Design has become the largest differentiator most businesses have. Don Norman covered a host of everyday problems with products in his classic book, The Design of Everyday Things. He uncovers how you may not be alone in having trouble figuring out if a door “pulls” open or “pushes” open. It is a very worthwhile read and shows off the ability of Design to lesson the value in usefulness.

All businesses have some unique selling proposition for their goods or services too. There is something – besides price – that continues to keep their business in business. In a world where white collar jobs are done by people in far off times zones who have no connection to the customer – design may be the ONLY thing that differentiates your sales efforts. It’s not just techies offshore either. Today you find HR, scanning MRI’s, financial back office, customer service centers, and as much business process as companies are willing to send away. See examples here: Scanning, HR jobs, Call Center, Contact Center, Healthcare, and of course Software.

In an October Mass High Tech article, Richard Banfield wrote;

“Today, leadership faces an ever-increasing wave of new startups with fewer barriers to entry than ever before. Thanks to the decreasing cost of technology and increased access to microfunding, each of these startups begins with less overhead and less risk. Less risk means more potential competitors for the incumbents. Less than This 20 years ago, you could dominate an industry by simply building a massive infrastructure that would be too expensive or time consuming to compete with. Today, a feisty startup can eat your lunch using a bank loan and a socially exciting website.

To survive in a world in which your competitors are younger, faster and smarter than ever, you’ll need something else. You need a design strategy.”

Fast Company’s 2007 Master of Design Annual had more must-read articles and gave insight into great design minds like Philippe Starck and Yves Béhar.

“The style of tomorrow will be the freedom and recognition of difference. We must replace the name ‘beautiful’ by the name ‘good.’ Beautiful means nothing.” Philippe Starck

Meaning: good design is really about simplicity. It is about stripping out all the extraneous visual nonsense and leaving only the key elements needed to communicate clearly. It means designing only the necessary elements to make your product or service be preferred.

Massimo Vignelli, who founded Unimark in 1965, believes that

“It’s really more about logic than imagination.”

He and his wife Lella have done brand identity work for Bloomingdales, Ford, American Airlines and Knoll. But all of their most lasting work is SIMPLE.

Created in 1972 (before Adobe made graphic design easier for all) their New York Subway map is a perfect example of simplicity – and it was all done by hand. Each line bends at 45 or 90 degrees. Every line has a color and it was modeled after London’s underground map.

Design as a differentiator is not new – but it does have more believers today. Legendary Apple is one of the “True Believers” who controls the hardware, software and industrial design elegance. MIT’s Technology Review did a great story last year on why Apple’s success stems form their design culture. You can read the MIT article here. Robert Brunner says his team pushed manufacturers to find new solutions during his tenure with Apple industrial design. And bloggers write about Apple constantly in this role – including sending more tech business reporters to MacWorld each year.

1. Who should be next Apple CEO?
2. What we can Learn from Apple
3. Newsweek looks at MacBook Air

But even companies like Proctor & Gamble and SAS have claimed that Design will be one of the ways they differentiate in their marketplaces. And not just visually.

An older article in Bnet discusses the actual Value design can add to enterprises. The article shows how Design has 4 Powers:

1. Design as Differentiator
2. Design as Integrator
3. Design as Transformer
4. Design as Good Business

This is really where Design makes a difference: adding value to the equation of your business. Our own case studies have shown some correlation to the value of design. We have had clients increase online sales or decrease costs using simple web design. Getting measurable ROI from Design differentiation is the ultimate goal.

The next generation of tools from Google includes customized home pages with groups and blogs, mail and chat, spreadsheets and video, calendars and checkout widgets to name a few. More focused solutions come from the likes of Zillow where a consumer-driven real estate market is blossoming using these Web 2.0 ideas combining tax values, satellite images, maps and personal info that may dis-intermediate realtors in the near future. Check out the ‘Make me Move’ feature which allows you to advertise your asking price – even if you don’t have your house on the market.

A couple of recent reports from McKinsey and Forrester show that Web 2.0 tools are not just the hype of next-generation marketers, but are also being adopted in mid and large companies at a far faster rate than previously reported. CIOs are taking note and adding Web 2.0 tools to corporate offerings in the hopes of demonstrating improved efficiency both in and outside the organization.

