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Cover & Book design: Sarah Chung, Idea Couture This book is printed on acid-free paper.

Copyright © 2013 by Idris Mootee. All rights reserved.

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Printed in the United States of America

10 9 8 7 6 5 4 3 2 1

To A. Mootee

Thank you, Dad, for believing in me before I did.

And you were always right.

Acknowledgments

ix

Foreword Erik Roth

x

SCENE 01 There’s No More Business As Usual

viii

The Butterfly Effect and Long-Range Planning

12

Applied Design Thinking Is Strategic Innovation

16

Time to Think beyond Crisis Mode

18

Changing Management Paradigms

22

SCENE 02 What Is Design Thinking, Really?

26

Is Design Thinking a Science or an Art?

34

Design Thinking Has Been Oversimplified

38

SCENE 03 Applied Design Thinking in Business

and Strategy

46

Design Thinking to the Rescue

56

We’ve Lost Touch with What’s around Us

58

Every Future Business Leader Needs to Be a Good

60

Design Thinker

The 1 0 Design Thinking Principles That Redefine

62

Business Management

SCENE 04 Introducing the Design Thinking MBA

76

Business Challenge 01: Growth

82

Business Challenge 02: Predictability

94

Business Challenge 03: Change

108

Business Challenge 04: Maintaining Relevance

118

Business Challenge 05: Extreme Competition

126

Business Challenge 06: Standardization

136

Business Challenge 07: Creative Culture

148

Business Challenge 08: Strategy and Organization

156

SCENE 05 Hiring Design Thinkers Is Not Enough;

We Need to Create Design Thinking Companies

188

About the Author

203

Photo Credits

204

Index

205

— ix

This book would not have been possible without the generous help and support from a great many people. Four in particular stand out: Dr. Moran Gerard, who came to the rescue on the week before I needed to submit my final manuscript and has been a valuable colleague, friend, and editor; Sarah Chung, who has been working with me to shape the design of this book and is responsible for giving it a personality and making it awesome; Erik Roth, who took the time from his crazy schedule to write the introduction for this book; and Brian Kenet, who invited me to design and teach the Design Thinking Executive Program at the Harvard Graduate School of Design, which this book was based upon.

I owe a huge debt of gratitude to all my friends and clients around the world who provided me the opportunities to introduce these ideas to their organizations. Scott Danielson for his friendship, enlightening dialogues, and creative spirit that he radi-ates. And everyone at Idea Couture, including Cheesan Chew, Scott Friedmann, and Patrick Glinski who are with me throughout our journey of prototyping a great design thinking organization. And Jessica Tien for taking all those things off my plate so I never have to worry about them.

I would also like to thank the anonymous reviewers for their feedback on earlier drafts and in particular Ashley Perez and Jamie Farshci for their patience to read and edit my messy first draft. And all those who helped me to improve the clarity and readability of this book. Any errors, omissions, and misinterpretations remain mine.

I know every author receives support from their family, but mine has been awesome and they have been the source of inspirations and I’m so thankful. We all need inspiration and watching them I find something, truly in my heart, that strives me to reach a little higher. . . dig a little deeper. . . dream a little bigger!

I truly believe we are at an important tipping point in human and economic history.

This book promotes the vision that sustainable growth can only be made possible when we synthesize concepts including natural capital, creative capital, and social capital and when all are integrated into the balance sheet. This vision of a design thinking organization is founded on the mutually reinforcing and integrated principles of efficiency, equity, and reciprocity. It is the habits of mind and strategy that often prevent today’s dominant firms from reinvention.

x —

Our world is increasingly complex and difficult ecosystem, their interactions with one another.

to interpret. Multiple forces—technological, regulatory, competitive, and so on—act on a given Although design thinking itself is not new, Idris context to shape the rules of what is possible and presents a fresh look at the practical application probable. Uncovering the most valuable opportu-of this competency within the modern enterprise nities is increasingly challenging for innovators, seeking to improve its innovation performance.

especially those using a traditional tool kit. New This book is not an academic exercise into the product development processes typically churn out possibility of design but a pragmatic explanation incremental, me-too solutions when more substan-of how design principles can be embedded into tial innovation is needed to capture competitive an organization to give it insight into valuable advantage.

opportunities previously hidden from traditional ways of working.

Delivering predictable, consistent, and meaningful value from innovation remains a top challenge for This book presents a framework and way of

executives, but most find the challenge too dif-working that accommodates the dynamism and ficult to crack. Instead companies essentially give uncertainty surrounding most decision making up and rely on pure serendipity to stumble upon companies face today. It also shares a methodol-valuable “eureka” moments, while others default ogy on how to embed a new design thinking–based to various versions of a creative process with the tool kit into a modern enterprise that will enable hope that it will yield a great outcome. Although a new wave of collaboration, insight, and learn-these approaches can certainly yield success, the ing to improve the quality of decision making, the repeatability needed by any large organization is allocation of resources to the best opportunities, quite low.

and ultimately the formation of a more consistent stream of value creation.

This book presents an alternative to the status quo, an alternative that some leading-edge Idris challenges the philosophies that underpin the companies have begun to adopt. Design thinking management regimes of the modern enterprise can weed through the uncertainty and anchor and offers an alternative that will allow companies innovation on the fundamental drivers of customer to adapt to the forces that impact their internal behavior, their interactions with the surrounding and commercial performance.

— xi

This mode challenges the status quo and

Apple, with all of its risk taking on product form, encourages:

user experience, and design, also maintains a laser-like focus on cost control, efficiency, and r'MFYJCJMJUZPWFSDPOGPSNJUZ

profit. Delighting its customer at the end of the r&YQMPSBUJPOPGRVFTUJPOTPWFSBOTXFST

day is the engine that drives its hardware-centric r$SJUJDBMUIJOLJOHPWFSLFZBTTVNQUJPOT

business model. Without design, there would be r&OBCMFNFOUPGUFBNTPWFSPSHBOJ[BUJPO

no business model, and without the business structures

model there would be no design.

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The need for this integrative thinking has never An innovation-driven company must put a different been greater. Technology exponentially intercon-set of capability at the core of its growth engine nects people, places, and objects in increasingly that puts both art and science into a commercial new ways. Understanding the nature of these context. This requires organizational agility and interactions both at the physical and emotional a culture of learning. Design thinking can be an level will be required to unlock the value of these effective tool to enable both of these attributes to complex relationships.

bloom within a company culture.

Idris sets the bar high for companies attempting This book also offers a refreshing take on the need to embed into their culture. However, the rewards for economic viability and design to coexist in a for success as indicated seem well worth the complementary and symbiotic way. Too often is de-investment.

sign used as an excuse for passing over economics that do not make sense. The mere aesthetic appeal of a new product or powerful emotional connection of a new service experience cannot be

—Erik Roth

used to justify an unprofitable business proposition. The models presented in the following pages Erik leads McKinsey’s Global Innovation Practice offer a compelling version of design that allows and is a partner of the firm. He is the

for the right balance of desirability, feasibility, and coauthor of Seeing What’s Next: Using the economic viability.

Theories of Innovation to Predict Industry Change.

flast.indd 12

08-08-2013 20:28:35

flast.indd 13

08-08-2013 20:28:35

— 1

Everything has changed,

is changing, and

will continue to change.

2 —

T H E R E ’ S N O M O R E B U S I N E S S A S U S U A L

— 3

Ever since we figured out fire, stone tools, language, some large companies have turned to design and the other great innovations of early human-thinking as a way to help them make sense of kind, change has been upon us. That’s why they disruption and sustain competitiveness.

call it evolution. That the rate of change today is arguably faster than it has ever been before is The sources of disruption are many, but one is probably true. Cultural theorist Paul Virilio refers obvious. As technological innovation accelerates, to that rate—and our pursuit of a science and logic people, communities, organizations, and objects of speed—as dromology, from the Greek dromos, are more interconnected than ever before. Thanks meaning “to race.” For him, the speed at which to everything Internet, our world has shrunk and change is occurring is as much about a dramatic we are now very close. As a result, we talk more, shrinkage in space as it is of time. As our technol-share more, complain more, celebrate more, ideate ogy, transportation, communication, and other ways more, and expect more.

of being in the world become increasingly fast and efficient, the old traditions around which cultures, This disruption has not been kind to businesses economies, and politics have been organized are used to operating by the rules of the old model.

upended.

We don’t have to watch their TV ads anymore. We don’t believe their marketing hype anymore. We One result of that speed is disruption. And few, don’t want to eat their junk ingredients anymore.

if any, of the old traditions have been more We don’t have to buy from stores anymore. And disrupted in recent years than big business. In we don’t want the best of them to just be profit response to constant cultural turbulence and its machines anymore. We want more, when we want effect on their reputation, growth, and bottom line, it, how we want it, and at the price we want.

4 —

D E S I G N T H I N K I N G F O R S T R AT E G I C I N N OVAT I O N

It is a vibrant and definite sea change from the way business was always done, when

financial profit was a driving force. Today, people are not afraid to say, Screw business as usual!—and show they mean it.

—Richard Branson

For businesses that have been most affected by exposure of any organization is very difficult to recent disruptions in technology and social assess. As a result, proven management tools communication, the challenge is one of manage-and techniques are being questioned for their ment. Originally, management was designed for a validity and effectiveness. Most were designed very different set of business needs: ensuring that for a very different world and operate based repetitive tasks were completed, improving on organizational designs well beyond their economic efficiency, and maximizing labor and best-before date, like those pointless mission machine productivity. Today those needs are vastly statements that are supposed to align employees.

different. Why? Because we’re facing a crisis.

If you’ve ever wondered where such inspirational Actually, we’re facing many crises. There are crises tomes originated from and what we’re supposed to of competition, economy, disruptive technology, job do with them, now might be the time to hang them creation, social development, and sustainability.

on a wall and call them antiques. Or just have a Some are more pressing than others. The natural laugh with Dilbert cartoonist Scott Adams, who resources crisis is certainly more pressing than defined a mission statement as “a long, awkward the economic crisis, and it’s getting worse as popu-sentence that demonstrates management’s

lations and their level of consumption keep growing inability to think properly.”

faster than human and technological innovation can find ways of expanding what can be extracted We need a new way, one that’s smart, human, from or produced in the natural world.

cultural, social, and agile and that puts innovation at the core of every move it makes. That But there is also a crisis of trust and credibility.

way could be design thinking. They won’t teach The management solutions that many leaders you this at B-school or D-school, largely because apply in case of emergency no longer cut it. With these organizations suffer from the same strain of most overwhelmed by the complexity and scale anticomplexity that haunts many big businesses.

of the problems that confront them, the true risk And that’s what this book is all about.

— 5

6 —

— 7

8 —

— 9

10 —

— 11

12 —

D E S I G N T H I N K I N G F O R S T R AT E G I C I N N OVAT I O N

We agree that our world is

changing rapidly. The future

is not like the past. The way

we do business today will not

be the way we do it in the

future. And it’s as difficult to

predict the weather over the

next 12 months as to predict

the performance of a business.

T H E R E ’ S N O M O R E B U S I N E S S A S U S U A L

— 13

Of course, we know that we can’t really predict an entire system. By modeling weather, Lorenz the weather. Meteorologists predict changes discovered not only the fundamental mechanism in weather patterns by studying atmospheric of deterministic chaos—sensitive dependence on patterns, compiling data, and applying what they initial conditions or the “butterfly effect”—but also see to predict what they think will occur. But their that long-term weather forecasting was impossible.

record of accuracy is poor beyond the short term, largely because they are relying on the present to Similarly, much of what we do in business strategy imagine the future. In the 1960s MIT professor, and planning is an attempt to predict the future mathematician, and meteorologist Edward Lorenz based on the present and the past. Despite pouring formulated a model of the way air moves around the millions of dollars into enterprise resource planning atmosphere, measuring changes in temperature, systems, however, we can only project three to six pressure, and velocity. Stripping the weather down months into the future at best with any reasonable to 12 differential equations, working through reams accuracy. Why? Because most business leaders of printed numbers, and plotting simple charts, he are averse to chaos, are overly linear, and are discovered that slight differences in one variable disconnected from global ripples not directly related could have a profound impact on the outcome of to the world of business.

14 —

D E S I G N T H I N K I N G F O R S T R AT E G I C I N N OVAT I O N

We are all more connected than we know.

Whether it’s business or any other systems-level organizational challenge, design thinking helps us appreciate and make sense of the complex connections between people, places, objects, events, and ideas. This is the most powerful driver of innovation. It’s what guides long-range strategic planning. It’s what shapes business decisions that have to be based on future opportunities rather than past events. It’s what sparks the imagination.

And it’s what reveals true value.

— 15

16 —

D E S I G N T H I N K I N G F O R S T R AT E G I C I N N OVAT I O N

Innovation management is about

more than just planning new

products, services, brand extensions,

technological inventions, or

novelties. It’s about imagining,

organizing, mobilizing, and

If you think strategic planning powers strategic innovation, you’re living in the old world. Design competing in new ways. To do

thinking powers strategic innovation. It can be used to begin at the beginning of an idea or that with any degree of success,

used to unlock hidden value in existing products, services, technologies, and assets—thereby organizations should heed the

reinvigorating a business without necessarily words of American countercultural

reinventing it. A disciplined process that can result in significant economic value creation, meaningful poet Tuli Kupferberg: “When patterns

differentiation, and improved customer experience, design thinking is by nature unorthodox. But it also are broken, new worlds emerge.”

holds the core capabilities behind innovation.

— 17

18 —

D E S I G N T H I N K I N G F O R S T R AT E G I C I N N OVAT I O N

Sometimes we make our worst decisions

when we’re in the middle of a crisis. By

acting reactively rather than proactively

or defensively rather than offensively,

we rely on how we have managed issues

in the past—usually by isolating one or

more discrete factors as the cause of the

crisis and then attacking them. Whether

it’s applied in a tactical or strategic

fashion, design thinking can help us get

out of the crisis mode by considering

challenges from a systems level.

T H E R E ’ S N O M O R E B U S I N E S S A S U S U A L

— 19

The de facto design of

It has been a heady decade for design thinking.

Will it fall out of favor over the next few years, management is not designed to

like other short-lived management fads? Or will ask managers to be creative but

it forever change the way business is done? Only to deter managers from doing the

time will tell. Traditional design firms, branding agencies, and design studios are all quick to wrong thing or taking extra risks.

claim that they can change their clients’ worlds; however, their clients might be disappointed with such a promise if their consultant partners lack Today, many businesses have been battered by an understanding of business strategy, portfolio systems-level economic failure and the collapse of management, market power, industry dynamics, traditional organizational design and management channel economics, and capital intensity. Change processes. These failures have left some business requires more than just cool design and catchy leaders gazing hopefully toward design thinking slogans. Adding a few young MBAs to your staff as the next management “wonder drug.” Given does not turn you into a strategy consultancy firm.

how various authors have presented it as a way And brushing on a thin veneer of design thinking to address complex, ambiguous, uncertain, and won’t do you much better. Design Thinking is volatile circumstances across multiple contexts changing the paradigm of management and it will and cultures, design thinking is often touted as impact us for decades.

bringing a refreshed, revitalized, and rejuvenated approach to management and strategic thinking.

It does, but it is far from a magical cure-all. Just as the pioneers of the modernist movement

recognized the need for new design concepts to match the technological advancements of the twentieth century, we need to recognize the need for new management concepts to match the

disruptive era of the twenty-first century.

