How does design thinking give companies a competitive advantage?
In 1985, Ethiopia was suffering a major drought. 1 million people had starved to death, and a huge sum of money had to be raised to avoid further disaster. Organizations began by approachingthe challenge with analytical solutions that met expected norms about how to garner help for such a large challenge. Some built distribution system, some setup donation channels, others created efficient food bundling. These were incredibly sophisticated responses, but it still wasn’t enough. The donations just weren’t coming.
Bob Geldof looked at the problem differently. By focusing on people first, he found most were not connecting to the realities of world hunger because it was presented as a statistic or theory. It wasn’t being talked about in a positive emotional way that engaged the individual in meaningful ways, and thus, they were not compelled to contribute.
How might we make famine in Ethiopia meaningful? That’s the question Mr. Geldoftook on. And when he did, he didn’t turn to experts or statistical data. He turned to music because he knew – as a musician himself – people experience music emotionally. It can be fun, sad, angry, and it can to inspire action. What Mr. Geldof was thinking was different.
How many of you watched Live Aid when it aired or was rebroadcast? 200,000 people attended on two continents. 400 million others watched through what was then the most technically ambitious satellite broadcast to date. The one-day event raised a quarter of a billion dollars. The immediate impact alone is impressive.
Think for a moment what you felt about world hunger the day before Live Aid, and the day after. I was 22 when I watched it. Like millions of others, it affected me then and it continues to inspire me today, to connect to people’s passions, to think differently, and to try answering the big questions. It engaged me, and millions of others, to act. To participate.To answer the meaningful call for help.
To put it simply I believe combining design thinking with traditional analytical thinking broadens and enriches the way we solve business questions. We are all familiar with the analytical processes that dominate business thinking today. Design thinking, by contrast, is best suited for problems where the goals are not yet well defined, the system is complex, and when there’s no obvious starting point. This makes it an important complement for moving beyond the data to generate new ways of connecting with people’s passions.
I didn’t know it at the time, but Mr. Geldof was an early design thinker. He took insights from people, business and technology, built them up into this new and ambitious way of addressing world hunger, made it experiential, brought his own intuition to the problem, and was uncompromisingly optimistic that something more could be done. And he did it.
The analytical thinking was important too. It’s great that design thinking helped connect people to world hunger and raise money, but the money still had to get to where it was needed most. Creating financial structures to distribute donations and similarly well-defined challenges are well suited for analytical thinking. Creating new value – and new meaning – that engages people to understand or interact with their world in new ways are challenges that are well suited for design thinking.
What do I mean by design thinking? Design thinking is a way of approaching questions. It is not about the craft of design, but it is based on the principles of thinking that are used by designers. Let’s take a second to look at some of the key principles.
Insight driven. Your insights can and should come from many sources, often not obviously related to the current business question. Traditionally innovation has been driven by the development of new technology, which is one good source of insights. But so are different business models or methods of operation. At IDEO our first source of insight is often from people. This is where we learn about human needs and learn how to connect with people.
Synthesis. Integrating the many initial insights and concepts to create a new and holistic solution is a key step to developing new offers. When synthesis is done well you be able to see all the interdependencies, supporting elements, and human interactions within the systemic solution.
Experiential. Our learning about an experience accelerates exponentially once we make it real. Humans react to real things they can touch, see, smell, taste, hear and interact with, ideally in their natural environment. Making it real means you can watch people and see what they really do and understand how they are feeling. This learning is best done with a series of iterative prototypes, initially very rough and becoming more refined over time. Start prototyping quickly so you can start learning earlier.
Optimism. To create anything new requires a passionate belief that there is a better way. Lots of people will tell you why your idea will not work. It is worth listening to learn, but it is important to always be looking ahead to what is possible. Traditional methods for predicting success rarely work with new to the world ideas. This is when it is important to use your experience and intuition to make the best choices to move forward.
