We can’t collaborate well until we speak the same language.
And as user researchers and designers, we are increasingly called to collaborate. Not just with product or marketing teams—but across departments, and alongside all levels of company decision makers.
It’s time we get to know these decision makers—their pain points, their goals, and their needs—as well as we know our users.
We sat down in a recent webinar with Carolyn Hou (Founder of Arlo Labs) and McLean Donnelly (Principal at The Makery) to discuss some essential vocabulary for working more strategically as a UXR or UX designer, and why building this vocabulary is mission critical.
Here, we’ve summarized their best advice, and their recommendations for developing “minimum viable business know-how.”
(You can also stream their webinar on demand, see additional resources they’ve provided, or jump to some FAQs).
We have a “seat at the table.” Now what?
Increasingly, UX practitioners are becoming key collaborators on company-wide, strategic decision making. It’s a natural (and powerful) combination.
Design-centric companies outperform the S&P index at 228%. And 74% of online customers will switch brands if they’ve had a bad experience.
UXRs and designers shouldn’t be stuck at the “end” of a business decision—validating product decisions, or making things look pretty. They should be at the forefront of critical business choices.
That means, UX strategy will cease to be separate from business strategy. And when you find yourself with a “seat at the table,” you’ll be expected to work much more closely with executives.
Learning business basics means learning the language of our peers. It means knowing how to represent our users (understanding their needs and their challenges, and determining how to design for them) and knowing how to represent our businesses (understanding our companies, our clients, and determining how to build in-line with their end goals).
Essentially, it’s granting our clients and stakeholders the same empathy we grant to our users—understanding their journey, their motivations, their goals, what their KPIs are, and what matters to them. And it’s applying our mental model for “working on behalf of our users” to “working on behalf of our stakeholders”—obtaining a solid understanding of our colleague’s challenges before we ideate on solutions.
Strategies + Frameworks: 3 Basic Business Tenets for UXRs
Financial principles, organizational structure, and corporate strategy are all terms we’ve heard, but could stand to be more familiar with. A true understanding of what they mean for our companies will leave us much better equipped to be interlocutors with our colleagues.
1. Financial principles
At its core, the language of business is finance. It’s how all executives communicate their results to the world, and how they evaluate success. If you’re looking to get a better understanding of financial principles, the easiest place to start is by reading your annual report—in particular, your profit and loss (P&L) statement. Building that into your workflow will give you a solid understanding of where your company is today, and make you more comfortable with basic business vocabulary.
At the end of the day, businesses work to drive the “top line” (increase their revenue) or drive their bottom line (cut costs and increase their net income). Knowing the health of your company—and dissecting the factors that make up their top and bottom line—can help you better frame your research projects to drive changes that will be meaningful to your stakeholders or clients.
For example, if you work with an executive, and understand that their biggest pain point is cutting SGNA (a general operating cost), and your biggest goal is to launch new products to market—you’d recognize some ways in which your viewpoints are conflicting. Understanding the pressures on that executives (to cut costs) that lie in contrast to yours goals (to build new things, which requires new resources) should help you move forward more empathetically.
Pro tip: Work with your accountants. Offer to buy them a cup of coffee and have them walk you through their P&L and income statements every quarter. You’ll be amazed how much closer that gets you to understanding business language and your company’s goals with a simple conversation.
2. Organizational structure
How do the people at your company actually work together?
Companies organize their teams in a way that help them achieve business objectives, and understanding how these teams work together will make you a better cross-functional collaborator. Are your people grouped by function (marketing, engineering, product, etc.)? By geography? By different product lines? A hybrid?
Applying your “anthropologist lens” to your company's structure, politics, and culture will reveal who actually holds power in an organization. And the person who hold power might not always be the same person and the one who makes the final decisions.
For example, sometimes power comes down to the team that has the biggest budget. In tech, that might be product. In consumer goods, it might be marketing. Maybe the CEO appears to have power, but is heavily influenced by marketing, or engineering. To truly influence decision making, you have to understand how decisions in your company get made.
3. Corporate strategy
Understanding corporate strategy means understanding the long game—beyond the sphere of what you're working on for the next six months. What are your business' long-term goals five years from now? Their short-term goal of one year from now? Are you designing or researching for solutions that solve those problems?
One of the best ways UX-ers can be an asset to corporate strategy is to understand (and dismantle, assumptions their coworkers may have) about people, about the market, about their users, and about their competitors.