20 —

D E S I G N T H I N K I N G F O R S T R AT E G I C I N N OVAT I O N

— 21

22 —

D E S I G N T H I N K I N G F O R S T R AT E G I C I N N OVAT I O N

20th

Century

21st

Century

Scale and Scope

Speed and Fluidity

Predictability

Agility

Rigid Organization Boundaries

Fluid Organization Boundaries

Command and Control

Creative Empowerment

Reactive and Risk Averse

Intrapreneur

Strategic

Intent

Profit

and

Purpose

Competitive

Advantage

Comparative

Advantage

Data and Analytics

Synthesizing Big Data

— 23

24 —

— 25

28 —

— 29

Ask a bunch of people who subscribe to design thinking exactly what it is, and you will get a bunch of answers, each of which varies just enough from the last one to give you the answer you’re looking for: There is no single, unifying, common definition of design thinking. Given its predilection for dealing with ambiguity, perhaps there shouldn’t be.

For most practitioners, the idea of design as a way of thinking can be traced backed to Herbert Simon and his 1969 book, The Sciences of the Artificial. An American political scientist, economist, sociologist, psychologist, and professor at Carnegie Mellon University, his distinction between critical thinking as an analytic process of “breaking down” ideas and a design-centric mode of thinking as a process of “building up” ideas is foundational to the practice. So, too, is his definition of design as “the transformation of existing conditions into preferred ones.”

30 —

D E S I G N T H I N K I N G F O R S T R AT E G I C I N N OVAT I O N

From Robert McKim’s 1973 book Experiences in Visual Thinking to Peter Rowe’s first noteworthy use of the term in 1987’s Design Thinking to Richard Buchanan’s highly influential article

“Wicked Problems in Design Thinking,” Simon’s big idea—that design is always linked to an improved future—has continued to shape the practice in every direction.

More recently, design thinking has caught the attention of businesspeople, thanks to it finding its way into the pages of publications like Bloomberg Businessweek and Harvard Business Review.

Where Simon and those who followed him took a more considered, scholarly approach to the Typically characterized as a step-by-step process epistemological underpinnings of the practice, the that’s made sexy with the help of multicolored understanding of design thinking in the business Post-it Notes, mind maps, and other overly press is overly simplistic. In focusing on applying simplistic visual representations of complex a human-centric approach to identifying problems systems or experiences, the business press followed by a rapid prototyping of ideas into has romanticized design thinking as a way

tangible artifacts or nonfunctional models to solve to solve problems and drive profit. It’s most those problems, the business press tends to do simplistic definition? Design thinking is a way to to design thinking what it does to most complex get businesspeople to think like designers and issues: turn it into an easily accessed tool kit that designers to think like businesspeople. But design anyone can use.

thinking is more than that.

W H AT I S D E S I G N T H I N K I N G , R E A L LY ?

— 31

—Roger Martin

32 —

D E S I G N T H I N K I N G F O R S T R AT E G I C I N N OVAT I O N

So,

what is Design Thinking?

it comes to organizations that successfully apply design thinking to challenges, that framework is A way to take on design challenges by applying essentially cultural. If you were to try to describe empathy?

the culture of a design thinking organization, some An approach to collective problem solving?

of the words that would likely arise might include: A framework to balance needs and feasibility?

A means to solve complex or wicked problems?

Human-centric

Creative and innovative

A mind-set for curiosity and inquiry?

Speed and agility

Connected and flat

A fixed process and a tool kit?

Adaptable and flexible

Fun and playful

A problem-solving approach to handle problems Inspired

Committed

on a systems level?

Disruptive

High-energy

A culture that fosters exploration and

Passionate

Risk-taking

experimentation?

Purposeful

A design buzzword to suggest that designers can do more than just design?

A management buzzword sold as the next

How many big organizations have cultures that strategic tool?

are like this? The answer is very few, which is why innovation is so challenging without the The answer to all is, “Yes, and more!” Here is my help of other, usually smaller, organizations that definition of design thinking: Design thinking is the do have such cultures. Respected design critic search for a magical balance between business and educator Don Norman suggests that one of and art, structure and chaos, intuition and logic, the major problems related to innovation is the concept and execution, playfulness and formality, ability to manage the desirable, feasible, and and control and empowerment.

economically viable. Although he is referring to designing things, the problem is equally present In my practice, this is a framework for a human-when designing systems, services, or even cultures.

centered approach to strategic innovation and a new management paradigm for value creation in a world of radically changing networks and disruptive technology. Although that framework is certainly Design thinking is not an

populated by valuable processes or tools (which experiment; it empowers

we’ll get to later), it is the framework itself that is where the magical balance resides. Design and encourages us to

thinking is about cognitive flexibility, the ability to adapt the process to the challenges. And when experiment.

— 33

34 —

D E S I G N T H I N K I N G F O R S T R AT E G I C I N N OVAT I O N

We don’t usually associate design with

science, but many design theories have

been inspired by scientific disciplines,

particularly the natural sciences. In such cases, design is envisioned as an objective, rational procedure that draws on the

same rigorous standards of testing and

verification as the sciences. These

theories focus on problem framing and

problem solving.

W H AT I S D E S I G N T H I N K I N G , R E A L LY ?

— 35

In the world of business, problems (starting point) It has yet to fi nd its way into business schools and goals (end point) are said to be like a chess so that our next generation of managers can be game: The initial positions of the pieces are clearly better equipped to handle increasingly complex defi ned and the goal, of course, is to checkmate challenges.

and win the game. But in design that’s not the case. As Donald Schön writes in The Refl ective Language that used to be associated with designers Practitioner, “In real-world practice, problems do has now entered other fi elds: Hospital administra-not present themselves to practitioners as givens.

tors are told they should be more patient-centric, They must be constructed from the materials policy makers are told that public services should of problematic situations which are puzzling, be more user-centric, and businesses engage with troubling, and uncertain.”

customers by offering new meanings for objects.

Design thinking is not something that is taught and That’s why design theorist and educator Horst practiced in a studio anymore. For executives and Rittel called design problems “wicked” and managers it is becoming our everyday language.

proposed that we need a completely different approach, what he called a second generation of design theories and methods. He advocates that if the fi rst generation was aiming to make design a purely rational process, the second generation recognizes that the notion of rationality implies serious paradoxes and that distinctions between systematic versus intuitive and rational versus nonrational design are untenable.

Some of the principles of design thinking originated from design discipline but were adapted to apply in a wider and more complicated business context.

Design thinking is popular among educators and social entrepreneurs for social innovation because it approaches problem solving from the point of view of the end user and calls for creative solutions by developing a deep understanding of unmet needs within the context and constraints of a particular situation. Some designers are picking up the skills when working in close collaboration with other domain specialists in the fi eld of engineering, economics, and social sciences.

36 —

— 37

38 —

D E S I G N T H I N K I N G F O R S T R AT E G I C I N N OVAT I O N

Design thinking’s association with

or application in business is often way

oversimplified. It is more than just

Post-it Notes covering a wall or creative

ways to brainstorm ideas. And it is

more than a five-, six-, or seven-step

process to arrive at those ideas.

Such an oversimplification forces us

into predetermined roles, and with

those roles come rules, conventions,

behaviors, and formal expectations

that will ultimately restrict what it is

we think and do.

W H AT I S D E S I G N T H I N K I N G , R E A L LY ?

— 39

“Complexity is the prodigy of

the world. Simplicity is the

sensation of the universe.

Behind complexity, there is

always simplicity to be revealed.

Inside simplicity, there is always

complexity to be discovered.”

—Gang Yu

It is important to recognize that Design Thinking is 03/ How the different elements in the ecosystem not exclusive to designers, or unattainable to those relate to one another and if any systems-level in other disciplines. Design Thinking is natural and impact exists.

inherent in all of us. It is an approach to inquiry and expression that complements and enhances 04/ What other ecosystems exist adjacent to your existing skills, behaviors, and techniques. But ecosystem.

it’s also critical not to define the discipline as the antithesis of data-driven analytical thinking. Design 05/ How new insights may be gained by looking Thinking is its own mode of analysis—one that broadly at communicative events within these focuses on forms, relationships, behavior, and real ecosystems and how they fit together from a human interactions and emotions.

systems perspective.

These may include:

06/ What the key characteristics and patterns of behavior of new relationships are when viewed 01/ How a product, service, system, or business from a systems level.

currently lives in an ecosystem.

07/ What the patterns of people’s information 02/ How people interact with the above and the behaviors are and how to map them visually to nature, frequency, and attributes of that interaction make sense of them.

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D E S I G N T H I N K I N G F O R S T R AT E G I C I N N OVAT I O N

— 41

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A P P L I E D D E S I G N T H I N K I N G I N B U S I N E S S A N D S T R AT E G Y

— 51

Applying design thinking to business problems quality, and minimizing cost remains the primary empowers organizations and individuals within management modus operandi.

them to better understand their competitive and operational environment. From behavioral patterns More than 100 years later, scientists haven’t to values to systems-level challenges to go-to made much headway in scientific management.

market strategies, the process of understanding how In the mid-1980s, they turned their attention to to meet the needs of people often turns itself inward chaos and used computer modeling to seek order and reveals some of the deadliest organizational through mathematical diagrams created at warp gaps and why they continue to persist.

speed. Although they found some fascinating data visualizations, they couldn’t explain or understand In 1893 the world’s first management consultant the patterns. Like forecasting the weather, all they got the notion to improve industrial workflow.

could do was make educated predictions—never Frederick Taylor, aka the father of scientific guarantee sunny skies.

management, embarked on a scientific study of industrial processes. Since the publication of A decade later, scientists turned their attention Taylor’s 1911 treatise, “The Principles of Scientific to complexity. They used advanced computer Management,” the field of industrial engineering models to uncover the structure of life-forms and has attempted to improve efficiency through apply it to business. They compared everything Taylor’s management model. At almost 100 years from beehives to genetic DNA to traffic jams to old, scientific management is primarily based on the complex properties of the technological and a mechanical view of our universe as it relates to economical environment. Although they did manage finding the “best” ways to work. Spurring powerful to create some compelling metaphors for strategic business models like the Ford assembly line, this management, these studies fell short of revealing discipline of speeding up productivity, controlling anything fail-proof.

52 —

D E S I G N T H I N K I N G F O R S T R AT E G I C I N N OVAT I O N

Today, Fortune 500 and other companies still manage themselves like machines, valuing

profit before all else, maintaining authority with command-and-control management, and relying on Six Sigma to improve quality. They also overrely on the utilization metrics, output, and efficiency of mass production. These practices serve to create a bureaucratic structure, distance executives from customers, and encourage executives to manage rigidly and systematically.

In the language of systems thinking, the problem with modern management and its quest to ensure consistency and predictability is that it attempts to eliminate variation. Excessive variation is absolutely the enemy of predictability; indeed, the function of strategic planning, quality control, and Six Sigma is to eliminate unwanted surprises. But as we all know, there is a tendency in life, as in business, for things to become uncontrolled and go off in all directions. Innovators understand and accept this because true innovation is about maximizing the chance of lucky surprises. As such, it needs to allow some degree of variation in a somewhat purposeful fashion.

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It isn’t the incompetent who destroy

an organization. The incompetent never

get in a position to destroy it. It is

those who achieved something and want

to rest upon their achievements who are forever clogging things up.

—F. M. Young

The average time a chief executive officer spends on strategic planning) is useful when it comes in the top position is decreasing rapidly, from an to evaluating strategies that have already been average of 10 years in the 1990s to about two to created but not so useful when it comes to framing three years today. The rate at which market leaders the problems that such strategies are meant lose their leadership positions, the so-called topple to solve. It’s even less useful when the task is rate, has doubled in the past two decades. For generating viable strategic alternatives.

companies that are built to last, the average life span of an organization, irrespective of its size, According to scenario planning expert Paul is now just 12.5 years. And of all mergers and Schoemaker, the extreme emphasis on responding acquisitions, no more than 20 percent are actually to new situations by extrapolating on the past creating value and more than 50 percent actually is the key flaw in his discipline. New challenges destroy value. In light of these facts, there are two have no history. Given the speed of change today, big questions we need to ask: Is management as extrapolating from the past could lead companies we know it working? and Is it time to rethink it?

down a dangerous path.

Remember Herbert Simon, the guy who wrote The Another reason why most planning efforts fail is Sciences of the Artificial and introduced us all to because they have “no plan behind the idea” or the proto-theories of design thinking? Well, he

“no idea behind the plan.” Sure, most strategic also wrote about strategic planning and suggested plans contain an impressive 150 pages of

that classic decision theory (and its influence PowerPoint slides, but most of them are so obvious

— 55

you wonder about the value of the big idea. Those some companies with making smarter strategic of you that have lived in this world will understand decisions, but they are also leading those that to execute such a plan means that you need companies down the quantitative path that has to call in the consultants to fill in the gaps. What made it so hard for them to design for humans in many companies refer to as a strategic initiative the first place.

isn’t really that strategic and doesn’t really center on an initiative. Calling something a strategic Actually, it’s a little scary. Never in the history initiative doesn’t make it one.

of humankind have we produced this level of information at such speed. And it’s not slowing Strategy planning is predicated on the availability down. As more of our daily activities are monitored of information. In the past there were not enough and our business activities are digitized, we are data to support meaningful analysis. Today, it’s coming to a point where we are suffering from data the opposite, thanks to big data. What are big paralysis. The signal-to-noise ratio has jumped data? Typically described in terms of three key from 50 to 90 percent, and maybe 10 percent of things—the volume of information (the amount the data is useful. Big data do not diminish the from all sources), the variety of information (the need for intuition and sense making in strategy nature of the information in all formats), and planning; they put more demand on it. But it takes the velocity of information (the speed at which strong leadership to maintain a balanced culture data are collected)—big data might be helping when it comes to decision making.

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Best practices are of little benefit, particularly for those looking to innovate in today’s creative Companies find

economy. It’s getting harder to weed out problems now that we’re bombarded with massive data themselves in a crisis

and enterprise software that force managers to because they can’t

think in confining formulas. Caught in the tangle of technology, process, product portfolios, and respond to change, even

business units, the manager’s straightjacket only tightens its grip.

if they recognize the need

for transformation. This

The relentless pursuit of growth is responsible for this chaotic cloud of debris that’s made up of is the age of extreme

bygone processes, product portfolios, and data, data, data. Once we realize that more is not always competition, and every

better, the simple solutions hidden underneath can reveal themselves and guide the way to how competitive advantage

to handle complex problems in new and more has been reduced to

creative ways. This challenge and its connection to the numbers game is perhaps best summed up by comparative advantage.

Roger Martin in his book The Design of Business:

“Data is no substitute for intimacy.”

From consumers to employees to the people in a supply chain, design thinking enables teams to build more intimate relationships. It helps us eliminate the complexity and clutter so that we can get back to the basics of human needs and human problems.

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A P P L I E D D E S I G N T H I N K I N G I N B U S I N E S S A N D S T R AT E G Y

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Most of the training business schools provide for managers is outdated. Much of it is grounded in false theory or theories so basic that they can be taught with PowerPoint and textbooks.

For the past 30 years, managers and consultants Sometimes we need to tune out the algorithms have been preoccupied with practicing stratagems and the data. We need to free ourselves from the that have nothing to do with economic value rational-logical-linear model that keeps us frozen in creation—constant organizational restructuring, a fast-moving and uncertain environment. We need following best practices and poorly designed a touch of finesse and the courage to wipe the growth strategies. This endless, tiresome shuffling slate clean. We need to rely on our gut.

of assets and shifting of organizational boundaries has created opportunities for investment bankers This might mean simplifying the amount of

and consultants, not value for shareholders.

technology system you use while honing the innovations that truly fit your workflow. It could More than 80 percent of our management tools, mean consolidating data on a knowledge-base systems, and techniques are for value-capture and getting employees on the same wavelength.

efforts, not for value creation; this includes It could mean abolishing the command-and-control techniques such as total quality management hierarchy and connecting on an egalitarian level (TQM), enterprise resource planning (ERP), Six with your company to gather new insights. It could Sigma, Lean Startup, and Agile Systems. These mean reinventing your brand in a way that no tools are valuable for keeping an enterprise brand consultant could ever do because that running smoothly. But we should be focusing on person doesn’t own it like you do.

value creation rather than value capture alone.