Web 2.0 companies who sincerely ‘get it’ understand that they need to have a core competency in data management or collective intelligence. And to really become a Web 2.0 company, they need to allow end users to ‘create’ and not just ‘consume’ their information. Many corporations struggle with the need to allow users to publish and the result is enterprises have embraced the Web 2.0 tools they can have more control over – but are not finding as many uses for the peer-to-peer and social networking elements. Dion Hinchcliffe’s recent ZDNET blog has this understandable diagram segmenting the Central production vs Peer production views.

Business tools are being leveraged in intranets and development areas, but the true collaborative knowledge sharing has yet to reach outside for many corporations. Exceptions include the types of all-in-one web services tools like NetSuite which allows a mid-sized company to throw away a whole smorgasbord of software titles for one rentable online tool set that includes financial, purchasing, payroll, CRM, web site, e-commerce, sales force automation and marketing campaigns among others. These types of Web 2.0 tools allow far-flung employees to collaborate and see real-time information in ways that took thousands of man-hours and custom development just a few years ago.

Interestingly, one of the discussion points from the recent articles claims that CIO’s really want one vendor to deliver all these Web 2.0 tools. Or a mashup with one service center maybe. One decent example is found in ConnectBeam

Another is En.terpri.se which is a BEA product making it one of the first enterprise packaged solutions delivering Web 2.0 answers for corporations.

Smaller – more specific project management tools like Copper and Basecamp have grown organically because they do one thing well. Smaller businesses have jumped at the ability to quickly shift their operational needs to a rentable solution like this. As these Web 2.0 concepts share their code they will extend the software. One example: Blinksale (an online invoicing tool) allows users to leverage their client data directly from Basecamp. In fact many more products now integrate with Basecamp because of the shared API.

This web site is a collection of Web 2.0 ideas allowing us to leverage tools like Radiant for overall web site Content Management while plugging into Typo for the blog engine. Open Source tools like these can be grouped almost at will with a little technical imagination.

Ultimately all Web 2.0 businesses will need to open up parts of their information that they have historically kept closed. Successful companies will engage customers in dialog – and allow them to create and publish dialog along the path to corporate success. These customers will share in the success or failure of the ventures in a much more compelling fashion than even the recent past.

You can’t find many businesses today who don’t claim to be ‘design driven.’ Who doesn’t want to be the next Apple? But making that quantum shift from repetitive process-driven business to a more intuitive project-based one geared to customers is daunting.

Go to Amazon and search for “Business Creativity” books and you will see almost 3000 results. Industries who have been investing in design far longer than the current crop of business books need to get religion about design again. Software and web developers need to refocus – especially if the business buyers believe design can help them differentiate.

Microsoft has arguably as many Design and User Interface employees as any major corporation, but they have a dismal record of creating user-preferred design. Apparently Vista has 9 different ways that users can shut off a laptop. Friday’s BusinessWeek article claims “that Vista, for all its capabilities, could end up being too complex for the average consumer.” Joel Spolsky covered the Vista shut-down this week and says that “the more choices you give people, the harder it is for them to choose, and the unhappier they’ll feel.”

We have recently needed to adjust a user interface in a Section 508 compliant design that can be read in software like JAWS. As a result we are looking at established conventions and lower browser standards. But it will make us ‘listen’ to the users as well as how they view our design. And it will make us rethink everything we design going forward.

Go back and read last year’s Fact Company article on The Business of Design. “Design-influenced companies also understand their customers at a profound level and mobilize around that insight.”

That is where we all should start.

Too many companies start their their online shopping experience with how the company is set up. Corporate organizational charts (focused on the inside view) take over the web solutions. Commerce stores are set up in the same silos that the company uses for financial reporting purposes. You can almost tell the organizational chart by their sales solutions.

Our experience with financial service companies finds that products and services are typically separate entities in the corporation. As a result customers need to self-select into the types of products that make sense for them. So depending on the level of knowledge a customer has, or the entry point to the site, or the targeted advertising banner rate quote, the customer quickly gets to a solution – just maybe not the best solution for them.

So how does a company understand that the potential site visitor needs to finance his daughters wedding? That ‘product’ doesn’t exist on a bank site. The solution may come from an “Any Day” loan, or an Equity product or a Card Product or some sort of unsecured borrowing that can only happen when the bank listens to the need. That kind of listening can only happen by improving customer relationships.

If you are trying to improve your site for the Holidays you have probably missed the window for a major redesign effort which could improve your online relationships. But what you do have time for is improving what you have right now.

