Design Thinking is the featured topic in the September issue of the Harvard Business Review with four articles on the subject. “It’s no longer just for products. Executives are using this approach to devise strategy and manage change,” reads the tagline in its cover.
The application of design thinking beyond products, - in innovation, problem solving and business strategy, - isn’t new. Nobel laureate Herbert Simon discussed the concept in his 1969 classic The Sciences of the Artificial. IDEO, a firm best known for pioneering this expanded view of design, traces its roots back to 1978. The School of Design in London’s Royal College of Art has long been pushing the boundaries of industrial design. Stanford’s Institute of Design, aka the d.school, was founded a dozen years ago. “But many companies still aren’t sure how it can improve their business,” notes Adi Ignatius, HBR’s editor-in-chief.
It’s not surprising that many companies don’t understand what is meant by design thinking, let alone its potential value to their business. It’s much easier to appreciate the role of design when it comes to physical objects: cars, bridges, buildings, dresses, shoes, jewelry, smartphones, laptops, and so on. But, it’s considerably harder to appreciate its importance when it comes to more abstract entities like systems, services, information and organizations. Their very nature is vague. You can’t touch them. Yet, they account for the bulk of the growing complexity in our daily lives.
More specifically, a design-centric organization should embrace four key principles:
Focus on users’ experiences, especially their emotional ones.
We generally associate quality and efficiency with a well-engineered product. Similarly, we associate solid revenues and profits with a well-managed business. But while quality, efficiency, revenues and profits are absolutely necessary… they’re not sufficient.
Good design brings together a high quality, competitively priced product with a positive user experience. It’s about having good customer service experiences with companies we do business with. Good design aims to make our interactions with complex products and complex institutions, - e.g., a business, a healthcare provider, a government function, - as appealing and intuitive as possible. Design-centric organizations are adamantly focused on their customer’ needs, rather than on their internal operational efficiencies.
How do you do this? In the end, it’s all about empathy, - “the capacity to understand or feel what another person is experiencing from within the other person's frame of reference, i.e., the capacity to place oneself in another’s shoes.” Empathy is a very important human feeling, whether trying to convince colleagues to embrace a major new innovation, attempting to get users to switch to a new product, or getting potential clients to do business with you.
“To build empathy with users, a design-centric organization empowers employees to observe behavior and draw conclusions about what people want and need,” writes Kolko. “Those conclusions are tremendously hard to express in quantitative language. Instead, organizations that get design use emotional language (words that concern desires, aspirations, engagement, and experience) to describe products and users. Team members discuss the emotional resonance of a value proposition as much as they discuss utility and product requirements.”
Create an exciting, compelling market strategy.
In our fast-changing business environment, much of the differentiation from competitors will likely come from market-facing innovations like business models and customer service, not from increasingly commoditized, undifferentiated technologies and products. In such an environment, formulating a winning market strategy is very complex indeed.
Innovation is absolutely essential to be able to adapt to, let alone survive unpredictable market conditions and intense global competition. Incremental improvements by themselves will not do. Companies must meet these market changes head on with innovative market strategies and business models.
With physical objects there is a long tradition that every so often you must take a radical approach. Think of changes in the visual arts and fashion over the years. Think of advances in engineering and the whole new ways of envisioning bridges, cars, computers, phones and music players through the ages. Think of innovations in the architecture of buildings and urban environments.
But, we’ve seldom applied such design thinking to organization-wide innovations - be it a company, government agency, educational institution or health care system. In fact, the problem may very well be that we have not thought of an organization as a holistic system at all, but rather as a collection of people, departments, buildings, processes, information and so on that somehow come together and do whatever they are supposed to do, with no one really in charge of the overall architecture or its evolution into the future.
That’s where design comes in. “Design thinking, first used to make physical objects, is increasingly being applied to complex, intangible issues, such as how a customer experiences a service,” writes Kolos. “Regardless of the context, design thinkers tend to use physical models, also known as design artifacts, to explore, define, and communicate. Those models - primarily diagrams and sketches - supplement and in some cases replace the spreadsheets, specifications, and other documents that have come to define the traditional organizational environment. They add a fluid dimension to the exploration of complexity, allowing for nonlinear thought when tackling nonlinear problems.”
Use prototypes to explore potential solutions.
We generally associate major breakthroughs with technologies and ideas coming out of R&D labs, like the transistor, penicillin, DNA sequencing, TCP/IP protocols, and so on. These breakthroughs are typically made by researchers working on new theories, technologies, algorithms and inventions that will hopefully, over time, find their way from the lab to the marketplace. Such lab-based breakthroughs are at one end of the innovation spectrum.
At the other end are market-facing innovations. Market-facing innovations are quite different, because they involve people and their many interactions with each other. People’s behaviors will generally exhibit lots more variations than the components of a natural or engineered physical system, which subjects complex social systems to significantly higher degrees of variance. As a result, people-centric systems are changing all the time, making them intrinsically emergent or unpredictable.
How do you then deal with such market-facing, people oriented complex systems? First of all, you need to know what’s going on. Fortunately, we now have access to vast quantities of data. We have the ability to gather huge amounts of information about the real-time behavior of people, organizations and markets, which we can then analyze so we can make better informed, more intelligent and smarter decisions.
Most important, the bulk of the R&D for market-facing innovations, has to take place in the marketplace, where their potential users and customers are, not in industrial R&D labs. The marketplace is truly the lab for such innovations, the place where new ideas must be developed, prototyped and tested. Market-facing innovations require continuous experimentation, learning and refinement until it becomes clear whether the idea works and what the company’s strategy should be.
“In design-centric organizations, you’ll typically see prototypes of new ideas, new products, and new services scattered throughout offices and meeting rooms,” writes Kolos. “Whereas diagrams such as customer journey maps explore the problem space, prototypes explore the solution space. They may be digital, physical, or diagrammatic, but in all cases they are a way to communicate ideas. The habit of publicly displaying rough prototypes hints at an open-minded culture, one that values exploration and experimentation over rule following.”
“A design culture is nurturing. It doesn’t encourage failure, but the iterative nature of the design process recognizes that it’s rare to get things right the first time… The company leverages failure as learning, viewing it as part of the cost of innovation.”
Conquering the fear of failure is a critical part of the learning that’s necessary to become good in your profession, whether you’re an athlete, writer, or entrepreneur. Marketplace experimentation requires the courage to put forth what initially might be viewed as half-baked ideas, iterating and learning until the idea gets refined and succeeds, or it becomes clear that it’s going nowhere and it’s back to the drawing board. Design-centric companies encourage such public experimentation and tinkering with ideas without fear of losing face or punitive repercussions.
“Design thinking is an essential tool for simplifying and humanizing…” writes Jon Kolko in his concluding paragraphs. “Every established company that has moved from products to services, from hardware to software, or from physical to digital products needs to focus anew on user experience. Every established company that intends to globalize its business must invent processes that can adjust to different cultural contexts. And every established company that chooses to compete on innovation rather than efficiency must be able to define problems artfully and experiment its way to solutions…”
“Adopting this perspective isn’t easy. But doing so helps create a workplace where people want to be, one that responds quickly to changing business dynamics and empowers individual contributors. And because design is empathetic, it implicitly drives a more thoughtful, human approach to business.”