More than 100 members of the CHI management community attended this SIG. During the discussion, it rapidly became clear that UX leaders had a lot to talk about, and one and a half hours was far too short a period to permit definitive answers to emerge. So, this SIG will be the beginning of a longer-term exploration. In this article, we are sharing what we learned by performing SWOT analyses on several UX business models during the SIG.
UX Business Models
To begin the SIG, we explained our goals and briefly described the following four simple organizational models:
- Centralized funding model—A central UX organization receives a large budget from a single organization, which views it as a cost center.
- Client-funded model—Individual business units fund a single central UX organization that manages the UX team and provides UX resources to product teams.
- Distributed model—Instead of a central UX organization, smaller groups of UX practitioners report directly into product divisions and focus only on the user experience of that division’s products.
- Internal consultancy model—Highly focused teams of cross-functional experts provide in-depth UX support on carefully selected products. This is the model Cisco’s UX group follows, and we discussed it in detail in our CHI 2007 Experience Report .
We presented these four organizational models as examples of business models that we could analyze during the SIG. We then opened the discussion for ten minutes to allow a free exchange about which models people had experienced or would like to know more about. Following this discussion, SIG participants chose the following three business models on which to perform SWOT analyses:
- Fully centralized model—In this model, both funding and the UX reporting structure are centralized.
- Hybrid model with a central UX group—In this model, funding is centralized and the central UX group is responsible for company-wide UX efforts. UX groups embedded within business units handle UX projects for those business units (BUs).
- Hybrid model with more distributed UX resources—In this model, there is again a central UX group, but this group focuses on process, education, infrastructure, standards, and a just few key design projects. UX groups are integral to the BUs that fund them, and do most project-based UX work. Participants assumed members of such UX organizations would be geographically dispersed.
Why did attendees choose to evaluate these particular models? When we polled SIG participants, we determined that these three organizational models were the models that their current companies had adopted. It is important to note that the two hybrid models, while similar, have salient differences. Are hybrid models more common than the fully centralized model, and if so, how much more common? We will explore this question over the next year and also stratify the data we collect according to company size, market segment, and other relevant contextual factors. It was interesting to note that almost none of the participants were interested in analyzing a fully distributed model, although many admitted to having experienced such a model.
What We Learned
The following factors quickly became evident during the discussion:
- UX leaders feel as strongly about this topic as we anticipated they would.
- The structure of a UX organization indeed plays an important role in determining the impact it can make in a company.
- The strongest conclusion of the SIG was that an hour and a half was not enough time for the discussion, and participants encouraged us to organize a follow-up workshop. An informal poll showed that at least 30 SIG attendees would be interested in attending the workshop.
- Participants wanted to talk about much more than the two dimensions of organizational structure that we presented—funding and centralized versus distributed teams. Some of the organizational dimensions they wanted to explore further included geographic distribution, reporting structure, size of UX teams, organization size, and organizational emphasis on product, engineering, or marketing. Participants also wanted to combine attributes of different models that reflect their experiences in industry today.
- Almost everyone agreed that a fully distributed model does not work well—although it is not an uncommon model.
- Participants wanted to learn from their peers in industry about what has worked for them in what contexts and what has not. They wanted to hear case studies and war stories.
SWOT Analyses for Three Organizational Models
An important factor that is beyond the scope of our SWOT analyses and this article is the reality that larger organizational factors and politics often play a role in defining organizational models. Sometimes, as UX leaders, we can influence these. At other times, we cannot. Subsequent articles on the topic of organizational models will touch on these more political factors.
Here are brief SWOT (Strengths, Weaknesses, Opportunities, and Threats) analyses for the three organizational models participants discussed during the CHI 2007 Management SIG “Comparing UXD Business Models.”
In this organizational model, both funding and the UX reporting structure are fully centralized.
- Permits different skill sets to coexist within a single, larger organization. For example, interaction designers, visual designers, user researchers, and usability professionals can all work in a single cross-functional organization.
- Provides a career progression for UX professionals, who report to a UX leader; follow best industry, research, and design practices; participate in peer reviews; and receive accurate performance evaluations.
- Ensures UX resources are not assigned to non-UX projects.
- Lets UX team members work on multiple projects and technologies over time.
- Lets UX professionals share their expertise, so less knowledge is lost if people leave.
- Gives UX professionals an independent voice, because UX resources report to neither product management nor engineering.
- Facilitates the development of standards and training and encourages knowledge-sharing exercises.
- Ensures visibility within the organization, because a central UX group tends to be larger and has executives who can create a clear and unified vision for UX.
- Business units (BUs) do not view UX resources as a part of the BU, sometimes making it more difficult for UX efforts to achieve traction or resulting in protracted engagements or delayed results.
- A UX team that is not aligned with BU objectives can appear out of touch and lose credibility, especially if the team resides in a different location.
- The UX team might lose the flexibility that is necessary to meet the unique business needs of specific product teams.
- Conflicting objectives make prioritizing difficult. Should a central UX team optimize for the needs of their group or for business objectives? Do BUs understand and agree with the central UX group’s project selection or prioritization criteria?
- The culture of the UX team might be insulated from that of the larger organization.
- UX professionals and others on product teams might lack shared incentives.
- The UX team can receive steady organizational support for growth and expansion. The impact of benefits to the organization could be huge for the team.
- The UX team could have higher visibility.
- Design can become part of the corporate mandate.
- UX professionals can easily share learnings across projects.
- When the leader of the UX team has a title such as VP of UX, the entire team could gain in credibility and the power of its voice within the organization.
- A cost center could become a target for budget cuts.
- Complacency could seep into the UX team, because of a lack of alignment with the business goals of specific divisions.
- Business units could choose to ignore UX rather than making the effort it takes to insert UX concerns into every product development effort.
- UX resources might “go native” in business units rather than aligning with the goals of the central UX group, diminishing the overall alignment of UX efforts within the organization.
- Business units might hire their own UX teams to ensure alignment with their goals and nimbleness, creating competition for a central UX team.
- If the members of a central UX team do not see their impact on products—because they are either not aligned with or included in strategic decisions—they are more likely to leave.
- Stifling innovation by overemphasizing consistency can reduce the overall impact of the UX team.