The Trade Off

This trade off way of thinking about design is central to strategy.

The lesson from systems engineering at JPL was that performance is the joint outcome of capability and clever design.  In particular, given existing capabilities, such as rocket throw weight or power supply efficiency, to get more performance out of a system you have to integrate its components and subsystems more cleverly and more tightly.  

On the other hand, if capabilities (technologies) could be improved the demand for tight, clever integration was lessened.  That is, more powerful booster rockets or lighter components would let us meet the weight constraint with less work on tight integration.  This trade off way of thinking about design is central to strategy.

ACTION POINT:  Understand the balance between capabilities and clever design.

The Discipline of Design

This work required learning about all of the subsystems and their possible interactions in order to imagine a configuration that might be effective. 

Jet Propulsion Laboratories (JPL) was tasked with doing the conceptual designs of a mission to Jupiter, a project that would later be named Voyager.   JPL was organized around the subsystems of a spacecraft--communications, power, structures, attitude control, computing and sequencing, and so on.  In the systems division the job of a systems engineer was the overall architecture of the spacecraft and working out the coordination among the specifications of all the different subsystems.

The basic constraint was weight.  It was expected that the Titan IIIC rocket would launch about 1,200 pounds into a trajectory toward Jupiter.  Using a Saturn 1B would allow for a 3,000 pound spacecraft.  Two designs were sketched out over a year, each with a different configuration based on weight.   With 3,000 pounds to work with, the design work was relatively easy.   The designers could essentially bolt together fairly well-understood subsystems.  Consequently, the divisions would not have to coordinate very much because the design challenge was relatively low.  But if they only had 1,200 pounds to work with, things were more difficult.  Interactions began to play a big role.

Most of the work in systems design is figuring out the interactions, or trade-offs, as they were called.  The moment you tried to optimize any one part, that choice immediately posed problems for other parts.  The weight constraint made the whole thing a web of competing needs, and it all had to be considered together. Each part of the system had to be reconsidered and shaped to the needs of the rest of the system.  A great deal of work went into trying to create clever configurations that avoided wasteful duplication.  This work required learning about all of the subsystems and their possible interactions in order to imagine a configuration that might be effective.  It was difficult to say the least, but it is also the beginning of learning strategy.

ACTION POINT:  Understand the interactions involved when changing one part of a system.

Competitive Design

Competitive strategy is still design, but there are now more parameters--more interactions--to worry about. 

That difficult exercise was design.  But in seeking the best smile per dollar, we took a monopoly view.  Yes, we went beyond product to include manufacturing and distribution in the design, but our strategy was tuned to please the customer, not to deal with competition.  To deal with competition, expand your vision again to include other automobile companies.  Now you are looking for a competitive sweet spot.  You have to adjust the design--the strategy--to put more smile per dollar on a driver's face than she can get from competing products.  That driver might not be the young woman we first envisioned on the Angeles Crest Highway.  Another firm may more easily meet her demands, so a critical issue becomes the identification of the particular set of buyers--our target market--where we have a differential advantage.

Competitive strategy is still design, but there are now more parameters--more interactions--to worry about.  The new interactions are the offerings and strategies of rivals.  Very quickly, you are going to focus on what you, or your company, can do more effectively than others.  It will normally turn out that competition makes you focus on a much smaller subset of car models, manufacturing setups, and customers.

Describing strategy as a design rather than as a plan or as a choice emphasizes the issue of mutual adjustment.  In design problems, where various elements must be arranged, adjusted, and coordinated, there can be sharply peaked gains to getting combinations right and sharp costs to getting them wrong.  A good strategy coordinates policies across activities to focus the competitive punch.

ACTION POINT: A good strategy coordinates policies across activities to focus the competitive punch.

Performance and Cost

you can probably, with effort, produce a good configuration.

Form an image in your mind of the BMW's driver; see her taking the curves on the winding Angeles Crest Highway.  Look at her face and imagine sensing her pleasure or displeasure with the automobile.  Now, begin to vary the design.  Make the car bigger, quieter, a bit less responsive but more powerful, heavier.  Now, lighter, quicker, more responsive.  To do so, you have to change the chassis, the engine weight and torque, the suspension, the steering assembly, and more.  It will sway less and hug the road; the steering wheel will provide more tactile feedback.  Now adjust the chassis: make it stiffer to dampen longitudinal twists and soften the front suspension just a bit to reduce road shock.  Varying forty or fifty parameters, you will eventually find a sweet spot, where everything works together.  She will smile and like her car.

But there is more.  Her driving pleasure depends upon the price paid, so we begin to include cost in our design.  We concentrate on her smile per dollar.  Many more interactions must be considered to find the sweet spot that gives the largest smile per dollar.  You cannot search the entire space of possibilities; it is too complex.  But you can probably, with effort, produce a good configuration.  To get more sophisticated, you should also include the pleasure the driver takes in buying a premium brand, backed up by image advertising and swank dealers.  You should also consider her buying experience and the car's expected reliability and resale value.  More design elements to adjust, more interactions to consider.  And then, of course, you should consider other drivers with other tastes and incomes, a huge step upward in complexity and interaction.

ACTION POINT:  Expand your view of the interactions and complexity required for effective design.

The Parts Of A Whole

The chassis, steering, suspension, engine, and hydraulic and electrical controls have to be tuned to one another.  

Business and corporate strategy deal with large-scale design-type problems.  the greater the challenge, or the higher the performance sought, the more interactions have to be considered.  Think, for instance of what it takes to give a BMW 3 Series car that "driving machine" feel.  

The chassis, steering, suspension, engine, and hydraulic and electrical controls have to be tuned to one another.  You can make a car out of high-quality off-the-shelf parts, but it won't be a "driving machine."  In a case like this there is a sharp gain to careful coordination of the parts into a whole.

ACTION POINT: Consider the parts of your organization and how they interact.  Do your customers experience the "driving machine" feel?