Design thinking is a process of bringing together the human, business and technicalperspectives. This simple framework helps as a reminder of how these three elements are used through out the process. Each of these elements is first a source of inspiration,usually starting with the human. Secondly understanding how tointegrate them.And finally,serving as the guideposts for implementinga new idea.
In business today design thinking can be used to address questions in many aspects of your company. It can help build meaningful connections between consumers and your products, services or spaces. Your real brand is the compilation of these experiences and when done right they build deep loyalty. A great example is howNetflix revolutionized the movie rental business using what I see as design thinking. They understood the human desire to avoid late fees and inconvenient travel to the video store. They used an online order system and delivered the DVDs through the US mail, bypassing the traditional retail model. And they used new technology that allowed them to simple sort through every disk in stock once a day, so no complicated inventory or access system was needed. There are many other details that make their business successful, but these simple principles form the foundation of a successful new service that has changed the movie rental business.
Design thinking can help move beyond the basic transactions of the B2B world to one based on human relationships. It is easy for a company to switch suppliers based on functional metrics, but the people involved will never have the same relationship with someone else as the one your build with them. A few years back IDEO was working Marriott Hotels to design a new experience for one of their brands. The new experience was very compelling and successful with their guests. But just as impactful was the way Marriott was able to engage the franchise owners in the new design. Normally it could take 3-4 years to form consensus among senior management, build a demonstration unit and engage the franchise owners. For this project we built a full-scale model with pure white walls and furniture in a warehouse. The senior management and the franchise owners were able to come to the warehouse in groups and truly experience the new design concept. Being able to walk through the space and talk through it with the group was very compelling. This time it only took 3 months for everyone to agree to the new direction.
Design thinking can even play a big part in nurturing a culture that attracts the best employees by reinforcing intrinsic rewards. Kaiser Permanente, a large group of hospitals in the US, has built a strong culture of empowering their employees to participate in innovating for the company. They started with a small group experiment that revolutionized the way the nurses exchange information with each other during the shift change. They measured the results, reducing the time until the nurse met with their patients from 43 minutes to 11 minutes, and then rolled the new format out across the entire network. From this beginning they built an innovation center to support ongoing innovations. Today this is a central part of their culture and individuals continue to create new ideas that are being adopted throughout Kaiser and even by other healthcare providers.
Design thinking is an alternative way to create a competitive advantage for any business. The most successful businesses take advantage of the benefits from both design thinking and analytical thinking. Maintaining the tension between the creative and operational needsis not about compromising either aspect but a dynamic dance between the two styles. The leadership challengeis to manage this tension, taking advantage of both approaches to create meaningful value that drives sustainable growth and the success of your business.
Venessa Miemis said:
Bruce,
Great piece. The idea of design thinking has certainly gained a lot of popularity lately, so I think it will be important for businesses not to get caught up in the hype of it as a buzzword and then lose sight of what it’s all about. I just came across an insightful piece by Noah Raford (@nraford) titled ‘The Coming Boom and Bust of Design Thinking.’ that’s worth a read. [http://news.noahraford.com/?p=246] In it he poses a warning about impending disillusionment towards the merits of design, which I think can be restated as the resulting clash that will occur when design thinking meets analytic thinking.
As you’ve said, bringing these worlds together “enriches the way we solve business questions,” but it requires a commitment to form new perspectives and truly change the way one thinks about and sees the world. Just jotting down “Start Thinking Differently” on the company to-do list isn’t going to cut it.
I see a lot of overlap in the methodologies of design thinking with futures thinking, which I employ all the time as I try to understand trends that are shaping society and their potential implications and impacts. I’d like to make some comparisons to the key principles you laid out:
Insight Driven: Insights and innovations are often a result of connections that are made from seemingly disparate information, so it makes sense that one of the foundational methods of futures thinking is ’scanning the world.’ It starts with knowing the right question to ask, and then looking at the drivers behind how that question could be answered. It requires digging deeper than the analytic, practical level, and really exploring things from a systems level, where everything is interrelated in some way. This includes exploring the big picture, like how other industries or fields affect yours, but also looking at the fundamentals of human nature, of how we interact in society, and what needs and desires motivate us to action.