This is where design thinking comes into play.

After so many attempts to understand industrial Companies such as Apple, Amazon.com, Netflix, management as a science, there’s a point when Samsung, Burberry, and BMW are winning by

throwing in the towel, sitting back, and defaulting design and the thinking behind that design.

to your intuition will unlock the truest answers you’ve been seeking. Management expert Gary One reason for the success of some leading Hamel once said, “Management is the least

design organizations is intuition. Intuition has efficient activity in your organization.” We can the remarkable ability to bring clarity to strategic make strategic management efficient only if we decision making because it reveals a subtle make it clearer. Sometimes, that clarity comes qualitative and quantitative balance that is often only from the inside.

needed for all the parts to click. Unfortunately, it can’t be taught—especially in B-school.

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Applied design thinking in business

problem solving incorporates mental

models, tools, processes, and techniques

such as design, engineering, economics,

the humanities, and the social sciences

to identify, define, and address business

challenges in strategic planning, product

development, innovation, corporate

social responsibility, and beyond.

A P P L I E D D E S I G N T H I N K I N G I N B U S I N E S S A N D S T R AT E G Y

— 61

When executed correctly, this integration forms management of organizational structure, reporting a highly productive dynamic between traditional hierarchies, and all the usual processes. The business management approaches and design

other is the soft management systems of design approaches, complementing and enhancing one thinking—the creativity, sensibility, and social another in a symbiotic fashion.

bonding that truly hold an organization together.

Combing these two does not discount or diminish The adoption of multidisciplinary approaches to the value of traditional or other analytical business business problem solving, including the application methods in problem solving. Rather, by leveraging of design thinking, helps organizations fill in critical the best of both business and design thinking, it gaps and deficiencies. Only by combining modes establishes a more sensitive, powerful, and potent and methods can organizations establish more analytical tool kit that escalates our thinking to complete and competitive bodies of knowledge a new level. This results in a holistic learning and insight that empower a human-centric,

experience that is meaningful, valid, and practical future-oriented approach. One mode is the hard to everyone involved.

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A P P L I E D D E S I G N T H I N K I N G I N B U S I N E S S A N D S T R AT E G Y

— 63

Design thinking helps structure team

interactions to cultivate greater

inclusiveness, foster creativity, deepen empathy, and align participants around

specific goals and results.

Humankind has survived thus far because we Many approach design thinking as a clear-cut can work well together, communicate, empathize, method because it employs some predictable anticipate, understand, and exchange. Design and repeatable processes that can, to some thinking is a refl ection of these abilities. The extent, be codified as algorithms. But it can culture behind its practices, principles, and also embrace serendipitous, ad hoc, and

processes is potentially more empathetic,

adaptive approaches to inquiry, synthesis, and human-centered, and courageous than business expression to leverage the power of intuition. As management.

a relatively new concept to the business world, it needs to be carefully adopted and integrated A multifunctional and multiperspective approach into traditional management practices. It

to solving problems has infl uenced many of the should not be exploited as a marketing tactic principles inherent in design thinking. As such, or used as an excuse for creative ideas to using it in business has the power to infl uence avoid analytical-based criticism or business our core values, identities, expectations, and logic. It should be positioned as a creative, views of the world. But because it comes with a logical tool that can facilitate innovation and

“responsibility to shape the future,” it is critical transformation. To do this successfully, however, that every new practitioner understand that it it is critical that organizations interested in begins by acknowledging and acting upon the adopting and applying design thinking recognize human need for meaning and connectivity.

its key principles.

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It proposes a cross-disciplinary learning-by-doing approach to problem solving. It allows us to accommodate varied interests and abilities through hands-on and applied learning experiences between individuals. A big part of design thinking is design doing. It’s getting your hands dirty and experimenting instead of being an armchair strategist.

A P P L I E D D E S I G N T H I N K I N G I N B U S I N E S S A N D S T R AT E G Y

— 65

It is disruptive and provocative by nature because it promotes new ways of looking at problems. The strategic framing of complex and ambiguous issues requires an approach free from organizational dogmas, codified limitations, and old assumptions. A large part of the design thinking process is stepping out of conventional roles and escaping from existing dogmas to explore new approaches to problem solving.

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It is always focused on the customer or end user’s needs, including unarticulated, unmet, and unknown needs. To do this, design thinking employs various observational and listening-based research techniques to systematically learn about the needs, tasks, steps, and milestones of a person’s process.

A P P L I E D D E S I G N T H I N K I N G I N B U S I N E S S A N D S T R AT E G Y

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Without an anticipatory, disciplined imagination of the future, the strategic planning process is dead in the water. Foresight opens up the future and invites us to explore uncertainties. It encourages us to be comfortable with working with unknowns and expects us to cope with inadequate information in the process of discovering and creating a tangible outcome.

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It is iterative. It requires ongoing definition, redefinition, representation, assessment, and visualization. It is a continuous learning experience arising out of a need to obtain and apply insights to shifting goals.

Here, prototyping, creating of tangible sharable artifacts, becomes an important piece of the design thinking tool kit.

A P P L I E D D E S I G N T H I N K I N G I N B U S I N E S S A N D S T R AT E G Y

— 69

It puts users at the core of everything. It encourages the use of tools to help us communicate with people in order to better understand their behaviors, expectations, values, motivations, and the needs that drive them and will improve their lives. We use these insights to develop new knowledge through creative learning and experimentation.

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Whether it’s developing and launching a new product or a service, there are many benefits in learning from small and smart failures. This will always happen, but applied design thinking practices help reduce risks by considering all the factors in the development ecosystem, including technology, the market, competitors, customers, and the supply chain.

A P P L I E D D E S I G N T H I N K I N G I N B U S I N E S S A N D S T R AT E G Y

— 71

PowerPoint and Excel spreadsheets are limited in their ability to communicate insights or ideas. Creating meaning is the hardest part of the design process, and the communication tools used in design thinking—

maps, models, sketches, and stories—help capture and express the information required to form and socialize meaning. Arriving at this takes time and emerges through multiple iterations and conversations.

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It fosters a culture that embraces questioning, inspires frequent reflection in action, celebrates creativity, embraces ambiguity, and creates visual sense making through interactions with visualizations, physical objects, and people. A design thinking organization creates strong “inspirationalization” and “sensibility” to give tangibility to the emotional contract that employees have with organizations.

A P P L I E D D E S I G N T H I N K I N G I N B U S I N E S S A N D S T R AT E G Y

— 73

Design thinking is the most complementary practice that can be applied side by side with Michael Porter’s theory of competitive strategy. It allows companies to create new products, experiences, processes, and business models beyond simply what works. It turns them into desirable products, which is a truly sustainable competitive advantage through innovation.

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— 79

The adaptability of any organization depends on the effective handling of other key strategic challenges: developing adaptable strategies, avoiding commoditization, creating sustaining differentiation, Discontinuity is causing chaos. It’s now the norm.

developing innovative culture, engaging custom-Traditional hierarchies will not survive long. The ers and employees, responding to technological next generation of leaders need to know how to disruptions, and balancing short- and long-term roll with change. They also have to mobilize people strategies. For each of these business problems who are resistant to change or don’t know how to we apply a design thinking lens to raise new successfully adapt to an ever-evolving business questions and shape creative ideas. Each subsec-environment. In this chapter we explore strategic tion is complemented with an activity. The basic business challenges familiar to most organizations illustrative design thinking implementations serve and demonstrate how design thinking approaches as useful examples of how to approach business can be applied to those challenges. Complex busi-problems with empathy, creativity, foresight, and ness problems today demand new leaders to man-consumer-centricity. They are intended to inspire age change effectively, reinvent business models new pathways that address even the oldest and and practices rapidly enough to keep up with the most wicked challenges. On the following pages competition, and outinnovate them while balancis the list of design thinking solutions that are ing the management of change with rapid growth.

matched to specific business challenges.

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I N T R O D U C I N G T H E D E S I G N T H I N K I N G M B A

— 81

BUSINESS CHALLENGES

DESIGN THINKING SOLUTIONS

Growth

Storytelling

Predictability

Strategic Foresight

Change

Sensing

Relevance

Value Redefinition

Extreme Competition

Experience Design

Standardization

Humanization

Creative Culture

Prototyping

Strategy and Organization

Business Model Design

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Business Challenge 01

Growth

Growth is at the forefront of every busi-Philip Crosby, author of The Eternally ness leader’s mind. Most tend to utilize Successful Organization, says growth is classic growth strategies to get there: unavoidable “if for no other reason than

new strategic partnerships, horizontal mar-to accommodate the increased expenses

ket expansion, vertical integration, prod-that develop over the years. Inflation also uct extension, and franchising. Although raises the cost of everything, and retaliatory all these strategies are well known, how price increases are not always possible.

does an organization come to select one Salaries rise as employees gain seniority.

over the other as a means for growth?

The cost of benefits rises because of their Once decided, how does a company focus

very structure, and it is difficult to take its resources? And what are the implica-any back, particularly if the enterprise is tions for organizational design?

profitable. Therefore cost eliminations and profit improvement must be conducted on

The process of redefining the boundaries

a continuing basis, and the revenues of the of business and making explicit decisions

organization must continue to increase in

regarding who it will and will not serve

order to broaden the base.”

often sparks intense debates around any

growth strategy. There are no simple black Most organizations, however, aspire to

and white answers to these questions, but

grow in order to prosper, not just survive.

design thinking can be used to bring clarity Growth means different things to different and align its business model to achieve

organizations. There are many dimensions a maximum leverage.

company can select to measure its growth.

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Although the ultimate goal of most compa-

pushing up their corporate profits. Growth Growth is also

nies is profit, other financial data may be was easy under those circumstances, and

used as indications of growth. Some busi-

business gurus were busy selling any num-

the very

ness leaders use revenue, EBITDA (earn-

ber of “proven” formulas to get it.

essence of

ings before interest, taxes, depreciation, and amortization), product line expansion, These management best practices devel-entrepreneurship,

employees, or other criteria to evaluate

oped during the boom period between the

organizational growth.

1980s and 1990s were widely codified

including

and taught in business schools around

corporate

Growth is also the very essence of entre-

the world. They were liberally applied to

preneurship, including corporate entrepre-

industry after industry by managers trained entrepreneurship.

neurship. High growth leads to managerial

in whatever best practice. Today, the danger complexity, so the alignment between

lies in applying theories and practices

shareholders, executive leadership, manag-

based on those outdated models of two or

ers, and employees can quickly become

three decades ago. Consider current macro-

choking points. Growth comes with the

economic trends and industry dynamics—

questions where a company’s leadership,

growth is a lot harder to come by because

culture, systems, management, and busi-

we are operating in a very different, much ness model can hold itself together.

more complex world. And if you’re thinking about relying on emerging markets such as

Growth largely depends on increased

China, Mexico, Brazil, and India, be warned economic activity, which requires certain

that you are entering a very different game preconditions, including consumer confi-with very different rules.

dence and demographic shifts. The 1980s

and 1990s were an unprecedented period

Growth can’t continue unchallenged forever; of economic expansion in the United States our Earth’s resources are finite. Sustainable as the country was driven by increasing

growth is still a myth: It’s quite impos-

demand for cars, housing, home appli-

sible to decouple economic progress from

ances, and other products. The debt-fueled environmental damage. With all of that, we growth of consumer spending was boosting

are looking at a no-growth future. Unless we the gross domestic product (GDP) and

can reimagine and reinvent new industries, creating millions of jobs while corporations we simply cannot rely on economic growth

were building their production capacity and to power our growth plan.

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GROWTH NEEDS A STRATEGY, AND

EVERY STRATEGY NEEDS A STORY

Most businesses develop specific plans

that, over time, will move their business

to a level that meets the goals of the

executive team, the shareholders, and the

investment community. The reason why

growth strategies are so vital is they keep things moving. And in business, if you’re

not going forward, you’re going backward.

Growth means creating a clear and

compelling vision of the future. Your vision needs to be very clear in terms of what

you want from your business. How do we

plan to attach an adjacency? How do we

become the market leader? How about

expanding to multiple geographies? And

what’s in it for managers and employees?

Ultimately, the most meaningful yardstick

is one that shows progress with respect to an organization’s stated goals, whatever

they are. So how do you develop your

organization’s stated goals? How do you

develop the vision of where you want the

organization to be in the future?

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WHAT’S IN IT FOR

HOW DO YOU DEVELOP

MANAGERS AND

THE VISION OF WHERE YOU

EMPLOYEES?

WANT THE ORGANIZATION

TO BE IN THE FUTURE?

HOW DO WE

HOW ABOUT EXPANDING

PLAN TO ATTACH

TO MULTIPLE

AN ADJACENCY?

GEOGRAPHIES?

HOW DO WE BECOME

THE MARKET LEADER?

HOW DO YOU DEVELOP

YOUR ORGANIZATION’S

STATED GOALS?

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Design Thinking Approach 01

Storytelling

People who most successfully practice de-with mid-level executives and employees in sign thinking are curious, imaginative, and a meaningful way. They circulate memos or

filled with wonder. In short, they are people PowerPoints. They produce corporate com-who love stories and people who love to tell munication booklets. They dust off the pom-stories.

poms for the next corporate off-site meeting.

Or they throw up a lot of dry data and factual Stories reveal the hopes, dreams, and

logic that some audience members receive

aspirations of authors, readers, populations, with their dukes up. In short, they fail to tell and cultures. They can also reveal the hopes, a good story.

dreams, and aspirations of large organiza-

tions. The story of a company is what truly Good storytelling is a technique where

determines its purpose and value. The right a leader is tasked with reframing an orga-story will always be more substantial than the nization’s past, present, future, problems, right strategy because strategies are suscep-needs, desires, and hopes using a narrative tible to the ingenuity of competitors, disrup-built on salient metaphors to help people

tive industry shifts, and bad luck while stories understand and connect with the company,

are impervious. If you write it, you own it.

its values, and its purpose. In a world when being strategic means being logical and fact-Every time a large-scale change effort fails, based, where do stories belong? They add an it’s because management fail to connect

emotional dimension to business logic.

I N T R O D U C I N G T H E D E S I G N T H I N K I N G M B A

— 87

“If history were

taught in the form

of stories, it would

never be forgotten.”

— Rudyard Kipling

They foster empathy and connectedness.

organization, its place in its environment, They prioritize information and objectives.

and how the choices of its members contrib-They provide a clear beginning, middle, and ute to its growth and success.

end. They help us manage crises. And they

evoke our hardwired predisposition to process Unlike more traditional commentaries on

information faster and more holistically when business growth, design thinking presumes

presented to us in the form of a good story.

that numbers cannot tell the whole story

and that other means of communication are

The narrative structure of a story is a teach-required to define and articulate the future.

ing tool that can make complex structures

The design thinking approach believes that or relationships more easily accessible to stories are uniquely useful in their ability to an audience. Because the important ideas

bring people onto the same page, organize

are set in a metaphor that people can easily information, and present it in an efficient and understand, both storytellers and listeners accessible manner. Often, many organiza-can move past arcane details and focus

tions suffer from a divide in the vision of on the problem at hand. The immediacy of

what they actually are. Storytelling is a

the story helps people track the important technique to harmonize the company’s vision relationships while empathizing with the sub-and translate the key elements of a strategy ject. This allows for a richer experience and into a compelling and accessible narrative fosters greater insight into the nature of the that connects the past with the present and the future in a cohesive way.

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So how do you tell a great story that will inspire senior executives and employees alike?

Make it structured

Make it collaborative

A narrative is employed in storytelling to arrange information in a logical structure that Whether you engage multiple stakeholders

can be followed because we, as humans, are in shaping the narrative and its presenta-familiar with beginnings, middles, and ends.

tion through some form of crowdsourcing or Because the storyteller and the audience

co-creation or you simply gather input from know this structure, they are able to focus employees at every level through informal

on the content of the story. When content

conversations, it’s important to ensure

flows, a good storyteller can communicate

that elements of what you are about to tell challenges and complex information in a

resonate with the audience. No matter how

format that is more clear and familiar to the fantastic, every great story has the familiar audience. Just remember: The key content

embedded within its structure.

is the ending—what a company wants to be,

where it wants to go, the future.

