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4 posts from December 2012

Design Business by the Numbers: Bid/Win Ratio

Bid Win Ratio of 50 percent

Numbers surround us every day. They’re woven into the fabric of our lives, part of the advice and cliched folk wisdom that we dispense to each other: Two's company, three’s a crowd. A bird in the hand is worth two in the bush. And so forth. Every one of these cliches, however, started out as a rule of them, intended to help us learn from our previous positive experiences and failures. They’re patterns we can follow that can help contribute to our future successes.

I'll be posting over the coming months numbers I heard from the design businesspeople I interviewed while writing Success by Design: The Essential Business Reference for Designers. These people had specific rules of thumb they followed as in order to ensure the health of their design business. They were either handed down to them from co-workers or mentors, or derived from hard-fought experience. I’ve added to these numbers the ones that I’ve recorded from my experience working at a range of small and large design studios.

It’s my hope that these numbers will help you establish useful guidelines that'll help you better manage your projects and operate your design studio.

Let's start things off with your business's bid/win ratio.

Anyone who runs a design business knows that if you aren't winning projects, you won't stay in business. So when you seek out new business opportunities, how do you determine which to pursue and which to turn away?

When researching Success by Design, a number that kept coming up in my interviews with studio owners was fifty. Or, to be clear, a 50% bid/win ratio for your studio's new business efforts. This is the number you should try to hit or exceed, and it correlates with how many potential projects you need to convert from proposals to paid projects every month. Otherwise, you'll be billing to much time to studio overhead (writing proposals) instead of working on paid client projects.

There are specific criteria you should use in order to try and hit that 50% number. These include gauging the following:

Dollar value of the proposal. This should be averaged over the number of staff members and hours required to fulfill the estimated scope. This assumes, of course, that you have the capacity in your studio to fulfill the work.

Level of competition. If your client won't tell you what other design businesses are in the running for the work, at least ask them how many other businesses might be in competition for the work. If you're filling out an RFP or RFI and throwing it over the wall—the odds of winning the work can be stacked against you.

Fit for the studio. Is this work that will contribute to staff happiness and morale just as much as your portfolio and pocketbook? You should determine this before you agree to write a proposal as part of your pre-qualification process. (You've got one of those, right?)

Relationship with the client. If you haven't sat down with this client and truly understood the problem they're trying to solve, you may not even be in the running at all. You also may miss nuances and politics that may be stacking the deck against you.

There are other factors to consider, but the above are mandatory considerations before you go down the path of agreeing to craft a proposal. Think about like going to a casino and choosing how to gamble your money. Say someone handed you $10,000 scot free and said, "Go bet this all on the roulette table, and if that number comes up, you get to keep the money I gave you." Would you rather put your money on a single number? Or on all odd numbers? This benchmark is intended to help you control risk and look beyond individual project possibilities to the overall impact your business development choices are having on your cash-flow. This isn't to say that you shouldn't take risks on projects that may be a great boon to your studio, per the above criteria. It's to say that your risks should be measured.

Be aware as well that when using this ratio is that you may not be winning the most valuable projects, balancing the above factors against sheer dollars and cents. If you aren't winning approximately 50% or more of the potential revenues available across the proposals in your pipeline, you may need to reassess your new business strategy.


"Micro-Networks Rise" Prediction in frog's 20 Tech Trends for 2013

I'm honored to have been able to contribute one of frog's 20 Tech Trends for 2013, "Micro-Networks Rise":

Micro-networks are intimate communication networks that people form around subjects of interest to them, whether as simple as their love of chocolate or as complicated as a shared passion for creating change in a local community. Most of these micro-networks are private, and rarely visible to the designer or trend-spotter.

These micro-networks have been fostered in local communities via face-to-face conversation or via email and phone, but just-in-time communication tools have allowed the content of these conversations to persist—and store what people are sharing over time. They encourage connection with people that had previously not been able to join those conversations.

Social platforms such as Quora and Facebook have exploited the budding micro-network trend, allowing knowledge to surface from these communities. Platforms such as Neighborland, frog’s Collective Action Toolkit, and Change.org allow micro-networks to gain momentum and grow around desired political and community change.

Identifying micro-networks and ethically researching how people participate in them will be an important part of how we design any product or service that’s meant to collect and share knowledge in 2013. By combining ethnography with an awareness of what people are doing through their micro-networks, we can gain visibility into trends that are happening, but aren’t always in public view. It can also point us to new and growing private communities that help illuminate for us emerging shifts in customer behavior.

Take a look at the whole set of trends above, or download the poster below:


Creating a Design Studio: The Elements of Design Studio Experience

The Elements of Design Studio Experience

There is a constant tension between the demands of your business—receiving monetary reward for your level of effort—and the knowledge that what you make has some form of meaningful impact. As design business owners and leaders, we wrestle with certain fundamental questions: What if I can’t earn a living running a design business? Am I going down the right path? Does this work make me happy?

Exactly how do you balance the competing demands of sustaining a profitable business with a joyful design practice? In the coming weeks, I'll be sharing the worksheets that comprise the last section of my new book Success by Design: The Essential Business Reference for Designers. You can use them to determine what your ideal design studio experience should be like. David Conrad (studio director of Design Commission) and I devised them, and we hope you can use them to better structure your design business to support what you love. Profitably.

