This sample chapter is from my 2008 Cengage Learning book The Business of Design.

Both editions include illustrations, case studies and other design elements not shown here. The trade paperback also includes a DVD of interviews with design industry professionals.

This sample chapter is © 2008 Cengage Learning and may not be reproduced without their permission.

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The Business of Design, Chapter 2: HOW BUSINESS THINKS

THE BUSINESS WORLDVIEW

The first thing aspiring professional designers need to understand about business is that few of the people you will work with in your career—clients, suppliers, managers—will share your skills, training, or way of approaching problems. Many of your coworkers do not see the world through the lens of an artist. This creates an array of misunderstandings. Many designers feel that business managers do not “get it”—good design and how it comes to fruition. Many business managers, conversely, know they need the design group but are unfamiliar with the creative process. From both the conservative approach of forcing internal design processes into existing ways of doing business to the fanciful view that bringing artists into the conversation will turn a bad product good, business executives still do not see the whole picture of design. So creates the invisible wall of business and design—the wall between profit motive and artistic sensibilities. It starts very early in an artist’s career—in school.

While your future coworkers in business programs around the world are being taught to analyze data or plot trends, you are trained to create something that is off those same charts in a radical new direction. Designers are trained to create the next big thing from inspiration that spans the breadth and depth of their experience. Many business students are taught to manage the last big thing, keep a watchful eye for flaws and defects, and pay close attention to the gyrations of the current, known, identifiable competition. Is it any wonder that design—while certainly important to business—is widely misunderstood, mismanaged, and applied to business problems in a rather distant, hope-for-the-best manner?

The good news — though it may take a while to reach any given employer — is that business is trying to understand design and going to great lengths to train their management in the ways, habits, and workflow of the artist. From heralded new master’s degree programs at leading universities to the quiet, but increasingly frequent mention of design in stalwart business publications such as Fortune magazine and the Wall Street Journal, artists—and how you do what you do—are in demand not only for skills, but also for their worldview and approach to problems.

Such cultural change toward acceptance of artists, however positive it may sound, is slow in the business world. Much like advertising evolved from necessary evil — how do you keep sales of carbonated, sugary water from slipping in the winter months? — to being the backbone of global corporate communication, design is gradually moving from the fringe.

Once the work of only “starving artists” who wandered into the art department or antisocial engineering types who toiled in obscure labs, design is now a prized skillset and sought after way of problem solving. Good design creates new opportunities that the traditional corporate hierarchy would miss or not take full advantage of, and this has the attention of even older, established industry leaders. That being said, this change can take years, even in today’s rapidly paced business climate. Until a Masters of Fine Art is the common resume centerpiece of the world’s top executives, young designers would be well served to understand business as it is now. This will help you not only work with “corporate types,” but also communicate your value to each project and organization as you progress in your career. 

Let's look at some common differences between formal business and the training of designers. 

Logic versus Emotion

 Many sciences influence business training but none more so than economics. Economics, as it has been taught to business students for many years now, is precise and logical. There is supply of a product, and it can be assigned an algebraic variable. There is demand in the population for this product, and that can also be assigned to a variable. Thanks to this approach, supply and demand and any number of permutations and formulas that revolve around these concepts can be neatly calculated and entered into — every artist’s favorite — the tabular spreadsheet to generate rather mundane graphs.

Supply and demand is one of thousands of variables that businesses use to make decisions. The supply of data is endless. Studies and reports fill pages of charts and numbers to tell business managers around the world everything from the expected demand for premium fuel at a gas station in Miami Beach to the spending power of today’s 10-year-olds once they reach the age of 25. Numbers and logic dominate business thought. There is a cottage industry of analysts and other number crunchers that supply this information to quench the insatiable thirst of business leaders for hard data — information they can count on, literally.

In walks the artist into this numeric mine field with an opinion phrased as “I think this — campaign, product, service, solution, color, pattern, music — will work.” 

Ultimately, the artist works on feelings and emotion, not just pure logic. Although many top designers will study market trends and other data, design is often not hard science. Design requires you to reach into the unseen and follow a path with few numbers to guide you. From the best advertising to the most sublime consumer electronics to automobiles that fetch thousands more than the cost of parts and labor could ever justify, design plays in a different arena than the comfort zone of most executives and decision makers in business. 

How does the designer combat this focus on math and science with training in color and form? First, come prepared to any project, position, or presentation with what you want perceived as hard data. Don’t have hard data on an ad campaign you just dreamed up while stuck in line at the bank last week? Find it. Find campaigns as offbeat as yours. Find products in other industries that tried the radical redesign you propose. Do your homework — and it will feel like homework — until at least some numbers support your conclusions.

Second, make sure you keep your own accomplishments in numeric form. Did product sales increase 10% or 1 million units after you refreshed the design? Make sure you have that data. Did your last client have a 400% increase in lead conversion after the website was overhauled with your user interface work? Have that in your arsenal. Did the book you did the layout work for last winter set a record for sales? Add it to your credentials as why someone would logically hire you. Business runs on numbers and cold calculation, so make sure decision makers have at least your side of the story to plug in to their equations.

At some point in your career, you may have reputation. You may be able to set the numbers aside and let your body of work speak for itself. Did you design the identity for one of the most-known firms in the world? Were the film graphics you designed the most imitated design element of the year—say, The Matrix titles in 1999? Did your copywriting spawn a million amateurs to post their own versions of your ad online—the “I’m a Mac.” ad campaign of 2007, for example? At that point, your portfolio may not need to include stats. Until then, be ready to make a logical case for your work, even when you know it came from inspiration beyond trends and analysis.

Profit versus Inspiration 

The most maligned aspect of business is profi t. Profit is invoked when critics of an industry or a particular organization want to call into question the motives of creating or promoting a product. Profit motive is often an easy target because, beyond some overreaching utopian goal of improv.ing life for all humanity, profit is the reason for the existence of a business. There may be some inherent good created by the operation of a business, but without profit, the organization will ultimately close its doors. We will explore the profit equation later in the chapter, but for now it is instructive to understand that profit is the central goal of the business. The careers of many business managers rise and fall with only percentage changes in profi t; profit is the bottom line.