Make it engaging

Make it performative

The medium can make or break the mes-

sage. What kind of media, experience, or

A storyteller engages an audience through an event is right for your audience? If your

oratory recounting of a narrative. An effective answer is PowerPoint, you don’t need a

storyteller does not simply speak the words good story; you need a good spanking. To

but rather brings them to life by leveraging really drive home your message, you need

dramatic techniques such as body language, to take your audience somewhere new with

tone, tempo, and timing. Storytellers like something new. Consider the simple power

Steve Jobs or the archetype of the trickster of videos, the tangibility of beautiful print, capture attention, suspend disbelief, and

or out-of-office immersions in spaces or

bring people deep into the emotional dimen-places that will inspire people through new sions of a strategic narrative through their experience.

compelling performance and delivery.

I N T R O D U C I N G T H E D E S I G N T H I N K I N G M B A

— 89

Make it tangible

Make it real(ish)

People like stuff they can see and touch. To Fictiveness refers to how true a story may help illustrate intentions and what the future be. The fictiveness of a story is related to its might look like, consider how technology

plausibility, its applicability, and its potential demonstrations, prototypes, and other see-to explain something. Even if it is entirely able and touchable artifacts can signal the fictional, the listener can identify if it applies strategic intentions of the organization and to real scenarios and the circumstances.

articulate how to move, grow, and transform The perfect fictive ratio for storytelling? Aim in a particular direction.

for a narrative that includes a vision of the future and possible growth that is just out of reach but that is grounded in a possible and plausible way. Such a story can then inspire Make it fun

and stretch while providing the information needed to guide your team.

Build interactive narratives in the form

of games or simulations that enable the

audience to encounter stories in a holistic, self-guided, interactive way. These typically encourage the sandbox-like discovery of a

growth narrative that is progressive, staged, or a hybrid of both. These serious games

allow people to explore and experience

the roles, tasks, and relationships within a clearly defined system of rules and understandable context.

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BUILDING EMPATHY AND EMPOWERING

TRANSFORMATION

Growth-oriented narratives help elicit

A story is a mirror that reflects existing emotional inputs and responses from

states of culture by illustrating how an

stakeholders and can be used to infuse the organization currently operates and how

organization with optimism or uncover anxi-it can or will have to change in the future.

eties about the future. This creates stronStories can place an organization’s exist-

ger internal bonds between stakeholders

ing culture within new contexts, highlight both within and outside of the organization strengths and weaknesses, establish the

by using human-centric narratives to foster purpose surrounding a vision for growth,

common purpose. Here, personal feelings,

and illustrate the transformation of roles.

perspectives, assumptions, expectations,

This gives stakeholders the chance to

and aspirations can be shared, illustrated, rehearse and prepare themselves for

and addressed by everyone involved. The

change. Furthermore, by hearing and

resulting dialogue allows organizations to engaging in growth-oriented stories,

accommodate and unify a large number

individual employees can recognize which

of diverse perspectives that may or may

new skills and capacities they will have to not initially align. This allows the newly acquire, develop, or improve. They receive energized organization to become more

a very direct sense of which resources

fluid, agile, and efficient through newfound, will have to be acquired and developed to

narrative-driven cohesion.

pursue new goals and milestones.

I N T R O D U C I N G T H E D E S I G N T H I N K I N G M B A

— 91

THINKING POINTS

There are seven to nine core narrative struc-Narratives tie the past, present, and future of tures that we typically consume in some form an organization together. One problem faced or another on a daily basis. They provide us by organizations is that younger or newer em-with the opportunity to experience new con-ployees lack the long-term view of their older texts and situations. These frameworks allow and more experienced coworkers. This often people to benefit from empathetic role-play creates a perceptual divide that can fracture and explore the goals, choices, decisions, the understanding of the company’s purpose.

motivations, actions, and successes and

Storytelling is an effective way to accultur-failures in a more intuitive way.

ate new employees. By illustrating the path or journey that the organization has taken, Paths toward organizational transformation stories help them gain a better understand-and growth can be communicated effectively ing of where the organization has come from, through the development of characters,

what choices and challenges it has faced,

personas, artifacts, and future-oriented

and what lies ahead.

archetypes that sit within familiar narrative structures. Stakeholders can easily identify, engage, debate, or learn by exploring their choices, actions, and experiences within a variety of contexts and situations.

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— 93

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Business Challenge 02

Predictability

Business strategy is about finding the

Wondering about the real difference

balance between two things: predictability between strategic planning and strategic

and malleability. Malleability is the extent thinking? Just ask management guru Henry

to which the external environment can

Mintzberg. For him, strategic planning

be influenced and shaped by the actions

“has always been about analysis, breaking

of companies or industries. Predictability down a goal or set of intentions into steps, is the extent to which the future of the formalizing those steps so that they can

external environment can be forecast or be implemented . . . and articulating the

predicted, which depends on the degree

anticipated consequences or results of

of complexity and speed of change. It

each step.” In contrast, he writes that

usually does not account for any shock or strategic thinking is about synthesis. Here, major disruption. It is highly desired and intuition and creativity are the tools that valued in business planning, new product shape a vision of where an organization

launches, and technology projects, as well can or should be going. Essentially, this is as among investors. It builds confidence strategic foresight, a highly effective way that managers know what they’re doing

to make sense of possible futures, clarify and will effectively plan for capital and ambiguity, and create new perspectives that operational investment.

can establish competitive frameworks and

opportunities for innovation.

I N T R O D U C I N G T H E D E S I G N T H I N K I N G M B A

— 95

“The best way to

predict the future

is to create it.”

— Peter F. Drucker

Most organizations strive to achieve a

The only true way to maintain a useful

value-adding level of predictability by

level of predictability is to actively engage implementing measurable, repeatable,

in the shaping of the organization’s future.

familiar business processes. This type

By studying, developing, and visualizing

of predictability allows companies to

forward-looking scenarios, an organization improve efficiency, effectiveness, and

can equip and prepare itself for tomorrow.

productivity while gradually reducing

Think, for example, how understanding

costs. Typically, business leaders

the implications of digital technology,

identify processes for improvement and

the increasing popularity of torrenting,

predictability by looking for characteristics and shifts in consumer attitudes toward

and parameters that include transportation ownership might have given Blockbuster

and supply chain issues. But this is the

a fighting chance. That fighting chance is present, not the future.

strategic foresight.

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— 97

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Design Thinking Approach 02

Strategic Foresight

To face the unknown, businesses must

Most managers appreciate and understand

adopt a different approach to predictability.

the value of strategic foresight but don’t The ability to manage the uncertainties of know how to make it tangible enough or

the future is critical to planning for growth integrate it into business strategy. Strategic or survival. Because of the rise of the foresight is not “planning”; it’s one of the innovation society, new technologies, and many inputs for planning. Strategic planning a rapidly globalizing economy, business needs to consider a multitude of factors

leaders are forced to deal with not only in the present competitive and operational the speed of change but also massive new environment and then extrapolate the

complexity, uncertainty, and paradox on a data into a possible future that is based

global scale. The future will emerge from a on a rigorous reading of weak signals.

constant stream of decisions, strategies, For foresight practitioners, the mission is and commitments that have to be made

to imagine what possible futures can be

in the present, with as much understand-created and provide strategy a vision (or

ing of risk, possibility, and wisdom as multiple visions) to facilitate a meaningful possible.

dialogue and a road map to close any

competency gap between today and

tomorrow.

I N T R O D U C I N G T H E D E S I G N T H I N K I N G M B A

— 99

“Don’t despair:

despair suggests

WHY DOES BUSINESS NEED STRATEGIC

you are in total

FORESIGHT?

control and know

To help to prevent or prepare for

what is coming.

surprises.

Within dynamic and discontinuous environ-

You don’t—

ments, foresight helps organizations better surrender to events understand the variables influencing the pace, nature, and possible impacts of

with hope.”

change. It addresses and confronts the

need to continuously orient, reorient, plan, and act within volatile, complex, and uncer-

— Alain de Botton

tain business landscapes so that we’re not caught off guard by change. Identifying and questioning the significance of the variables influencing and driving “change” ultimately Strategic foresight is a deliberate and

help us anticipate and prepare for future

systematic process concerned with

conditions.

establishing well-informed future-oriented perspectives that help guide and inspire

To help to establish and maintain competi-innovation, planning, and decision making.

tive advantage.

It helps us understand, anticipate, and

Practicing foresight helps an organization prepare for change by equipping us with

gain a more robust understanding of how

the tools and resources needed to ask

competitive dynamics might be changing

provocative questions, challenge and test

and where gaps and opportunities might ex-

assumptions, rethink goals, and explore

ist. This, in turn, helps enrich an organiza-meaningful strategic alternatives. It

tion’s latent innovation potential, resources, encourages the deliberate and systematic

and maneuverability. This is often accom-

exploration of uncertainties and their

plished by strengthening the ability to de-potential impact on behaviors and

fine and occupy opportunity spaces faster

relationships.

and with greater competence.

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To positively influence and support

To empower and engage.

innovation.

Practicing foresight helps individuals and Foresight is one of many critical inputs or organizations develop and improve their

raw ingredients that help frame, fuel, and ability to identify future opportunities and manage innovation. Any organization with

transform them into meaningful outcomes.

an 18- to 36-month innovation cycle that

Developing and practicing these skills also is drawing on trend analysis to shape its

builds the confidence necessary to make

future might as well throw in the towel. By decisions within dynamic, uncertain, am-the time you’re ready to launch, your trends biguous, and less tangible contexts.

are old news. Foresight draws on trends—

but it is not about trends today but rather what they might evolve into tomorrow. It can be used at the front end as a guide, as fuel, filter, or catalyst. And it can be used postin-novation as an amplifier or critical future proofing lens.

“Create your future

from your future,

not your past.”

— Werner Erhard

I N T R O D U C I N G T H E D E S I G N T H I N K I N G M B A

— 101

WHAT ARE WEAK SIGNALS?

DESIGN THINKING AND STRATEGIC

In the 1970s, Igor Ansoff, an applied

FORESIGHT

mathematician, business manager, and the

father of strategic management, noticed that Design thinking is about solving “wicked”

failures in strategic management were caus-problems. As the speed of change contin-

ally linked to organizations overlooking vague, ues to increase the complexity of doing

anomalous, ambiguous, yet critical informa-business, new and more complex systems

tion. To rectify that, he developed the weak and even more “wicked” problems will

signal theory.

continue to emerge. The race is on between bigger challenges and quicker solutions.

For him, weak signals represented change or the potential for it. This change can, at first Foresight is an iterative and cumulative

glance, be insignificant (such as the emer-learning process that employs the design

gence of P2P file sharing) or highly disruptive thinking tool kit, which includes environmen-

(such as digital cameras). These signals are tal scanning, context mapping, archetype

not facts or trends. Rather, as signs of new creation, and scenario development. It

and emerging capabilities that could disrupt offers ways to explore, learn, and make

or transform existing norms, they represent sense of the variables and uncertainties

subtle changes in reality that will manifest in shaping possible futures by questioning

individual or organizational behaviors, needs, their relevance, illustrating their qualities desires, or values.

and potential, and describing their influence on existing models and relationships.

For example, early research investment in an obscure technical domain may be an obvious, Exploring the future and its uncertainties strong signal of things to come for experts should be a daily activity sustained by indi-working within that context who may, even at viduals throughout the organization. Done

the very early stages, understand the poten-properly, it should align more closely with tial impact of the new capability. For those planning, strategy, and innovation cycles.

of us who are outsiders unfamiliar with this particular domain, that signal is still weak.

To help organizations win that race there

are many foresight tools, processes, and

Beginning with weak signals, there are a

methods that can be employed, most of

number of component parts to the strategic which begin with weak signals.

foresight process, discussed next.

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Weak Signal Scanning

critical information, this activity can shift the attention of an organization toward

Signals are driving forces that influence and new opportunity areas, threats, and

shape the rules, boundaries, and relation-

potential blind spots by filling in knowledge ships of future competitive and operational gaps and developing a more holistic

contexts. Ultimately, the objective of scanning understanding of the world. Key observa-is to identify what these driving forces are tions and insights generated from

and build awareness around how they inter-

scanning can help an organization

act and how they might redefine the future.

reevaluate its current behavior in relation to the changing landscape, develop a new

Weak signal scanning involves searching

dialogue, plan for the future, and compete the environment for information and in-effectively in the long run.

sights that will help construct the ingredients of near-future contexts. Through desk Traditional approaches to environmental

research on the Internet, scientific and

scanning include identifying and analyzing academic journals, media, policy makers,

the qualities and characteristics of signals start-ups, competitors, and other sources, from within the social, technological,

an organization can develop an under-

economic, environmental, and political con-standing of how new and emerging shifts

texts (STEEP). As a cumulative process,

in technology, behavior, culture, products, sustained scanning in these subject areas

services, and other inputs might evolve to across a multitude of subcategories can

shape possible futures.

help build a stronger and more competitive knowledge base from which potential fu-An evidence-based method of gathering,

tures can be defined, prioritized, mapped, synthesizing, and socializing new and

and explored.

I N T R O D U C I N G T H E D E S I G N T H I N K I N G M B A

— 103

Weak Signal Amplification

Determining which signals, insights, and

drivers are most critical to include in future contexts and where they fit in relation to one another is key to reducing noise and

creating clarity. In this activity, practitioners consider which signals are more relevant to specific business objectives, organizational Weak Signal Processing

capacities, or other previously determined

goals. Identifying which might have the high-Questioning signals helps decision makers

est impact on the vision, objectives, and

and planners review long-standing assump-

strategies of the organization or its future tions, critique cultural logic, and question competitive landscape is the aim.

strategic rigidity. In this process, stakeholders also become aware of opposing or re-

Here, outputs from the previous steps are

straining forces that are barriers to growth.

used to create and expand upon forward-

Drivers are found in diverse contexts and

facing views. Scenario, visioning, and

identified through different approaches.

normative methods are applied. One should

not limit the use of any specific tools; sys-Here, signals are used to create an initial tems thinking can also be highly effective, analysis and translation of what might be

or simply drawing a systems map or causal

the road ahead. This is essentially a “first loop diagram forward in time with different cut” at creating order out of the bewildering assumptions is also a valid technique to

variety of data that scanning generates.

examine how different futures may unfold.

Ultimately, this is an insight organization The question asked at this stage depends

stage where signals are subject to discus-

on the type of potential futures under

sion and analysis based on an identification consideration and where they are possible, of structures, patterns, themes, and trends.

plausible, probable, or preferable.

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Context Mapping

from many perspectives, while also provid-

ing a common artifact that can be shared

Context mapping is a sense-making

and responded to.

process that involves establishing and illustrating the conditions and rules that frame Scenarios typically emerge from context

future-oriented scenarios. This process

mapping exercises that have established

seeks to prioritize, organize, amplify, and very clear frameworks, lenses, and systems visualize the significance of the signals col-of rules. By participating in the creation of lected through scanning. In a sustained or well-informed scenarios, stakeholders gain ongoing foresight model, the rules, boundar-a better overall picture of the forces driving ies, and relationships defined within context change and how futures may evolve and

maps may evolve over time to match and

manifest.

align with changing market conditions and

organizational behaviors.

