Introduction to Value Pricing | November 25, 2014

I think most designers would agree that design has a huge amount to offer businesses in terms of differentiating products, solving complex problems and delivering increased value to consumers. I think most designers would also agree that this ability is often ignored or seriously undervalued by those same businesses.

Value pricing is an attempt to redress the balance by pricing work based on the value it delivers to clients rather than the time it takes to create. The argument goes that the value of a logo, like the Coca-cola logo, is often worth more than the hours that went into its creation. So whether the final creation took a team of branding experts 6-months, or was sketched on the back of a napkin during the first meeting, the value to the client-and hence the cost-should be the same.

This can be best illustrated by the fable of the plumber, who when asked to fix a boiler, pulls out her hammer, hits the boiler in exactly the right spot to get it working, then asked for £100. When the homeowner questions how she could justify such a high charge for so little work, the plumber responds by saying “that was £10 for me hitting it with the hammer and £90 for knowing where to hit”. The implication of this story is two-fold. First off the plumber wasn’t charging for her time on the job, but for all the years of training that led up to that point, and ultimately the customer wasn’t paying for the time either, bit for a working boiler.

It’s a great story and one that makes a lot of sense. After all, there are plenty of circumstances where you care more about the output than the time it took you to get there. In fact with time being so precious, getting there quicker can often be worth more. This is one reason why Concord was always more expensive than a 747, and why some people will pay more for an abridged audio book than the full version - because they value their own time over completeness.

Designers often struggle to price projects based on the value of their work, so typically sell their time instead. As such, the only way to earn more money is to increase their day rate or sell more hours. So when you see news stories of that latest multi-million dollar rebrand, you can’t help but wonder whether all that time was strictly necessary to come up with final logo, or whether it was the agency trying to justify extra revenue through unnecessary focus groups and consultation.

By contrast, value pricing takes elapsed time out of the equation and tries to focus on outcomes instead. That way it doesn’t matter if it takes one month to solve the problem or six if the problem still gets solved to the clients satisfaction. If you’re good at what you do (read “efficient at solving problems”) you’re able to generate much more profit than simply billing on time alone.

Value pricing seems to require a little more work up front as you need to spend time understanding what the client values before you can come up with a figure. For instance, are they willing to pay more for the project to start sooner, or for access to specific experts. Are they looking to hit specific revenue targets by a certain date, or are they more interested in developing out the capabilities of their team? Do they need every page designed and built, or would some kind of pattern portfolio deliver more value? Now none of the questions are exclusive to value proving, but you do need to spend more time uncovering these issues when you take this approach.

Value pricing also seems to imply fixed scope contracts, as you need to define exactly what value you’re proposing to deliver to what price. So there’s an interesting question as to whether value pricing can work alongside agile practices.

On the whole I think value pricing is a very interesting concept and one that I’ve seen come up more frequently over the past few years. Possibly because designers are feeling ever more squeezed to produce more for clients on less. So I can definitely see why people are attracted by the concept. However I also see a number of challenges with this approach, not least that fact that it’s not how the majority of agencies price their work.

In my next post on the subject of pricing I’m going to flag up some of the issues I see with value pricing. Then I’m going to look at the more traditional approach of time-based pricing, paying particular attention to agile pricing. Finally I’ll end things up with a short summary and a list of places you can go to find out more information on this subject.

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Craggy Island: The climbing gym that hates boulderers? | September 25, 2014

Over that last year I’ve got really into bouldering. I’m not especially good, but I enjoy the mental and physical challenge of solving bouldering problems over the tedium of a regular gym. I tried rope climbing once, but wasn’t keen on all the equipment or the need to climb in pairs. So I much prefer the freedom and flexibility that comes with bouldering.

When a work trip took me to Guildford, I decided to head down the evening before and check out Craggy Island. I’ve met a few people who climb there and highly recommend it, so I was looking forward to my bouldering session the whole drive up.

