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

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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)