Ultimately, this process aims to create

tangible outputs that give organizations a range of strategic options for dealing with possible futures. Through written descrip-Scenario Development

tions, visual maps, multimedia presenta-

tions, and even experiential events, the

Scenarios are storytelling tools that pres-goal is to communicate future contexts,

ent choices and dramatize the impacts

potential disruptions, options paths, and

of decisions and strategies. They allow

the key drivers and rationale that shapes

stakeholders to access, experience,

and surrounds them. Here, building time-

debate, and rehearse multiple responses

lines that help organizations imagine pace, to possible futures. They are also highly

impact, change (continuous, rapid disrup-

effective prototyping tools that mobilize the tive versus sustained and incremental) con-imagination and place human experience,

texts of adoption, new uses, applications

behaviors, and motivations—both individual of technology, and the transformation of

and organizational—at the core. As fictive values, behaviors, and expectations makes

spaces, they allow us to sketch, question, preparing for the future feel more present and explore a spectrum of possible futures and tangible.

I N T R O D U C I N G T H E D E S I G N T H I N K I N G M B A

— 105

THINKING POINTS

Technology scanning looks beyond popular

Scenarios are not an end in themselves.

tech-media and out into the labs, start-ups, They are a tool to improve the quality

universities, and garages of inventors to

of decision making when dealing with

collect, analyze, and interpret the functional many unknowns. The outcome is not one

characteristics of emerging technologies.

future but multiple futures. The strategic These technologies and the potential

planning approach in most corporations

they carry may someday transform or

is still heavily biased toward single-

disrupt existing models, behaviors, and

point forecasting. In such a context, the

relationships.

executive premise is, “Tell me what the

future will look like; then we can make the Cross-industry scanning curates market

decision.” The existence of this mind-set

expressions and innovations from adjacent

will not benefit from multipoint forecasting industries to identify new organizational

and scenarios and likely cause more

behaviors—research and development

confusion and disbelief. They need to be

(R&D) investments, patent applications, ready to accept that there is no definitive emerging products, services, business

scenario and to review each scenario to

models, and experience archetypes—that

determine the optimal setting for each

illustrate how others are creating, defining, strategy component (for example, What

or adapting to change.

would be the best design or technology

investments for scenario A? Scenario B?

Scenario C?) and review these scenario-

specific settings to determine the most

resilient option for each strategy element.

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Business Challenge 03

Change

All companies must endure change to sur-opportunities that emerge from it. Simply

vive or grow. Our dynamic world continues stated, an organization that not only is

to include unexpected events that cause prepared for but expects change is one that disruption and uncertainty. The dirty

can overcome challenges.

little secret of change is that there is no theory for change. Change is the heart of As I mentioned at the beginning of this

leadership, and leaders must understand book, we are living in an age where change its context before designing and imple-is reshaping industries and categories.

menting any change program. They must

Whether it’s the bursting economic bubbles anticipate everything possible to avoid of the past decade, shifts in regulations, and manage resistance to change. Rather competition from emerging markets, new

than suppressing it, they must encourage consumer expectations, or the impact of

an expression of concerns and critiques.

consumer conversations on the role, value, Leaders also need to avoid people thinking and legitimacy of brands, the business

that change is for change’s sake.

landscape today is very different from the one most current chief executive officers

Organizations need to plan for change.

(CEOs) first entered.

At a minimum, they should be able to

effectively react to problems as they arise.

The research and literature on change

At a maximum, they should know how

indicate that the number one reason for

to anticipate change and capitalize on

the success or failure of a change initiative

I N T R O D U C I N G T H E D E S I G N T H I N K I N G M B A

— 109

hinges on the leadership skills, level of

as they arise, rather than be sensitive,

energy, and knowledge of the individuals

intuitive, and creative in the development responsible for leading the change. In light of preemptive change strategies. This

of this, one obvious question arises: What creates a chain reaction of error. For many leadership behaviors or competencies are

companies, this resistance to change is

most strongly associated with effectively

the beginning of a slow and continuous

leading or overseeing change initiatives?

decline. Products become obsolete. Brands

You won’t get a straight answer for this.

become irrelevant. Organizations become

complacent.

Work environments that nurture the ability to change and encourage employees to

Organizational change ultimately comes

develop new and creative ideas will almost down to dealing with three components:

always outlast their competitors. Many

companies cannot meet the challenges

1/ Discrepancy

of change because it is easier to stay

“We have a strong case for change.”

satisfied with current processes instead

of working toward improvement. Striving

2/ Appropriateness

for change and growth is what keeps

“We have the right strategy and

companies competitive.

stakeholders are on board.”

But most companies are designed and built

3/ Efficacy

for efficiency and predictability. Few are

“We can handle it and are committed and

flexible enough or agile enough to handle

confident we will survive.”

the full scope of change as it exists in the real world. Wide-stemming cultural changes A company’s agenda for change might be

regarding how and why people use goods

strategically sound and seemingly able to

and services are not evaluated correctly

pave the way forward for years, but visions through market research. Employees

are susceptible to error and unforeseeable are not empowered to creatively frame

events. To help guard against the chaos of solutions to endemic organizational

change, a company can use sense making

problems. And most companies find it

as a means to remain strategically agile

easier to deal with glitches in the system and nimble.

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Design Thinking Approach 03

Sense making

The design thinking approach to sense

Sense making can be a one-time or continu-

making is both agile and adaptive unto

ous effort to understand connections and

itself. It employs a broad range of “senses”

insights in any particular context in order to and various techniques to identify, collect, anticipate their impacts and then act effec-question, and interpret the meaning of

tively on them. Quite literally about making increasingly complex situations. As unex-sense of what’s going on, sense making

pected events continue to cause disrup-

takes an obscure situation that is clouded tion and threaten prosperity, companies in uncertainty and complexity and makes

must endure change to survive. A plan is it more understandable for decision mak-needed—not just as a reaction to change, ers. Here, neither the frame nor the data

but also in anticipation of it. It is important are locked into place. The frame informs

to realize that you will need to apply other the data, and the data, in turn, inform the design thinking tools and techniques to frame. Sense making is more than just a

change as well. You will need to recognize process; it’s a mind-set that is instrumen-where you are today, where you want to

tal in the commitment to understanding,

be in the future, and what it will take to learning, and improvement. Once we have a

make that transition. Sense making is a better idea of what is going on in our world required capability for developing change through sense making, we will be more

competency.

equipped to apply our other capabilities of visioning, imagining, and connecting.

I N T R O D U C I N G T H E D E S I G N T H I N K I N G M B A

— 111

A plan is needed—

not just as a

reaction to change,

but also in

anticipation of it.

In business contexts, the design thinking

Karl Weick, the organizational psychologist approach to sense making tends to lean

and father of sense making, described the

toward the qualitative, rather than the quan-process as “structuring the unknown [by]

titative, side of signal processing. Design placing stimuli into some kind of framework thinking employs sense-making techniques

[that enables us] to comprehend, under-

to understand, question, and confront

stand, explain, attribute, extrapolate and change so that businesses can actively

predict.”

construct, rather than be passive victims, of the imminent. Seeking out the social, tech-This activity begins by encouraging and

nological, economic, environmental, and

developing a heightened state of awareness political drivers and conditions that shape and turning up every level of sensitivity. This the behaviors, values, and motivations of

may come more naturally to some than to

people and organizations, sense making

others, but it can be nurtured through new inspires teams to pursue new questions

relationships and by establishing dialogues rather than lock on to simple, often old

with unconventional sources and networks

answers.

operating beyond the business core.

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FROM SENSING TO SENSE MAKING

explanations for phenomena. Ultimately,

it doesn’t solve. It widens the scope of

From the ever-shifting external market

awareness so that the status quo can be

conditions that threaten to redefine

questioned and revised.

demand, to the people, processes, values,

and beliefs that continue to shape what,

Sense making is the process by which

why, and how companies work from within,

design thinkers understand experience. It

businesses are complex organizations that

can be used to learn about a sudden shift

must remain sensitive and agile to change.

in markets, value migration between indus-

Design thinking uses sensing techniques

tries, emerging behaviors associated with

to look for explanations and answers in

disruptive technologies, or the reason why terms of how people see things and their

a previously successful business model

interrelationships. Sense making suggests

expired and needs a redesign. To do this,

that organizational issues—“strategies,”

the process of analyzing inputs—such as

“breakpoints,” “mental-models,” “goals,”

consumer insights, foresight weak signals,

“aspirations,” “core capabilities,” “teams,”

business objectives, competitive analysis, and so on are not things that one can find and so on—requires moving back and forth

out in the world or that exist in the organi-from the simple to the complex. Then you

zation. Rather, their source is people’s way go back again to challenge assumptions

of thinking.

and identify new knowledge, perspectives,

and appreciations for conditions.

Externally, sensing means understanding

consumers and culture, not data-driven

Sense making is as much about pattern

markets, so that even the minutest of

recognition as it is about anomaly detec-

signals of change can be evaluated before

tion. Although discovering outliers through they become sizable shifts. Internally, sens-an expansive outlook is useful, sometimes

ing involves qualitative, people-centered

the outcomes reveal trends or trajectories inquiry: understanding the meanings sur-that can be leveraged in the innovation

rounding the rules, practices, relationships, process through one key ingredient: timing.

technologies, and contexts that define us

Timing is a critical factor in any innovation as people. Because these are fluid and re-pipeline. Through sense making, organiza-

quire some intuitive read on their trajectory, tions can get a better sense of the timing sensing requires being open to and thriving required to design and launch a new

in ambiguity, not seeking hard data point

product or service.

I N T R O D U C I N G T H E D E S I G N T H I N K I N G M B A

— 113

So, how does an organization

redesign itself in order to

incorporate an internal sense

making capability?

1/ Improve the senses to increase agility.

to encourage dialogue and collective

Design thinking promotes a more dedi-

sense making.

cated effort to adapt and acquire the tools, methods, and resources needed to sense

4/ Cultivate sensing networks.

changing behaviors. It also encourages us

Encourage cross-functional, cross-market,

to remove the filters and dogmas that limit cross-industry, and cross-cultural con-our exposure to, understanding of, and ap-

nections within professional or social

preciation for the world around us.

networks outside of your existing depart-

ment, division, organization, market,

2/ Collect the real data.

and industry context to discover what’s

Sense making requires robust inputs: deep

going on in adjacent worlds. Learn

consumer insights, weak signal scanning,

about the topics of interest, perceived

competitive analysis, soft and hard leading opportunities and threats that are being

indicators, and, of course, business per-

discussed, and the language and mental

formance metrics against which everything

models surrounding them.

else will be measured.

5/ Leverage social media.

3/ Building sensing capabilities.

Build a broader automated sensor net-

work through conversational platforms.

Empower individuals or teams in your

Identify the critical nodes and monitor

company to become sensors. Encourage

them regularly, cross-reference with

all members of your organization to collect other sources, and drill into salient

and share signals regularly. Formalize this topics as they emerge.

process and make the content accessible

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THINKING POINTS

You’ve seen all those photos of design

get romanced by looking cool. Be effective: thinkers or creative consultants surrounded Define the best way for your organization to by Post-it Notes and probably wondered

identify, organize, cluster, and prioritize the what they were doing. In many cases, it’s

information on the wall.

sense making. But sense making is about

more than using Post-it Notes.

Sense making is not a linear exercise, and it is not a process that turns information Sense making involves the process of

into insight. Sense making doesn’t always

creating mental models or mental maps

have clear starting and ending points.

that serve as memory representations

Visualization is often used interchangeably with a salient visual imagery component

with sense making, but visualization is expressed in terms of concepts, ideas,

not just a shared image with intent; it

and knowledge. They are used to explain

also implies the proactive use of shaping

events, not isolated stimuli, which helps

actions to reduce risk and uncertainty,

with connecting the dots and making

probing actions to discover system effect

decisions in complex and dynamic

implications or opportunities, and modeling environments. Every organization needs

actions that include behavioral and

to find visual, interactive, and “movable”

cognitive aspects to test and/or transform ways to organize the raw inputs of sense

the environment. Visualization is central to making that, well, make sense to it. Don’t sense making.

— 115

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Business Challenge 04

Maintaining

Relevance

All brands need to establish visibility, to an offering that is created through

purpose, meaning, and credibility to

substantial or transformational innovation.

be considered relevant in a category.

Through innovation, an organization

The expectations of consumers are rising

can elevate itself above its competitors at the same time that many brands are

and render them largely irrelevant to

becoming more resourceful and savvy at

consumers. This is quite different from gaining attention and tailoring their unique brand preference. Relevance is felt

selling propositions and reasons to believe deeper and can create a clear divide

to fit the market. But customers are

between brands.

becoming more demanding of companies to

stay relevant to their ever-changing lifestyles.

Innovating in a white space category or

Relevance is extremely difficult to maintain subcategory is imperative for market

long term. Over time, brands must rethink

success today. In virtually all categories, and redefine the value that they bring to

from beverages to computers to financial

consumers. It’s getting tougher to lock in services to air travel, marketing and

on value propositions that will truly satisfy.

product improvements rarely affect the

Value redefinition is a design approach that sales or profits of a brand because of

helps develop a new voice and meaning that habitual consumer behavior. Meaningful

will not only resonate with consumers but

changes in sales almost always relate

also sideswipe the competition.

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Design Thinking Approach 04

Value

Redefinition

Design thinking seeks relevance by pro-

The design thinking approach to redefin-

moting harmony with the identities, aspira-ing value begins with people, not prod-

tions, attitudes, beliefs, needs, and desires ucts. It seeks to locate the functional,

that shape the ways people perceive and emotional, social, and cultural values

define value. It recognizes that individual that already exist within or can be

perceptions and interpretations of value designed into a brand’s DNA and align

are constantly in flux and therefore aims to those with the current and emerging

identify the underlying forces influencing values of consumers.

this change. It aspires to develop greater empathy among people, brands, and busi-There are many ways to identify and

ness by observing, engaging with, and

interpret the shifting and relative nature listening closely to people. To do this, the of value. On the brand side of the equa-focus must be on establishing, framing, tion, being honest and authentic is the

and stimulating the right conversations best policy. Let’s face it: Brand teams

that will power up real insights that help are so immersed in their daily challenges

businesses redefine value and maintain

and their particular brand culture that

their relevance in the face of change.

they fail to see the forest for the trees.

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“Price is what

you pay. Value is

what you get.”

— Warren Buffett

Having oversubscribed to the mythology of

their brand, few of them are ready, willing, and able to admit what they can’t admit:

The soda is not refreshing; the detergent is This perception of value is shaped by

pumping toxins into the water; the mobile

factors such as personal experience,

phone is clunky; the service sucks; it’s not needs, wants, desires, and expectations.

really about convenience; and you’re noth-

In addition, inherited social cultural norms ing but a me-too innovation organization.

and the sheer force of fitting in socially influence our notion of values. But many of On the consumer side of the equation,

these inherited norms are more fluid today rigorous and empathetic human-centric

than ever before, constantly being shaped

research is the best practice. It’s simple re-and reshaped by new information, ideas,

ally, and we’ll get to it shortly: You will never relationships, and opinions that challenge truly understand how people define value of definitions of value.

products and services through online sur-

veys, consumer panels, and focus groups.

In setting out to manage customer value,

you may grapple first with the concept of

There is a complex and dynamic suite

how customers perceive value and how

of factors that combine to influence our

they are influenced by marketing or pre-

notion of value. We associate value with

conception or how technology or emerging

the satisfaction or fulfillment of a need.

behavior trends are shaping how value is

That is, value is associated with a product, defined and delivered. Customer value is

service, system, artifact, or relationship at the core of any competitive strategy and that provides a means to a desired end.

is often least managed, often resulting

From another perspective, value is linked to in individual marketing, brand, product

actualization. Something is valuable when it development, and pricing decisions being

serves a meaningful purpose and provides

made rather than a conscious strategic and a benefit that equals or outweighs its cost.

design exercise being undertaken.

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Here’s a starting point to clarify

how customers perceive and define

the value of your brand or business:

01/ Identify the functional, social, cultural, 05/ Conduct a workshop to identify op-and historical reasons that have driven

portunities to redefine value ahead of the value for your brand, product, or business.

game on those dimensions that have the

How has it been meaningful before, and

largest gap between how they are being

why? Now, compare that to today and

served and what their needs are.

identify the drivers and intensity of those changes.

