One of the challenges design system managers face is convincing the powers that be of the value a design system provides both in terms of the revenue and as a driver of innovation. In a previous blog we discussed measuring digital production cycle time and tying it directly to ROI and revenue to demonstrate the value of a design system. In this post we will focus on understanding design systems as an innovation driver through the competitive power it provides an organization.
The seven powers of competitive advantage
In his book "7 Powers: The Foundations of Business Strategy," Hamilton Helmer, outlines a framework for understanding what it takes for a business to maintain its competitive advantage. These powers, or strategic leavers, can be moved through a well-structured and maintained design system.
- Scale Economies: An organization can achieve a competitive cost advantage when its size, output, or scale of operation is able to lower per-unit costs as the production volume increases.
A well run design system is able to create a competitive advantage of scaled economies by reducing duplicative efforts and increasing production velocity, thereby reducing costs associated with digital, and sometimes physical, production. The scaled benefits of a design system really take off when you begin to think about systems-of-systems. Knapsack engineered its scheme-first platform to provide the tools engineering and design teams need to efficiently create, innovate, and mature a design system at scale.
- Network Economies: The value of a product or service increases as more people use it.
Yes, we recently said adoption wasn’t the metric you should focus on when trying to make a case for the true value of a design system, but that doesn’t mean its not useful in telling a part of the story or that adoption of a system isn’t important to creating value. The value a design system provides increases as more teams adopt and contribute to it, creating a network effect that fosters community, enhances collaboration and knowledge sharing, and helps accelerate production.
- Counter-Positioning: When a new and more efficient business model arises that legacy competitors cannot easily replicate without disrupting existing operations, the originating organization gains a differentiating competitive advantage.
Usually this competitive advantage is claimed by new organizations who do not have legacy systems to contend with. Younger companies must be agile and scrappy to differentiate themselves and disrupt the status que to gain market share. A design system helps achieve that aim. However, for more established organizations willing to make a big bet, investing in a well-structured design system can help them regain a competitive edge over long-standing rivals and protect against disruptors.
- Switching Costs: Organizations and customers do not like to switch products, tools, or processes because of the perceived loss of value or efficiency they may suffer.
Once a process or tool is deeply integrated into a company’s way of doing things, the cost to switch becomes high, both in terms of time and resources. The stickiness this creates is a major incentive to build something right and invest in it fully to maximize its value. If your current system is not meeting your expectations and you are thinking of retooling or building something new it’s worth exploring how Knapsack can help you realize the value of your system and avoid or minimize the cost of starting over. A well maintained and mature design system creates a competitive advantage by eliminating the need to switch tools or systems for all the right reasons.
- Branding: A strong brand can create a powerful and durable competitive advantage by embedding a unique identity and value proposition in the minds of consumers, often allowing for premium pricing.
The Systems of Systems model we’re pioneering at Knapsack enables brands to maintain their integrity while also allowing for necessary evolution and innovation of a company’s brand(s) through the deployment and management of components, tokens, documentation and themes across a multi-tiered brand and product ecosystem. This uniformity in design strengthens brand recognition and customer loyalty, critical components of competitive advantage.
As an example, the Coca-Cola Company, a Knapsack customer, reports that 51% of its stock market value is attributed to brand equity. The design systems used by Coca-Cola directly impacts the value of its brand name and consequently the company's financial well-being
- Cornered Resource: Access to limited and coveted resources at a preferential cost.
A design system can be a cornered resource if it contains unique assets such as proprietary components, design principles, or integrations that are not available to competitors. This exclusivity makes the design system a unique asset that others cannot replicate easily.
- Process Power: An organization's ability to produce at a lower cost or at a higher quality level is difficult to match except through sustained effort by the competitor.
Because a well-structured and mature design system optimizes the product development process by standardizing design elements and workflows, a good design system is able to reduce product time-to-market and enhance product quality. This process power is difficult to compete with if your organization is not working to mature it’s design system.
How to Maintain Your Edge
At the core of these seven powers is the goal of being able to get a superior product to market faster at a lower cost. Knapsack helps design systems reach their full potential as drivers of competitive advantage and achieve the goal of better, faster, cheaper.
Learn more about how design systems can create and drive competitive advantage.