Many designers, especially with a fine arts background, do not like their ideas turned into the simple Boolean equation of “Will this make us money, yes or no?” Artists work from a different perspective, and whether divinely inspired or just a really good idea, it seems callous and almost inhuman for management to boil the idea down to profits. As a designer, always remember that executive decision makers are fi rst and foremost searching for profits—both long term and short term. If your idea, design, or solution is not going to make the company more than it costs to produce, in the worldview of business it should not be produced.

There are many, many great designs and great ideas that only see the light of day when they are found to be profitable. If you are certain your idea would make money but you cannot find an executive or a client who shares your enthusiasm, step back and look at the numbers they are using. Perhaps your idea is better suited for another firm, or could be produced with different materials, or would sell only in a given season and will take too long to prepare for this year’s turn in the market.

Timing plays a big role in profitability also. The uses of retro and nostalgic images in advertising, for example, are usually reserved until enough time has passed that the negative memories of the era have passed. Use 1980s imagery in 1994 and the Cold War and corporate greed might be fresh in the public consciousness. Use the same 1980s images in a campaign in 2004 and customers would fondly remember a lighthearted era of synthesizer music and New Coke.

Regardless of what you need to change, a design that does not make a profit is destined to be a hobby, sideline, or never produced at all. For all the negative press corporations in some industries receive for record-breaking profits, remember that profit sustains the business and in only rare circumstances will management forego that responsibility to pursue your idea.

Repeatable versus Custom 

Henry Ford is largely credited with the creation of the assembly line and the industrial revolution it spawned. The idea of diving tasks into small, repeatable steps so they can be duplicated en masse has since been at the heart of thousands of successful businesses in a variety of industries. Documenting every process from the 1 minute and 40 seconds required for slices of a potato to fry in hot oil to the scripted response a manager should follow to deal with an irate customer, modern business is designed around mass production. 

Employees with similar skills can follow repeatable processes—even as one retires or quits or gets fired or downsized—and another steps in to work in their place. While this idea was originally conceived for the assembly line of turning screws and welding and stitching cloth seats together, the search continues for ever faster, more precise, more cost-effective ways to produce results evenly and predictably. The more processes that can be duplicated, the more costs can be lowered and profits can be increased. Mass production is efficient, and when a unit of the product you are creating must be duplicated, every aspect of its creation will be dissected and analyzed by management that is trained to understand and evaluate its suitability for the assembly line. The assembly line might be digital files that move across continents with a few clicks or actual manufacturing that will allocate resources at multiple production sites, but ultimately business must find a way to bottle success and duplicate it. 

Artists then, by nature and training, do not look for such efficiencies and are understandably suspect when their creativity is turned into another cog in the wheel of a smooth running, mass production, business machine. Designers, especially before the reality of business sets in through the course of a career, often fancy themselves as artisans of a slower, more enlightened age. The creator sees the work as unique and timeless, not one piece in a million-unit shipment needed by next Thursday. 

Although some design disciplines—especially industrial design—are taught to appreciate and work within the idea of mass production, many are still approaching design as craft. Craft and skill are certainly still important aspects of a designer’s work, but business leaders who sign off on what goes from design to production are under constant pressure to produce more, cheaper, faster, and with greater efficiency.

How do you reconcile mass production with artisan care and craft? First, consider the influence and opportunity that mass production creates. Not every great work of art is a limited edition in a museum. Great music, for example, has spread far and wide to influence millions around the world because of mass production, mass marketing, and—at least until the digital revolution— mass packaging. The best music of the last century would still be as great without the mechanisms of business behind it, but who would have heard it? 

Second, consider that not all mass production requires sacrificing what makes a design great. Thousands of niche markets are created each year and new manufacturing methods continue to reduce the scale of what can be produced for these markets. Although some industries—such as automobiles—have little room for niche design, even these old standard bearers of mass production have seen brands such as Mini and Scion offer endlessly customizable options and other makers latch on to the “mass custom” approach.

Embrace the constraints of mass production like you would any other design problem. Great design requires restraint; overcoming the barriers of a given problem creates the daily work of a designer. The identity package you create for a global client must have meaning in Beijing, Dallas, and Prague. Although this could be looked as a recipe for a bland, conservative mark that leaves nothing to chance, it could also create the opportunity to create something unique—and the fact that it is duplicated in any number of applications only further showcases the thought put into the work. 

Finally, understand that business is not based on mass production by whim or careless choice. Business is under intense pressure to continuously lower costs and extract more from less. This goes from the raw materials of industry to the continuous battle among business competitors to attract talented people as employees. Employees—like you—have talent and skills and a unique approach that helps the business achieve its goals. But employees come and go for a variety of reasons, so the more a business can document and reproduce the results of their fi nest people—often called best practices—the less dependent they are on any one person in sustaining their success. The mass production process, even when applied to design and the arts, is there to extract the best you have to offer and multiply it by a scale that no single employee could match. 

Numbers versus Images 

Throughout this chapter, we noted that a good amount of business decision making was based on hard data — numbers. However, the tool kit of the designer—color, sound, form, shape, and motion — plays on the senses, not on the logical mind. This gives a designer a unique position in the organization as one that can alter perceptions, solve problems, and get across ideas with.out supporting evidence—without the numbers to back it up. This is a major reason why design has become the newest obsession of business leaders and why design training is so sought after in today’s business world. Any number of professional specialties solves problems with logical approaches. If there is an existing case law on a subject, a lawyer can logically evaluate his client’s approach to a suit. If the production capacity of a plant is at maximum and orders are still running late, operations can logically plan to expand. If the number means this, the logic speaks to what to do about it. But an artist works in the strange area around, beneath, and behind the numbers.

The conclusions of great design can often come seemingly from thin air—“More of our cars would sell if we offer this red I saw on a lipstick walking through the department store on Fifth Avenue yesterday.” There is no evidence or any logical way to evaluate the validity of this opinion. 