This Holiday season more companies intend to improve their relationships with some old fashioned technology – and still the only ‘killer app’ – email. In a recent WebTrends survey 80% of retailers stated that regular customer email is their preferred method for building relationships.

There are tons of email marketing sites that can help improve yours, but this recent article shows 3 successful ways to improve response without using discounted prices as the driver. Make your emails relevant; Time them to the season’s buying habits; and take advantage of key repurchase behavior. Repurchase behavior is key since it means you know about your customers.

More companies improved customer relationships this year with the addition of live chat and personalized promotions. Look at Bank of America’s Mortgage. The minute you land on those pages, a liveperson pop-up asks if you need assistance now. Liveperson did small sample interviews that showed users spend an average of 20 hours online each week and that 17% of the time is dedicated to research and comparison of products. Those shoppers spend more than $1000 online each year.

Customer relationships are expensive to start and invaluable to improve on. Use the information you have right now to improve yours. Why do customers buy from you in the first place? What parts of your site are most popular? Are there repeat sales of similar items? Do your customers ask for items that you have but can’t be found on your site? Can you cross-promote similar items better by using existing customer data? How can you better solve the needs of site visitors?

Someone once said that web users can really only do 4 things on any web site: Research, Purchase, Entertain themselves or Flee.

Help your customers research and purchase from you. See if you can’t speed up their getting information from you. Conduct a series of conversations with them through email or personalized content on your site. Use your ears and listen to what they need. Do everything you can to avoid the last of the 4. Flight means no return.

Take the steps to make sure your customers enjoy their Holidays.

Fortune magazine dug into the problems in a recent article entitled “Tearing up the Jack Welch Playbook.” By making fixed costs more variable (ie outsourcing, partnering, and focusing on core strengths), corporate success stories now come from agile companies with streamlined business models that do not require scale but with technology that can (Fortune article)

Software tools that allow instant publishing of opinions, news and information are totally changing the political landscape. Politicians are abusing the flexibility of this new medium by editing their opponents pages as well as enhancing their own (Charlotte Observer article) as covered in this recent article. Flexibility is not a license to cheat however and those indiscretions had to be monitored and made less flexible (try editing President Bush’s wiki entry for instance).

Apply flexibility to your business life. Get down on the floor and stretch. Get your employees and co-workers and clients to do it with you. Try to gain back some of the mobility you had when you were younger. Use it as you go about business today. It may bring a little tightness tomorrow, but you will start to see the results almost immediately in other aspects of strength and agility.

We are starting to see the frothiness of web hype (Web 2.0 BS Generator) again with mergers, venture money and hyperbole from consultants, but many of the old adages still apply. The Journal of Marketing has only been around since 1936 and has published a ton of research on effectiveness. One of the articles I remember most came from a 1961 quarterly publication. It was by Robert Lavidge and Gary Steiner and we used it in class at Georgia when we discussed measurement. It took users through the 6 step process from Awareness to Knowledge to Liking to Preference to Conviction to Purchase. Advertising programs have been teaching kids to write copy to get people across that spectrum ever since. Bill Bernbach exemplified the skills starting with the 1959 Volkswagon Think Small campaign and held our attention for decades.

How does that age old ’selling’ translate to the web? Where are we on Lavidge and Steiner’s continuum? Seth Godin has important opinions in his book “All Marketers are Liars” highlights which can be seen in a fantastic video of a talk he gave at Google’s offices (Godin Video). He believes that people “poke around” on a site until they can find meaning. And Meaning is the only thing that leads to Action (purchase in the old model).

His premise is is that you don’t have to invest millions in advertising (like the push model of old) if you can make a story worth telling by your customers. Engage your site visitors with a story? Have you been to a sales training session of any type where they didn’t tell you that? Story telling as a sales process works and it has been since the beginning of advertising. Getting customers to tell them is another story altogether.

So – how can a company cause those conversations to take place? That may be the most qualitative measure I have ever studied.

Now it’s all about instant gratification. Who wants to be a millionaire? Everyone. Who wants to work 40 years to earn the security that comes from being a millionaire? No one. Smith Barney had it right 15 years ago: “We make our money the old fashioned way… we earn it.”

That message is passé today. Boomers want youth in a pill. Youth wants instant clout. Society wants fitness in a bottle. Lose 10 pounds this weekend on the Hollywood Diet. “Eat-anything-you-want-and-burn-fat” infomercials promise all that and rock hard abs in three minutes a day. What ever happened to eat less, exercise more?