Synthesis: Futures thinking would call this ‘mapping the possibilities,’ where you examine those insights and interdependencies and say “so what?” It’s where you start to do scenario building (i.e. prototyping), and thinking about the many potential solutions/outcomes to your question.
Experiential: Another way of saying ‘making it real’ could be ‘providing a context.’ Whether it’s physically creating an environment to demonstrate a prototype or generating a story around a big idea, people need some way to help them connect the dots. Once a person’s imagination is accessed, they can start expressing what that innovation would mean for them and how it would be integrated into their lifestyle or worldview.
Optimism: I’ll agree that passion and vision are crucial for anything new and transformative to emerge.
So both design thinking and futures thinking have a lot of commonalities in their approaches, but I think each can be elegantly boiled down to “process.” This may be the point that will be difficult for most businesses to embrace. The process is about iteration, about making a choice to challenge one’s own beliefs about “the way things work,” and becoming a practitioner in an organic, non-linear way of thinking. It won’t just happen overnight, and can’t be executed like assigning workers their position on an assembly line. It’s radical, it takes effort, and will evolve (in unexpected directions) over time. If the anticipated organizational change doesn’t start with this shift in mindset, then things may just remain business as usual.
Noah Raford said:
Hi Bruce and Venessa,
Great post and thanks for your comments and link to my “Coming Boom and Bust of Design Thining” post (http://news.noahraford.com/?p=246).
The “coming bust” of design thinking isn’t so much from a conflict between design and analytical thinking. Design thinking is very analytical and most analytical thinking is also creative.
The point of my riposte is that design thinking has become such a buzzword that there is likely to be a strong overselling of services by designers and an even more dangerous over-inflation of expectations by clients. This will result in both poor quality service delivery and a general disappointment and backlash against the very real value which design thinking can offer.
The problem is that 90% of most design projects in the professional world are about window dressing; executing someone else’s strategy on a product or service which for which most of the important parameters have already been defined. This kind of engagement with rarely produces the type of competitive breakthroughs which Bruce is talking about.
Venessa’s point linking design and futures thinking is a perfect example. Businesses (and human beings in general) are rarely willing to open themselves to the kinds of uncertainty and discomfort which often comes from subjecting themselves to an iterative process of creative exploration; especially one which involves giving away power and control to those outside the board room!
Thankfully this is changing, not least of which due to efforts by firms like IDEO. If designers are hired to “gussy up the facade”, as often happens in architecture and urbanism (my fields), than the battle will have already been lost. My experience is that for design to be transformative, it needs to be brought in at an early stage and considered as part of an overall, integrative suite of tools and perspectives.
Last comment; there is an important difference is between “design” and “human centered design”. Someone recently pointed me to another critique of the term “design thinking”, by Peter Merholz of Adaptive Path (Why Design Thinking Won’t Save You, Harvard Business Review: http://blogs.harvardbusiness.org/merholz/2009/10/why-design-thinking-wont-save.html).
Peter’s point is that most of the rhetoric around “design research” is actually just applied social science research; a process which begins with users and uses a range of analytical techniques to help them uncover important insights which drive the creative process. Link that to the action research tradition from the 1960’s and you’ve got user-driven, user-tested creative design.
There is a ton of design that is neither human centered nor grounded in social science research. Until recently, I would bet that 85% of all design schools and design students (if not more in architecture) have been taught design the Bauhaus way – as if designers were the center of the universe and had some divine insight which is their duty to “enlighten” the customer with.
Again, this is changing thanks to efforts by folks like IDEO, Adaptive Path, the Stanford D-School, Cooper-Union, etc. But given the rise of the “design thinking” buzzword meme, I think it is more important than ever to link design thinking to its antecedents and be very clear what it does, and does not, offer.
Thanks again for the post Bruce and keep up the good work.
Meenakshi A. Benjwal said:
Very Engaging Post Bruce!