For this reason, business leaders are excited about the boundless opportunities present in the minds of their design staff and fearful that there is no way to extract such insights on demand or in a timely, efficient, predictable manner. You must keep in mind as you embark on your career that the training you have absorbed and skills you take for granted—knowing when colors look good together, seeing a typeface in your head that would be perfect for the campaign you are working on, knowing just when to cue the sound effects at the end of the opening credits—are not the domain of anyone else in your organization or the clients you serve. This is both a selling point and a detriment to your career. This is what you do and what you offer, but be patient with those you work with, because it is only part of a project to them. Most employees are not knowledgeable about design process and are counting on you to provide a perspective they cannot offer.

Factual versus Conceptual

A good designer is able to think conceptually. Using his understanding of a problem and all the variables that contribute to a given situation, a designer works with possibilities and ideas until a solution arises. This may happen immediately or in the middle of a meeting, but is just as likely to occur during a day off or waiting for a mocha latte during lunch hour. Concepts and ideas—and their counterparts shape, image, and color—dance in the mind of a creative professional and can be so vivid and all-consuming that the conclusions drawn have a powerful effect on the designer. The effect of all this natural, internal brainstorming is that the feeling that the idea—the solution he has in mind—is real, attainable, and correct.

Business though, does not work in only concepts and ideas. Business managers deal in facts. It is not a fact that your solution is correct. For that matter, much of what you use to draw your conclusion—influences that span your lifetime and shape your career—are not factual to an outsider either. Management is largely a practical, logical practice and not lost in the world of ideas.

This difference between conceptual thinking and factual basis for action must be understood to work in professional environments. The idea you have may be valid. The solution you dreamed up might be the right one. But a business is concerned with getting it right and taking the most direct route to a desired result. Your ideas are good when you have facts that back up your claim. Much like the weight given to numbers, the emphasis on factual information is not always appreciated by designers. Designers, as creative people, often have an aversion to taking facts at face value. If you create for a living, it is not a huge mental leap to think many truths are nothing more than urban legend or myth repeated often enough to take hold as fact. But while this may be philosophically interesting, your client or your boss is unlikely to take up the discussion. Instead of swim.ming upstream with a debate of what is factual or the value of your concept, find facts to back up your conclusions. A fact will often turn your hunch into something management finds actionable. A fact—“Sales of red cars were up over this quarter last year.”—for example, will always support your case and gives business decision makers more comfort in dealing with a known—the facts— than an unknown—your opinion that a certain shade of red might work on this year’s model.

Imagination versus Status Quo

The nature of business is conservative. Risks are calculated. Wild ideas are not acted upon with reckless abandon. Change is relatively slow and incremental. The best bet for this year is what worked last year. If the numbers show a trend that goes in one direction, all planning will be based on the idea of the trend continuing. Step one in the process should be followed by step two. Business courses are in large part designed around this conservative, timeless approach. 

Little wonder then that the artist is left feeling a bit out of place. Groundbreaking art has always steered the opposite direction of the status quo. Creative minds naturally challenge the prevailing wisdom and seek new ways of doing things. Design is not at its most rewarding when the project spec is “add more green”—designers want to change things. Shake things up. Make something happen. Improve the human condition. Or at the very least, stop the use of such boring fonts in all their clients’ sales materials. Although business is often the maintenance and protection of the status quo, great design often means tearing down what worked to build something better in its place.

Slowly, the business world is learning the value of such an approach. Designers are at the forefront of reshaping many industries around creating new markets and inventing entire new service lines instead of blind allegiance to what works right now. Business executives are looking for opportunities, as margins on old product lines dwindle in the face of global competition. The more whimsical approach of the artist, though still reined in by the inertia of business, has come to be more accepted and appreciated.

Although a grudging acceptance of this sort of creative risk taking is in vogue, the beginning designer will likely have to wade through many projects, clients, and even entire jobs that are based more on the work of the recent past and “what works” than any attempt at going in a new direction. Even in the most edgy, artistically free design shops, the bills are paid and the lights stay on because of rather mundane, routine, and unimaginative work that clients continue to request each year. If your dream is to redesign the Internet presence of Mercedes-Benz, you will probably find yourself making relatively small changes, minor updates, and occasional fixes to many unknown and sterile websites before such an opportunity crosses your desk. If you plan to design film graphics for Industrial Light and Magic, you may find that you will be learning your trade on local television ads or small national clients years before they need your skills. 

The business of design is not always about creativity, but often it is about producing content. Thousands of annual reports, brochures, television ads, logos, websites, and other design work are constrained by conservative clients to be normal, even uninteresting, and only modestly different than the previous version. Learn what you can on each assignment and do your best work, understanding that the design industry is not always flush with requests for trend setting and avant-garde work.

Long Production Cycle versus Constant Improvement 

Most industries favor rather long cycles of planning a product, going through all the necessary contortions of development, testing, legal approvals, staff training, and other steps before releasing something new to the marketplace. Business fancies itself as fast changing and rapidly paced, but the reality of most industries is still that products take time to be developed. The larger the organization, generally, the more time involved in producing a new product. This relatively slow process means that there is a defi ned emphasis on getting it right. The product, after consuming the time and resources of the organization for an extended period of time, needs to succeed to pay back that investment. This level of pressure on each new product—or revision to existing products and services—tends to weed out many edgy, irrational ideas as too risky.

Designers naturally want to see their ideas come to life and get into the hands of the intended user or audience. The long—and expensive—production cycles of many businesses allow for only a precious few designs to go from concept to finish line. A shorter production cycle that gets more ideas out into the public eye would make the work of a designer, especially starting out in the business, more rewarding than spending months or even years on work that in the end does not make the cut. Although some design disciplines understandably take a long time to perfect, some areas of practice are starting to see continuous improvement cycles displace the harsh filtering of what gets released. In information design and interactive, for example, major international companies may still take months to design even small features for public use, but many more progressive clients are going in another direction. Instead of making sure every part of a design is perfect, they are releasing sites and site features much earlier in the design cycle and improving them based on user feedback instead of closed-door testing. This change of philosophy can be embraced by business not because of blind compassion for aspiring designers to see their ideas in public but simply because constant improvement is often faster and cheaper than long cycle development. Getting more ideas out in public sooner also spreads the risk of spending more time and money developing something the public does not want. The experience for designers of publicly failing—however harsh it might sound—can also be an excellent teacher when you know your next product will release in weeks, not years.