Business caught the same disease. Employees demanded stock options and unrealistic salaries. It became less about working for something, and more about being due those perks. Executives blindly followed Internet fiction. And companies foolishly paid ridiculous amounts to get it because they were scared their competitors might beat them to the promised land, scared that the startups’ “increasing returns” rationale was indeed rational, scared that without being the first to market they would be forced to pay a huge multiple of the newcomers’ costs.

They were scared because they didn’t have all the facts. Nobody did.

Intelligent people invested serious money in terrible ideas, ones that didn’t make sense for any economy. How many pets do you know who shop for food on the Internet? These ideas were based on the “dollars for eyeballs” falsity that after building market share, a company could achieve increasing returns. Profitability would obviously follow that.

The media fed the frenzy. Suddenly IPOs, stock options and exit strategies were in fashion. First time entrepreneurs told the world (and many actually believed their own press) that they had the skills necessary to run public companies. Unbelievably, investors didn’t balk. Even more farcical was the notion that only time stood in the way of these ventures putting stodgy brick and mortar companies out of business. Few pundits bothered to mention that the old school companies had actual paying customers.

The fiction continued with valuations that were just plain ludicrous.

Somehow many believed that “best to market” no longer mattered in the face of “first to market.” And venture capitalists did little to lead protégés with time-tested business acumen. Many individual and institutional investors believed—mistakenly—that those companies’ fantastic success was based on talent and not timing. Today those same investors must decide which ideas have any value and which should be cut off from further investment. It should be an interesting tax return season.

A few sobering links may further qualify these ideas. The Internet Wasteland chart shows more than 250 companies whose value has dropped over 90% in the past 12 months. Investors will ultimately decide their fate.

Others may not be so lucky. A recent Industry Standard article lists more than 250 publicly traded firms in danger of being delisted by their stock exchange. Delisting is death for a public company. Most mutual funds and hedge funds do not permit ownership of stocks not listed on the major exchanges. And there are not enough individuals interested in penny stocks or pink sheets to merit keeping those businesses afloat. The public trough is dry and these companies are dead. They just haven’t locked the doors yet.

Supply and demand, monetary policy, interest rates and wage expectations: it seemed so complicated and “old school” in college economics class. It seems so clear today. The markets work. And it takes hard work to build businesses that survive in markets.

Welcome to the new millennium, when the economy matters, just like it always has. When success depends on the simple time-tested theories of supply and demand. When customers have more information to make better decisions than ever before. When Internet technologies further enhance the ultimate decisions of those customers—buying decisions.

And when common sense makes a most welcome comeback.

Many of today’s business headlines are garnered by companies that have sold their souls for startup money. Instead of taking the time to define their core values and build a solid business foundation, Internet companies are jumping right into the development of glossy business plans and slick marketing tactics. They have marketing departments and PR firms, but no sellable solutions. They have ideas, but neither the knowledge nor the ability to carry them out. They have sales organizations, but no service understanding. They hire resumes instead of people.

They don’t understand what a true Internet company is all about.

The fact is, a true Internet company is no different from any other successful business in that it must stand for something; it needs core values. It needs focus. It needs a spine. Despite what you read in Internet publications and the popular technology trades, true Internet success is based on the fundamental principles of service, quality, knowledge, relationships, commitment, innovation, individual respect and integrity. A true Internet company isn’t seeking funding.

A true Internet company reinvests its earnings in the people and the process. It is made up of individuals who genuinely understand the medium—because they believe in it. People who are missionaries for the medium, not mercenaries for the dollar. People with years of exposure to the evolution of the Internet. People who weren’t insurance agents last year or real estate brokers in March or investment bankers last month. They “get it” in a way that newcomers will not understand for years. They believe in the medium, not just the paycheck or the stock options or the BMW.

True i is the guiding philosophy at Vialogix. It is a belief system based on the understanding that the Internet has fundamentally changed customer relationships forever. Companies used to be in control of the information—but today, customers are in charge. True Internet companies develop solutions for those customers. They don’t confuse the business model du jour with the fact that success comes from having a solid business plan based on serving those customers.

A true Internet company uses a browser or a WAP phone or a PDA to deliver compelling information. It uses those same tools to reduce costs and share information with employees and suppliers and customers—and it has done this for years.