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I’ve been waiting to write this one.
As a designer, business thinking has always been something I wanted to learn...
but it just seemed so daunting.
So, in a three-part series, I want to scratch that doubt in me.
In the series, I'll share the basic vocabulary and concepts of business thinking that’ll benefit you as a designer.
I learned so much from researching, and I hope you will too.
Before we start, here's an overview of the series:
First, I’ll go over the basic vocabulary (competitive advantage, profit, trade-offs, etc).
Then, I’ll share eight important topics of business thinking. The topics (bolded text) are as follows:
What I’m about to share comes from InVision’s Business Thinking for Designers and 7 Things Every Designer Should Know About Business.
Will highly recommend these two resources if you’re interested.
And for each part of the series, here’s a quick breakdown:
Let’s get started.
According to Ryan Rumsey, the author of Business Thinking for Designers, business thinking is
A collection of methodologies to build trust and confidence with business partners, empowering designers to do great work.
At its core, it’s the ability to understand and respond to different business situations well.
Here are a few reasons why designers should learn business thinking:
Wait what do you mean?
I meant compared to the business people. And I think Ryan Rumsey sums this up very well:
While the power of design is making products and services better, it’s important to remember that we’re joining an ongoing conversation. And the truth is: they (business leaders) could build things without us.
And here’s another truth:
Designers need to learn business because we can’t expect our counterparts to listen just because we arrived.
Imagine you spent hours working on a design only to be smashed by stakeholders because it doesn’t align with the business goal. It’s demoralizing.
This leads to the second reason:
In my previous article about design thinking, I shared this diagram:
As you can see, design thinking is at the intersection of
As a designer, you want to advocate for the user.
But, an equally important pie is the business. And when you’re working at an organization, you need to think:
How does my solution benefit both the user and the business?
Understanding business thinking can help you communicate more effectively with non-designers.
We need to meet them where they are. That means learning their language.
The business language.
Let’s dive into it.
A condition that puts an organization in a superior business position relative to competitors.
Apple’s competitive advantage - design.
Geico’s competitive advantage - low prices.
(How much you’re making) minus (How much it costs to make)
The amount of profit a company keeps relative to the same price.
Normally, people will refer to profit margins as high or low. This helps people decide whether they need to sell a lot or little to achieve the income target.
Apple - high-profit margins on their iPhones. They don’t have to sell a lot of them.
Geico - low-profit margins. They have to sell a lot.
Decisions companies make to reduce something in return for increasing something else.
The good-fast-cheap scenario is a common trade-off. You can only choose two of the three characteristics.
In short, when there’s less stuff (supply), more people want it (demand). And vice versa.
Supply and demand are a relationship. And companies can affect demand by controlling supply.
Pressures that change the supply and demand of products in a free market.
Industry analysis is a tool. It showcases a company’s position relative to other companies that produce similar products or services.
It enables business owners to identify the threats and opportunities facing their business. Then, they can focus on developing unique capabilities that could lead to a competitive advantage (Source).
(Remember what competitive advantage is?)
Now, one of the best frameworks for industry analysis is Porter’s Five Forces.
Porter’s Five Forces evaluates five competitive forces, which influence industry attractiveness. Here’s an overview of the five forces:
Damn... That’s a lot! How should I use this?
Great question. You can analyze the industry by looking at every five forces and giving them a low, medium, or high score.
For example, let’s say you want to design a mobile game app for meditation.
Well, let’s take a look at the number of games in the app store.
A lot.
So, the Threat of New Entrants in the mobile gaming industry is high.
Now, let’s see if there’s any existing meditation game app.
Hm... there are quite a few...
Well, in this case, the Rivalry Among Existing Competitors may be high too.
Thus, we can ask ourselves:
What can we do to differentiate ourselves?
What unique features can only we offer?
These evaluations of the forces can be extremely valuable because it tells you what to focus on. And remember: Analyze from the perspective of the company that’s already in the industry.
We want to see how attractive this industry is if you’re in it.
Understanding competitors’ strategy, business model, and future roadmaps help us design better products.
According to dMBA, there are three steps to conducting competitor analysis:
Trust me - you do have competitors.
In general, there are direct and indirect competitors.
Try to 4-10 direct and indirect competitors.
One way to organize the research is by these three categories:
A few ways to find insights are skimming and color-coding. Read through your data and look for patterns. Here’s a similar approach used in user research for reference.
And that’s a wrap for part 1 of the series “Business Thinking for UX & UI Designers”!
In the next article, we’ll go over topics such as Business Models, Business Strategies, and more.
Thank you for being awesome and reading this far! :)
If you have any questions, feel free to reach out on LinkedIn, Twitter, or by email. Will love to set up a casual call and chat!