It’s sad to say, but even the most usable, sexy, or innovative design work won’t succeed if it doesn’t fit within the greater business strategy of the organization. But just how do you know what that greater business strategy is?

It’s difficult to quickly get smart about an organization’s overall business strategy when there’s usually no simple Powerpoint deck to spell it out. Below are 6 questions I use to quickly sense the business strategy:

1. What’s their generic strategy? Years ago Michael Porter devise a model of three generic business strategies: cost-leadership, differentiation, and segmented strategy. Figure out which strategy the business follows, then the strategic decisions the organization makes will become more obvious.
2. How is the business different from its competition? Good differentiation means a unique position in the market relative to competitors. Example: Bose is the leader in sound quality, and will remain the leader because of its investments in R&D. Done right, the identified differentiators should be deeper than just brand perceptions, stretching to the organization’s competitive advantage. You’re work should embellish these differences.
3. How does the business make money? Look at the public financial reports, read what analysts say, and boil it down to the essence of how the firm makes money. Perhaps it cuts out the “middle-man” by making deals directly with suppliers and passing the savings onto customers. If so, where does experience play a role in that money-making process?
4. Is their market growing, shrinking, or flat? Again, go back to the financial reports. Look at year-over-year growth for their business and their competitors. Look at the trends in the overall marketplace. Is the business trying to grab the most of a growing market, steal business from others in a flat market, or survive and transition from a shrinking market? This shapes the overall intent of any firm’s business strategy.
5. What do they invest in? Based on whatever press information you have or historical details about projects and spending, discover what the firm believes in spending money on. People, process, product, financial, innovation? This reveals their bias for creating solutions, and the spending should correlate to what makes the business distinct in the market.
6. What do they say? Be like Scooby Doo. Look for clues and evidence. What activities does their marketing say they perform for customers? Grayhound Buses says, “leave the driving to us.” Enterprise Rent-A-Car says, “we’ll pick you up.” This marketing reveals what the firm believes customers care most about. If you’re project doesn’t improve or extend these activities that the firm promotes, it might be time to get a new project.

Sometimes you know the answer to these questions immediately, sometimes it takes a little homework. But by answering them, a team can end up much smarter about the business that they’re designing solutions for. Let’s call these smarts, “business empathy.”

Business empathy is like customer empathy—you’ve got to distill it down into operating principles that the team and business can rally around. The business’s stance, value, and activities can each be translated into important assumptions that frames what kinds of research, ideas, and solutions your team should pursue.

But what’s powerful about business empathy is it can demystify business for the design team, just like how user research can demystify the world of the customer:

• With customer empathy — We go to the customer’s world to gain empathy for them, to generate new ideas, and to realize needs that they aren’t able to articulate. The difference in design results from this insight can be profound. As pointed out in the HBR article Spark Innovation Through Empathic Design, “Sometimes customers are so accustomed to current conditions that they don’t think to ask for a new solution.”
• With business empathy —The same can happen if we engage in the same good behaviors with the business. A design team can understand the business’s unarticulated criteria for judging what design solutions fit their business. And just like the customer, the business is so accustomed to current approaches that it doesn’t think to ask for a new or creative solution.

So try it out. Get some business empathy, see how it changes your work — And if connecting business issues with experience design is where your head is at, then you should probably come join us at the 2009 MX Conference. (Use RNSB as your discount code and get 15% off!)