Winning by Design

Sounds very clichéd and over-used? There are folks who swear by this term and those who question its relevance in today’s rapidly changing world. The average shelf-life of companies is on the decline. As a result, focus has shifted towards higher speed in execution across the board – from strategic planning to product launch to Brand Building to Fulfillment to Growth & Profitability. Along the way, companies are having to make more and more complex decisions in less time and backed by less data. This is the world that we live in. Interestingly, there is enough scientific literature to prove that the human brain get exhausted after making complex decisions. We are more likely to make decisions based on intuition and cognitive bias than logic and data which by nature is time-consuming. The opportunists tend to follow the former while the purists tend to lean towards the latter!!!

Is Design still relevant?

The case for design is very strong. Classic Examples are the plethora of companies that have succeeded through sheer dint of design. I like to think of opportunity-led thinking being complementary to a design-based approach. Here’s how

Design Opportunistic
Step Change in Value for all Stakeholders Capture incremental value at every point
Critical for complex problem solving & avoid pitfalls in longer run (Type-1 decisions) Help remove obvious bottlenecks and win in shorter run (Type-2 decisions)
More applicable in core areas – Technology, Product, Process, People Applies in softer areas – Promotion, Partnerships, Pricing
Creates a significant competitive wedge and sustainability over a longer duration Value & Differentiation – Both are marginal & can be erased quickly

In the longer run, it is design that generates value and drives a differentiation for a firm. This is amply exemplified by the best firms in business – Apple, Google, Salesforce, Baidu, Netflix, Airbnb, Amazon, Alibaba, TripAdvisor, Zapier, DropBox to name a few.

The Design DNA

To win by design, companies need to operate with what I would like to call a “Design DNA” – a fundamental design-led approach towards solving problems, building products, developing process, delighting customers and in the process, creating sustainability in business. The design DNA guides everybody in their choices  – Choice of Products, Markets, Strategies, Business Models, Processes and Brand (Positioning & Communication)

In particular, I wish to call out 3 essential ingredients critical to the design DNA

  1. Clarity in Purpose – As broad as it sounds, Purpose is defined by a strong clarity in thought on what a business seeks to achieve. It answers fundamental (and mostly uncomfortable questions) around a business’ existence – also the part that needs constant evaluation to validate core assumptions. Have borrowed some of these principles from a popular book on multisided platform economics
    • What problem are we trying to solve? How big is the problem and who benefits from solving it?
    • Does our company’s offering solve the problem and do it better than others?
    • How hard is initial adoption and do we have a plan to achieve critical mass?
    • Do we need to rely on partners in the ecosystem to achieve initial adoption? If yes, are we capable of making necessary investments & deal with associated risks to lock in & scale through partners?
    • Do the prices necessary for adoption and growth enable us to make more money?                     

                                                                                                                                    

  2. ‘User First, Product Second’ – This is the brutal reality of our times. Unless you have a breakthrough product like a Tesla or an iPhone, most firms will fall in this category. Once the base value (which is addressing the core problem) is captured, products should be designed to delight users – nothing short of it. If its only an incremental improvement over substitutes, the value will not just be incremental but will be eroded very quickly. With the explosion of web and mobile, users are inclined to window shop for products atleast for the first time. Users are waiting to be delighted for aspects beyond attractive pricing – Features, Ease of Navigation, Utility, Ease of Payment to name a few. Users are expecting a valuable yet premium experience for them to migrate from their existing provider. Once they get hooked onto a platform, the next player is considered only in cases where the base value is not met. 

     

  3. Making Scalable Tradeoffs – This is part of the “ignition phase” of a company – The time when many tradeoffs are made to achieve speed of execution. Now tradeoffs are inevitable but a scalable tradeoff is one that can be seamlessly scaled going forward. For example, customer support in an internet business. This is usually driven by being agile in responding to customers and managing customer escalations on the go. While this solves the problem, inherently, it is not scalable as it is usually people driven. A scalable tradeoff in this scenario will look like this – Document & communicate processes for service delivery and fulfillment and cascade it throughout the organization. In due course, these manual processes get codified into automated systems to track customer journey and product usage, allowing human intervention only to detect & address gaps in servicing the customer. Another tradeoff happens in go-to-market – While it is ideal for every single user to buy our product, it is humanly impossible to reach & service every customer (either directly or through partners). This implies gearing organizational resources to tap your high priority segments even it means losing out on potential business from low value and non-scalable customer segments. While most of these trade-offs are generally reversible, there is a danger of less efficient solutions becoming part of organizational and people DNA as business grows.

So what does it mean for us?

The design rules apply more so in the Indian context where the average customer generally expects everything for free and is willing to switch if the platform or product does not meet their expectations. This is clinically achieved by the likes of Airbnb, Uber, Amazon as compared to their local competition. What these firms may have lacked in local context is more than made up in their design. Sure, they have deeper pockets than their Indian counterparts but their constant endeavour to rule by design separates them from the rest. After the great Indian startup meltdown, it is heartening to see some startups playing by these design rules  – SwiggyCoverfox, Razor Pay – to win in the market. We can expect lots more to follow suit.