06/ Design and conduct a participative design session in which you invite customers 02/ Determine how your key customers to talk about these dimensions to validate rate you versus competitors on these value your assumptions and allow them to co-drivers. Represent these value drivers

create new value combinations.

through visual mapping to illustrate the differences between key segments.

07/Analyze the results and conduct a value-mapping workshop to explore how to

03/Define and articulate each of these redefine value to change the competitive

value drivers in the context of the users.

landscape. The success of Ikea, Netflix,

Zipcar, Nintendo, Amazon.com, Salesforce

04/ Identify the rate of change on each of

.com, Zappos, and EasyJet are all classic these dimensions and look for signals to

examples of companies that have been

confirm which ones are slowing down and

successful in redefining customer value to which ones are accelerating.

change the game.

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THINKING POINTS

What is our current understanding of

rHow can you solve my problem anytime,

customer value? Have the top three attri-anyplace? Value here is defined by your

butes valued by customers been validated high degree of readiness and accessibility, recently? Which of them are still relevant, and even the customer is expecting to pay

and which ones are definitely not? Consider for the extra cost. Focus on the service,

the following nonexhaustive attributes

reliability, and experience and define

when thinking about customer value.

your market based on how availability is

important for those segments.

r How can you solve my problem quickly?

Value is based on the simplest, cheapest,

rHow can you solve a problem for me

and most effective ways to solve a

that I don’t want to know about? Value

customer problem or complete a job.

here is defined by how you can eliminate

Focus on those three that will help you to some of your customer’s problems with

secure a strong position.

as little involvement as possible from the customer. Focus on how you can help

rHow can you solve my problem the way I

them handle those parts of the tasks that

want it? Value is based on a high degree

most people would rather not have to deal

of personalized preferences and is not a

with or even hear about.

one-solution-fits-all scenario.

rHow can you solve a problem that I don’t

r'PDVTPODVTUPNJ[BUJPOBOEIFMQJOH

even know I have? Value here is driven by

customers see that their problem and

your supreme leadership in any domain.

your solution are somewhat unique and

Your customer will believe whatever you

that you are ready to tackle any kind of

communicate and will trust that you

problem within a certain domain.

are thinking ahead and can anticipate

problems throughout a job.

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Business Challenge 05

Extreme

Competition

So much shareholder value has been

If business decisions and their tactical

destroyed in the past 10 years as a result approaches were made through purely

of mismanagement, poor strategic deci-

logical and analytical means, our world

sion making, and an inability to react to would look very different. We would arrive disruptive innovation or extreme competi-at solutions optimized for efficiency.

tion. Traditional competitive strategy often Competition would be reduced down to

leads to further commoditization. Look

highly predictable shifts. And consumers

at almost any industry, and you will find would see all the world’s products and

companies struggling to differentiate what services as interchangeable commodities.

they have to offer from everything else in the marketplace. Differentiation needs to But competition in business is not shaped

be relevant and meaningful, so it’s hardly by objectivity. It’s shaped by creativity

surprising that one of the most common

and innovation that accelerates change

complaints from senior executives is: “My and drives differentiation. This makes

product is becoming commoditized, and

conducting business less like tic-tac-toe

the pace of commoditization is accelerat-and more like chess, where, despite the

ing. What should I do?”

availability of known moves and patterns

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— 127

of behaviors, the best business leaders

are suffering—or unknowingly preparing

deviate from the most common paths and

to suffer—from a lack of differentiation.

take new avenues toward victory.

When all you have is another hotel

Today, navigating those paths is more

brand, energy drink, luxury purse,

challenging than ever, thanks, in large

smartphone, or hybrid car, what do you

part, to overcommoditization. Although

do? The answer might be experience

some products and brands stand apart

design. Innovating through experience

from the crowd because of key factors

design offers companies a high degree

such as craftsmanship, quality, heritage,

of differentiation in some of the

and long-standing semiotics of value, the

most ubiquitous product and service

majority of products and brands out there

categories.

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Design Thinking Approach 05

Experience

Design

Experience design is a holistic and

Experience design is an established set

multidisciplinary approach to creating

of design thinking practices that, when

meaningful contexts of interaction and

performed properly, can enchant customers

exchange among users and products,

and create a sense of loyalty that will keep services, systems, and spaces. It

them keep coming back to you every time.

considers the sensation of interactions By maximizing each and every dimension

with a product or service on physical and of an experience at every stage in, for

cognitive levels. The boundaries of an

example, a shopping experience—discovery,

experience can be expansive and include interaction, departure, and postdeparture—

the sensorial, symbolic, temporal, and

it considers how customers engage with a

spatial. It can include tangible customer product, service, or brand in order to set value as well as emotional value. It’s

the stage for something truly different,

not just about interface, usability, or special, and even magical.

customer service flow. It’s about the word:

experience.

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“Focus on the journey,

not the destination.

Joy is found not in

finishing an activity but

in doing it.”

– Greg Anderson

To set this stage, organizations must

With increasing competition across multiple consider and evaluate not only how a

categories, the distance between one

product or service functions but also

brand’s price, features, and design and

how it communicates meaning and

another’s is becoming shorter and shorter.

intent. Experience design highlights

Intuitively, however, most of us know the

the importance of developing a clear

difference between Tom’s Shoes and

understanding of consumer needs,

Converse, United and Southwest, Target

cultures, expectations, assumptions, and

and Walmart, Taco Bell and Chipotle, and

capacities. How an experience speaks to

Dodge and Mercedes-Benz because we have

consumers will ultimately determine how

experienced one or both.

one product or service feels different from another.

Design thinking seeks to explore the wiggle room between brands like these and

Design thinkers critically observe and

transform it into a competitive chasm. When evaluate the various experiences they

that difference is or might be emotional,

encounter throughout their day and reflect design thinkers ask: When does the value

on how one may differ from another by

of a product exceed its functional value? At asking, What makes a better experience,

what point does emotive value reach a point and why? In fact, most of us do this on

of diminishing return? What is the value of some level every day, especially those of

the emotive premium? Should there be an

us who share our experiences with others

emotive premium at all? Can we engineer

in a highly opinionated, social media–

emotive elements into the design without

driven world.

adding cost?

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The answers to these questions lie

Learning experiences. Can your brand, buried in the nature of experience.

your stores, or your online property shape All experiences are functional, social,

learning and mastery, where your customers cultural, and personal. They are important, have access to experiences that make them

relevant, and meaningful to people.

smarter, faster, stronger, or better?

They have a past, present, and even a

future subject to reflection and reflexivity.

Meaningful experiences. Beyond social and To communicate and reinforce a value

learning, how else can you give your custom-proposition, they need to be thoughtfully

ers the opportunity to experience greater

facilitated through the purposeful design

meaning in their lives through your brand? If of brands, products, services, interfaces, your first instinct is to jump to cause market-and interactions.

ing, think again. You need to do more than increase impressions by giving away money.

How?

Geeky experiences. Who doesn’t love to Social experiences. Social is about more geek out on what they love? In the design of than Facebook and Pinterest, okay? How

stores, for example, consider the immediate can you make your brand more social? Can

expression of experience that walking into you connect people? Can you help forge

an All Saints store with their sewing ma-

meaningful relationships? Could your stores chines in the window does for apparel geeks be redesigned to transform them into more

or the huge digital displays at Burberry do for social spaces?

fashion fanatics who want to feel the runway.

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UNDERSTANDING THE FOUR KEY DIMENSIONS OF EXPERIENCE DESIGN

Because human experience is multidimensional so, too, is the design thinking approach to it. Here are four ways to get started: 1/ Determine the scope of the

3/ Identify the key experience triggers.

experience.

Experiences are triggered by stimuli that

Decide on a starting point and an end

elicit recognition. These could include visu-point. You can expand boundaries, but you

als, symbols, photographs, videos, smells, need to have them at the beginning. With

and sound. Experience designers need to

scope comes the breadth of interactions in consider what combinations of these are

store, marketing, digital, and beyond. Where the triggers for brand recognition and how to and why do you want to or need to engage

use them to support delivery.

customers?

4/ Deepen the customer’s engagement

2/ Understand the intensity

to evoke meanings.

of experience.

Experience design achieves the highest im-

Some experiences are simply a routine

pact when it evokes meanings. Sometimes

way to get something done quickly and

these are distant from the product or

effortlessly. Some are complex, intense,

service, but when executed authentically

and highly emotive. You need to analyze

(meaning it’s a part of your business cul-

and prioritize your effort based on those

ture), they become very close to the brand.

parts of the experience that are both

At the center of meanings are core values.

highly rational and emotive. That’s where

If you can express them well, customers will the intensity is high, as well as the stakes.

subscribe to them.

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THINKING POINTS

You may not have a customer experience

Customer journey mapping succeeds when

strategy, but you have a customer

these exercises are based on ethnographic

experience regardless of whether you

research and contextual inquiry that allow create it consciously. Every company

researchers to experience and perceive the provides a customer experience. You may

emotions of customers, thereby making it

not have total control over that experience, possible for managers to convey more than

but there are always opportunities to make just anecdotal quotations. The outcome

it emotive and memorable and to make

of the exercise shows how customers feel

it work for you. So how can you design

throughout their journey, and customer

an emotional experience? The implicit

journey maps invite stakeholders to enter

problem is knowing what will work or not

the world of customers and share in their

work in terms of emotional engagement

experience. In turn, stakeholders are better and economic and operational feasibility.

able to convey their story to management

It begins with using customer journey

and frontline employees. This should be the mapping to visually illustrate an individual starting point for your experience design.

customer’s needs and goals, the series

of interactions and information necessary

to fulfi ll those needs, and the resulting emotional states a customer experiences

throughout the entire process.

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Business Challenge 06

Standardization

Standardization is a necessary cost

rule-driven workflows, and automate

driver for every company. It is a means repetitive tasks. It makes sense not to

to achieve operational, cost, and per-

reinvent the wheel every time you need to

formance efficiencies by streamlining

go for a drive. Regardless of the reasons

activities, leveraging technologies, and for pursuing it, however, the race for

maintaining employee workflow to reduce standardization can come at a serious and

operating costs. But standardizing prac-often unforeseen expense.

tices can mean losing the personal touch, reducing the choices customers have, and Like companies, many people prefer

disconnecting employees. This is the bal-efficiency to inefficiency. We like reliability.

ancing act every company must master:

We like consistency. And we like to do

How do you stay lean, mean, and efficient things well and quickly. But we also like

while maintaining the human qualities that a degree of feeling in what we do. When

will ultimately endear you to people?

a company’s primary focus is on making

standardization its priority, it can lose

To streamline operations and be as

sight of the emotional quotient of its

profitably productive as possible, every

brand and alienate consumers. Here,

company seeks to better leverage the

for example, a standardization of market

powers of enterprise technology, design

research practices can fail to see real

I N T R O D U C I N G T H E D E S I G N T H I N K I N G M B A

— 137

human needs, a standardization of product

your LinkedIn page. Standardization can

design practices can get sucked into

make internal processes more efficient and looking no further than today’s coolest

effective. It can clearly establish common feature, a standardization of segmentation goals of performance that every employee

can miss valuable opportunities to serve

must meet. It can provide common

the underserved, and an internal mandate

platforms that make a supply chain run

for standardization can take some

faster and cheaper. And it can be a rallying stakeholders’ eyes off the real prize of

cry for product departments to make life

today: a customer-centric culture.

simpler and more pleasant for consumers

through the simplicity of design. Or it can’t.

Contrary to what some design-minded

authors will tell you, this critique of

One of the most common challenges

standardization is not based on a belief that that clients in industries from consumer

companies that value sameness will be less packaged goods to technology raise with

successful in innovation than companies

my teams when we are scoping out a

that value difference. Like people,

project is that no matter how great an

companies are complex creatures, each with insight or idea might be, it will ultimately its own history, qualities, and characteristics be subjected to company standards. In

that, when it comes to innovation, cannot

some cases, the standardization of legacy

be reduced down to the kind of Top Ten

manufacturing poses a big challenge to

Ways list that proliferates at the lead of innovation.

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How do you maintain

operational efficiencies

without sacrificing

innovation opportunities

and the human lens

through which they will

ultimately be identified?

Although every good consulting firm worth

value of an insight that they believe could its billable hours understands that it’s

be leveraged to create real competitive

going to be a very long, uphill battle to get differentiation for a client. But when the a company that sells circles to consider

client’s market research department

squares, clients—particularly in the world of has such a fixed and highly rigid way of

packaged food—are often quick to point out approaching, thinking about, and talking

how their company’s innovation capabilities about customers and how it identifies

are restricted by factors such as size,

their so-called needs using words such as

shape, and ingredients. We all know why

target, segment, actionable, and the worst the machines were made the way they were

ever, reason to believe, standardization made 20 or 30 years ago—efficiency—but

becomes the enemy of innovation. It

that shouldn’t stop us from considering a

restricts vision. It dampens empathy. And

day where squares sell more than circles

it ultimately causes companies to miss out because consumers need or want them.

on potentially transformative opportunities.

Here, the standardization of the past can

restrict the opportunities of the future.

The balancing act of standardization

is a difficult one: How do you maintain

In other cases, we deploy anthropologists

operational efficiencies without sacrificing to perform contextual inquiries and they

innovation opportunities and the human

use the simplest, most concise, and most

lens through which they will ultimately be engaging language to communicate the

identified?

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Design Thinking Approach 06

Humanization

Great design refutes standardization in

in order to give everyone what they need.

favor of the gentler, more human, and more Similarly, products, services, and business emotional aspects of customer experience.

models naturally detach from the softer side It’s the joy, pathos, laughter, and anxiety of life to operate efficiently. But ultimately, found in each can of soda, user interface, customers don’t care about the operations

and public transit terminal that customers behind their favorite coffee brand; they care might not be able to openly describe but

about the exhilaration they feel when they nonetheless deeply feel. Design thinkers

have a cup of coffee in their hands.

are sensitive to the human touch points that encourage and foster such emotions as pro-Design thinkers remind businesses that they found moments of attachment to a product,

are ultimately responding to human values, service, or brand.

beliefs, and needs. They understand that efficiency and standardization will always have The lack of humanization in experiences is a place in business processes but recognize not always purposeful but rather naturally that it’s the human touch points that reso-occurs as standardization takes hold. A physi-nate most in real-life customer experience cian who treats scores of injured patients dur-to give products, services, and brands true ing an emergency must detach from emotion

value and meaning.

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HUMANIZATION FROM AND WITHIN CULTURE

the barista, the coffee connoisseur, and

the housewife who wants her special treat

Great design is only as good as its ability when the kids take their nap. So many

to connect and forge relationships with the emotions and contexts define the coffee

people who ultimately use it. This means

experience. Design thinkers unpack each

that the first task of great design is to

coffee context in search of humanization

understand the cultural touch points to

opportunities. From this, a more holistic

humanization that make such relationships

picture of drinking coffee in the real world possible.

emerges—defining what coffee means to

consumers in their everyday lives. More

Culture is the shared values, beliefs, and culturally relevant designs ensue, providing performances that define a group of people brands meaningful customer interactions

and their behaviors. Without a thorough

that stand the test of time.

understanding of culture, businesses cannot understand the human emotions that either

Humanization doesn’t just come from

make or break customer experiences. As a

culture; it is also produced from within

valuable tool in design thinking, culture is a cultures. Designers, like the businesses

springboard for unpacking opportunities for they work for, are people who impart

humanization in design.

social values and beliefs on the things

they produce. Design thinkers seek to

Understanding culture means unpacking all

understand the cultures not only of others the social meanings (and emotions) that

but also of themselves, recognizing that

define a particular customer’s experience.

their own emotions, practices, and belief

For example, drinking coffee can involve

systems inform what, how, and why they

the emotions associated with enjoying that do what they do. To balance this, design

wistful first cup on a foggy Saturday morn-thinkers encourage a dialogue between

ing, recovering from a college all-night study everyone in the product or service ecosys-party, or kicking back for an after-dinner tem by consulting with the company, their

“release” after overindulging at a favorite partners, brand representatives, and end

restaurant. It is a unit of cultural capital for customers.