If you can look at how these assumptions have driven their strategy, you can investigate them, and hopefully inform a better path forward.
The business model canvas: Breaking down the top and bottom line
The business model canvas is business school 101. It breaks your company into five component parts—three of which are supported by the financial principles earlier discussed.
Understanding how the business model canvas works will help you determine where you “fit” and where you can find new ways to provide value.
Your company’s infrastructure is made up of their key partners and suppliers. If you’re a specialty grocery store, these would be your local organic farms. This also includes your key activities, or unique strategic assets—the things you need to be doing to deliver your offering or to maintain your value propositions.
Usually, UXRs focus their energies on their company’s offerings and customer segments. A few things you can investigate that are mission critical for executives, when positioned along this framework:
- What makes your offering compelling or unique—especially compared to other players on the market? (Offering)
- How are you reaching your customers? (Customers)
- Who are your customer segments? (Customers)
- How do your sales team and customer relationship teams actually interface with your customers? (Customers)
- What are the different touch points in the user journey? (Customers)
Understanding these questions in the context of the entire ecosystem can make your work more impactful. For example, if you’re answering a question on the “customer” side of the canvas, ask in addition: How does that impact our cost structure? What does that change about our offering? How does that impact what we need on the partnership side?
Whenever you make a recommendation based on a UX decision, you’re impacting all other aspects of the company—aspects that you might not see because you’re not routinely sitting down with the head of business development, or the finance manager.
The strategy diamond: Companies as cohesive
The strategy diamond, developed by Hambrick and Frederickson, is the gold standard for understanding organizational strategy. It's a quick, visual way of cutting all the different parts of an organization and framing them to understand how they support one another.
Anytime you start a project, you should understand the arenas where the company is active, the vehicles that move its decisions forward, the differentiators that separate it from the market, and staging that dictates their timelines for taking action.
In general, as a UXR, knowing the strategy diamond gives you a starting point to keep your teams or collaborators on the same page. If you can identify where your company strategy is going, you can pinpoint their assumptions, where they’re making big bets, and how they’ve chosen to act in the market.
Ask: Do we have a shared understanding of our goals? What kind of decisions have we made already? And where do we want to challenge those goals and decisions with research?
Asking these questions may also better position you to move from primarily “evaluative” research to primarily “generative” generative research. Companies frequently over-rely on evaluative research because it’s more quantifiable.
Generative research is key to understanding how the “differentiators” in the strategy diamond will play out, and the “arenas” in which your company has an opportunity to occupy.
Porter’s generic strategies: The competitive advantage of good UXR
Economist Michael Porter constructed a simple yet far-reaching structure to guide corporate decision-making.
It all rests on the premise of achieving an enduring advantage over your competitors, which he calls “the moat.” Porter defines the two ways to achieve a competitive advantage over its rivals: cost and differentiation. These can play out in a combination of a few different business strategies—each of which have different business ramifications.
- Low cost strategies require having the lowest price in the market. To succeed at a low cost strategy, you need to have high volume. You need to have contracts to make sure your costs are fixed. Retailers like Walmart have low-cost strategies.
- Narrow segmentation strategies own an entire market. In order to do that, you need to build a “mote”—or an enduring competitive advantage—that makes it hard for other folks to compete. This involves filing patents and getting ahead on research.
- Differentiation strategies are where a lot of UXRs and designers break through. With a differentiation strategy, you can work back from an ideal customer experience. A classic example of this strategy is Warby Parker—who redefined the experience of buying eyewear. When they changed how people bought lenses (ie. from home), they changed the supply chain. They changed the “backstage” business workings in order to build a more ideal experience.
The ROI Calculator: A practical application of UXR’s benefit
ROI calculators are the most basic application of a financial model. It can give financial credibility to design-led projects that would’ve been previously considered “non-revenue generating.” And it can be a powerful tool for quantifying larger initiatives (ie. the launch of a new app, a new product offering, a new checkout page, an e-commerce feature, a brand campaign).
Creating a basic model of ROI gives you a leg up in a stakeholder meeting. It’s leaps and bounds more effective than just coming forth with a full prototype, or research plan.
Getting to ROI will involve some cross-collaboration amongst stakeholders, as you work to project appropriate metrics.
An example of what this might look like...