I recently read an article of businessweek and think it would be interesting to share some design thinking examples for the discussions going on here…
At GE, P&G, and other companies, a design perspective is a problem-solving apparatus that can be applied companywide
When the best and brightest managers from GE attend the company’s Crotonville learning center in Ossining, N.Y., for the Technical Leadership Development Course, they start by reading a comic book. For many of the handpicked participants, this is their first, uncomfortable encounter with design. They’re stretched further over the two-week training as they’re asked to decribe their toughest problem in a haiku and draw workflow and patient experience maps.
For Lawrence Murphy, the chief engineer of global design for GE Healthcare who leads the sessions and helped start the program, the goal is to equip employees with new problem-solving tools to help the company evolve to “imagination at work” from its focus on operations efficiency tool Six Sigma.
Managers looking to build design thinking throughout the organization can learn valuable lessons from pioneers such as GE Healthcare, Procter & Gamble (PG), and Philips Electronics (PHG). In addition to hiring design thinkers from schools, they have developed in-house programs to bring people—from all functions of the organization—to think through this lens.
Full Article is here: http://www.businessweek.com/innovate/content/sep2009/id20090930_853305.htm?chan=innovation_special+report+–+design+thinking_special+report+–+design+thinking
Would like to discuss more examples ….
Kalyan said:
Bruce.,
A very interesting post with lots to learn for all.
I believe that the first principle of Design Thinking (and as you pointed out) is understanding the needs of the user, a concept that you term as INSIGHT. I believe with the current B2C & B2B world, companies need to focus on defining their users – both “first-user” & “end-users”. More importantly, INSIGHT should bring about reconciliation the differences in “first-user” & “end-user” needs and experience. For example, while developing an aircraft subsystem, where should the focus be? The Tier-1s, OEMs or Aircraft or Passengers?
How does Design Thinking aid in this situation? Most examples of design thinking has been in isolating user experience at the “first-user” experience level. It would be interesting to find more details and examples when dealing with complex & multi-layered experience.
Daniel McKenzie said:
With the fear of sounding too trite, the real magic behind design thinking is the connection to people. It’s no secret that getting people to love your product is the key to business success. Apple, IKEA and Zappos all have products or services that people love. Whether it’s products that “just work”, design furniture at affordable cost or a customer service that delights, these companies know how to get in the minds and hearts of people. We’re just beginning to witness the results of design thinking’s ability to empathize with the end-user as we try and tackle other “wicked problems” in the areas of health care, government and rural poverty. In the process of design thinking, there lies the human spark that with some skill, can lead to better products, services and hopefully a handful of positive changes to our world that we haven’t thought up yet.
Patrick McGowan said:
Thank you to everyone for your insight and perspectives. I appreciate the balanced approach to the subject — giving it validity while at the same time keeping things real.
What I struggle with today is not the core rational of design thinking or future thinking. I think the conversation needs to get beyond the question: “What is Design Thinking?” or “How Does Design Thinking Give Business Competitive Advantage?” We need to take things to the next level: “How do I implement design thinking into my organization?” Or to be more specific: “I am a small business owner, I have 5 part-time employees, I run a retail store: How do I use design thinking today to give my business a competitive advantage?” What do we say to this person that is actionable?
I have nothing against companies like GE, P&G, and IDEO — in fact, I appreciate the work they do and how they advance the legitimacy of our discipline. But let’s assume the validity of what we speak and concentrate on grassroots efforts to make it tangible and applicable at a non-P&G level. How do we move this conversation forward?
I look forward to your thoughts. Thank you.
February 3rd, 2010 at 12:03 am
syamant said:
Design thinking needs to demonstrate it can solve business issues.
When a company tries to grapple with a business situation , they will turn to internal resources to solve the problem. Is this team likely to use design thinking ? Unlikely today. Are they likely to hire someone who brings a design thinking perspective ? Perhaps.
But they are also more than likely to use the more traditional approaches.
So how does one then prove value ? Recently on Wenovski, i wondered if companies will hire people who have specialised design skills or will they hire engineers, communicators, service strategists etc who also have design thinking skills? My guess is the second situation.
