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Aligning Strategy and Design Perspectives: A Framework of Design's Strategic Contributions

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Many aspects of strategic importance can be influenced through effective use of design. An integrated, holistic application of skilled design resources can make important contributions to competitive advantage. Identifying such contributions elicits a framework useful for clarifying the concept of 'strategic design' in general terms, and for describing design's use in specific organizations. This paper presents such a framework and descriptions of two contrasting firms, based on interviews with designers and others in design-related roles in each. These demonstrate differing approaches to the use of design as a strategic resource, and how such a framework helps identify and describe them.
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Aligning strategy and design perspectives: a framework of design’s
strategic contributions
Abstract
Many aspects of strategic importance can be influenced through effective use of design. An
integrated, holistic application of skilled design resources can make important contributions
to competitive advantage. Identifying such contributions elicits a framework useful for
clarifying the concept of ‘strategic design’ in general terms, and for describing design’s use in
specific organizations. This paper presents such a framework and descriptions of two
contrasting firms, based on interviews with designers and others in design-related roles in
each. These demonstrate differing approaches to the use of design as a strategic resource,
and how such a framework helps identify and describe them.
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Introduction
The services and methods of designers and design agencies are increasingly discussed in
business press and other media, seen as offering a significant contribution to business
performance. Firms like Apple, Sony and BMW have become cliché cases in point. No doubt
such firms excel in conceiving and shaping superb customer experiences, yet an examination
of design contributions in relation to strategic models suggests that design can make
significant contributions in many ways beyond those visible to customers. Successful
exploitation of this we term ‘strategic design’.
We choose the term strategic design, as distinct from design strategy which is commonly
used to mean a long-term plan for implementing design, particularly at a product, rather
than corporate, level. Whereas design strategy is explicitly practiced by skilled experienced
designers and design managers, strategic design involves complex interplay of influencers
and stakeholders and might not be explicitly recognized in an organization.
Thus, it is often claimed that through strategic design, benefits come not only from better-
designed products and services, but from better use of design throughout the firm. Such a
broad claim merits closer examination. This paper seeks to clarify how design might
contribute to the formulation and implementation of strategy. In doing so, a framework is
developed that aims to integrate concepts which have previously been described
independently, and to provide clarity to the rather intangible concept of strategic design. The
framework is based in literature and is illustrated with examples from two detailed case
studies in industry.
Through a brief look at some key strategy concepts, potential contributions can be attributed
to the activities of design professionals and related specialists. To explore their occurrence in
practice, case studies have been carried out in two large UK-based firms, chosen for their
visible use of such services. Summary excerpts from the case study findings are presented to
demonstrate that these contributions do occur, albeit in different ways in different firms.
First the theoretical context is outlined from which design’s strategic contributions were
established, concluding with a summary diagram outlining these contributions as a simple
framework, then case study excerpts and observations follow.
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Theoretical context
There are many perspectives in strategic management that have become accepted as useful
views of how firms achieve and hold on to competitive advantage. Arguably, these various
views attend to different aspects of strategy and some are regarded as complementary, rather
then mutually exclusive (Roos, 2005). Early treatments the of the subject assumed a
rational, orderly nature to the problem, reflecting the prevailing view of economics pre-
1980s, but subsequent attention has drawn on sociological, psychological and philosophical
thought to tackle its ‘messier aspects… involving politics, culture, interpretation and
emotion’ (Stacey, 2007: 3), and attempted to account for various professional perspectives,
such as those of management and marketing. Within this broad and complex domain, focus
has widened in three decades from trying to understand and shape the external competitive
environment, to examining internal capabilities and resources, including such intangibles as
tacit knowledge, corporate culture, and shared vision.
This paper does not attempt to argue the case for one viewpoint over another, nor can it do
full justice to the deep and detailed knowledge that has arisen from the field. (For summary
accounts of this history, see e.g. Roos, 2005; Mintzberg et al., 2004, 1998; Mintzberg, 1994;
Nag et al., 2007.) At a time when design and ‘design thinking’ are touted as a magic bullet for
corporate woes, it attempts to bring some clarity to these claims. What does it mean for
design to be strategic?
Broadly, strategic management addresses initiatives around the utilization of a firm’s
resources to enhance its competitive performance in its environment (Nag et al., 2007). In
this section, influences and contributions from design activities are described in four main
foci, with reference to literature from the strategic management domain:
1) Competitive forces
2) Strategic fit and value creation
3) Resources and capabilities
4) Strategic vision
Design contributions in these foci, are now outlined briefly in turn, summarized in Table 1
with their respective sources in strategic management and design management literature
.
[insert table 1 about here]
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Competitive Forces
In this focus on the competitive environment external to the organization, design acts in
building market differentiation, customer intimacy and perceived value, and in influencing
supply chain dependencies.
Design used to build market differentiation, customer intimacy and loyalty; to raise customer perception of signalled
value and address varied markets
Perhaps the most visible, recognized and accepted of design’s strategic contributions, this
role relates to market positioning and differentiation by which loyalty and perceived value
confer strategic advantage, reducing the threat of substitution and buyer bargaining power
(Porter, 1980, 1985; Treacy & Wiersema, 1993). In this capacity, design is acting externally of
the organization, shaping customer perceptions and experiences both directly, through
products and services themselves, and indirectly through corporate image and brand
activities (see e.g. Blaich & Blaich, 1993; Lorenz, 1994; Olins, 1989). Similarly, as a core
competence (Prahalad & Hamel, 1990), design can improve access to a wide variety of
markets and contributing significantly to perceived customer benefits .
