design management 4-management overview for designers

1. 04 Design Management University of Kansas, Department of Design ADS 750 (3 credits) Fall Semester 2014 Thursday 6:00-9:00p, Edwards (BEST245), Lawrence (CDR, West Campus) 4. Management Overview For Designers design management

2. Week/ Date LECTURE & DISCUSSION Supplemental Readings or Exercises http://vimeo.com/12370894 design management Wk 4 Sep 18 3. Management Overview Chapter 3. Management Overview: Economics, Process, Planning (70-105) DOWNLOAD & READ: Design in Age of Accountability Miller ! What Do Great Managers Do? HBR, Buckingham Wk 5 Sep 25 Accounting & Finance Chapter 4. Accounting & Finance SCREEN THE VIDEO DOWNLOAD THE CONTENT & READ: !!!! COURSE SCHEDULE TONITE NEXT WEEK Text Reading www.brainsbehavioranddesign.com https://drive.google.com/file/d/0B36lum- QNuqxOHU0OE4yNlVHNWM/edit?usp=sharing

3. Chapter 3. Management Overview What are the implications? What are the assumptions? What are the exceptions? What are the limitations? Where are the opportunities? design management

8. design management Cases comparisons & contrasts: industry market offerings business models

9. design management Plan:

10. design management MAS Holdings

11. design management TATIN

12. design management RatnerPrestia

14. 2003: We have been navigating this economic contraction. We are holding our own. We have sadly, however, had to reduce the size of our company about 10%. It appears we are now the size that the market wants us to be. http://www.bizjournals.com/cincinnati/video/8xZTlzbzql_VlTlBOio-bqQwSnwgzC-b?autoplay=1#ooid=8xZTlzbzql_VlTlBOio-bqQwSnwgzC-b HumanCentered 2007, All Rights Reserved! design management

19. Who feeds Paris? (who feeds you?) Why is it that you can go to a restaurant and have your tuna served to you? He is trying to get us to realize that there is a long economic process that goes on behind the scenes so that the tuna can be put on our plate. It's how the economy works. The fisherman fishes for tuna. He has to supply the tuna to the restaurants because tuna is in high demand. Because of this fact he can raise the price of his tuna that he sells because people want it. As tuna goes up in value, salmon goes down. He stops fishing for salmon because it is in his best interest to fish for tuna because he can make more money on it. He has more incentive in the tuna than he does in the salmon. All you have to do is order it at the restaurant and it will be put on your plate for you to eat, but that can only happen if each step in the behind the scenes process happens in an economic and efficient manner. HumanCentered 2007, All Rights Reserved! design management

21. Finite supply of physical resources time, food, shelter, water, expertise (how do we allocate them to make the most out of life?) [ But there is a virtually infinite supply of intellectual and creative ] resources HumanCentered 2007, All Rights Reserved! design management

31. In a free market system Market economy is a force for making life better, raising the standard of living Markets are amoral Price allocates resources Most markets are self-correcting If prices are fixed, some upstart will find another way to compete HumanCentered 2007, All Rights Reserved! design management

34. design management Charting Organizational Functions

35. Human Resources Sales and Marketing Research and Development Production/Operations Customer Service Finance and Accounts Administration and IT design management

36. Human Resources Recruitment and retention Job descriptions Person Specifications Dismissal Redundancy Motivation Professional development and training Health and safety and conditions at work Liaison with trade unions design management

37. Sales and Marketing Market research Promotion strategies Pricing strategies Sales strategies The sales team Product advice on new product development, product improvement, extension strategies, target markets design management

38. Research & Development New product development Product improvements Competitive advantage Value added Product testing Efficiency gains Cost savings design management

39. Production/Operations Acquiring resources Planning output labour, capital, land Monitoring costs Projections on future output Production methods Batch Flow Job Cell Efficiency design management

40. Finance & Accounts Cash flow Monitoring income/revenue Monitoring expenditure Preparing accounts Raising finance Shares Loans Links with all other functional areas design management

41. Customer Service Monitoring distribution After-sales service Handling consumer enquiries Offering advice to consumers Dealing with customer complaints Publicity and public relations design management

42. Wheres Design? design management

43. DESIGN DOMAIN/ APPLICATION AREAS CROSS-MATRIXED ORGANIZATION: Design Disciplines / Application Domains PRODUCT OFFERINGS Application Domains SERVICE OFFERINGS MEDIA/ COMMUNICATIONS ENTERTAINMENTS ENVIRONMENTS industrial design service design visual comm design information design brand design marketing communications interaction design fashion design engineering design ux design ... Design Disciplines HumanCentered 2004, All Rights Reserved! design management

44. ECONOMICS FOR DESIGN: 11 general principles for designers to learn design management Jeremy Alexis http://books.google.com/books?id=RkbV8iSX_hoC&printsec=frontcover&dq=naked +economics&hl=en&sa=X&ei=jgEbVO6ZDMOayASs84GABQ&ved=0CCsQ6AEwAg#v=onepage&q=naked%20economics&f=false

46. Incentives matter Economists look at the world through the lens of incentives. Most outcomes, good and bad, can be explained though the application (or misapplication) of incentives. And, they believe, if you want to change behavior (invest more, commit less crime), you can create a set of incentives to trigger this behavior change. ! As designers, our work is also concerned with behavior change (making things easier, trying something new). We rarely, if ever, consider how to apply an incentive strategy along with our new design, or how our new design may work/ not work with an existing incentive strategy. Design of incentives is a powerful new frontier for our profession, and should be integrated into our everyday work. aligning incentives HumanCentered 2007, All Rights Reserved! design management

