Stranger in a Strange Land

I originally wrote this essay before starting at MIT Sloan in August  —  but the breakneck pace of the semester distracted me from publishing it. I’m now done with my first semester at Sloan, and I was pleasantly surprised to return to this writing and find that my ideas still feel compelling (at least to me).

Here, I want to argue three core points that motivated me to apply to business school in the first place:

1. Design creates business value and provides competitive advantage
2. Design’s role in creating a successful product is bigger than you might think
3. An MBA makes you a better designer

Design Is How Products Create and Capture Value

Invention is at the heart of all business. “Business” is really just transferring a product from one party to another. The product could be any number of things: a physical good, a financial product, or even a consulting recommendation. But no matter what it is, it’s unique in some way. Maybe the product itself is unique, or the location of the store, or the knowledge of the sales rep who sold you on it. Something made you buy this product and not some other one, and invention is how that something came to be.

I’m going to take this chain of logic one step further and propose that the best inventions depend on good design because design is inventing with intention. Sure, sometimes great things are invented from happy accidents — but I don’t think anyone believes that’s a repeatable recipe for success. Inventing with intention — carefully crafting a creation to meet a set of strategic priorities — is absolutely the most sound way to create a product that people want. I don’t think it’s a big logic leap to say that successful businesses are built on top of products that people want. It is product-market fit that allows a business to truly create and capture value.

Let’s think of invention as if it were a function. In this case, the inputs would be capital, labor, raw materials, and market information. The output is value for both the customer and the firm. The customer gets a product that provides more value than it costs to buy, and the firm gets more money than it cost to create said product. Everybody wins!

The real problem to solve here is what the internal guts of this “function” are. How do you map from these inputs to these outputs? Anyone could figure out some mapping, but if a competitor finds a better mapping — you’re hosed. So the real challenge is to find the best mapping — and that is nearly impossible to do without employing a design mindset. A design mindset allows you to uncover latent customer needs, hidden efficiencies, and unique solutions.

Case in Point: Biotech

I saw the benefit of using design to find the best mapping first hand when I led design at Transcriptic (a biotech and robotics startup). Biotech is an industry just chock-full of new answers to ancient problems. I believe the amount of innovation in the industry is on par with that of traditional Tech, but receives a small fraction of the public awareness.

However these innovations often optimize for scientific/industry output (new data, speed, accuracy, throughput, etc). Few optimize for operational efficiency, ease of use, or ease of integration. That means scientists are stuck with tools that are hard to use, prone to human error, and generally frustrating. As a result, there is ample value to be captured by re-thinking biotech innovation from a user/human perspective and creating with intention. There's a better mapping out there to discover, and more value to capture as a result.

Here in lies my core point: at Strateos, the Design team was best positioned to find this optimized mapping, because we were closest to the output of the invention function. We knew the customer better than any other team as we spent dozens of hours interviewing them, observing them, and speaking with them. We were also the team tasked with dreaming up solutions based on these insights. We knew how to provide value to the customer, and we were constantly dreaming up new ways to do just that. To Strateos, the benefits of our work were two fold:

1. We stood out from our competition by offering more, unique value to our customers, increasing their willingness to pay.
2. We left less low-hanging fruit for our competitors to pick up and beat us at our own game with.

This isn’t the traditional role that Design plays in an organization, and we really had to fight to get it. But over time, Design really helped to define our corporate strategy, and our customers took notice.

Design Can Guide Corporate Strategy

Part of finding the optimized mapping for a product is making and justifying engineering decisions. Often it appears that the best engineering approach is clear based on engineering resources, established conventions, etc. However, sometimes Design shows this choice in a different light. Apple's tight custom hardware/software integration is a perfect example.

Despite immense competition in the smartphone market (Android holds 87% of the global market), Apple continues to capture 66% of the profits. Apple pulls this off because their products are simply better — and one of the reasons they are better is that Apple prioritizes Engineering resources based on Design decisions.

If you wanted to make a high quality smartphone (5G, high-res screen, good cameras, biometric identity, etc), you really don't have to design and fabricate custom parts. You could get everything off-the-shelf and have the specs of a high-caliber phone. However, while this phone would look great on paper, and maybe even work pretty well, the user-experience overall could never come close to that of an iPhone. That's because your software has to do back-flips to make all of those commoditized parts talk to each other resulting in a slow, clunky UX. Tightly coupling custom hardware and software unlocks just enough marginal improvement to support a user experience that's faster and sleeker than anything a commoditized manufacturer could offer.

From a pure Engineering perspective, it doesn't make sense to devote resources to custom chips, boards, and sensors the way Apple does. But from a Design perspective, this decision makes a ton of sense. By taking this approach, Apple can deliver a well engineered product, and a superb user experience. That's a lot more expensive than the approach of Apple's competitors, but it's clear that Apple's customers are willing to pay for the outcome.

Apple leads with design, and then uses engineering to manufacture an eternal competitive edge. No matter how good commoditized tech gets, you can always squeeze some marginal improvements out of a custom solution, and offer a better user experience as a result. And that is ultimately what people are buying.

For an example of this effect, look no further than the power and speed comparison between Apple's custom processors and its commoditized alternatives. This goes beyond "marginal improvement" and starts to edge towards "off-the-chart".

Apple's design-centric view of product development creates a mindset where commoditized, modularized technology is simply never good enough. When technology isn't good enough, integration always offers a competitive advantage.

This examination of Apple leads me right into my next point: In order to capture the complete value of an opportunity, Design has to be allowed to lead in defining and framing problems. Historically, Design has been relegated to second fiddle and positioned to simply enable Engineering by providing surface-level solutions for whatever problem Engineering has identified.

This is fundamentally backwards — the most value Design can offer is exposing what problems should even be solved. Then, for those problems, Design can offer guidance on what a successful solution looks like. To unlock this value, Design must be considered equally for resource allocation.

If you shift your mindset from Design as a support role, to Design as a problem-defining role, it's clear that not resourcing this discipline is an unforced error that can kneecap a firm's success.

An MBA Can Make You A Better Designer

If the last two points check out for you, then it follows somewhat naturally that there's value to a designer in getting an MBA.

Your job as a designer is not to create value for the user. Your job is to optimize the balance of value going to the user and to the firm. You are uniquely positioned to understand when these two goals are aligned, and when they are at odds. And when they are at odds, you are uniquely positioned to propose the proper balance between the two (favor either too strongly and the firm loses).

Traditionally, designers are well trained on the user side of this equation — and by all means there is ample work to be done focused on just that. However, traditional design training prepares you little, if at all, to understand how to provide value to the firm.

What exactly should you optimize for? How do you capture the benefits of your optimization? What are the short, mid and long-term goals of the firm? How does accounting, financing, marketing and corporate strategy factor in?

These are all questions that demand an understanding of business vernacular, as well as a good sense of competitive strategy, financial modeling, etc. If a designer is able to leverage these skillsets and knowledge when optimizing the user/firm balance in their proposed solutions — they can perform on an entirely new level.

So that's why I've headed back to school. It's still too early to tell if my theory is correct, but my first semester at MIT Sloan has indicated I'm on to something. Already I feel that I can make more informed design decisions that better weigh the needs and priorities of users, and the business.

Over the remaining year and a half I have at MIT, I plan to keep checking in on this. I'll let you know what I find out.