This approach has wide-ranging impact on business but obviously only fits certain situations. Ford Motor Company is not likely to skip their multiyear design and testing methodology to release fifty new models each year. Although that prospect might make the industry—and the public at large—buzz with excitement, concerns for safety and the price of ramping up an assembly line for each new model is prohibitively high to do so. Other market leaders in other industries use a long production cycle to make sure only the very best ideas of their design staff make it to production—even if it means hundreds of prototypes and mockups are thrown away to get to the very best the company has to offer.

The lower the cost of trying new ideas, the more likely the management might take the chance on a short production cycle. Your next idea for a video advertisement might not be green lighted for the Super Bowl, or even for broadcast on high-definition television, but thanks to the falling cost of technology, your employer may tell your team to shoot it and release the ad online or in other inexpensive video distribution arenas. This type of short production cycle was unheard of only a few years ago, and falling manufacturing costs continue to push the barriers of what can be produced with limited planning.

Cost and risk are always at the forefront of business decision-making, so understand that your client or employer is not intentionally moving slowly toward new products, services, or other market opportunities. If your ideas do not expose the business to legal problems and are inexpensive to produce, you might be able to persuade the executives to move faster and fix problems, make corrections, and add features as they arise.

Business versus Job  

Having a business and having a job is not the same thing. While this may sound obvious enough, make sure you have given some thought to the distinction when you are looking for career opportunities in design. Business executives are trained to create processes that earn a reliable, constant return on investment of capital. In other words, a successful business makes money for investors while they are at their desk, while they are asleep, and while they are vacationing in the Andes.

This is a fundamentally different thing than a job, and most designers—and recent college grads in particular—are looking for a job. A job, no matter how sophisticated or how much training is required to perform it, converts labor into income. When you work, you get paid. When you do  

not work, you do not get paid. That is the nature of most employment, but not of a successful business. Many jobs mask this fact by offering salary, creating an illusion of income while you are, for example, on paid vacation. Salary can be a good thing, but it is still tied to performing a certain function for the organization.

Design jobs can offer secondary income in the form of residuals or royalties, but most work performed by starting designers does not offer this opportunity. Businesses do not approach earning money the way individuals do. When you design a product or a service, the business is looking for a way to earn money when you step away from it. The ad you create should return business to the client long after you have archived your Photoshop files and moved on to another project. The product you created should sell for some time after the testing is done and the approval is given to ship it. A business that does not earn money from past work is subject to continuously finding new clients just to keep afloat. This distinction from earning money as an employee is critical to understand the rational of business executives. This is also important to consider when you plan to go on your own — see Chapter 8 — and in looking at a client’s ability to continually fund new work.

Google, for example, ties an infinite supply of searches to advertising that is automatically placed by software that, while constantly improved, is already developed. Mercedes-Benz designers will spend years on a new product, but the product then can sell for a decade with only small, incremental improvements. This idea of earning residuals applies to Getty Images and their library of stock photographs or your local real estate brokerage and the percentage they earn when each agent under their employ sells a home. Business is about creating processes that generate continued profit. Jobs are created to fuel these processes.

Risk and Reward  

To understand how and why a successful business earns a profit, we have to look at the critical factors involved—time, resources, and risk. There are myriad other formulas for calculating profits, and we will even look at a few of them, but from your perspective as a designer, these are the main elements. A business invests the collective time of every person involved in the business, from the first paper sketches of the founder to the daily shift of the security guards. A business risks the time of their employees for the expected, or at least hoped for, result of profit. Time is the easiest to understand and appreciate, especially for many designers who hope to freelance or otherwise work for firms that bill their time to clients. Your expense of time is a primary component of the business.

A business risks other resources, as well. This can be a natural resource, purchased wholesale products that contribute to the business, digital assets, or information resources. A business acquires resources to risk them in the pursuit of profit. Looked at another way, if the resource is more valuable as it stands — money safely invested, employees working on routine takes, etc. — than it is to use on a new project, product, or service, the business is better off doing nothing.

That is an abstract way to view the allocation of resources but true nonetheless. It is most true of capital—monetary resources—the business has on hand. If a bank will give the business, for example, a 4% annual rate of return, and a new project that requires the use of this resource will earn 4% after all expenses are accounted for, the business will pass on the project because there is no additional return on the capital at risk. Each resource in the business is accounted for in this way. The work of the business decision maker is to maximize the profi t from each available resource—including your time as an employee. This unfortunately means for many talented designers that their time is better spent, from the business point of view, on projects that are not high on the scale of interesting, challenging, or groundbreaking. They are projects that have the highest return on investment, and therefore are the most appropriate use of the designer’s time at work.

The business uses time and resources to earn a profit but only when it is put at risk. Risk is a critical part of the business equation. A business puts their resources at risk for the opportunity, the chance, that if everything goes as planned it will profit. An appreciation of risk, and your own tolerance for risk, will inform your career decision making in many ways. While many factors account for how much you earn in a career, the amount of time and resources you risk will have a direct impact on the opportunities, and as such, the income you receive for your work. Business successes make headlines, and the newest top selling product, top grossing Hollywood fi lm, and fastest growing franchise might hide the casual observer from the fact that business is, at its core, a high-risk proposition.

Risk Without Reward: Biggest Hollywood Losses 

• Battlefield Earth—Cost $73MM, Earned $21.5MM
• Waterworld—Cost $175MM, Earned $88.2MM
• Ishtar—Cost $55MM, Earned $14.5MM
• The Adventures of Pluto Nash—Cost $100MM, Earned $4.4MM (Source: BoxOfficeMojo.com) 

Risk Without Reward: Dot Com Failures

• Boo.com: Spent $188MM but was only in existence for 6 months.
• FreeInternet.com: Lost $19MM in one year (1999) before filing for bankruptcy in October 2000.
• Pets.com: Famous for their $1.2MM Super Bowl ad, they were listed on the NASDAQ stock market in February 2000 and liquidated 9 months later.
• TheGlobe.com: Stock shares traded at $97 during initial public o.ering are now worth less than 5 cents each.

Billions of dollars and millions of hours of labor are expended each year on products and services that do not earn a profit. This is the chance you take in business, and the reason executives are able to create a track record of success in creating profitable products and services are rewarded with enormous incomes and prestige.

