Strategic Innovation in

Product and Service

Design
School of Visual Arts
MFA Interaction Design
Fall 2009

Class 1: Overview and Introduction

14 September 2009
Course Objectives

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)
Grading

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 criteria

Contribution to class discussions, assignments, and

exercises

Quality, timeliness, and completeness of your

assignments

Quality and timeliness of your final project

Expectations (mine)
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
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

 Intro to
Strategy
What is 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 objectives
Why 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
outcome
How 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 advantage
What’s our posture towards the world, what
What strategy isn’t

Planning, necessarily

Thinking big thoughts

The opposite of tactics

What only the more senior people do

Opposed to design
Strategy =
Why
Dogbert’s reason
All companies
need a strategy
so the
employees will
know what they
don't do.
 “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
Why strategy is hard

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
Mauvaise foi

I cannot understand
nor do I want to
understand! I want
to believe!
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
Great strategies
development, unify these levels.
etc)
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
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
Cost leadership as a strategy

 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

Differentiation 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
Focus 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


Core competencies

ProductProduct Product ProductProduct Product Product

Product Product Product Product
Business Business Business Business

Core Product

Capabilit Capabilit Capabilit

y y y
Example:

local
searchmaps Groups News FinancePicasa Desktop
Gmail Chat Toolbar Browser
local communicatio info desktop ?
ns services

Search

algorithm beta interface

engineerin rollout design
g
 We make our
buildings, and
thereafter they
make us.
 We make our
buildings
products, and
thereafter they
make us.