Design influencing dependencies in the supply chain
Also with an external influence, this design contribution relates to the principles of market
positioning, and to the generic strategies of both cost leadership and differentiation (Porter,
1980, 1985; Treacy & Wiersema, 1993), specifically to buyer and supplier bargaining power
as identified in Porter’s Five Forces, which influence the competitive environment outside of
the firm (Porter, 1980). It also relates to the concept of value co-creation in the value
constellation or network (Normann & Ramirez, 1993; Stabell & Fjeldstad, 1998). Design
decisions such as choice of materials or components can influence supplier bargaining
power, e.g. by minimizing switching costs to reduce dependence on particular suppliers or
technologies. More subtly, the supplier relationship is arguably as important as the buyer (or
customer) relationship, and design can similarly have an emotional influence on loyalty and
preference.
Strategic fit and value creation
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In this focus on operational efficiencies, design serves in integrating and mediating between
professional domains, and in supporting primary and secondary value activities within the
organization or value network.
Design integrating and mediating between professional domains
The role of designers necessarily involves other professional domains, and the design process
brings together disparate expertise and perspectives from within and outside the
organization. Here design contributes to the principles of strategic fit, improving linkages
between internal value activities (Porter, 1985), and to external co-ordination of the firm in
its environment, identifying potential partnerships and generating new industry vision
(Stabell & Fjeldstad, 1998; Borja de Mozota, 2003).
Design supporting primary and secondary activities in the value network
Design’s value is increasingly recognized not only in the primary value-adding activities of
product development and marketing, but also in research, infrastructure, human resources
and other secondary (support) activities. As above, this design contribution also relates to
the principle of strategic fit, (Porter, 1985), as part of a holistic design strategy in which
design is permitted to contribute across communications and identity, products and services,
and environments (Cooper & Press, 1994).
Resources and capabilities
In this focus on the firm’s intangible resources and capabilities, design serves in shaping and
communicating corporate culture and improving knowledge management; also design
capability is itself a tacit knowledge resource.
Design shaping and communicating corporate culture
Relating to the principles of the learning organization (Senge, 1990), design contributes to
creating and communicating a shared vision, one of the learning organization’s five
disciplines. A design-influenced corporate culture also relates to nurturing people with
knowledge, as valued according to the knowledge-based view (Wernerfelt, 1984; Barney,
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1991; Grant, 1996; Manville & Foote, 1996). The communication and interpretation of
corporate vision occurs through designed material artefacts such as products, interiors and
buildings, and through ‘culturally-mediated language such as metaphor, stories and humour’
(Hatch & Schultz, 1997). Communication design and graphic design provide a medium for
the intangible elements of culture embedded in language and stories (Hayes, 1990; Olson et
al., 1998).
Design in processes and systems of knowledge management
Design can be applied to improve knowledge management systems and processes,
contributing to strategic fit (within the firm infrastructure, a support activity in the value
chain), as above. But in its own right, knowledge management is a crucial strategic
capability according to the knowledge-based view (Grant, 1996; Wernerfelt, 1984; Barney,
1991). So organizational knowledge management systems may be considered strategic assets,
provided they are conceived and implemented accounting for the users and the context of the
system (Meso & Smith, 2000) – in other words, if they are well designed.
Design as a tacit knowledge resource: path dependent and hard to imitate
This contribution, like the previous, also refers to the principles of the knowledge-based
view; the tacit knowledge of designers (and its effective management and integration in a
firm) can be a strategic resource or capability if it is path dependent, or difficult for
competitors to develop quickly (‘imperfectly imitable’), and is valuable to the firm (Barney,
1991).
Strategic vision
In this focus on decision-making for strategy formulation, design activities at leadership level
help achieve a holistic view of complex systems and create a shared strategic vision. They are
used in exploring uncertainty and assessing trade-off, in stimulating creativity and providing
fresh perspectives.
It could be said that strategy formulation is about designing an enterprise (Liedtka, 2004),
and designerly methods or ‘design thinking’ (Martin, 2009) may provide creative tools for
exploring possibilities and building a qualitative understanding of what holds meaning, and
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hence value, for customers, employees, suppliers and other stake holders.
Design stimulates creativity and provides fresh perspectives
This design contribution relates to Mintzberg’s fallacy of formalization, the misconception
that strategy can be made in an imposed formal structure and process, without allowing
freedom for creativity (Mintzberg, 1994). Designers and design methods may include both
formality and freedom, which might contribute to strategy formulation.
Design helps explore uncertainty and assess trade-off through prototyping and visualization
This design contribution relates to Mintzberg’s fallacy of predetermination that business
conditions can be predicted to any meaningful degree – and to the fallacy of detachment
that strategy should or could be based only on hard facts in objective isolation (Mintzberg,
1994). It also relates to the concepts of strategic intent and trade-off that are required of a
business leader in order to set a strategic course (Hamel & Prahalad, 1989; Hammonds,
2001). Predictive tools are valuable, but only if the future is an extension of the present (de
Bono, 1992). Design methods include ways to safely explore the unknown territory of the
future.