142 —

“The essence of being

human is that one does

not seek perfection.”

—George Orwell

I N T R O D U C I N G T H E D E S I G N T H I N K I N G M B A

— 143

HUMANIZING THROUGH LANGUAGE

If all businesses are human enterprises

that produce things made for human

Consider the language that most

beings, it’s time to start humanizing the

businesspeople use today: target, driving business narrative. Design thinking seeks

performance, leveraging outcomes,

to reinsert human-centered qualities

actionable, and other taglines that make that can introduce new meaning. This

managers feel like they’re in some kind

means using real talk about the personal

of special ops group. Here, the language

histories, dreams, and desires that define of power, pragmatism, and predictability

each worker, team, business unit, and

creates the illusion that businesses are

office to produce human narratives of

machines. They’re not. Businesses are

company culture that resonate worldwide.

organizational cultures filled with human

Remember: Each worker isn’t a cog in the

beings who define and attach value to what wheel. The suit that goes to work also

they do every day. And, oh yeah, they are

goes home. It’s worn by a person with

also organizational cultures that should be a meaningful life—and that’s a valuable

fulfilling human needs.

brand story of not just what a company

does but who a company is: its people.

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— 145

THINKING POINTS

One route to greater humanization is

Humanization can be leveraged by usability, reassessing how your organization does

human factors, customer experience

research on consumers and talks about

design, and brand storytelling. All

or represents them. On the research

customers, employees, and their friends

front, consider hiring people who are

are part of your story network and can all specialists in human culture: sociologists, be part of your humanization design; if

anthropologists, and other social scientists you let them bring their humanity to your

who specialize in understanding us without brand or organization, they’ll also bring your putting us in focus group facilities and

brand into their networks and their lives.

looking at tracking studies. On the talking Brands that have been humanized attract

and representation front, remember

and sustain communities of real live people that language structures all cultures;

and make customers more forgiving when

organizations that talk about targets and organizations make mistakes.

segments distance themselves from people with every utterance.

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Business Challenge 07

Creative Culture

Big or small, many companies fall into the Creativity cannot be taught. Some compa-trap of trying to innovate the “right” way.

nies run occasional creative workshops

By spending so much time, energy, and

with designers; hold creative events

resources on getting it right and avoiding featuring artists, architects, or chefs; and failure, not enough time, energy, and re-encourage creative projects on company

sources are dedicated to playful, experimen-time hoping this will promote it among em-

tal creation.

ployees so that they come up with more

innovative solutions in their daily work.

Innovative cultures are creative cultures.

Others companies, such as Pixar, whose

Few of us would disagree that those compa-

Pixar University runs more than 100 courses nies that innovate well have some degree of on everything from improv to cooking to

creativity in their DNA. But having a creative self-defense, nurture the creativity of

culture is not about a workplace that’s filled employees as an ongoing, in-house initia-with funky chairs, table tennis games, a

tive that supports a macro organizational

video game zone, or Post-it Notes. It’s about attitude. For those who do it well, however, recognizing, even celebrating, uncertainty the creative capital of teams and compa-and ambiguity from the get-go and applying nies is earned only through experiences

your passion and skills—whether they live

of trial, error, and occasional failure. Here, in the right or left side of the brain—to

the name of the game is experimentation,

come up with ideas, find solutions, and

and when done well, it nourishes a culture solve problems in new and strategic ways.

of curiosity and excitement.

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— 149

Because most companies are run by the

an influence of the environment on the

numbers and tend to be very risk-averse,

judgment of creativity, they suggest that

the attitude toward creativity in those

the relationship between people and the

whose bottom line is not connected to a

environment is like that between investors creative output (such as animation) tends

and a stock market. Here, creative people

to be very narrow when it comes to the

are like good investors who buy low and

softer, fuzzier, warmer side of innovation.

sell high. Innovative ideas might not be

In fact, many such companies are actually

considered by the market to be creative

fearful of creativity, thinking it’s a plague at first, but these people try their best to against efficiency. They’re wrong.

change that judgment in order to sell high.

Once the market has been convinced of

If an organization’s culture is not engi-

the creative value of the idea or product, neered or nurtured to truly be innovative

these people move on to the next idea

and to take risks, it will surely fall victim that will, not surprisingly, be unappreciated to competitors that are more tolerant of

at first. Why are these people so creative or driven by creative experimentation. In a and so tenacious? According to Sternberg

business age fueled by how well new ideas

and Lubart, they are able to draw on six

do in the face of intense competition and

resources that are critical to cultivating overstandardization, creativity and design creativity: intelligence, knowledge, thinking thinking need to be the centerpiece of any styles, personality, motivation, and the

company.

environment.

In 1995’s Defying the Crowd: Cultivating These are the raw ingredients for building Creativity in a Culture of Conformity, a creative culture. Design thinking offers American psychologists Robert Sternberg

many ways to help a company develop

and Todd Lubart argue that “People are

such a culture, but the one that stands

not born creative; rather, creativity can be out the most—that encourages trial, error, developed.” Putting forward their invest-experimentation, and creative play—is rapid ment theory of creativity, which describes prototyping.

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Design Thinking Approach 07

Rapid

Prototyping

Rapid prototyping is an iterative learning Most businesspeople are familiar with the

process that acquires and expresses

“fail fast, fail cheap, and fail early” concept.

increasingly complex information of higher Design thinking suggests another dimension fidelity over time through repetitive and

to this rule: “Learn fast, learn cheap, and cumulative cycles of build, test, see, and learn early.” Prototyping is the way to open refine. Prototypes are traditionally used

up that dimension; it’s a relatively low-cost, in design and engineering environments,

hands-on activity that helps bring people on but when they become integral to other

to the same conceptual page, uncover new

organizational cultures, they serve to

knowledge, and identify and mitigate design develop a creative mind-set that is able to and development risks early on. This is

effectively focus on imagining, socializing, done to avoid downstream costs while also

and testing any idea, including work

building up critical assets for the internal and processes, team structures, business

external communication and socialization

models, and, of course, products and

of ideas. As part of the hands-on approach, services. Because every output of design

prototyping typically seeks to involve and thinking begins as a prototype, think

engage multiple stakeholders and so-called of them as part of a culture and not

end users as participants at every stage of specifically as a tool.

iteration, from paper to final production.

— 151

Prototyping is a currency for creative

“You may never know

dialogue. It embraces play behaviors as

a critical component of imagination and

what results come of

ideation. By creating multiple feedback loops through employee-to-employee iterations

your action, but if you do

and employee-to-user testing and refinement of illustrations, models, or product and

service mock-ups, it is a way to produce new nothing there will be no

knowledge and make ambiguous concepts

more tangible. The concept is quite simple: result.”

It’s much easier for people to articulate

what they want by playing with prototypes

— Mahatma Gandhi

than by enumerating business requirements

in Excel or PowerPoint. Given that almost

every organization claims it wants to design a more agile process for faster product

development, it’s shocking how few of

them utilize rapid prototyping as a way to accelerate learning and speed up feedback

loops that can assess potential implications and generate shared mental models of the

business problem.

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THE BENEFITS OF PROTOTYPING IN BUSINESS DESIGN

01/ Increase team ownership.

04/ Promote cross-functional collaboration.

Rapid prototypes can ensure that all those Prototyping facilitates social bonds among leading or affected by changes to a company employees who may not have the chance

are involved in understanding and perhaps

to interact and empathize with one another.

even shaping the future in a context that

The experiences, artifacts, and stories that comes to life in a more tangible way.

emerge from prototyping become a part of

that group’s shared narrative, which can

02/ See the possibilities.

be passed down and transmitted to others

Rapid prototypes expose potential solutions, within the organization. In addition, the

obstacles, and unanticipated outcomes

bonds that form among employees engaged

of an idea. By bringing everyone on to the in co-creative activities increase relation-same page to discuss and develop solu-

ships by reducing assumptions, stigmas,

tions, they create a shared understanding of and other barriers to communication.

a current vision or a future state.

05/ Improve visibility and predictability.

03/ Deepen insight.

Rapid prototypes provide a blueprint for

Rapid prototypes let you see the big picture change that can be as detailed as needed,

without losing sight of the details. By utiliz-leading to a clear future state with concrete ing them in context with both stakeholders milestones and transparent progress.

and potential users, teams are able to

Whether it’s about designing a product, a

better identify the kind of usability issues, service, or a new way to work within a com-workarounds, gaps, brand connections, and

pany, this results in increased predictability.

opportunity extensions that drive develop-

ment and refinement.

— 153

BUILDING, FOSTERING, AND EMBEDDING

CREATIVE CONFIDENCE

It is important for leaders to support

a culture of prototyping with the right

Prototyping plays an important role in

resources for creating, for example, dirty developing a more engaged and creative

spaces—workshops or labs for making

organizational culture by encouraging

stuff with simple tools and basic materials people to bring their ideas to life in a

such as paper, markers, foam, clay,

more tangible way. This makes it easier to cardboard, tape, and even computer-aided

share ideas with others and to leverage

design (CAD) software or 3-D printers.

feedback to make improvements upon

There’s no need to invest a lot of money;

them. Encouraging and enabling aspects

just demonstrate a commitment to

of prototyping across an organization can

prototyping and a willingness to encourage help foster a more creative culture that is and support it in a tangible way. In addition, more comfortable, confident, and capable

training sessions that introduce specific

in its ability to propose, explore, and learn techniques and processes can be adopted

about innovative solutions to problems and to help improve existing skill sets and the opportunities.

quality of the prototypes.

154 —

THINKING POINTS

Remember the excitement of show-and-tell

when you were a kid? Or the thrill of story time? Prototyping can bring that magic

back and facilitate the kind of dialogue

and learning among employees that is

sometimes lost. By promoting prototyping

events where employees can showcase

and share their work and ideas, companies

will learn to work better and move faster

to take advantage of new and disruptive

opportunities.

Everyone can participate in rapid

prototyping. You don’t need to be creative.

You need to be willing to try—sketch, draw, cartoon, map, make, and show. However

rough and raw the prototype might be, every employee can get an idea down on paper to

share and develop an idea.

— 155

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Business Challenge 08

Strategy and

Organization

Not every company needs to make radical

transformation in critical. This is where

changes to its core business, but when

design thinking comes into play.

the case for change is desperately obvi-

ous, it’s desperately obvious. Consider the New disruptive business designs often

cases of Kodak, Sony, Palm, and GM: In

leverage new and emerging technologies.

each case, a business model redesign of

Through creative and innovative approaches, structures, systems, cultures, and capa-many organizations make large shifts

bilities was driven by strategic innovation toward capital-light business models

in order to play a new game.

through a variety of means, including the

adoption of open source technologies,

In cases like these, such transformations

the development of strategic alliances,

may include strategic decisions to move

or a reconfiguration of their role in the

upmarket, move downmarket, or shift from

value chains. Designing a capital-light or products to services and solutions. When

capital-efficient business model is in the the pace of commoditization continues

best interests of shareholders and can po-

to accelerate or the industry’s boundar-

tentially add real value and a remedy

ies open up for new entrants, this type of to stagnation.

I N T R O D U C I N G T H E D E S I G N T H I N K I N G M B A

— 157

Companies need to

find a future that they

can play a key role in

to create value.

Increased disruption and the volatility of team or with the help of consultants, most many business environments can make

leaders hedge their bets by relying on

strategic planning a demoralizing exercise specialized planning departments run with

among executives who realize they must

elaborate data systems that do little more attempt to shape a future that is never

than further embed old assumptions or

truly known or under their control. Tasked organizational dogmas.

with managing today’s business activi-

ties and cash flow, most get trapped in

Because imagination and creativity have

calendars not designed to enable them to

little or no place in the formal planning

be flexible enough to deal with tomorrow’s process, operational improvements

changes in the marketplace.

usually take center stage because the

benefits of them are easily quantifiable

Leaders and executives are often ex-

and can be benchmarked. As time goes

pected to have visionary capabilities, able by, however, many companies forget that

to see into the future and deliver a coher-there is a limit to the extent to which

ent strategy for their company. This is a

continual operations improvements can

dangerous approach to strategic planning

sustain growth. Instead of all these small because what happens if and when that

and ongoing tweaks, companies need to

leader or executive is wrong? Knowing this find a future that they can play a key role can and does happen rather frequently,

in to create value. To do that requires a

and whether the process occurs inside

degree of corporate imagination in busi-

the private mind of the CEO and executive

ness model design.

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Design Thinking Approach 08

Business Model

Design

There are plenty of myths around business Costco, and ING. A good business model is model innovation, and it is often used

also hard to replicate because it requires interchangeably with business strategy

interlocking components.

and business design. There are two

reasons for its rise in popularity: (1) the Some business models are more powerful

proliferation of new technologies that

than others. Their robustness depends on

gain consumer acceptance but a company

how value creation is matched with value

fails to figure out a way to make money capture. To innovate a company’s business

from them and (2) the intensification of model, one must first understand how

interindustry competition as well as rapid the previous model was defined and then

emergence of disruptive challengers.

examine what options and paths exist

In strategy, the highest form of value

for improvement in the future. The aim is

creation comes from business model

to create models that create customer

design, and a robust business model can stickiness, loyalty, or barriers to entry for raise barriers and allow companies to

competitors. The process is transformative, sustain their competitive advantages for a complete redesign of core offerings to

decades. Think Ikea, Apple, Zara, Amazon, capture value in a new way.

I N T R O D U C I N G T H E D E S I G N T H I N K I N G M B A

— 159

“You never change

something by fighting

the existing reality. To

change something, build

Everyone knows that a successful business

model should unlock latent value from all

of a company’s assets. Even though so

a new model that makes

much has been written on the subject,

however, the term business model is poorly the existing model

understood. The fuzziness and confusion

stem from the fact that when different

obsolete.”

authors write about business models, they

are not necessarily referring to the same

— Buckminster Fuller

thing. Some are referring to parts of a

revenue model (a subscription or license

model); some, to specific processes

(a distribution model); and others, to

business strategy concepts (elements and

relationships between value chain players).

But only something that refers to the

totality of a business’s activities—not just one part—can be called a business model.

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THE FUNCTIONS AND OVERCOMPLEXITY OF

risk and operating perspective. Strategic

BUSINESS MODELS

competitive advantage is created by the

combination of strategy, culture, systems, The functions of a business model are

brands, products and services, and the

many. It should articulate a strong value

people in the organization. This in turn

proposition for some set of customers. It

creates a complex ecosystem that extends

should define the structure of the value

beyond the boundaries of the boardroom

chain and how the company’s role in it

and indeed the business units. Often, value delivers value to those customers. It should resides in these complex ecosystems and

describe the position of the company in

makes it difficult for competitors or new

the value network that links suppliers and entrants to replicate.

customers, including the identification of potential collaborators and competitors.

Many large organizations are so complex

And it should design a value flow that

that it is hard to fully understand how

illustrates where revenue will come from

they operate and how they make money.

and how it can be optimized over time.

It often seems as if they are running on

autopilot. In fact, they are being run by big These days, there is a lot of talk about

enterprise software systems, which interact how some business models are overly

with other specialized systems to form the complex or difficult to manage from a

organization’s central nervous system.

I N T R O D U C I N G T H E D E S I G N T H I N K I N G M B A

— 161

But there is inevitably a problem that arises sustainable competitive advantage. GE

when the software gets too big and too

is a good example of a company that

many systems are running. Like robots out

leverages complexity to its advantage.

of control, they can behave in unintended

In fact, research shows that there is a

ways and trigger unpredictable systems

direct correlation between the successful

behaviors. Whether software is to blame for management of complex business opera-Toyota’s recent crisis or not, its failure did tions, overall company performance, and

raise a critical question: Is software today return on capital.

so complex that it can’t be controlled?