The other thing, i have read recently is that the ones who are talking about design thinking are also the ones who are selling these sevices. Perhaps the person was a bit unfair but it does put into perspective the challenge design thinking approach has in proving value.
So how does one start ? Perhaps design thinking skills and approach needs to be used to improve the employee-company relationship. If this approach helps make improvements internally, it will get used more often in more business situations. The question is how, who will be the first person to take that first step….
Would like your thoughts..
Patrick McGowan said:
Sayamant — Thank you for your feedback. I think my personal challenge is getting beyond the theoretical, intrinsic value of Design Thinking to its hardcore, practical, real-world application.
And you are right — businesses need to take that necessary first step. Identify a persistent problem and work through the solution using the tools of design. That certainly makes sense. I also agree that businesses will also want to hire what Tim Brown calls “T-Shaped” people — folks who have an exeptional talent + design thinking skills. This is the core to the what I think Roger Martin means by “dynamic interplay.” It starts with people. Truly, it could start with a single person…
It is a design challenge — and where I would kind of like the conversation to go — to persuade business leaders of the tangible value of thinking like a designer. Ultimately, the value is in the results — but a broader view of the “results” would suggest that the process we take has more effect on outcomes than anything else. That is where I see the value of design thinking — it is the process we take to uncover the next best solution to an acute problem.
Again, your reply is appreciated and helped me dive a little deeper on the subject. Thank you.
February 3rd, 2010 at 2:26 am
syamant said:
Patrick – Thanks for your response and I agree.
I just read this by Niti Bhan – ” ..what would happen if we approached doing business with the BoP without the filter of “social impact” or “doing good” or other fuzzy wuzziness etc? What if the design of a product or service was simply considered the same way one would for any other demographic? And metrics of profitability, viability and sustainability of the revenue model applied to the decision to enter a new market, regardless of whether they were “the poor” or simply humans? How does this influence the success of the product or service in the market and, critically, how does it influence design?” http://bit.ly/bPnuRm , http://bit.ly/9WTX5e
There are 2 (actually more) business situations that i have been discussing
- apply design thinking to address some of the challenges companies face with regards to collaboration/enterprise 2.0 etc eg http://bit.ly/cFLyAF
- improving availability of primary health services in emerging markets by reworking the existing healthcare model
so it is obvious that this is going to be a collaborative effort and it will also require inputs at an early stage from senior management. Both examples have immense potential and there is a feeling that design thinking can provide some breakthroughs. the question is where do we start, how and who will lead that first step.
-
February 3rd, 2010 at 7:30 pm
mcgopat said:
Sayamant – Robert Greenleaf, the father of servant-leadership, had a similar situation to what you and I have been talking about – how to overcome acculturated confusion and resistance to different methodologies. “Among the management issues [Greenleaf] was concerned with was equal opportunity for women employees….At the time, most operations managers did not hire women.” To overcome this, Greenleaf used has been called the “Friendly Disentangling” method, once used by a fellow Quaker to give freed African slaves land to farm in Pennsylvania. It has four parts:
1. Frame to oneself a “we” fellowship relationship with others and look for the source of current problematic behavior within the biases of an embedded tradition rather than solely in the behaviors and governing values of individuals.
2. Approach those involved in a friendly manner.
3. Ask for help in disentangling a problematic behavior from potential biases within “our” embedded tradition system.
4. Work with those who are agreeable to experiment with alternative behaviors and/or governing values that do not rest on the troublesome biases of the tradition system.
Using this method, Greenleaf achieved more by working with others to find equitable solutions to sticky problems. Nielsen writes,
In the conversations, Greenleaf inquired about ideas for potential experiments that might address the women, heavy lifting, non-hiring entanglement. One of the operations managers suggested an experimental packaging of the wires in 25-pound rolls instead of 50. The experiment was tried. It was found that women could regularly lift 25-pound rolls. It was also found that most of the men also preferred the 25-pound rolls instead of the 50-pound rolls. Greenleaf did not press. He explained his perception of entanglements and the disentangled experimental solution. The packaging was changed. More women were hired.