Design helps achieve a holistic view of complex systems, creating a shared strategic vision
This relates to the concepts of shared vision and systems thinking, two of Senge’s Five
Disciplines (Senge, 1990). Systems thinking is a discipline for seeing wholes’, which is
described explicitly by Senge as a ‘design approach’; shared vision is required for a firm to
have a united sense of strategic direction.
The design contributions outlined are summarized in Figure 1. In the next section these
categories of strategic contributions provide a descriptive framework for two case examples,
illustrating their occurrence in practice.
[insert figure 1 about here]
Case examples: two design-active firms
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Interviews in 17 UK firms have been carried out over a three year period as part of a larger
study. Excerpts from two of these firms are presented here as examples of design
contributions being made in the categories identified.
The aim of this study was not to make generalizable claims about the design contributions
but merely to verify their occurrence and recognition in practice. Firms were judged suitable
based on being accessible and willing participants, and having some visible design activity.
Neither case included respondents from all operational divisions, but respondents’ roles,
seniority or experience suggest that their views would provide relevant insights.
Case 1: Alpha Structures
Alpha Structures is a large global design and engineering firm with headquarters in London.
It was identified as a suitable case for this study as it is large, geographically accessible, and
willing to participate. Also it has a reputation worldwide for design excellence. This might
suggest a greater awareness of design’s strategic impact than many other firms, as well as a
better understanding and greater capability of managing design.
Alpha provides design, engineering and business consulting for the built environment. It has
around 9000 staff in 100 offices worldwide, and headquarters in London. Its annual
turnover is approximately £700 M (2008). Alpha is active in many industry sectors, grouped
generally into transport, energy, property and social infrastructure. The firm is known for
technical excellence and innovative attitude, which have given them a high standing among
their peers. Consequently Alpha has been associated with many of the world’s biggest
projects and most iconic structures of the past 50 years.
Design activities in the firm are primarily in the services it offers its clients: engineering
design, architecture and industrial design, and within its foresight team. In-house design
activities also include web and interaction design, and print and communications design.
[insert Table 2 about here]
Case 2: Beta Telecom
Beta Telecom is also a large, UK-based firm, but founded primarily on telecommunications
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technology and service delivery. Beta has around 100 000 staff worldwide, and headquarters
in London. Its annual turnover is approximately £21 000 M (2008). Beta primarily provides
communications network services and technology to consumer, corporate and public sectors,
and also has a large Research & Development (R&D) group.
In contrast to Alpha, design is not a core activity in Beta: it occurs mainly in three
proportionally small areas of the firm: in R&D, the Consumer division, and in the group-
wide Brand department.
[insert Table 3 about here]
Methodology
Semi-structured interviews - 12 in Alpha, 11 in Beta - were conducted with designers, product
managers and others in senior design-related roles. Discussions were loosely structured
around four key concepts relating to the use of design throughout the organization. The
concepts were deliberately broad, to avoid biasing the responses with leading questions.
They were i) stakeholder involvement in design activities; ii) design support of the firm’s
operations; iii) roles of design from strategy to market; iv) evolving contributions of design
over time.
To aid the interviews, a set of four diagrams was used to facilitate open-ended questioning
and discussion of these concepts (termed graphic elicitation (Crilly et al., 2006)). The
purpose of the diagrams was twofold: first, to help explanation of the concepts by the
interviewer; second, to be drawn on by the interviewees to complement or clarify their
spoken responses. Graphic elicitation is considered especially suitable for discussions with
interviewees having high ‘visual literacy’ as many designers do. These four themes, and the
design of the diagrams were informed by a previous study (Stevens et al., 2008b, a).
[insert Figure 2 about here]
Collectively, these themes and diagrams provided a means to consider attitudes and practice
of designers and related roles within the case firms. Verbatim transcripts of the interview
recordings were analyzed in conjunction with the diagrams, according to a coding structure
based on the contributions already outlined. That is, each transcript was coded by identifying
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any remarks related to any of these contributions (e.g. Design influencing dependencies in
the supply chain).
Case findings
Design skills and services were found to contribute to strategy implementation in many of
the ways identified. Some key differences between the case firms were explicitly evident in
how they each value and apply design resources.
Competitive Forces
Design used to build market differentiation, customer intimacy and perceived value
Both Alpha and Beta recognize and exploit the strategic importance of design for market
differentiation, customer intimacy and perceived value. For Alpha, design helps its clients
differentiate themselves, adding value in a variety of markets. In providing this expertise,
Alpha shapes perceptions of its own value offering and specialization to potential clients and
to the general public. Perceptions of value are reinforced by a consistent brand identity in
marketing communications, offices, and other publicly visible elements. In Alpha, design is
the core activity, reinforced by other market-facing design.
In contrast, Beta uses visible brand expressions to represent its intangible primary activities,
in products (such as phone handsets and broadband routers), service interfaces and branded
marketing and PR communications.
‘Design is effectively the point of experience delivery of the network we call it the last
millimetre. It's the interface... to your fingertips, to your ears, to your eyes, and that's where
opinions are formed and that's why it's important.’ [B-1]
This is especially important for a telecom and networks provider, because most of what they
do is intangible; the visible elements are manifestations of the invisible. In Beta, brand and
product design primarily serve the core activity to shape their customers’ perception of it.
Beta outsources most design work to agencies, some with long-standing relationships,
allowing it to focus on core activities.
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Alpha’s designers build intimacy with clients by challenging them for a deeper
understanding of their motives and needs.