McClean: When I took a job at Expedia, they put me on the “flights'' product. I was told flights were intensely commoditized things, and that we needed to “de-commoditize flights.” I didn’t initially know that that meant, so I met with someone from investor relations and found that when you buy a flight on Expedia, the company only makes $7.00—even if it’s a $500 flight.
But the cost of acquiring a customer can be $42.00. How do we make up the difference?
They could start by selling hotels and rental cars, but we thought flights could be a stand-alone generating product. So we investigated where we were losing margin, and it turned out to be in customer support. We looked at NPS studies and realized people lacked transparency in fees and pricing. They’d call in, complain, and we’d lose money on the call.
So we thought about ways we could articulate better transparency about flights, and about pricing. We laid out a good experience map, and we stackd up a good business case by looking at what it would do to increase conversion rates.
We ultimately found that we could project it’d increase conversion rates by half a percent, increase organic repeat purchase by 2%, bend customer costs by a third of a percent, and it’ll take two teams, five designers. But if you take those small conversion rates and project them over tens of millions of dollars—they stack up. You’re looking at 9.5 million of net income.
To “get to these numbers,” return back to your profit and loss statement. Get familiar with Google Analytics. Start to think about how your UX project can be positioned along these lines and within this language.
Pro tip: If you don’t have access to this kind of data, or are in the early stage of collecting it, usability metrics can be a persuasive way to make your case. If you’re doing a task analysis, and you see someone takes 16 minutes and 312 clicks to complete a core function, you can often resonate with stakeholders by offering to shave off platform time, or reduce click count.
"Is it 'worth it' to get an MBA right now, especially if you're a designer or UXR?"
McLean: I'd say candidly, a third of my MBA program was incredibly valuable in learning statistics, finance, strategy, and business law. And some of the other things weren't 100% applicable. Khan Academy has a great free finance course, go take that. I really love mini-MBA programs, what Carolyn does, but also with institutions. There's great online mini-MBAs that pack in a year and you can stretch it out if you really want to.
So at the end of the day, I'd say like, learn on your own what you can. If you love the structure and what you're doing, then jump in further. I think for a lot of designers, they're like, "Oh, we don't like math." "Oh, I don't do that." You just did complex fractions with aspect ratios in the grid. It's just an educational gap about learning these things. So try the skills, if you like it, then maybe go to this instruction and education.
Carolyn: I was very heavily weighing whether I was going to go through an MBA program and especially after a couple of years working in consultancy. Even though my practice and expertise is in research and ethnography and the social science methodologies, I hope that I bring a lot more to the table for clients. I thought an MBA would give me an automatic kind of stamp of approval kind of ability.
I did not end up getting an MBA. So a lot of the learning that you can do on your own gives you that credibility. So if you're speaking and using the language that your stakeholders or clients are, they're immediately going to see and believe that you are more than a "UX practitioner" that you understand their business goals.
"How might we merge research outcomes with business outcomes in pitches?"
McLean: ...to be candid, sometimes for an observer, there feels like a real gap between research and business outcomes. And as a result, research can feel like a “check the box” sort of thing. I'd say one area where I think research can really connect the dots is in understanding market value and market opportunities.
A quick example, at Shutterstock, we were in the stock photography space. We traditionally worked with creative agencies, etc.. We worked on an initiative: it was a lightweight content creation tool. That was a completely different business segment. And I think a lot of people were like, "Oh, why are we doing this? This feels like a one off thing." But even our researchers were able to calculate, 'Hey, the market for creative professionals is XYZ. The market for small businesses, marketing budgets is 100X what we're looking at here. So even if we only get 1% of this market, it's probably 20% of this market. And so I think often for researchers, if you're looking for quick wins, ways to quantify your value, just look at the addressable market size. And even if you can kind of bite off 1% or 2%, it's going to be a heck of a lot of money there.
"Any suggestions for getting your hands on data for creating ROI calculators?"
Carolyn: ...a lot of my clients are very open and they're more than happy to share their numbers or strategy docs with me. Again, this is to help me help them do a better job. And I would say the most important thing for someone who has a research background is not to plug numbers day in and day out, but to build strong relationships with the teams.
I fold them into my own fieldwork and research a process. I'm hoping that they build me into their kind of investment analysis process as well. And then we're kind of both aligned at going in parallel tracks together.
Resources from Carolyn Hou:
Resources from McLean Donnelly:
Mac Hasley is a writer and content strategist at dscout. She likes writing words about words, making marketing less like “marketing,” and unashamedly monopolizing the office’s Clif Bar supply.