I’ve been to mixed climbing and bouldering places before, and have never had a problem. However when I arrived at Craggy Island I was turned away at the door. You see, despite only wanting to go Bouldering, the folks at Craggy Island won’t let boulderers into their gym unless they also know how to rope climb. I tried to explain that I only wanted to use the bouldering wall, but it fell on deaf ears.

Having been rope climbing once before, I decided to try my luck and give it a go. However without the necessary muscle memory I hit a mental block and couldn’t remember how to tie a belay knot. As each successive person passed by on their way into the gym, I began to feel more and more humiliated.

I tried to reason with the guy on the front desk. After all they were asking me to prove I could do something I had no intention of doing, just to get in. A little like asking for proof you can high-dive, when all you wanted to do is a couple of laps of the pool.

I asked if he could jog my memory as I was almost there, but he wasn’t willing to help. Instead he suggested I came back another time to do a refresher course - something I obviously couldn’t do because I was only there for a day, and didn’t want to do because I was only interested in bouldering.

Rather than trying to help, or give me the benefit of doubt, there was a real “jobsworth” mentality at play here. What if they let me in because I said I was going bouldering, but I lied and actually tried to scale the climbing wall not correctly tied in? This would make sense had I not been to mixed bouldering and climbing gyms in more litigious countries like the US and faced no such problem. Instead you just sign a waiver, hand over your money and are trusted to do the right thing.

Walking out of the gym I felt angry, humiliated and dejected. What should have been the highlight of my trip turned out to be the low point, and put me in a bad mood for the rest of the day. Instead of a great climb I left with the feeling that boulderers aren’t welcome at Craggy Island, and I most defitly won’t be going back.

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Could the movies of your childhood be made today? | July 20, 2014

I’ve been thinking a lot about the effect digital technology is having on society of late. I’m especially curious how it’s changing our most formative years, when the stories we tell about ourselves are generated and our identity formed.

Looking back, my adolescence seems like a halcyon time, devoid of mobile phones and status updates. Heading into the big city was an adventure into the unknown, and even something as mundane as meeting up with friends was fraught with uncertainty and excitement.

A lot of the movie tropes of my childhood, relied on these vagaries. For instance the whole premiss of Desperately Seeking Susan relied on two individuals not being able to find each other, and the hilarity and intrigue that ensued. So how different would this movie have been if it were set in the modern day?

The lead characters would now be following each other of Facebook, Twitter and Foursquare, so only a check-in away. Similarly (spoiler alert) the people searching for Susan would only have needed to check her profile image to know if they’d got the right person. So the whole movie would have been reduced to “I wonder were Susan is?”, swipe, “oh, she’s there”.

A lot of 80s comedies relied on the fish out of water scenario. However can you imagine National Lampoons European Vacation in an age of Trip Advisor? No laughably bad hotels, terrible meals or getting lost on the backroads of Europe. Just highly rated B&Bs and top class restaurants. Similarly Mick Dundee would have had a much easier time navigating the cultural differences of New York with a Lonely Planet Pocket Guide on his Fire Phone. Call that a knife? I could buy that on Amazon for $9.99 with next day shipping.

Getting from A to B was another common trope in these old movies. Whether it’s the antics of Smokey and the Bandit, The Cannonball Run, or Every Which Way But Loose. How different would all these movies have been with Waze telling you the bridge was out and your Sat Nav warning you of speed traps? Right turn in 200 yards Clyde.

I wonder how Planes Trains and Automobiles have played out if Steve Martin was a ZipCar user? Or how about Martin Scorsese’s After Hours if the main character could have called up an Uber? Probably a lot better come to think of it.

I always liked the “day-off” or “parents out of town” fantasy. However I wonder if Risky Business would have been different if Tom Cruise had advertised his activities on Craigslist or set up a Kickstarter campaign? And what about Ferris Bueller? No doubt his performance on the float would have gone viral and he’d now be making a living from posting inane clips on YouTube.

Another popular conceit is the fallibility of memory. About Last Night? Check-out my Instagram feed. Dude, where’s my car? Oh, my parking app says I left it over there.