‘When the client [first] gives you a brief you say ‘okay, so what you are trying to do?’ to get a
deep understanding as what they’re actually wanting, because we assume that the brief is
wrong.’ [A-7]
Their design projects are very large and mostly one-off, not for the mass market; market
research does not directly drive design decisions, though they are informed by research in
long-term social, geo-political and environmental trends. Although large, Alpha is smaller
than many of its competitors, and its own differentiation is achieved through its reputation
for technical excellence, design and innovation, embodied in the iconic structures they help
their clients build.
‘Broadly, people identify firms with their products… My kids like that I work [on well-known
buildings] because they can tell their friends. I think that's about our product, which is
design.’ [A-3]
There is a sense among respondents that the firm’s core essence is design, and this is deeply
seated in the firm’s culture.
Beta’s consumer products are strongly market-driven, informed by extensive market
research. Customer focus and design awareness used to be minimal but, thanks to a
determined drive in the past decade, are now high throughout the firm. These contribute to
Beta’s value and reputation in the consumer and corporate markets.
Although designers are involved very little, proportionally, in the firm as a whole, they play
an important role as advocates of the customer to the rest of the organization. An example is
a initiative started by a team of designers and usability specialists to maintain a consistent
graphic language across all the firm’s design. It began as a measure to improve usability of
phones and other devices (making them easier to learn and remember), but has also served
to significantly strengthen brand consistency and recognition.
Alpha and Beta recognize and work towards exploiting the strategic importance
of design for market differentiation, customer intimacy and perceived value.
Designers are often advocates of the customer, their loyalties divided and
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conflicting between customer and firm. Design can play such a role as part of,
or in support of, a firm’s core activity, and confer competitive advantage
through strategic positioning.
Design influencing dependencies in the supply chain
Designers’ decisions are recognized in Alpha as having strategic influence over suppliers,
both for client projects and for their own infrastructure and operations.
‘When you have too many [suppliers] you don't receive much respect from any of them… It is
important to us that we develop relationships where we're preferred. If you don't do
anything you end up with a very fragmented supply chain.’ [A-3]
Design activity has also enabled strategic alliances with manufacturer-suppliers, e.g. of
lighting and furniture.
Beta recognizes that design must be used to differentiate and add value to their consumer
products, to reduce the bargaining power of retailers, i.e. to maintain its margin in
competition with unbranded products. Still, for some products, differentiation is sacrificed
in favour of a buy-and-badge approach – devices are bought from other manufacturers and
customized with Beta branding – to allow rapid entry to market at lower risk.
‘Because we’re trying to get things quickly to market… often a lot of our things are procured
in… We’re fast followers, we’re not first to market. If we see an opportunity… then we’ll
jump on the bandwagon and follow suit quite quickly.’ [B-3]
Design is not evidently used in either Alpha or Beta to deliberately shape the experiences of
suppliers. However, Alpha recognizes that suppliers may be influenced by the credibility and
pride of association with other prestigious or iconic projects. Beta staff identified aspects
where design could improve procurement processes, to allow more agile supplier
engagement especially for small firms.
Design is seen to shape supply chain dependencies upstream and downstream.
Supplier and buyer bargaining power can be influenced by decisions in the
design of products, by high profile design output (such as iconic buildings or
popular products), and by design-led alliances, resulting in competitive
advantage through strategic positioning. These influences are recognized in the
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case firms, though may be traded off against other factors such as speed to
market.
Strategic fit and value creation
Design integrating and mediating between professional domains
The mediating role of designers is regarded in Alpha as fundamental to its core activity and
performance. Multi-disciplinary collaboration is emphasized in sales messages, and appears
to be highly valued strategically. Visual tools such as project sketchbooks and models are
used for sharing and exploring ideas between professional domains. The firm tries hard to
emphasize its unity as an organization in order to attract complex, multidisciplinary design
challenges. Such work, in turn, improves the way these disciplines work together.
‘If you're able to communicate that you are one big group of designers that can solve any
problem, that changes the questions that come to you and helps you to become integrated.’
[A-5]
Recognition of such a role was not explicitly evident in Beta. However, influential designer
mediation was evident in R&D activities and also in consumer product development (by an
external agency).
‘[This agency offers] experience platform design and co-ordination… Silos are the enemy of
innovation. So a lot of what we do is help companies correct their dysfunctional behaviour
relating to poor or distant connections between the marketing and the technical.’ [B-1]
Agency designers of consumer products mediate between marketing and technical specialists
inside and outside Beta (including suppliers), and between project managers and their senior
managers. They may also recognize and connect people in the firm with relevant skills and
agendas who may not know one another.
Designers in R&D use visual methods and models to communicate real life applications of
novel research and technologies, among other researchers, between researchers and product
development teams, and also between product development and external firms and
universities. In this way they contribute to the formation of new partnerships in business and
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knowledge-sharing among others with a common interest in future applications of
communication technologies. Working with scientists and engineers, they advocate
innovations relevant to their end users, rather than the pursuit of technology for its own
sake.
‘There are [other] people refining the technology, making it better and better. But designers
are useful for reminding people what their technology is for, and what real people will do
with it.’ [B-6]
Designers are seen to provide mediating roles within and outside a firm,
identifying potential partnerships, optimising linkages (fit) and generating new
industry vision. Some firms recognize design’s role here as strategically
important.
