%5. Information Usefulness 14.8%6. Information Accuracy 14.3%7. Name Recognition & Reputation
14.1%8. Advertising 13.8%9. Information Bias 11.6%10.Writing Tone 9.0%11.Identity of Site Operator 8.8%12.Site Functionality 8.6%13.Customer Service 6.4%14.Past Experience with Site 4.6%15.Information Clarity 3.7%16.Performance on Test by User 3.6%17.Readability 3.6%18.Affiliations 3.4%
“While information structure is often associated with usability, the comments here show how information structure has implications for credibility. Sites that were easy to navigate were seen as being more credible.”
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Okay, I’m sold
Now what?
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Paths for Designers & IA’s
Designer decides they want to move up
Choose business (PM, Strategist, Analyst
Chooses design
Chooses Individual contributor
Becomes General manager
Chooses management
Chooses entrepreneurship
Deep specialization
Solo Work
Builds company
Becomes CD
Leaves for company with growth
Becomes VP
Switches to general management
Becomes VP of BU
Becomes SVP of BU
Becomes CPO, or equiv
Becomes CEO
Chooses growth
Chooses entrepreneurship
Consulting
Builds Start-up
Sells to Yahoo for 25 mil
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What does it take to manage?
• Business Knowledge
• People Skills (up, down across)
• Leadership and Vision
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Moving Up in Influence
Man
ag
er
New
E
mp
loye
e
Em
plo
yee
Dire
cto
r & U
p
Needs Help for everything
Self-Sufficient, Contributes Individually
Contributes via others
Contributes via influencing organizations From
“Novations” by G
ene W. D
alton
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“Perhaps an MBA is not the best degree to lead a company to success afterall.”
“We need broad generalists to successfully run large, complex organizations.”
- Richard Kovacevich, CEO Wells Fargo & Co.
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Business Turns Its Eye Toward Design
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Business
Diagram from Design of Business by Roger Martin, U of Toronto
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We do not imagine the production of form to be the endpoint of design. We look for something more difficult and tenuous: to engage as directly as possible the environment within which design occurs. - Bruce Mau, Life Style
Trends: re-designing design
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Adapted from The Rise and Fall of Strategic Planning by Henry Mintzberg (1993)
Strategic Planning
UnrealizedStrategy
Plans Executed
EmergentStrategy
Realized Strategy
10%
90% 90%
The paradigm “ready, aim, fire” no longer applies; it is now “ready, fire, steer.” Paul Saffo
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We get there.. Eventually.
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Quality is not (always) the point
Market Segmentation
Identify segmentation variables and segment the market
Develop profiles of resulting segments
Market Targeting
Evalute the attractiveness of each segment
Select the target segments
Product Positioning
Identify possible positioning concepts for each target segment
Select, develop and communicate the selected positioning concept
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The person who is in
charge is me!
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Seven Surprises for Design Managers
• Surprise One: You Can’t Design Anymore• Surprise Two: You Are Still Designing• Surprise Three: Giving Orders Is Costly• Surprise Four: You Are Always Sending a
Message• Surprise Five: You Are Not the Boss• Surprise Six: Pleasing Your Boss is Not
Your Goal• Surprise Seven: You Are Still Only Human
Also see Peter Druckers “ Seven Suprises for New CEOs”
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CEO or CXO?
(or cmo, cio, cpo)