Wednesday, August 30, 2006

Business case modeling for design

The power of business case modeling...

"Thomas Watson Jr., the man responsible for transforming IBM into a computer giant, famously declared that "good design is good business." Like most maxims, Watson's observation is both widely cited and widely ignored. Traditionally, investing in design has been considered both costly and risky. Thankfully, this attitude is changing. Over the last few years, more and more people have begun to recognize that design can be a vital component of strategy as well as a driver of business value. You only have to mention successes such as the iPod, Netflix and Target to generate near-universal agreement that design creates business value. Unfortunately, citing examples oft-used in traditional business magazines isn't enough. Although an entire industry has grown by applying design methods to business, many practitioners in the field lag in their ability to communicate business cases for design initiatives, perhaps subscribing to the notion that such efforts are beyond their domain of expertise. They are mistaken.

Business case modeling, conducted by design teams, can yield powerful results. Like rapid prototyping, business case modeling enables designers to effectively assess and communicate the viability of products and concepts.

A simple model can:

illustrate potential project outcomes
provide rules of thumb for further development by illuminating tradeoffs between development speed, product cost, product performance and development program expense
help manage the risk inherent in any development project

Once incorporated into the concept development process, a business case model adds depth and rigor to a design team's work. Using simple techniques, it improves both design and business strategies by rationally focusing on the potential outcomes of a project. The ability to understand and use these very simple tools can dramatically increase any designer/developer/engineer's value to an organization. And constructing a model isn't even all that hard to do.

Modeling 101
Modeling can begin just as soon as the initial concept development phase is complete.

The first step is to set up a base case that estimates the costs and benefits of the project. Think of this as the design prototype that assembles the most basic components in a way that is structurally similar to the final product. The business case model will do the same. It combines the project budget, sales volume forecasts (or some proxy for the desired outcome -- site visits, for example) and estimated production costs. It isn't necessary to go into great detail, but there should be enough information to keep things realistic. The most basic variables you need to take into account include:

-development cost (the cost of your time)
-ramp-up cost (the cost of starting production)
-marketing and support cost (the cost of promoting the product and supporting its users)
-production cost (the cost of building or maintaining the product)"   (Continued via adaptavie path)   [Usability Resources]


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