Design supporting primary and secondary value activities
As already noted, design is regarded in Alpha as an essential element throughout all primary
activities, and more broadly as a unifying process between of all of them. Alpha regards all its
Operations activity as design, and also much of its R&D. The value of design is less
recognized in support activities, where there is little evidence of a ‘design approach’.
‘The design process… is a very valuable background that is missing in some of the more
corporate functions: HR, Management, in-house technology development (if it's not part of
project delivery), Marketing, Sales, all these things.’ [A-1]
While some areas may have design applied effectively these efforts may be isolated in
pockets, not well integrated, despite effort and intention to do so.
Beta has a company-wide program that rewards holistic design, identifying linkages and
improving fit between primary value activities. Although the program is not solely the
domain of designers, there is ambition to better capture behavioural and subjective aspects
of the customer experience, likely to result in more design involvement.
Both firms use and value design expertise in technology development. Design’s potential
contribution in other secondary value activities is recognized in both firms, but is not
evidently practised; some specific concerns were identified (notably in the HR departments
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of both firms).
In the two firms discussed, design makes a recognized, valuable contribution
supporting value (co-)creators within primary activities, in technology
development, and in some other secondary activities, though is not
systematically applied or co-ordinated across all secondary activities.
Resources and capabilities
Design shaping and communicating corporate culture
Alpha regards its strong and distinctive corporate culture as an essential contributor to the
firm’s long-term success; its culture is believed to encourage performance through technical
excellence and creative freedom, and is seen as a key factor in staff satisfaction and hence
retention. The firm encourages the sharing of experiences among peers wherever they are
located.
‘My role is to sustain and encourage the design culture… A component of that is around wise
investment in our skills networks, the prime vehicle for developing and sharing skills and
knowledge.’ [A-3]
Cultural values, histories and knowledge are communicated and reinforced, both publicly
and internally, through graphics and communications, digital interaction design, and
interiors and architecture. Design is also regarded as an essential part of the culture itself.
‘We publish and celebrate our work… There may be an element [of arrogance] to it, but I
suspect it is actually a genuine celebration of the passion for design.’ [A-11]
Beta’s Head of Brand believes that designers cannot shape culture, and that this is the role of
Human Resources managers. However, important elements of the strategic vision are
introduced and reinforced in corporate culture through graphic and communications design.
Awareness campaigns produced by Corporate Communications teams are run throughout
the organization, via intranet, posters and presentations.
‘The values and strategy type stuff, ‘this is what we do as a business’, is… part of the
architecture of the business… Walk round the building you’ll see all kinds of stuff that
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relates back to that.’ [B-11]
Also, R&D produces concept prototypes that are used internally to articulate Beta’s long-
term direction, and indirect cultural influence may come from the design of Beta’s products
and services which express and reinforce the firm’s values and purpose.
Design is regarded in some firms as a powerful tool for shaping and
communicating corporate culture. It is recognized for its role in creating a
shared strategic vision for a learning organization, and for improving employee
satisfaction and retention in accordance with the knowledge-based view.
Design in processes and systems of knowledge management
Knowledge management is regarded as critical to Alpha’s culture, performance and
sustainable advantage. Design is used by the firm’s Information Management group to
provide a core resource to the primary activities in the firm, combining interactive systems,
physical places, graphic and communications design. The firms recognizes design’s strategic
importance in this respect.
‘We have a very deliberate system to make design expertise available through the firm, and
actually the system itself was also designed… It's about as good as it gets. It's easy to find
people and to find knowledge… Our big challenges are keeping everyone informed, sharing
knowledge and continuing building the culture... It's also one of our core values. It's super-
important.’ [A-4]
Knowledge management in Beta was not examined, so design in this context was not found
to be either recognized or applied as a strategic resource.
Well designed knowledge management processes and systems may be regarded
as strategically important in some firms, as in Alpha, in accordance with a
knowledge-based view.
Design as a tacit knowledge resource: path dependent and hard to imitate
As design is part of Alpha’s core activities, the strategic value of tacit design knowledge is
recognized as a crucial competitive resource for the firm. It is difficult for competitors to
imitate yet difficult to manage as a resource. Alpha’s culture nurtures tacit knowledge by
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encouraging personal interactions, and learning by example, demonstration and
participation, and this is regarded as an essential element of the Alpha culture, as already
noted.
‘In the realm of the more hard-to-capture stuff… in terms of our knowledge strategy, we try
to encourage connection between people… because how else are you going to derive that
more tacit knowledge than through a person? Because some things can’t necessarily be
codified or written down or easily communicated in a paper form, or even electronically.’
[A-9]
Design activity within Beta is mainly a support activity, as in R&D where it supports
technology development. Otherwise external design services are bought in, as is industrial
design by the Consumer Products teams. Most tacit design knowledge for consumer products
resides then with the agencies, so does not provide strategic advantage in itself. Its value may
be recognized in a general sense but considered inappropriate for Beta’s fast-follower
approach to products. With a few agencies Beta has maintained long relationships, ensuring
that acquired tacit knowledge remains available to the firm (and not its competitors). One
has worked for Beta for over 20 years, and speaks of having ‘led their teams delivering
probably about six to seven hundred’ of their consumer devices. Such long-standing
relationships with agencies may provide a trade-off between knowledge ownership and the
burden of its management.
In R&D, design activity plays a role in exploring and translating technology applications, and
design knowledge within the group could be described as a tacit resource, with strategic
value. Yet this value is not always recognized within the firm. One designer suggests that the
value of their activity, as perceived by senior management, can diminish so far that it is
almost ignored, or has to be hidden.