Other famous plot lines would have similarly shortened. So rather than the “will they won’t they” romance of When Harry Met Sally, all Billy Crystal needed to do was fire up Bang With Friends to see if Meg Ryan felt the same way.

In fact most high school romances would have been rendered redundant thanks to services like this. For instance would John Cusack have traveled across the country for a Sure Thing, when he could have found one on campus with Tinder?

Similarly The Breakfast Club would have been a movie about 6 outsiders playing Angry Birds while bitching to their friends on Facebook. No need to crawl through air ducts or share snatched conversations in the hallway to bond. Swipe left. Swipe right. Let’s meet in the janitors closet in 5. I’m sure what Judd Nelson saw under the table would have gone on Instagram straight away.

So If that’s what’s happened to romantic comedies, what about Sex? Would Sex Lies and Videotape have been renamed Sex, Lies and SnapChat? Would the protagonists in 9 1/2 Weeks have started their own webcam channel, ordering ever more obscure food from Tesco Direct to sate their subscribers increasingly niche interests. Taramasalata anyone?

I can think of hundreds of classic movies that would have been irrevocably altered in todays environment. Sure, some of the examples are slightly artificial, but it’s an interesting thought exercise nonetheless. So hit me with your best shot and let me know what movies you think would have been changed by todays technology and how?

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My Advice to Young Designers and Developers | March 16, 2014

I meet them on a regular basis, tech-savvy teens who’ve been coding websites from an early age. They’ll often seek my advice about breaking into the industry. Should they continue their studies or jump straight into the labour market? I usually tell them that ability trumps education and I don’t put much faith on the current raft of tech degrees. So I’d prefer to see three years of experience than three years of study.

That being said, I’ll also point out that University is about much more than just acquiring a skill. It’s a formative experience that will shape your attitudes for the rest of your life. It’s also a huge amount of fun, or at least it was in my day.

As University becomes more expensive, it’s understandable that people question its value. So it makes sense for many young designers and developers to skip higher education in favour of the workplace, and who can blame them? As somebody who was earning less than ‘300 a week throughout most of my twenties, I can’t imagine what it must be like for a twenty year old to earn that much a day freelancing.

However I worry that in the rush to join the establishment, people may be missing out on formative experiences they’ll never get back.

Now I don’t want to romanticise low paid jobs or suggest poverty tourism for the soon to be tech-elite, but there’s something to be said for getting by on minimum wage to enforce a respect for money. There’s also something to be said for working behind a bar, in a call centre or any number of service-based jobs to instil a sense of empathy for other people.

If you’re interested, I’ve worked variously at a chip shop, a supermarket, a warehouse, a watch factory, a restaurant kitchen, a bank, a call centre, a travel agent, a farm, a hostel and various dive centres around Australasia. In all of these situations I met interesting characters and learnt valuable life lessons.

The tech-sector is a wonderful place to work, but it’s also a homogenous and often self-entitled one. So I wonder if the young engineers making their way down to Silicon Valley may have been better equipped to handle the ire of ordinary San Francisco citizens if more of then had tried living in the city on minimum wage themselves?

When I’m asked for advice from school age designers and developers about breaking into the industry, my answer is usually the same ’ ‘don’t rush into a career at 18, only to look back when you’re 28 or 38 and wonder where the time went.’ ‘Instead’, I’ll suggest, ‘why not take a few years off to go travelling?’

I know it’s a clich’ but travelling really does broaden your horizons and expand your mind. Not only do you get to meet new people and experience different perspectives on life, but you also get to reflect on the choices you’ve made or are going to make. For instance I was convinced that I wanted to be a pilot at the age of 18 and even took up flying lessons. However it was only through travel that I realised what a mistake that would have been and what I really wanted to do with my life.

By comparison, the majority of people I know who went straight into a career ended up hating what they did for a living, but only realised this once it was too late. There really is no rush to start down the career path, so I find it weird how many people are settling into their careers so soon. It’s something I associate more with my parents or grandparents era and is oddly conservative.

