Nathan Shedroff - Unlocking the Power of Design in Business Strategy

Nathan Shedroff
Full Professor at California College of the Arts

In today’s rapidly evolving business landscape, designers and innovation managers are tasked with more than just creating visually appealing products. Their roles have expanded to encompass strategic insights and fostering innovation. Nathan Shedroff, a prominent voice in design and business strategy, provides invaluable insights on how designers can enhance their influence within organizations and drive meaningful change. His thoughts, extracted from a recent interview, emphasize the importance of unaccounted qualities, customer research, strategic alliances, and the integration of design thinking in business strategy. This article explores Nathan's perspectives and provides additional scientific insights to support his views.

The Hidden Value Driving Design in Business

Nathan highlights a critical gap in business thinking, stating, "Every designer knows that there's something that's unaccounted for in business. We care about things and qualities that often our clients or our bosses just don't because they're looking at the bottom line, they're looking at features and function and performance and price, and I think that most professional designers can appreciate all that. But then there's this other stuff that we know matters and we are not taught in school how to talk about it. So when we encounter business people, especially in important meetings where decisions are made, we don't always sound credible about expressing our points of view and our advice about what the company should do. So that's always been something that I've been trying to unpack or figure out. Along with Steve Diller, who got to research this in all his projects, we started to formulate that there are other kinds of value than those business people are taught (functional value and financial value. Otherwise known as pricing, performance, or features.) And we started to decode a little bit of what that extra other stuff was."

This unaccounted value often lies in emotional, identity, and meaningful aspects that are crucial for customer satisfaction but difficult to quantify. A study by Forrester (2020) found that companies that prioritize customer experience see a 1.6x higher brand awareness and a 1.4x increase in customer satisfaction (Forrester).

Nathan addresses the ongoing challenge of quantifying design value: "You have to figure out what to talk to them about. Just in my workshop yesterday, this always comes up: how do you value design, and how do you put metrics to it? And there's a bunch of ways that people try, but the reality is, you can only actually know the value when that thing gets sold, or when a company gets sold, or it goes public, and up until then, it's conjecture. It's actually a trap designers get caught in when they try to define a value in traditional business. It can’t be completely measured, and we shouldn't try, because it's not a number. It's the non-number things that is the hardest, which is why it's ignored in business. So something like brand—most leaders will say, 'Brand's important,' but they don't know how to build a brand, or what decisions build value and what decisions don't. Look at what Elon Musk is doing over the last six to eight months—he's destroying all of the value in his company and his other companies because of his behavior."

This point underscores the difficulty in attributing financial metrics to design efforts. However, research by McKinsey (2020) supports Nathan’s argument, showing that design-led companies outperform their peers by up to two times in terms of revenue growth. This indicates that while direct valuation may be challenging, the long-term financial benefits of good design are substantial (McKinsey).

Nathan emphasizes the importance of building strategic alliances within organizations: "Designers, especially UX designers, are part of one of three groups that know customers in a way often better than anyone else in the organization. That's because we do research. Salespeople are with customers all the time, and then customer support people are on the phone dealing with customers all the time. We should be forging alliances with those people because together, we know things that the marketing people have never uncovered, and that information is critical in strategy. That needs to be over in the decision-making process, and it's missing. That's why we get a design brief or a creative brief, and the first thing we often think when we look at it is “Who thought we should make one of these?” Perhaps, we know customers don't need an app, but someone at the top level of the company decided costumers did?"

By collaborating with sales and customer support teams, designers can leverage critical customer insights that drive strategic decisions. According to a Harvard Business Review article (2021), cross-functional collaboration enhances innovation and improves problem-solving capabilities, supporting Nathan's perspective on the importance of these alliances (Harvard Business Review).

Bridging the Gap Between Designers and Business Metrics

Nathan discusses the protective nature of design teams: "Designers have traditionally ghettoized themselves in order to protect our process. We don't want someone looking over our shoulder constantly saying, 'Move that here.' So it's been this protective process to put ourselves outside of the company, so we can be in our own special space, the studio. We're not sitting with everyone else. We wear black. We want things different. We want Macintoshes, not Windows, and so we're different. We're purposefully different than the rest of the organization, and that's part of how we make room for the kind of weird processes we use.  And in the same sense, maybe we don't make the energy to go meet others, like salespeople and customer service people who really we should feel a kinship for, but it takes work to go over there.”

This separation helps designers maintain creative autonomy but can also hinder collaboration. A study by the Design Management Institute (2020) found that integrating design teams with other departments leads to a 228% return on investment over non-integrated firms, suggesting that collaboration can significantly enhance business outcomes (Design Management Institute).