‘We go through periods when design within research is not valued in any respect at all and
you’re hiding it away… claiming you don’t do design, but you do some other thing… It’s not
regarded that highly [and some senior managers] would much prefer if it wasn’t here. They
don’t see the major value that we actually add.’ [B-3]
Firms may prefer to use design agencies rather than in-house teams, but the success of this
approach might depend on internal capability to manage the process, to co-ordinate the
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relationships with design agencies. Although avoiding the necessity to manage design
knowledge, this management role itself still requires some design expertise.
Tacit design knowledge may be nurtured as an imperfectly imitable resource,
conferring strategic advantage in firms where such knowledge is valuable. In
some firms, the value of acquiring and keeping such knowledge may be less
than the cost to do so.
Strategic vision
An important contribution to Alpha’s strategic decisions comes from its Foresight team,
dedicated to understanding possible futures and to bringing these scenarios into the firm’s
research and strategy consulting activities, as well as to design projects. This foresight
activity includes not only analysis and research, drawing on social and physical sciences, but
also art and design. Their use of design methods to share and explore ideas is an important
differentiator for Alpha from other management and strategy consultants. The foresight
stage is considered a valuable precursor to strategy formulation, exploring possible future
scenarios in which any strategic plan will exist.
Agency designers involved with Beta’s consumer products claim to contribute to discussions
about product strategy, and less often, brand strategy. But Beta is a large firm and most of its
activity is in provision of networks and telecommunications; consumer product strategies,
although important, constitute a small element of corporate strategy as a whole.
There is some scepticism towards the motives and abilities of outside consultants claiming to
have strategy expertise. It is suggested that consultants want to do strategy consulting
because it is easy money for little work, and many such engagements result in little value.
Although it is important to explore long-term ideas with freedom from practical limitations,
Beta’s Consumer Products teams have to focus on near-term commercial products. Creative
exploration must be balanced with core business. Long-term exploration of applications is
the remit of R&D, and designers there play an important part.
Stimulating creativity and providing fresh perspectives
Alpha’s Foresight team uses design methods to bring creativity to the firm’s strategy-making.
Page 19
Designers from Alpha are invited by their clients to offer ideas and challenging views on
strategic-level questions, and even participate in board-level discussions, for clients and for
the firm.
‘[We are] helping identify opportunity from a different perspective. Because one of the
things that limits you… is an assumption that [something] is impossible. And sometimes an
engineering or design view might be… ‘that’s no longer impossible, so do you want to
consider that again because it would transform your industry?’ [A-12]
Whereas in Beta, designers may present to the Board, but are not participants; their
presentations may serve as visual stimuli, the results of free and creative exploration, but are
presented quite formally. Long-term exploration of tech applications is the remit of R&D,
and designers there play an important part. Concepts usually involve technologies
originating from the R&D research scientists but also from sources outside Beta. These
concepts contribute to business leaders’ awareness of technical possibilities and of
competitor activity, and help generate ideas around long-term options for the firm.
Agency designers involved with Beta’s consumer products claim to contribute to discussions
about product strategy, and less often, brand strategy. Such high-level relationships depend
on trust, and the level of engagement varies as personnel change roles. But Beta is a large
firm and most activity is in provision of networks and telecommunications; consumer
product strategies, although important, constitute a small element of corporate strategy as a
whole.
Stimulating creativity and providing fresh perspectives in strategy-making may
be achieved through design involvement at board level. This is is evident in
Alpha and in Alpha’s clients, and to a lesser degree in Beta.
Exploring uncertainty and assessing trade-off through prototyping and visualization
Rather than trying to predict the future, Alpha’s Foresight team focuses on understanding
many possible futures, and designers use visual media to share and explore them. Although
informed by rigorous research, this approach encourages intuitive and judgemental thinking.
Clients come to Alpha for this service, but the Foresight team also contributes to Alpha’s own
strategy making. The use of sketches and drawings, models and prototypes is a key aspect of
design practice and related disciplines. It is regarded in Alpha as a vital skill on project work,
Page 20
and also in strategy consulting. These methods help clients explore possible future scenarios,
often specific to their industry sector, e.g. healthcare or the hotel industry.
‘We’ve got people… talking with clients and client associations at quite a high level about
where is their industry going, where is their business going, what opportunities are there,
which is bringing this [role of] helping visualize things strategically.’ [A-12]
During strategy workshops, client participants explore ideas by making physical models,
which are then used to share concepts with their own design teams:
‘[There are] physical deliverables, it isn’t just bullet-point lists of recommendations… Only
we could do that compared to other consultants. So that is a differentiator: we are
designers.’ [A-7]
There is increasing recognition in firm and among their clients that such approaches to
understanding possible scenarios is highly valuable for strategy makers.
In Beta, visual designs help senior management make strategic decisions regarding
investments in new applications of communications technologies. As already noted, R&D
designers play an important role generating and communicating concepts. It is not about
merely adding cosmetic gloss to an idea. They use sketches, models and prototypes to ‘bring
technology to life’; visual flair is of secondary importance to the holistic consideration of
these complexities.
‘Here people aren’t interested in whether it looks cool or funky. Sometimes it’s a hindrance.