More importantly, travelling is a lot of fun. It’s also something that gets harder to do as you progress in your careers, buy houses, raise families and settle down. So it’s something I always recommend people to do when they’re young, or risk missing out. After all, the tech industry will always be there, but you only live once so you may as well make the time count.

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Specialism, Ego and The Dunning-Kruger Effect | February 19, 2014

Every few weeks I see a discussion emerge that tries to dismiss the need for specialists in our industry, or refute their existence entirely. It usually goes along the lines of Im a [insert discipline] and I do my own [insert activity] so [insert specialism] is unnecessary or doesn’t exist.

While its great to have people with a broad range of skills and abilities, its also a little hurtful to people who have dedicated their careers to being good at a particular thing, as it implies that all their choices and hard work were a waste of time.

Sometimes this conversation spins into the area of job titles and their general inability to sum up exactly what an individual does. Other times it has us dismissing fairly well understood disciplines or defining the damned thing. The conversation usually ends up with somebody saying something like Well Im just going to call myself a Designer/Developer as if picking the broadest and most generic term adds clarity to the conversation.

The problem is that I really do understand the sentiment. If youve been working in the field of design for a very long time at a reasonably high level, everything starts to look the same. So when Ive seen product designers, architects or moviemakers talk about their process, the similarities are uncanny. As such its no surprise when very experienced people pronounce thats its design (or development) all the way down.

However when you start to unpick each discipline, you discover that while the thought processes are similar, the individual activities and craft skills are often very different. You also realise that scale has a big influence.

If youre working on relatively simple projects, its entirely possible for a talented individual or small team of generalists to create something amazing. You see this in everything from Web design and indie-publishing to residential architecture and independent filmmaking.

For somebody who has built a successful career in this space, its very easy to look at large design agencies, architectural firms or film companies and boggle at all the specialists they have. After all, do Hollywood movies really need a best boy, key grip and clapper loader when youve just produced a short that you wrote, filmed and directed yourself?

It seems excessive, and maybe it is. I do think some industries have gone crazy with specialists, so theres always room to assess whether a certain level of specialism is necessary for your particular requirements or situation.

However therein lies the problem! People really do have the habit of making statements about the whole industry based on the small corner they inhabit. I know, as Im as guilty of this as most. As such we see lots of comments dismissing the need or even existence of certain specialisms not because they dont actually exist, but because those individuals just havent hit the limits of their abilities where having those specialisms would help.

This is actually a fairly common cognitive bias known as the Dunning-Kruger effect, which sees people inaccurately assess their own level of knowledge while failing to recognize the skills of others. So if youve ever watched a man try to build a fire, cook a BBQ or put up a shelf youll know what I mean.

In its most passive state, the Dunning-Kruger effect manifests itself as naivety and may actually be a key driver for learning. After all, isnt it more enticing to think that if you start learning a new skill, youll get good at it quickly, rather than realising that youre going to need 10,000 hours to perfect your craft?

As such we can help people get over this hump by expanding their worldview and explaining the deep specialisms of others. It doesnt mean that you have to become a specialist yourself, but its useful to know when youre reaching the limits of your own abilities, if only to inform where you go next.

However I think the Dunning-Kruger effect can have a more divisive role. Im sure weve all come across the egotistical designer or creative director who rates their own abilities above all else. This approach often leads to really bad design decisions to the detriment of the product or its users.

Ive seen similar issues in other fields, like developers feeling they are the most qualified people to design the UX because they are expert technology users, or interaction designers believing they will make great visual designers because its just a case of learning Photoshop right? This is an interesting area where Dunning-Kruger overlaps with the Halo effect to make people think that because they are good at doing one thing really well, they must be good at doing other things equally well.

I think this attitude is also holding a lot of people back. Ive met plenty of talented practitioners over the years that had the opportunity to be great, if it wasnt for the fact that they already believed they were. A lot of this is environmental. For instance if you happen to be great at creating mid-sized projects or happen to be the best designer in an above average agency, its easy to think that youve got it nailed. However put that person in a world-class team or a hugely complex project and watch them struggle.