The risk these business decision makers are taking is not, most often, of only their own time and expense. As often as not, it is not their own monetary risk either—at least not more than the value of stock and other investments. So who is risking everything to make all this profi t? Investors. Before you write off investors as a small group of mega-billionaires, though they certainly do risk large sums in search of profitable enterprises, consider that millions of people take part directly or indirectly in financial vehicles such as the stock market. The global markets, which are hidden behind a wall of jargon and fine print in the retirement accounts of most workers, are the monetary resources used by many companies to risk for profit.

Let us explore an example of how resources and risk come together in a design transaction. An employee of a small local company invests a modest amount of money each month toward retirement. The money is put into stock shares of a larger, international company. This larger, international company requires an entirely new identity for a great product that is not making inroads with the target customer base. They call a design firm to do the work—your employer. After some negotiation, they hire your firm to do the identity work. The money they use, though passing through banks and brokers and all sorts of complex systems, is ultimately the money invested by the employee of the small local company. In this example, the employee is looking for a reliable return on their money toward retirement. The international company is looking for design work that helps achieve that goal. The design firm is providing the work toward that goal. The designer is employed to create the actual identity for the fi rm. 

As you can see, the more put at risk, the higher the reward. The employee—by investing in a relatively safe retirement fund—is taking only a slight risk that their investment will be lost or will not return a modest gain. The international firm, by risking resources on a large scale must return a sizable profit. The design firm is risking the cost of employing designers and other staff without certainty that clients will continue to use their services. For this risk, they must earn a profit, as well. The designer, on salary, is only risking their own time, and that the paycheck from the firm clears.

Looked at in strictly monetary terms, a designer might be paid $3,000 for the month they are em.ployed on the project. The design firm might involve two staff designers and a senior art director and earn the firm $20,000. The client, the international firm, might use the new identity system to increase sales of the product and earn over $1 million per year in additional profit for several years. The investor might never see a return directly from a single project, or even single company, but overall might earn 8% of their $2,000 investment in a year, or $160. This positive scenario paints a picture that the large firm is making an unreasonable amount of money from a designer that earned $3,000 for their efforts.

Consider the same project, but the product does not catch on with the public and does not return a profit. Now the small investor, who has their monetary risk spread across many companies— each with a variety of products and services—will still earn their $160. Your design firm still earned their $20,000. Your paycheck still cleared. But the client is now out $20,000, plus all the time and resources of developing and marketing the product. In this scenario, the client is the one left feeling that other parties benefited while they did not. The business executive responsible for this project now goes from earning the company millions to explaining the loss of millions to upper management, the board of directors, and ultimately to the investors.

This is the nature of risk and reward. Although obviously a simple example that leaves many variables out of the equation, the general principle is the same. Your design work, like the work of many others in the business world, is part of this complex system of risking resources for profits. 

COMPETITIVE ADVANTAGE 

In the quest for profits, business must create and maintain a competitive advantage over their competition in the market. The customer base must deem their product or service better, for one reason or another, than something that can be substituted for it. In many ways, this is the reason for the business world’s interest in design—creating an advantage through superior design is one of the primary ways successful businesses stay one step ahead. In this section, we look at some of the traditional ways business executives attempt to differentiate their offerings. 

Quality  

Making a product of better quality can set it apart. That is simple enough in concept. An automobile that runs for 10 years without breaking down or a watch that ticks away without problem or clothes that stand up to years of use and cleaning will naturally be looked at, over time, as more valuable in the market because of their high quality. But to business, quality is easier said than done. There are several problems with basing your competitive advantage on quality, much to the chagrin of many designers who would prefer their work, once printed or manufactured or otherwise offered to the public, stands alone as the best. First, quality is only an incremental advantage.

Management in almost any industry has to be too concerned with not just quality but perceived value from quality. If a competitive product is not poorly designed but instead only of slightly lower quality, the public—everyone except designers, for the most part—may never notice the difference. More importantly, they will not pay more for the difference in quality. This can be difficult to swallow for a designer, as the effort and attention spent on each detail of their work can wash away without notice when the customer is making a buying decision.

Second, quality is expensive. The higher cost of a product or service to produce will lower the profit unless the cost can be offset by more sales, a higher sale price, or both. The profit motive we already discussed can be a harsh judge of a design, as details that the designer would like to use— the better paper stock, the nicer cloth lining, a higher grade leather—can turn a product from profit to loss. This balancing act between high quality and low cost is the work of every designer and an inevitable part of almost any design project in any of the design professions.

Quality can certainly make a difference to the bottom line of a business. High-quality products can command premiums and cause consumers to go to extreme lengths to acquire them. But keep in mind as you work on a design that business views quality as a variable like any other aspect of a project. Be able to work at both the high end with the best materials and production options, but make sure your work can also travel down the scale—toward lower-quality materials and faster, less expensive production means—without losing effectiveness. 

Quality is one way a business seeks competitive advantage. In many industries, offering second-tier quality at lower prices often will win business. The reality of business is that there is a market for products and services across the quality scale and the more of that scale you are able to work within, the more opportunities you will avail yourself. 

Cost 

In today’s hyper-competitive global market, lowering costs is a key competitive advantage for many industries. Cost, in the calculations of a business, has many variables and is not the same as price. The amount you will offer your goods or service to the marketplace is the price. The cost is the amount the company spends to create, market, and sell the product or service.

Your employers and clients are looking for a way to profit and have an advantage in the market, not just offer the lowest price. Your work as a designer is, more often than not, part of the cost of doing business. The value you bring to the business should be more than what it costs to have you employed. From a business executive’s point of view, minimizing costs is a daily pursuit. Cost includes labor — your salary — along with raw materials, taxes, office and warehouse space, legal expenses, technology, and an array of other areas that must all be factored into the cost of a product.

Businesses are always looking for a way to minimize cost as a competitive advantage. Your design training can help this pursuit, as finding a better, more efficient way to do things is a natural part of your thinking and education. Find a way to use recycled materials if it saves money or use old layouts as a template for clients that cannot afford custom design every month. Save the company money—reduce their cost—and you are contributing to the bottom line. 