47. Gravity works the same everywhere. Market forces do not. Much of Western economic thought was developed with the belief that, like gravity, basic economics formulas will work in any culture and for most problems (this is a gross oversimplification, but true none the less). Unfortunately, while gravity relies on fairly stable naturally phenomenon, economics relies on the individual decisions of people (which have proven, over time, to be less stable). This is not to say that free markets and free market theory cant be applied everywhere, only that the applications have to be tuned for each culture. HumanCentered 2007, All Rights Reserved! design management

48. Gravity works the same everywhere. Market forces do not. Designers can play very important role in the new global economy. Innovations in logistics have made it possible to get new products and brands anywhere in world (as well as be produced anywhere in the world). Our role is to ensure that these products and services are appropriate for each culture and country. We cant assume that markets and products will work the same other places as the do here (in North America), we need to design these markets, interactions, and offerings to and for each market. HumanCentered 2007, All Rights Reserved! design management

49. Cash is king If your great new idea cannot produce enough cash to pay for its own development, plus a little extra for you and your friends, it may not be such a good idea after all. It is critical for designers to understand that businesses run on cash (meaning earned profits above expenses, or EBITDA for the accountants). Our job (as a professional designer) is to make things that make cash. HumanCentered 2007, All Rights Reserved! design management

50. People do not always make rational choices (But over time, markets appear to be rational and most things regress towards the mean) Quite a bit of recent economic research has focused on defining the irrational (irrational does not mean bad, just not driven by math) choices people make under uncertainty. There has been the dominant (although always challenged) thought in economics that people behave rationally and that this behavior can be quantified (game theory, the Nash equilibrium). But, we have come to learn, through the development of Prospect theory (as well as other advances in behavioral economics): people do not always make rational choices. For example, recent declines in the stock market have lead many to note that the market does overreact to current events. Wall street may be the only market where, when they put on a sale, all the shoppers leave. HumanCentered 2007, All Rights Reserved! design management

51. People do not always make rational choices (But over time, markets appear to be rational and most things regress towards the mean) As designers, we should pay close attention to this convergence of psychology and economics; it can provide insight into the adoption and use of our offerings. bounded rationality HumanCentered 2007, All Rights Reserved! design management

52. How a company finances itself shapes its options and strategy (and how it approaches design) Designers are not often interested in how the companies they work for are financed. However, financing choices lead to how willing (and able) a company is to take risks and spend money. We would prefer to work for companies that have plenty of available cash and are willing to take calculated risks. We have all worked for companies that seem stuck in the past, and are unwilling to innovate. It is important for us to know the financial condition and financial structure of the companies we work for. Too often, we propose design solutions that have no chance of being developed, not due to interest, but due to available investment money. We should adapt our design solutions to be compatible with the financial context of the company HumanCentered 2007, All Rights Reserved! design management

53. Design both creates and mitigates risk Design is seen as a risk for companies. Moreover, it seems like a risk that the company cannot manage (compared to changes in exchange rates). As designers, we need to recognize that we are seen as a risk, and them demonstrate how our work can actually mitigate certain types of risk. In fact, the most potentially devastating risks a company faces (changes in customer preference, market forces, and technological change) can all be managed within the scope of a design project. We need to shift our position from creating risk to managing it. HumanCentered 2007, All Rights Reserved! design management

54. Design creates and destroys value Every time we put pen to paper, we are either creating or destroying value for customers and businesses. We destroy value by designing things that can never be implemented, or do not solve for real user needs. We also destroy value by creating shelfware, or design briefs that only serve to weigh down file cabinets. We create value by identifying opportunity spaces, and then providing real options for taking advantage of those opportunity spaces. We also create value by energizing and inspiring the organizations we work for. Designers should be obsessed with creating value; this frame of reference should guide everything we do. creative destruction HumanCentered 2007, All Rights Reserved! design management

55. Accountants have a hard time accounting for design There are two reasons that accountants have a hard time thinking about design. First, like most R&D dollars, design is an expense, and as such, needs to be shown as a cost on the balance sheet in the year it was incurred. Compare this to a new machine for a factory, which can be depreciated over time, so a percentage of the cost is taken each year of the life of the machine. So, even though your design project may create insights and a product that has a life of ten years, the entire expense needs to be taken in the year the work was originally done. Second, accountants do not recognize value creation until a product has been ordered or shipped. Usually, by that time, design is long gone from the equation HumanCentered 2007, All Rights Reserved! design management

57. There is an investment curve for design Most design firms that I know of are trying to get into the strategy game. This means they want to have more input into product definition, not just product design. This trend results from a shift in economics design development and production/construction drawings are not as lucrative (or time consuming) as they once were. Faster software and global competition are driving this change. So, in order to continue to remain in business, firms have had to shift the bulk of their billings to strategy work, which requires less horsepower, and more knowledge and domain expertise. HumanCentered 2007, All Rights Reserved! design management

58. 04 Design Management University of Kansas, Department of Design ADS 750 (3 credits) Fall Semester 2014 Thursday 6:00-9:00p, Edwards (BEST245), Lawrence (CDR, West Campus) 4. Management Overview For Designers design management