The more holistic, strategic we can make something [the better]: IP, potential revenue, and
the back story [of] why we’ve done this initial prototype, they’re the important things.’ [B-3]
They help senior management make strategic trade-off decisions, and to explore uncertain
futures, including softer aspects of human attitudes, behaviour and preference.
Design is being used by firms to consider unpredictable futures. Through visual
representations, trade-off decisions may be explored and clarified, and decision
makers may draw more on intuitive and judgemental thinking.
Achieving a holistic view of complex systems and a shared strategic vision
Page 21
Alpha’s Foresight designers help represent and communicate complex systems to aid
strategy making. In strategic consulting services for its clients, Alpha’s strength is said to lie
in translating strategic visions into concepts. This is a key strength in differentiating them
from other management consultants, and also other engineering firms. Senior designers help
translate a strategic plan into a shared vision, a concept which can be assessed and also
executed, and this contribution is recognized in Alpha and by its clients. Conceptual thinking
is said to flourish at operational level, that is on the design projects themselves, and also at
the senior and Board level. Again, the Foresight team provides a visible example:
‘[Our Foresight workshop] has really helped just to get people thinking about some of the
bigger issues, and think about how you can innovate around that… it gives people more of a
handle to tackle them’ [A-7]
In Beta, R&D designers inform strategic decisions by representing complex technologies and
systems, addressing the complex systems of new business propositions. When they are taken
up by the Board, these concepts may have far-reaching impact on Beta’s business,
influencing pricing structures or network infrastructure, or creating new businesses for the
group.
‘[We generate and communicate] concepts which together might actually create a whole new
business case related… [which might] drastically change the strategy for the deployment of
wi-fi hotspots across the city, for instance. And will influence potentially even the pricing
models.… So these concepts… should influence the core strategy that the company develops
and deploys.’ [B-3]
Designers help some business leaders visualize complex systems and provide a
common vision. This may be achieved with visual representations of products,
or with abstracted representations such as conceptual frameworks.
Discussion
There are several existing conceptual models relating to design services and the strategic
advantage they may confer. They differ in focus, scope and in their terms and concepts, and
there have been no published attempts to consolidate and align them, or relate them to real-
world cases. Through case studies of design’s use in real firms, this study has aligned these
models and related them to industrial practice.
Page 22
Some firms value and exploit some or all of these contributions; unsurprisingly, different
firms have different approaches and priorities, and this framework provides a structure with
which to examine these differences. In some cases, even in highly design-capable firms, these
contributions may be recognized as important but are not practised; they may be difficult to
implement, or may be inappropriate for a firm’s strategy or business model.
Limitations and further work
This study has taken a broad view of what constitutes design activity, and includes various
design disciplines, which are often treated distinctly in other studies. This is deliberate, on
the premise that design disciplines need to be considered in toto, and the strategic
contributions identified are not specifically related to single design disciplines. This study
was not intended to provide a detailed recipe for successful strategic design, and has not
resulted in recommendations or best-practice guidelines. These would require an
understanding of the causal factors for the phenomena identified, which are often complex
and subtle. These might be the subject of more focused studies, and indeed in some cases
already are, as documented in the literature on which this study was based.
One of the main findings of these case studies is that even a firm with strong design culture
and focus may not be using design as best it could. The findings show less use of design in
the support activities of both firms, despite their awareness of the potential benefits.
Exploring this further could bring more clarity to why and how this might be. The case
descriptions might provide these firms with useful perspectives on design use, perhaps
indicating unknown problem areas they may wish to address themselves.
Returning to the case firms might also provide an opportunity for discussion with senior
leaders in the firm. The views of strategy makers in both firms are lacking from the study,
and would be valuable additions to a follow-up study. Most executives approached for this
study were unable or unwilling to participate. The model derived at this stage might enable
better articulation of the study purpose, and therefore prove useful in persuading such
involvement.
Exploring more firms moves attention away from the model itself towards specific cases.
Perhaps more cases would give useful insights into variations between firms; findings from
Comment [j1]:
This discussion
really is a little light. Are there any
results from the case studies that are
surprising? Are there any examples
where the evidence disagreed with
the theory. If the issue is one of
emphasis, how does the emphasis
vary between the two firms?
Page 23
using the model may be useful in themselves. The model as it stands is valid as a generalized
view, but further work might generate different versions for different business models. The
authors recognize that the field of strategic management includes a breadth and depth that is
not addressed in these simple summaries of the ‘classics’ of strategy theory. A deeper
examination of specific fields might yield further specific examples of design’s contributions
to current strategy approaches.
Conclusions
It is often claimed that through strategic design, benefits come not only from better-
designed products and services, but from better use of design throughout the firm. This
paper has set out to clarify exactly what this might mean, through the development and
testing of a framework that captures the different ways in which design might contribute to
strategy formulation and implementation. Case studies from two firms are presented to
illustrate the elements of this framework.
Individually, each of these strategic contributions of design is not a new concept in its own
right. Much of this previous work presents partial descriptions of design, related to various
strategic imperatives. The theoretical contribution of this paper is the consolidation and
alignment of these various terms and concepts into one simple framework. The nebulous and
collective term ‘strategic design’ may now be grasped more precisely and broken down into
more specific, meaningful categories.
Empirical literature of design management and strategic management uses terminology and
concepts specific to these domains, yet this study has identified an important conceptual
overlap, and has aligned the concepts there. At this stage, the framework may not be
comprehensive. Nonetheless, this study has resulted in a more complete, more
comprehensive, empirically grounded conceptual understanding of design’s strategic
capabilities.