Distribution Network 

Another competitive advantage is the distribution network a business uses to get their products and services to the end customer. This can be the elaborate network of trains, planes, and trucks of a global brand or just having the prime location in a busy corner of town. For new arenas such as digital media, the distribution network might consist entirely of hard drives and high-speed Internet lines. The speed, efficiency, and cost of getting the product or service produced, and in the hands of the customer all create a competitive advantage. This is a primary reason established companies in some industries see their advantage increase over time. As their network grows, it gets more efficient and less expensive per unit to operate. This makes it even more difficult for a newcomer to the industry to compete because they would have to overcome the advantages of the distribution network. 

Monopoly 

Another advantage a business may have is monopoly power. A true monopoly—locking down an industry to just one company — is illegal in most capitalist countries. Too much power over an industry in the hands of one company creates abuses such as price gouging and also stifles innovation — why get better if there is no competition? There are many industries though that have product or service monopolies for a period of time. Because these monopolies control only small parts of large, complex industries, they operate legally and have become rather common. The competitive advantage of a monopoly is clear—if a company is able to shape consumer demand toward a product or service that they alone offer, they stand to make a profit from each transaction. Design can create and destroy this highly desirable advantage for a business. For example, a design that creates a new market segment can redefine the market to such an extent that all conversation, sales comparisons, and future product reviews are based on it.

Innovation 

When costs have been cut as far as they can be, quality is as high as possible, and there is no monopoly at work, a business can struggle to maintain its profits. This is the case in many indus.tries each year, as intense competition drives down prices while not allowing for lower-quality products. For this reason, successful businesses are no longer solely occupied with maintaining their market share, but innovating. Innovation creates new markets and expands the opportunities of a business in ways that other competitive advantages cannot. When a business innovates, it offers something unique to the market, and therefore is less dependent—at least for a short time—on cost or distribution advantage.

The iPod, for example, did not rely on price as an initial advantage. It was actually more expensive than other portable music players, especially the last generation of portable CD players. Apple has a mature, efficient distribution network in place, but could not rely solely on this advantage against consumer electronics makers such as Sony that are equally capable. The iPod was created as a high-quality product, but some areas were cost-prohibitive even at the time it debuted. For example, the design team may have preferred to use a color screen, but this was left out of the product until later versions. The iPod is an example of innovation. No other product had taken the idea of a portable hard disk that played music in the direction of the device, and consumers responded.

Starbucks, with its blended coffee drinks, was another innovative approach. Instead of competing with numerous coffee shops, diners, and restaurants with a product that has literally been offered for centuries—coffee—Starbucks created an entirely new class of beverages, from versions of Italian and French classic drinks to many new and infinitely customizable concoctions. The innovation, not the distribution network, cost, or existing monopoly earned market share. Now many firms are trying to compete with Starbucks by offering blended coffee drinks, but the innovation is lacking and they are primarily competing based on cost or other factors. 

THE PROFIT EQUATION 

Profit, as we discussed in the previous section, is central to the ongoing success of any business. The standard equation for a business to determine profits is simply stated as—Revenue (the amount the business earned) minus Costs equals Profit. If the number is positive, the business earned a profit. If the number is negative, the business lost money.

But within this simple equation are many hidden details that paint a more complete picture of the quest for a profitable business. Focusing on design, the key questions for a business are as follows: 

• Is good design a cost?
• Will good design earn additional revenue to o.set the cost?
• Can design save the business money in other areas? 

As a professional designer, many projects you get involved in will have all three aspects to consider. How you relate your work to these parts of the profit equation will shape your career and the projects you work on. Let us explore the relationship between design and profit further. Design costs money to produce. The salary or hourly wage of each design professional on a project is a cost of business. So too is the cost of the tools you use. You may have the impression from advertising and industry websites that all professional design is done on the very latest computers with the most up-to-date software, but this is simply not the case. Technology is an expense the business must account for like any other. Stock or custom photography, the use of freelancer artists, the materials of production—all are expenses. When you search for a job or plan to freelance, keep in mind that while your work may earn a substantial return for the business, it is initially an expense.

When the business calculates the resources it needs to complete a project, expand their services, or respond to their competition, the amount you require to work for them is a cost. A successful business understands how to get the best talent to work for them in a variety of ways — from the environment they offer to the benefits they provide to the challenge of their clientele - but does not continuously overpay employees. It is not a personal preference or a mean-spirited human resources director who wants to negotiate down the last dollar when acquiring your services. Your income is part of the profit equation and, at least at first, a cost.

Once you are on staff or hired as a freelance worker, you have the opportunity to see your design skill turn your employment from cost to benefit. The first way this can occur is to produce higher revenue. When your design work can be shown to increase revenue, either directly — designing a product that sells big — or indirectly - designing an ad campaign that drives more sales, you are no longer just a cost of the business and the risk they took to acquire your skills has paid off as they anticipated.

The other payoff you can provide your employers and clients is cost savings. You can find where the business is needlessly spending money and reduce the expenditure. For example, a company may have a website that earns income but requires expensive staff to make changes every week. If you can redesign the site to reduce their cost of maintenance while maintaining other functionality, your design saves the business money and offsets your cost of employment.

Your preference for applying design skills to these profit variables will start to shape your reputation in your career. Each area can be rewarding and pay well, so ultimately you need to determine what appeals to you about the work. Do you like the challenge of creating new products from scratch, something entirely new to offer the world? Or do projects like marketing and advertising appeal to you, applying your design skill to increase demand for existing products and services?  

Perhaps you see your best opportunity as a designer in redefining business processes to save your clients money. Designers naturally look for a better way to do things, but you have many options in how you direct this skill. As you start your career, you may not always have complete control over where you fi t in the profit equation. Project and job descriptions will often spell out what is needed, and your role is to respond to the needs of the business. This may be to find ways to reduce costs, to create a new product, or to generate demand for an existing product.

THE BOTTOM LINE

• Business is driven by logical decision making.
• No business can sustain itself long term without profits, and designers must understand how their work fits into this goal of clients and employers.
• Business managers must find ways to replicate processes and products that are successful and not rely too heavily on any individual for continued success.
• Business decisions are often made based on numbers and statistics and successful designers must translate their accomplishments into this form to communicate their value.
• A business is based on creating systems to continuously make a return on investment, whereas a job is a trade between labor and income.
• The time and resources put at risk in the course of business must return a profi t much greater than safer investments.
• For a business to succeed, it must find a competitive advantage over other products or services in the marketplace.
• Innovation is a critical competitive advantage and an area that designers can have a significant impact.