Design Thinking is still very much a black box. Can a similar method be used successfully to begin transforming a culture – to help people take the first step? My guess is that it can. Even A.G. Lafely, former CEO of P&G, said that he made incremental cultural changes at P&G. The point is – I think – every step counts, so will something like this help make that first step?
(Nielsen, Richard P., “Quaker Foundations for Greenleaf’s Servant-Leadership and ‘Friendly Disentangling’ Method.” Insights on Leadership: Service, Stewardship, Spirit, and Servant-Leadership, Ed. Spears, Larry C., John Wiley & Sons, Inc., 1998, p. 128.)
S Sivaguru said:
i find design thinking a simple, but powerful idea.
but, from some of the comments posted, get a feeling that the ‘how do I begin’ question is confusing in many cases.
I fully agree with the principles – starting with connecting with real people to get insights. most of our management systems rely on metrics and consequently set goals that are met or exceeded – resulting in the expected metrics being achieved.
this makes the scope of innovation limited in the day to day activities for most members of the organization.
in order to enable every individual to be ‘aware of the present’ when interacting with stakeholders of the organization, I find some of the models related to complex systems thinking very useful.
In particular, the Cynefin framework by Dave Snowden is a good way to approach complex systems and sense making techniques to be in touch with reality.
the experientialism aspect is also enabled through the use of micro narratives – that makes it easy to capture feelings and expectations. as these are free format and small, the likelihood of pointing to various aspects is higher.
techniques such as ‘future backwards’ also ‘force’ workgroups to innovate by questioning the status-quo and empowering the members to effect changes.
While i was not aware of the principles and details of design thinking till i read this discussion, i feel that it is quite practical.
the quesitons i have, though, are:
? are there any characteristics of the problems that may be solved by design thinking – or, in other words, are there situations when design thinking is NOT recommended
? faced with a crisis situation or a need to face unexpected business situation, how can design thinking be deployed across multiple teams in an organization?
Noah Raford said:
S Sivaguru said:
“…faced with a crisis situation or a need to face unexpected business situation, how can design thinking be deployed across multiple teams in an organization?”
Short answer, it can’t be. DT is primarily -tacit knowledge-, not explicit knowledge that can be reduced to handbooks, rules or procedures for easy deployment.
Design can certainly be taught, but it can’t be deployed. It takes time to develop and is domain specific.
My critique of DT is that it oversimplifies both design and the problems it seeks to address through blanket affirmation.
Put simply, different kinds of design problems require different skills to deal with them, and the kinds of social and intellectual skills a designer develops doing product design or web design does not equip them to handle other domains of challenge.
VanPatter talks about 4 different levels of design;
Design 1.0 Artifacts and communications (traditional design)
Design 2.0 Products and services
Design 3.0 Organizational transformation (bounded by business or strategy)
Design 4.0 Social transformation (complex, unbounded)
In a recent post, A DJ is not a Conductor”, I argued that issues in the complex domain (D3/D4, similar to Snowden’s Complex Domain in Cynefin) are fundamentally different and require different skills.
“While a successful techno DJ and a successful orchestral conductor might both perform using the same basic tonal systems and musical theories, I challenge any conductor to rock a club in the way a skilled DJ can, or vice versa. Abstract knowledge about core processes does not translate to tacit knowledge about how to execute it.”
Speaking of Snowden (who I know and respect significantly), you guys might be interested in a video clip from a recent presentation I gave at the LSE Complexity Programme, entitled Adapting Snowden’s Cynefin Framework to Encompass Systemic Organizational Change” This video relates to the different kinds of problem domains VanPatter mentions and places them in the context of the kinds of knowledge and design strategies necessary to solve them.
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[...] I’ve also noticed a theme emerge across the many articles on design thinking recently. Bruce MacGregor talks about the importance of gaining insights early. Venessa Miemis mentions Tim Brown’s book which [...]