Although strategy is much talked about in design circles, few design companies actually have one for their own business. Often, this is because they confuse strategy with operational efficiency. They spend a lot of time focusing on cash and productivity, keeping close to their customers and monitoring the performance of competitors. While this is undoubtedly very valuable, all it amounts to is operational efficiency, and has little to do with having a strong, sustainable strategy for their businesses.
There are several reasons why operational efficiency alone is simply not enough. First and foremost, there is a limit to the efficiency improvements that can be achieved. Companies, like Formula 1 cars, can make incremental improvements in speed and efficiency, but the real gains come when there is a genuine breakthrough. The introduction of wet race tyres, for example, must have had a radical impact on racing in the rain.
Another problem is that there is a tendency for people to copy each other in the pursuit of excellence. Systems, for example, are easily replicated and people are too readily poached. Rather too much hero-worshipping goes on. The result is that more and more design consultancies are starting to look alike – a flick through any design directory will confirm this.
Strategy, on the other hand, is about being able to do things differently from your competitors. It implies leading rather than following. But it is much harder to make it happen since it involves innovation as opposed to imitation. The development of a strategy requires a much greater time investment than simply pursuing operational effectiveness. The result is that, while many consultancies are efficient and profitable in the short term, their longer term prospects are less certain and they are certainly not as valuable (as businesses and brands) as they could be.
It is reassuring to know, however, that companies outside design also find it difficult to do things differently. Gary Hamel, visiting professor at the London Business School, has observed that there are three sorts of company:
1. The rule-makers, such as IBM, United Airlines and Hertz, which were often first into the market and shaped the industry. Such companies are anxious to protect their market positions.
2. The rule-takers, which pay homage to the rule-makers and try to ape them – the likes of Fujitsu, US Air and Avis.
3. The rule-breakers – companies that are intent on rewriting the rules and creating their own niche markets. These include IKEA, Swatch, The Body Shop, Dell Computer and Netscape. They lack respect for the industry incumbents and are not prepared to play catch-up. They are revolutionaries!
The good news is that the number of revolutionaries within the design industry appears to be on the increase – many of them are small and many are new. Start-ups have a wonderful opportunity to break the rules rather than conform with tradition. The overthrown monarch often finds it easier to head off in the opposite direction to the motherland, rather than stay and fight a much bigger opponent.
The real challenge for design though, is for the rule-makers and takers to create revolutions in their own companies so that they can continue to enjoy the rich pickings of success. Life never stands still – you either move forward or backward. And the moment you think that you’ve made it is the time to watch out.
So how does a seemingly successful design company, a rule-maker perhaps, set about becoming a rule-breaker?
Design leaders hold the key to this. They don’t have the answers, but they have the power in their organisations and can pose the questions. They must start by loosening their grip on the strategic direction of their businesses and opening themselves up to other influences inside and outside their companies.
The older we are, the more difficult it is to change. The higher we climb, the further we have to fall, and the experience that helps us rise to the top of our organisations comes from the past rather than the future. Wise leaders know this and search elsewhere for valuable insights into their business.
Successful strategy relies on involving younger people within the company, as well as suppliers, clients and other outsiders who can bring a fresh, external perspective. You need people whose views on life are different to yours. A vivid manifestation of this is in the world of new media where it is the young, whose playground has been the Internet, who are capturing the market.
You can start the process by identifying the fundamental beliefs that you have about our industry – there are usually half a dozen or so of these. Then start to question why your company has to be this way, and whether there may be a better approach. Talk to people outside the industry and get a new perspective on what you do and the way you do things. Question the way your company tackles problems, learn to appreciate what the company is really good at and consider how all this can be better leveraged in the future.
The more people you can involve in this process the better, since this will ultimately make your life a lot easier. The days of what I call “2/363 day” strategic planning are over. This is where you took the board away for two days to that nice hotel and came up with a new strategy for the business. You then spent the next 363 days of the year trying to get everyone else to buy into it!
The planning process you use will depend on the size and nature of your business, but for most companies of less than 50 people or so, you should aim to involve everyone and be prepared for a process that can take anywhere between 6 and 18 months.
I come across plenty of design consultancies that do good work and have good clients, but very few which are truly different. The answer is to develop a strong and sustainable strategy over time and to avoid quick fixes. And always remember that this process is even more important than servicing clients.
From the outset, establish a small representative team of people from within the company who can help drive the process forward.
Use questionnaires to ensure that everyone has an opportunity to express an opinion – many people find it difficult to contribute in large meetings, especially when directors are attending.
Actively seek the views and opinions of clients, suppliers and people you respect. One of my clients even invited some of his competitors to his first company away-day.
Hold company planning meetings at times when everyone can attend, and try to hold them away from the office environment.
Use an external consultant or non-executive director to facilitate the whole process and to bring an objective, outside influence. This is important since it adds weight to the process, enables the leader of the business to contribute to meetings rather than run them and ensures that the process isn’t derailed by those demanding clients!
Test any strategy fully to ensure it really is different, and will give your company a new slant so it stands out from the crowd. Like any good design solution, it needs to work under variable and extreme conditions. If it doesn’t, push for a better one.
Ultimately, the strategy has to be capable of energising and enthusing every single person in your company – this is often the real acid test.