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Update 3: This discussion is over. Almost two years after I posted this piece, Flash for mobile is now dead and Adobe is reinventing itself as an HTML5 company.

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This is satire from 2003, lampooning the design industry of the time. Some of this is still current, while other trends - like Flash - have faded. Perhaps you've worked with (or for) firms that are run this way? Enjoy.

DeSetto Interactive Group LLC - Internal Use Only

MEMO

November 10, 2003

To : All Staff

From : Management

In the interest of serving our clients, DIG is restructuring in an attempt to abide by current design industry norms. Please observe the following changes and contact Human Resources with any questions or concerns. Thank you.

Dress Code

All staff must be dressed in black at all times and wear Prada at least twice a week.

Recruitment and Training

All newly employed designers must be trained in fine arts and quickly become disenchanted that their skills are wasted and misused by evil corporate profiteers.

Relocation

Although we have no clients in the area, the design team will be relocated to our new New York office. Any designers interested in living elsewhere are asked to apply for opportunities as we expand to other self appointed design capitals - Prague, Minneapolis, and Austin. Though the Internet makes the expense of these offices highly questionable, our clients aren't that progressive and expect our presence in hip urban areas.

Interior Design

All office locations will be have new space planning to include chic, coffee baresque furniture and obvious references to Beatnik era loft space. Further, all office recreation areas will be equipped with video game machines.  Creating this playful space will encourage "team building."

Halogen lighting will be installed in the lobby of each office to create an immediate ultra-hip, mall-casual impression with guests.

Management and Promotion

Those applying for partner and other upper-level staff positions will need to have an uplifting, awe inspiring tale of their stint in a rock band, time they hitchhiked across the country, or other psuedo-dharma bum experiences before they "awakened" in the design field.

We currently have an opening for one managing partner. Qualified candidate must be an ex-hippie and able to ramble on about how much the field has changed since the early-1980s.

Marketing and Public Relations

Company website will be redesigned to incorporate trendy tools like "Flash" to showcase our technical supremacy and youthful nature.

In Closing

Thank you for your assistance as we work through this transition. Management feels that although none of the above changes have anything to do with design, our competition is just way cooler than us.

Besides, we'll get more work if we look the part. Nobody knows what designers do all day anyway.

Copyright 2003 Joseph DeSetto.

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Back in 2002, after a rather awful opening week debut in 95 degree heat of the new look, Chucky-coached, Bucs, I decided to start a blog to vent about a team that would become a champion a few months later. The View from 132, as I called it, was named for my season ticket location in Section 132, Row CC. Although I never wanted to be the guy they show during Giants games that is 89 years old and never missed a game, I did see at least 8 games a year in person, and usually more, from 1997 to the end of the 2008 season. In short, I finally had enough, and my lost patronage is one small reason the Bucs will struggle again this year to fill the once frenzied Raymond James Stadium.

There are other reasons the Bucs may struggle to sell tickets though, certainly. From the time the stadium opened in 1998 (a comeback win against the Bears), to the current circumstance of 40,000 people attending a home game, it is no secret the economy collapsed. The local economy is based on, well, nothing. The speculators of the real estate boom have cashed in their chips. With that highly speculative money, based largely on the idea that Tampa condos will be worth the same as Miami, New York, or other towns that have a coffee shop open past 10pm, went the jobs servicing the speculators.

Noone is buying tile floors, granite kitchens, or xeroscaping. Realtors still earn 3 to 6%, but on homes that sell for $100k, not 500k. The gold in the hills has been mined, and all Tampa is left with is half baked ideas like Channelside and embarrassing boom era retail experiments like Centro Ybor and St. Pete's BayWalk. The money has left town, so it stands to reason that $99 lower level seats or the all important, and even more pricey, Club section is but a shadow of its former glory.

But before you cry for the Bucs or lament why those of us that still live in the area, still earn a living (thanks, at least in my case, to out of state clients), and remain fans no longer buy enough tickets for you to comfortably watch at home, locally, on live TV, you may want to consider the efforts the Bucs - our beloved local affiliate of the Manchester United - have made to retain its customer base.

After 10 years of requiring seat deposits for new season ticket holders, the Bucs have stopped the practice to attract the last local sports fans with money to burn on such foolishness. This means that to purchase a season ticket in a section with a face value of $99, you don't have to pay double that your first year. Remarkably, this was what they were able to charge for years because of a nice mix of new stadium, strong - even if bogus - local economy, and high caliber product, including a league champion.

Understand that for anyone that originally signed this agreement with the Bucs - a 10 year non-refundable deposit based on the face value of your seat for one season, paid back at 5% per year at 0% APR - completely financed the success of this franchise. A seat deposit is simply a loan from fans, and knowing the ridiculous amounts required to pay players in the Jerry Jones, Bob Kraft, Dan Snyder era, most of us knew the game the NFL was playing and went along with it.

In 2007, the Bucs changed the terms. Instead of a 10 year repayment, it was pushed back to 13 years. As such, instead of being paid my final (roughly) $500, I was sent $48 per seat and asked to stay the course. It was money from 1997 - it was actually money I was paid to move back to Tampa for a job before I had even $1000 in furniture. As such, it was not a big deal to tell the Bucs, fine, I agree to terms.

When I refused to pay for the 2009 season, the Bucs, as their original, ridiculous terms allowed, kept the final $384 of my 1997 deposit. Even that would be fine with me, but now new season ticket holder have no deposits at all. That won't do, so I'll never be back as a season ticket holder - and very rarely a single game ticket holder. If the seats require a deposit, they require a deposit. If they don't, the old deposits should be returned.

Without that policy in place, the Bucs have made a crucial marketing blunder - new fans are worth more than old fans. By their decisions, the Bucs created the situation they are find themselves. Not only do they now need to find thousands of new customers, but they continue to alienate those that remain.