Page 24
Figures and tables
Table 1: Design contributions to competitive forces, value creation and fit, resources and capabilities,
and strategic vision, based on literature of strategic management and design management
Strategic contribution of design Strategic management
literature
supporting the importance of the
contribution
Design management
literature
supporting design’s capacity to
contribute
Competitive Forces
Building product (or brand) differentiation,
and customer intimacy and loyalty.
Porter, 1980, 1985; Treacy &
Wiersema, 1993
Blaich & Blaich, 1993; Lorenz,
1990; Olins, 1989
Raising customer perception of signalled
value and addressing varied markets
Prahalad & Hamel, 1990; Porter,
1985
Influencing dependencies on and of
suppliers and buyers
Porter, 1980, 1985; Treacy &
Wiersema, 1993
Strategic fit & value creation
Integrating and mediating between
professional domains, both within the
organization (e.g. marketing, production)
and outside (e.g. suppliers, partners)
Porter, 1980, 1985; Treacy &
Wiersema, 1993
Lorenz, 1994; Fujimoto, 1990;
Trueman & Jobber, 1998;
Walsh, 1996; Seidel, 2000;
Hayes, 1990
Supporting primary and secondary value
adding activities
Porter, 1980 Borja de Mozota, 2003;
Phillips, 2004; Phatak &
Chandron, 1989
Resources & capabilities
Shaping, communicating and reinforcing an
organization’s internal culture
Manville & Foote, 1996; Hatch &
Schultz, 1997
Jobs, 2000; Borja de Mozota,
2003; Diller et al., 2006: 59;
Olson et al., 1998
Improving processes and systems of
knowledge management
Wernerfelt, 1984; Barney, 1991;
Grant, 1996
Meso & Smith, 2000
Being a tacit knowledge resource: path
dependent and hard to imitate
Prahalad & Hamel, 1990; Grant,
1996; Barney, 2001
Borja de Mozota, 2003; Rose et
al., 2007
Strategic vision
Stimulating creativity and providing fresh
perspectives in the strategy context
Mintzberg, 1994; Kim &
Mauborgne, 2004; Lovallo &
Mendonca, 2007
Seidel, 2000; Borja de Mozota,
2003; Diller et al., 2006
Exploring uncertainty and assessing trade-
off through prototyping and visualization
Senge, 1990; Hammonds, 2001;
Mintzberg, 1994
Kelley, 2002; Liedtka, 2004;
Seidel, 2000; Martin, 2009
Achieving a holistic view of complex
systems and a shared strategic vision.
Senge, 1990; Mintzberg, 1994 Diller et al., 2006; Rhea, 2008
Table 2: Interview participants from ‘Alpha’ company
ID code Role
A-1 Skills Network Leader, Structural Engineer
A-2 Researcher, Foresight
A-3 Director, Civil & Structural Engineer
A-4 Director, Global Leader, Lighting
Page 25
A-5 Product Designer, Lighting
A-6 Leader, global facade engineering
A-7
Associate Director, Foresight
A-8
Associate Director, Structural Engineer
A-9 Knowledge officer, Information Management
A-10
A-11 Head of Web technology, Information Management
A-12
Associate Director, Materials / Facades Engineer
Table 3: Interview participants from ‘Beta’ Telco
ID code Role
B-1 Industrial designer and Chairman, external agency
B-2 Industrial Designer, Research & Development, Technology Development
B-3 Media interfaces designer, Research & Development, Technology Development
B-4 Usability manager
B-5 Propositions manager, Consumer products – Handsets, Consumer Division
B-6 Research manager, Human Factors specialist, Technology Development
B-7 Group Chief Technical Officer
B-8 Propositions manager, Consumer products – Broadband, Consumer Division
B-9 Product Manager, Head of Fixed Line Devices; Strategy, Convergence & Products
B-10 Head of Consumer Affairs and Inclusion, Consumer Division
B-11 Head, Insights Research Centre, Technology Development
Figures:
Page 26
Figure 1: Design contributions to strategy formulation and implementation, based on published
empirical literature
Page 27
Figure 2: Diagrams used in interviews: i) stakeholder involvement in design activities; ii) design
support of the firm’s operations (Porter’s Value chain); iii) roles of design from strategy to market;
iv) evolving contributions of design over time
Page 28
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building market differentiation,
customer intimacy & perceived value
influencing dependencies in the
supply chain
integrating &
mediating between
professional
domains
supporting &
optimising primary
and secondary
value activities
shaping &
communicating
corporate culture
being a tacit
knowledge
resource
stimulating creativity &
providing fresh
perspectives
exploring uncertainty &
assessing trade-off
through prototyping
and visualisation
achieving a holistic
view of complex
systems & shared
strategic vision
competitive forces
strategic vision
resources & capabilities strategic fit & value creation
EXTERNAL
INTERNAL
Market
Product concept
Design detail
Production
'Strategy'
Support
activities
Margin
Margin
Operations
Inbound
logistics
Outbound
logistics
Marketing
& Sales
Service
Primary activities
Firm infrastructure
Human resources management
Technology development
Procurement
Organisation
Buyer
Supplier
Employee
Shareholder
Consultant
i) ii)
iii) iv)
End user /
Customer
Design
Service
requested
Remit extends
and rises
through the
organisation
Strategic
services are
recognised
separately
Services are
commissioned
separately and
directly
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