The worksheet that kicks off this section of the book is The Elements of Design Studio Experience. This is a revised version of the framework I first wrote about two years ago on this blog (read more about it here).

Here's the new version of the worksheet, which you can download from SlideShare:

In the coming weeks, I'll be providing activities and accompanying worksheets that help you determine the five key elements in this framework that are necessary to create a stable design business: 1) Philosophy, 2) Customers & Staff, 3) Process & Culture, 4) Market Need & Capability, and 5) Product. By working your way from the bottom up, you’ll better understand how structure your design business to support your goals. I'll also provide you with an additional activity you can carry out to course-correct your business every three months.

Note: The worksheets I'll be sharing are covered under a Creative Commons Attribution-NonCommercial-Share Alike 3.0 Unported License. For details on this license, go to creative-commons.org/licenses/by-nc-sa/3.0.


Thinking Ahead of Yourself

Amber Wave exhibit by at osecology at The Feast Conference Pavilion 2012

Another sunny Saturday morning in early fall 2001. The starlings in the nest outside our window wake us with their cassette-tape song on rewind. Stirring from sleep, my wife and I settle into one of our rituals—acquiring lattes from one of our favorite coffee roasters before the morning escapes us. Pulling on our clothes and shoes, still a bit groggy, we make our way out of our third-floor Seattle apartment. The door clicked behind us, and as we headed down the stairs and out of the building, I realized the keys were sitting on the counter inside.

My adrenaline spiked. I thought to myself, Don't panic. But I couldn't help myself. At our previous apartment in Alexandria, Virginia, we would just walk down to the management office and ask them to unlock the door with their master key. But our landlady here lives on an island, many hours away. There was no way she could help us get back in.

Mary and I debated our options. It seemed like all we could do was bring in a locksmith. But I was loathe to make the call. We had just taken a full month off for an amazing cross-country jaunt as part of our move to Seattle. Due to the impact of 9/11 on the marketing and design industries, it had been hard for me to find work since our move. Going for coffee was a splurge, and if I had to call a locksmith to open up the door, there wouldn't be any more coffee dates for a good while. There had to be a way to open this door without a key.

The solution came to me in a flash: My next-door neighbor was a mountaineer. And the door from our balcony into our apartment's living room was unlocked. We knocked on his door, explained the situation, and I asked if I could borrow one of his climbing harnesses, a rope, a belay device, and a chair.

Standing on the chair, I popped the door to the roof open. My wife and neighbor clambered up after me. We tied off the rope and tugged on it with two people's full strength to make sure the chimney could bear my weight. I strapped on my harness and threaded the belay device. With my brake hand firmly on the rope, I winded two curls of the free rope around my right leg, peered over the edge, and took a deep breath. Without giving it too much thought, I turned around backwards and backed myself out until I was parallel to the roof's edge, slowly providing slack to the belay device until I went from parallel to dropping over the edge.

With a jerk, I came to dangle five feet away from our balcony. To my right, the Olympic mountains were rimmed with liquid yellow fire, late afternoon sun painting the houses below me with golden light. I lowered myself down and untied my harness, then walked through our apartment to pop open the lock on the front door.

Problem solved… until three weeks later, I was hanging upside down from a rope tied to the chimney of my apartment building, many stories above the asphalt pavement of our parking lot, thinking to myself: How did this happen again?

Instead of the keys sitting on the counter, they were in my jacket pocket in the hall closet.

*

We can be creative about dealing with what we've forgotten. It is much harder to prepare for what we never want to forget. We are swimming through possible consequences, rather than acknowledging what’s in front of us.

Routines and systems only go so far. You can’t fully run a life on punch cards and coffee makers with timers.

My wife and I started leaving our keys in the same place—our overflowing change tray—every time we walked in the door. We made a spare copy of our house key for our next door neighbor. I kept my bag I take to work in the same place, the larder stocked with cereals and soups in the same locations. Our bookshelves, while not alphabetized, became organized by genre and when they will be read or revisited. But there isn’t a place for every item, every detail, with absolute certainty. I somehow forget the grocery list, which causes me to have to take another trip for critical staples. Or the transit checks to load onto my Clipper card. Or my phone. Or my laptop. Just this past week, I forgot my keycard for work. Twice.

I had to turn this over this habit in my mind for a long time to realize: in every one of these situations, I was one step ahead of what I needed to do, right then and in the moments before that I couldn’t recall.

What are you thinking about before you start checking your pockets, trying to find your car key so you can get to work on time? When you left the car keys on the counter yesterday? When you were driving home? We spend our time rewinding the clock, while also addicted to the adrenaline spike in the present moment. We’re addicted to crisis. The tickets to the rock concert. The passport for the international trip. Paying the monthly rent on time.

By this point, it’s too late to unfurl memories about places you don’t even remember. We think we’re taking a well-worn shortcut, only to discover it’s an even further path to the actual destination we had in mind. With the sticky note reminder on the door, we walk right past what connects our livelihood to our well being, implicitly accepting the behavior.

The hard work is not in the future. It is confronting our decisions in the here and now.