Good luck this year, Bucs. Maybe a budding star at QB and lots of ESPN coverage will find you 65,000 people per Sunday. But if not, don't blame the economy.

And furthermore...

This is an actual email exchange with some sales hack at the Bucs office regarding this matter.

Hi Joe, 

Thanks for responding so quickly.  I spoke with my manager, about your question regarding your deposit.  Unfortunately, your deposit of $384 will not be returned.  In terms of being offered a substantial discount, you will receive a discount for being a season seat holder as all season seat holders gets their tickets at a lower rate than face value.  I did check to see if your seats were available for this upcoming season and they were recently purchased.  But we still have great seat locations in the lower part of the stadium.  I was able to confirm that your seniority date of 1997 would be reinstated if you were to rejoin the Buccaneers family.

Regardless if you decided to come back or not, I would like to invited you down to One Buc Place (our state of the art training facility) to show you the locker room, players lounger, super bowl trophy and ring, as a thank you for being a long time supporter of the Buccaneers.

All the best,

Sales Hack

P.S.- we don’t have a current phone number for you, if you would like to provide me with an updated one.

Yes, update the CRM even if you can't solve anything. Nice work. My phone number is available to anyone in the Bucs organization for a certified check of $384.

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Two years ago today I was a speaker at the HOW Design Conference to formally announce a new app development tool called Corona. I wrote a few words for the Ansca Mobile blog about the experience.

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See the full gallery on Posterous

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The story of how I became the first user of iPhone development software Ansca Corona is now online. Ansca founder Carlos Icaza and I agreed our meeting at a Miami hotel sounded like the old world mafia, and thus the "Godfather" title text.

http://blog.anscamobile.com/2010/12/guest-post-the-birth-of-corona-part-i/

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Yesterday, The Steve announced the forthcoming Mac App Store, an OS X equivalent of the simple one-click software shop that is seen on iPhone, iPod touch, and iPad. It is a logical move. Many of us that follow this industry saw this coming. But retrofitting the new way to "discover" and purchase software into a very stylish version of the old Xerox windows-menus-mouse-and-keyboard paradigm is not as straightforward as starting fresh with an entirely new way to use your phone.

As such, here are a few of the many questions those of us that make a living in the iOS development world are trying to sort out today. Please feel free to add your own in the comments or answer some of these.

1. A user downloads a free demo app via the Mac App Store. He or she likes it, visits the developer's website and buys a serial number to unlock a full version. The developer doesn't have to give Apple 30%, as the transaction wasn't through the App Store. Yes, this is a hypothetical, but what would prevent developers from doing this?
2. How much time will it really take to develop for Mac vs. iPhone? Yes, the language is the same, but that isn't the whole story. Mac development is often seen as more involved, if not more difficult, as it should given the relatively complexity it has to support.
3. What will be the common way to control an App Store game on a Mac? Consoles have standard controllers and sell add-ons such as steering wheels for cars. Will App Store games for Mac have this level of interest from "serious" gamers or will it primarily be a store of casual games, like the mobile store?
   • Will we see common use of the iPod touch/iPhone as a controller for Mac games?
   • How soon will there be FaceTime gaming - perhaps similar to Microsoft Kinect?
   • Can you sell games in the store that need additional equipment? For example, "steering wheel not included" or do Mac App Store products need to be complete as downloaded?
4. What game development tools will support Mac, and how soon? Corona? Unity3D? Cocos2D has already announced support. Unity can do Mac games, so the basics are there, but nothing formally announced yet.
5. Will the App Store for iPhone, iPad, and iPod touch apps stay inside iTunes or move to the new App Store that was demonstrated yesterday? Using iTunes was brilliant to rope in existing legacy iPod users, especially on Windows, but it is severely lacking as apps become more important to all of these devices.
6. Will users get totally confused by two App Stores? If you think that is a silly question, work in IT for a year and see what questions you answer from co-workers. 
7. Will "Universal" apps remain Universal for iOS devices, or include Mac? A user could be understandably upset for buying something labeled Universal that didn't work on their computer.
8. Is the Mac App Store just an experiment to see how Apple's revenue would be altered if they allowed other App Stores on iOS devices?
9. Who are these 600,000 registered Mac developers in Jobs newest slideshow? Has anyone ever met one? Yes, there are some great indie Mac shops, but 600,000? Really?
10. What did Jobs mean when he alluded to "simple" licensing that allowed software to be used across "all your personal Macs." What is a "personal" Mac? I use my Mac for business. Does that count?
    • Can we add our own licensing terms, as we can with iOS apps, or is this a take-it-or-leave-it situation?
11. Will the average Mac user browse around the store looking for new apps? Compared to the fast twitch reaction of iPhone users to fidget with apps like the App Store, Mac users aren't as likely to be surfing at stoplights or while stuck in Newark on a layover.
12. How old can a Mac be to run the Mac App Store? 50 million Macs is a nice number, but how many of these machines are actually part of the potential install base?
13. Can developers set minimum specs for their app, both for hardware and the operating system? Is it up to the user to know if they meet the standard, or will the store detect these things? For 3D games, this is especially important, as an old Mac mini running Jaguar isn't likely to keep up and would result in angry customers. The iOS App Store has made it very simple for users to know "this works on my phone" - but will the new one be able to do the same?

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By the 9th inning, more than half the crowd had seen enough. Much of the good will the team built since 2008 with a fledgling baseball market washed away in 48 hours.

Unused corporate suites in the press level are clear signs the local economy is still struggling.

See the full gallery on Posterous

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Fight the Power. Original work. All Rights Reserved.

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Zoom Level. Original work. All rights reserved.

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"Upon investigation, we were stunned to find that the formula we use to calculate how many bars of signal strength to display is totally wrong. Our formula, in many instances, mistakenly displays 2 more bars than it should for a given signal strength," wrote Apple. "Users observing a drop of several bars when they grip their iPhone in a certain way are most likely in an area with very weak signal strength, but they don't know it because we are erroneously displaying 4 or 5 bars. Their big drop in bars is because their high bars were never real in the first place."

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I will be a guest of Winston Edmondson today on Innovation @ Work, his CNN Radio show. We'll be discussing virtual offices, The Business of Design book, iPhone development, and related topics.

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