I think this is why some of the best designers I know are going to work with big Silicon Valley Tech companies. It forces them to move out of their comfort zone and up their game.

For me, the very best practitioners usually exhibit the opposite of the Dunning-Kruger effect, known as the imposter syndrome. With this cognitive bias, people often have so much visibility of the great work and skill going on in their sector, that they never feel they match up. So they quite literally feel that at some stage they will be unmasked as an imposter.

This bias has a number of benefits in our sector as it forces people to up their game and learn new things, while at the same time making them realise that they will never know everything. As such, people with imposter syndrome tend to specialise. It also means that people are incredibly critical of their work and are constantly striving to improve.

However the imposter syndrome also has its negative effects, like never believing that youre worthy, or giving overdue credit to people demonstrating Dunning-Kruger like behaviour. So in it’s worst manifestation I seen really amazing people stuck in mediocre jobs because they don’t truly believe how great they are.

As such the key learning is to try and develop a well-rounded view of the industry, the skills you have and the skills and expertise of others. So please, no more tweets or articles like this one decrying a particular skill, discipline or job title. It turns out they are very unhelpful, and more often than not wrong.

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Better design through Web Governance | February 8, 2014

I meet a lot of in-house designers in the course of my travels and the same frustrations keep bubbling up - how can I convince the company I work for to take my expertise seriously. It seems that companies have a pathology of hiring highly talented people but taking away the decision making abilities they need to do their job.

Quite often the people at the top of the business know what is broken and are trying desperately to fix it, while the people at the coal face can see the solutions but are unable to act. So whats going on here?

It seems to me that theres a mid level of management responsible for turning strategy into tactics. So its their job to understand the business goals and communicate them to the experts in a way that ensures the problems find a good solution. If this was their only responsibility, I think we’d be in a good place. However a lot of the time this middle tier also start filtering solutions and this is where things start to go wrong.

Im a firm believer that the people with the most experience in a particular facet of business should be the ones making the decisions for that facet. As such it would be nonsensical for the tech team to be making core financial decisions, as it would for the finance department to drive the technical infrastructure. So why do product managers, designers and UX practitioners constantly find their recommendations being overridden by managers from different departments with little experience in digital.

I think one of the problems lies in the hierarchical approach to management which is a layover of the industrial age. There has always been the assumption that as you rise up the hierarchy you gain more knowledge than the people below you and are therefore more capable of making important decisions.

However in the knowledge age this process is often reversed, with the people at the top forced to rely on the experts below them. Sadly a lot of mid level managers still believe they are in the former model and end up prioritising their opinions over the expertise of others.

This is one reason why I really like the idea of Web Governance. The idea is simple to put in place a governance strategy that explains how decisions get made in the digital sphere.

Web Governance allows an organisation to identify the experts in a range of different disciplines and cede responsibility for those areas over to them, even if they happen to be lower in the organisational hierarchy. For instance, the governance document may state that a senior stakeholder has responsibility for delivering a set of business objective and metrics, but that UI decisions are the ultimate responsibility of the head of UX.

Imagine working in an organisation where the head of UX actually had genuine responsibility for the user experience of their product and can turn down bad poor ideas if they cant be demonstrated to be in the service of a specific set of business outcomes.

Of course, there will be times when these issues clash, so the governance document needs to include information about who needs to be consulted on various decisions. However the goal here is to encourage discussion and negotiation over blanket control based on status alone.

The main thing here is to clearly set out the roles and responsibilities of each individual, rather than have them implied by status or inferred by domain. Its also about breaking out of the traditional corporate hierarchy and allowing experts to have decision making responsibilities that can override more senior members in certain well defined areas.

Web governance feels like an effective solution to me and all the documentation I’ve reason on the subject so far seems extremely logical and positive. So if you’re struggling to get your expertise heard, maybe its time to start thinking about a governance strategy.

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