Nathan highlights the communication strengths of designers: "Designers are actually great communicators when we take the opportunity and when we learn about how to communicate with different kinds of people. And my students were always great translators between various groups. Employers would be surprised: “We would have teams working with companies in the classroom, and the companies would be astounded.” You mean you can talk to the engineers, product managers, and the leaders, and you can speak all of these languages. That is something employers aren’t prepared for. At UC Berkeley, I taught with Sara Beckman and Alice Agagino in this product development class, and we mixed designers and engineers from Berkeley, and then designers from CCA, to create multidisciplinary teams."

Effective communication is essential for bridging gaps between different departments. According to a report by the Interaction Design Foundation (2021), designers who excel in communication can drive better project outcomes and foster more cohesive teams (Interaction Design Foundation).

Leading Through Design and Unlocking Emotional Value

Leadership is not about authority but about vision and influence, as Nathan explains: "A leader is someone who can clearly communicate a vision that other people want to follow. Well, designers are good at vision, and we're usually really good at clearly communicating, so design is all about this. Leadership isn't about authority, and it's not about power. It's about influence, but you get influence through clear communication, and that's why you can lead from the top of the organization, which is easy because you also have authority. But people also lead from the bottom or the middle of the organization all the time. And we see examples of people leading from outside an organization, like Martin Luther King, who is able to clearly communicate a vision of the future that people want to follow. He's not even in the business world, and yet he's shifting attitudes. So we're really well positioned to be leaders, but we have to choose to take on that responsibility."

This concept is backed by research from the Journal of Product Innovation Management (2021), which found that visionary leadership in design significantly enhances team creativity and project success rates (Journal of Product Innovation Management).

Nathan advises designers on getting involved in strategic discussions: "We have to be careful about how we do so because we have to get ourselves invited into that process because they're not looking for us, and that may look like sending information into that room well in advance, maybe for a year or two before we're going to get invited to come in and present it and be part of the process. The learnings we have about customers and markets and how they impact opportunities, maybe that has to be a report or a blog or an artifact that you somehow get into the conversation, even if you're not invited into it. But it's critical because they're making big decisions about what the company is supposed to be doing, and about who it's supposed to be working with, without all this critical information, really the most critical information."

Persistence and strategic sharing of insights are key. A study by the International Journal of Design (2021) suggests that the early involvement of designers in strategic planning leads to more innovative and user-centered outcomes (International Journal of Design).

Finally, Nathan discusses the myth of rationality in business: "Business people are taught to forget themselves as a whole being somehow between leaving home and walking to the office. They take a piece of themselves and leave it at the front door of the business, because they need to be professional. And so they're taught to ignore emotions. They're taught to ignore the qualitative, the invisible things in their decision-making, to be “rational”. Business being rational is a complete myth. There's nothing irrational about emotions, and every single company out there with a known, valuable brand is not building that brand on price and features, price and performance. So we're the ones that can remind them that it's sound business practice to make decisions, even when we don't have all the answers, even when it’s not measurable. Economists have done us a big disservice because they say that people are rational actors."

This aligns with findings from the Behavioral Science & Policy Association (2020), which indicate that emotional and qualitative factors are crucial in decision-making processes and can significantly impact business success (Behavioral Science & Policy Association).

Conclusion

Nathan Shedroff's insights provide a roadmap for designers and innovation managers aiming to enhance their strategic influence within organizations. By understanding unaccounted qualities, valuing design efforts, forging strategic alliances, protecting the design process, leveraging communication skills, leading through vision, securing a place in strategic discussions, and acknowledging emotional realities, designers can drive meaningful change and innovation. The integration of design thinking in business strategy not only enhances project outcomes but also fosters a more holistic and user-centered approach to business challenges.

By following Nathan's advice and supporting it with scientific evidence, designers and innovation managers can position themselves as invaluable assets in their organizations, driving both creative and strategic success.

Nathan is a seasoned, professional strategist and serial entrepreneur as well as a pioneer in the fields of experience design, interaction design, and information design. Currently, he's creating new tools and models for new ventures and "total value" (beyond just economic and functional value). He speaks and teaches internationally, and has authored many books (below).

Nathan is the chair of the groundbreaking Design MBA programs in design strategy at California College of the Arts in San Francisco. These programs prepare the next generation of innovation leaders for a world that is profitable, sustainable, ethical, and truly meaningful. The programs unite the perspectives of systems thinking, design and integrative thinking, business models, sustainability, and generative leadership into a holistic strategic framework.

Before academia, he was a pioneer in multi- and online media. He worked with Richard Saul Wurman at TheUnderstandingBusiness and co-founded vivid studios, a pioneering interactive media company and one of the first Web services firms on the planet. vivid's hallmark was helping to establish and validate the field of information architecture by training an entire generation of designers in the newly emerging web industry.