Also, what toll will the exposure of inherent WHAT’S THE DIFFERENCE BETWEEN

bugs exact when millions of lines of codes BUSINESS MODEL AND BUSINESS

turn into tens of billions?

STRATEGY?

This question goes beyond software. Today, Organizations need to understand the

everything is too complex. Some systems,

difference between how business models

like some businesses, are too complex to

and strategies affect decision making

be allowed to fail. Policy makers worried

and performance. One question today

about the next banking or other crisis argue is whether or not a business model and

that this complexity should be avoided or

business strategy are one and the same.

eliminated through regulatory changes.

Business models were popularized when

In a sense, the idea is that dangerously

there were many start-ups that had little

complex systems can’t be relied on to

or no idea of how to create value or make

operate smoothly or even at all. Bigness is money. As such, we can see why a start-up

the implicit culprit.

can be seen as a company with a strategy

but no idea of how to make money.

Recently, there has been talk about the

collapse of complex business models.

One case in point is Twitter. For four years From an investor’s point of view there is

they’ve have a great strategy but no real

a philosophical argument about whether

business model. Three years into it,

it is better to invest in companies

Twitter hired one person whose job it is to whose business models are easy to

develop a business model, but there’s no

understand versus those that are overly

real expectation of seeing major revenue

complex. But sometimes complexity

anytime soon.

can be an advantage, often a very big

one. Companies that are successful

Any successful business model should

in leveraging advantageous complexity

operate under basic strategic principles,

and eliminating disruptive complexity

including the concepts of fit and differen-in their business strategy can enjoy a

tiation. This is an old idea made popular

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D E S I G N T H I N K I N G F O R S T R AT E G I C I N N OVAT I O N

by Harvard Business School professor

pieces of a business fit together. However, Michael Porter in the 1980s. It’s about

strategy mainly deals with competition

lining up all of your business operations

and sustaining differentiation, whereas

behind a central logic of value creation,

business models focus on the interplay

and it is the most rigorous and practical

of different elements, relationships, and

strategy concept ever developed. The fit

how value is being created, captured, and

and differentiation concepts are also unlike transferred. In short, the core focus is how business model design or business model

you make money.

innovation, which operate fuzzily around

crafting value propositions, business

02/ Business strategy includes the

activities, and a revenue model.

organizational capabilities that have a

direct impact on operational decisions

Business strategy and business model

and the organizational culture or on how

innovation diverge when we are dealing

a strategy is to be executed. A business

with radical business model innovation.

model is more about how a business

Strategy is competing within today’s defined functions in the value chain or networks.

market space and industry boundaries and

Business model execution and resource

perfecting a set of business activities that allocation decisions are mostly neglected.

differentiate you from your competitors.

Business model design is part of strategy

03/A business model has a narrow focus innovation and is essentially about

on how a company can make money by

designing business activities around

focusing on pricing strategy, strategic

tomorrow’s opportunities. Its main mission partnerships, and channel choice. All of

is to answer the following questions.

these decisions affect the top line and

have as their goal the optimization of

BUSINESS MODEL VERSUS BUSINESS

revenue or sometimes the survival of an

STRATEGY

early phase of a business. On the other

hand, business strategy deals with much

It is generally acceptable to use the terms broader and deeper issues, including

business strategy and business model capital structure, cost structure, and asset interchangeably, as long as we understand

utilization.

the subtle distinctions. Both are used to

refer to all the components and activities 04/Business models are subject to

that guide managerial decisions. There are changes in technology and competitive

four key distinctions between the two:

dynamics and are therefore constantly

subject to change themselves. On the

01/ Both describe the business system other hand, once a strategy is set, it’s all and activities that show how each of the

about the execution.

— 163

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I N T R O D U C I N G T H E D E S I G N T H I N K I N G M B A

— 165

BUSINESS MODEL DESIGN FRAMEWORK

and creative tactics. Design thinking

approaches to business model innovation

Forget what your company knows it can

may examine and seek to exploit the

already do. Instead, begin this process

latent and potential value existing within by asking what value is being created

an organization by identifying how its core today and how it aligns with established

competencies, resources, and assets

or emerging customer needs. What is the

(including intellectual property) can be

exchange of value between everyone in

leveraged in new and innovative ways.

the ecosystem? How does the current

Design thinking may seek to interpret the

system answer customer needs and create

qualities and characteristics of this latent customer surplus while generating profit?

potential, question what part of the value This purposeful linking of interdependent

chain an existing model sits within, and

activities performed by the company in

explore ways in which the organization’s

collaboration with suppliers, partners, and latent potential or untapped assets and

customers is the essence of business

resources can be realigned into a new

model design.

model.

A business model design exercise that

There has been little knowledge or practice puts the essential building blocks and their development to date devoted to this

relationships in the value chain together

important undertaking. It is as much a

makes it easier for managers to make

creative exercise as an analysis exercise.

decisions based on a better understanding

Here we provide a conceptual tool kit that of value flow and how a company makes

enables readers to design their future

money. They can adapt and fine-tune

business models and that also helps

the business model once it is working.

managers analyze and rethink their current Explicating, capturing, and visualizing a

designs so that they can be fine-tuned

business model will improve planning

for the future. It needs to begin with

and provide a common understanding

identification of emerging behavior that will among key stakeholders. From a design

affect how value is being created today and thinking perspective, business model

identification of what the drivers of chance innovation leans toward exploring new

are. What is the value exchange among key

approaches to the softer and less tangible parties involved, including everyone in the qualities such as value proposition,

activity system such as the purchasers and organizational culture, values, and core

consumers, which sometimes are different

competencies. Rather than building

parties? How does the current system

fixed assets or long-term infrastructure,

respond to customers’ needs and create

there are mountains of opportunities to

customer surplus while generating a profit be discovered through more resourceful

for the company?

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That objective is reflected in the customer value capture by codifying the overall size value proposition that is linked to an

of the pie, or the total value created in

economic logic that requires a host of

transactions, which can be considered

activities that include the engagement of

the upper limit of the firm’s value capture human, physical, and/or capital resources

potential.

of any party to the business model to serve a specific purpose toward the fulfillment of The business model design determines the

the overall objective.

company’s bargaining power based on its

strategic assets, access, and capabilities, The purposeful design of interdependent

as well as the intensity of the competition: activities performed by the company itself The greater the total value created and the or in collaboration with suppliers, partners, greater the focal firm’s bargaining power, and/or customers—is the essence of the

the greater the amount of value that the

business model design. It is basically a

focal company can appropriate. How much

design thinking undertaking; experimenting of the total value the firm actually captures, and mapping links between different

however, depends on its revenue model and

activities will provide insights into the

if there is any lock-in mechanism for the

processes that will enable the evolution

business model, such as barriers to switch.

or radical redesign of a company’s activity Business model design for an innovative

system as its competitive environment

product or service could have very different changes or the business opportunity

implications; it may not be about increasing justifies it. The purposeful design through the share or the size of the pie but about visual modeling and activities mapping

creating a new pie that has not existed

within and across firm boundaries is the

previously but that can be scaled very

context of the business model design.

quickly. The adoption curve of that new

business can impact the business model

The company’s revenue model plays an

as the business scales.

important role in the overall business

model design. It is linked to a pricing

When designing a new business model,

strategy for specific products or services.

one precondition is to re examine

The revenue model complements a

assumptions regarding what to consider

business model design, and the two cannot

core capabilities to the company and the

be separated, just as a pricing strategy

business boundaries. Strategic discussions complements a marketing strategy. They

including Who are we? What is unique

are closely linked but yet distinctive. A

about us? What businesses are we in? How

business model is geared toward total

do we differentiate? How do we create and

value creation for all parties involved. It lays capture value? and What is our operating

the foundations for the focal company’s

model? Many value chain activities are

— 167

based on transactions only, and when

value chain the company should choose

design thinking is applied in business

to participate. But in design thinking,

model design, we need to be creative and

we start from the emerging customer

look at what existing and new activities

needs and use that to map customer

should be considered for higher value.

value clusters. Based on those cluster

High value activities are the activities

scenarios, we examine what value systems

that either generate revenue directly or

are not being fulfilled today. Each of those indirectly enable you to generate revenue.

then provides relevant differentiation and Unfortunately, many of the activities that sustaining market power. With that ideal

companies perform are not high value

state in mind, we can look at how existing but taking the same level of energy and

capabilities can deliver against those

resources to maintain operations.

activities.

STARTING WITH THE CONCEPT METAPHOR

In the process of designing the value

delivery system, businesses also need to

To use design thinking for business model

seek to identify which role—or position

innovation, we need to start with the

in the chain they currently occupy or

right conceptual metaphors to aid in the

would like to occupy—can potentially be

exploration of an organization’s latent

eliminated or outsourced to a vendor

potential in relation to new and innovative to lessen capital investment, especially

business models. In the traditional world

in times of scarce resources. This can

of business education this exercise would

often reduce organizational burdens while

start from the value chain and apply the

simultaneously opening paths toward

concept of fit to decide in what part of the innovation.

168 —

— 169

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OU’RE HEARING

T Y

WHA

This is where you

can apply real design

thinking to real subjects.

UNDERNEATH THE SURFACE

Get your pencils out and

your thinking caps on.

I N T R O D U C I N G T H E D E S I G N T H I N K I N G M B A

— 171

WHA

T YOU’RE SEEING

What are the emerging behaviors

that can potentially affect the value

creating activities system today?

UNMET NEEDS

What are the current

WHAT YOU’VE IGNORED

(THAT MAY ACTUALLY BE RELEVANT)

unmet needs of customers

in a particular category,

and how will each of

these be affected by these

emerging behaviors?

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How does each segment define value,

and are those definitions aligned with

what the company thinks?

What’s important to me?

CUSTOMER ONE

CUSTOMER TWO

What do I love most?

CUSTOMER THREE

What am I paying for?

I N T R O D U C I N G T H E D E S I G N T H I N K I N G M B A

— 173

Using these definitions,

what assumptions do we make?

Identify the key gaps

and explore the reasons

behind what’s causing the

differences.

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How is value being

created and distributed

in the current state?

I N T R O D U C I N G T H E D E S I G N T H I N K I N G M B A

— 175

Is the business model based

around a single stream of

revenue or multiple streams?

What is the logic behind

these decisions?

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What are the emerging drivers

for change in customer value

systems? What is the potential

POTENTIAL

INTEGRATING

for integrating activities?

ACTIVITIES

EMERGING DRIVERS

What are the unique

value creation activities

in the system?

How is value migrating

within the system

today?

I N T R O D U C I N G T H E D E S I G N T H I N K I N G M B A

— 177

How do they all

fit together to form

the most attractive

business system?

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How does this value

creation and delivery system

compare to the current one?

Outline the distinctive

benefits of the old and the

new business models.

I N T R O D U C I N G T H E D E S I G N T H I N K I N G M B A

— 179

How would those benefits

change over the short and

medium term, and what

causes the change?

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What are the other creative

What are the underlying revenue

ways to combine capabilities

model options (for example, selling,

and assets to deliver to these

licensing, subscriptions, advertising,

value systems?

sponsorship, transaction)?

I N T R O D U C I N G T H E D E S I G N T H I N K I N G M B A

— 181

What are the other payer options?

What are the underlying purchase

Can this product be subsidized?

behaviors affecting the revenue

Are there bundling opportunities?

model decision?

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D E S I G N T H I N K I N G F O R S T R AT E G I C I N N OVAT I O N

Does our revenue

model link to our

customers’ value or

their success?

Does the business model

rely heavily on third-party

partnership to develop and

provide a revenue stream?

I N T R O D U C I N G T H E D E S I G N T H I N K I N G M B A

— 183

At what point we need

to explore changing a

business model because

of a change in revenue

source?

How will the value migration evolve

over the next three to five years?

What is the estimated life span of

this business model, and at what

point does the current business

model become invalid?

3 years

4 years

5 years

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D E S I G N T H I N K I N G F O R S T R AT E G I C I N N OVAT I O N

THINKING POINTS

The most sustainable competitive

of certainty about the future. Spreadsheets advantage lies in a robust business model

won’t provide users the ability to see the design. Although on a surface level there

entire supply and demand relationship and

are only limited business model options,

it is the reason why so many new business

companies competing using different

models fail, even though they look robust

business models can have very different

on spreadsheets and in PowerPoint.

outcomes. Analysis of business models

cannot be mechanical and needs to be

A business model redesign often requires

considered on a systems level, which often transforming organizational structures,

becomes complex. Network effects are an

processes, and culture in addition to

exogenous feature of technologies, and

capabilities. This is often a missing

a winner-take-all end result is common

consideration or an afterthought, a

among platform-based competition. Design

common cause of less successful business

thinking can be applied to visualize and

model design implementation. There is

identify the relationships and long term

a strong link between business models

implications of different business models

and organizational form and decision-

and their strengths and weaknesses.

making structure. Most unique business

When they are performed as a simple

models require the support of a unique

spreadsheet exercise there is a false sense organizational design.

— 185

186 —

— 187

190 —

— 191

It is time to demystify what strategic planning is. Those are two separate things: strategy and planning. Planning is about analysis, and strategy is about synthesis. Planning is about facts, people, processes, operations, and finance budgets, whereas strategy requires creative thinking about customer needs, core capabilities, competition, and competitive advantage. Planning is a process approach to consider probabilities of what we think is going to happen and how it will happen, rather than consideration of the possibilities of what we want to happen or what we can make happen.

Strategy is a process of continuous renewal and sense making that straddles the tension between competing for today and tomorrow; maintaining financial health and strategy health; and disrupting too much or not leveraging current core. Design thinking help leaders deal with these paradoxes and drive strategic dialogues and decisions around a new value system and tomorrow’s possibilities.

192 —

D E S I G N T H I N K I N G F O R S T R AT E G I C I N N OVAT I O N

Bill Gates is frustrated with our inability to improve the lives of the world’s extremely poor. He believes that we can do better. He speaks of a new system that ties together capitalism’s profi t motive with the power of recognition. If we fi nd “approaches that meet the needs of the poor in ways that generate profi ts and recognition for business,” he says, “we will have found a sustainable way to reduce poverty in the world.”

Gates and many other leaders believe business is the most powerful force for this global change. No other institution, including religions, governments, or nongovernmental organizations, has the resources, experience, or effi ciency to deal with the most wicked social, environmental, educational, infrastructural, health, or fi nancial challenges of today and tomorrow. To transform the world, however, business must fi rst begin by transforming itself.

W E N E E D T O C R E AT E D E S I G N T H I N K I N G C O M PA N I E S

— 193

Jack Mackey, founder and co–chief executive are doing in the world—is once again king.

officer (CEO) of Whole Foods, and his thought partner, Raj Sisodia, a business professor, wrote As this transformation gathers steam, the next in their book Conscious Capitalism that capitalism generation of businesspeople can exert great can be a force both for economic and social good.

influence and authority as they become leaders And Bill George, former CEO of Medtronic, puts it in in their fields and usher in the age of creative the book’s introduction: “Well run, values-centered capitalism—but only if they adapt and adopt ways businesses can contribute to humankind in more of doing business that fulfill our expectations for tangible ways than any other organization in positive change.

society.”

One of those ways will be to follow their intuition.

That transformation is upon us. A generation of In their seminal book A Behavioral Theory of the consumers who have grown up with the Internet Firm, organizational theorists James March and and sharing through social media expect bigger Richard Cyert argue that intuition is critical to and better things from their favorite brands.

business success. They propose that managers Richard Florida’s “creative class” wants their treat intuition as real, memory as an enemy, employers to offer them real meaning and

experience as a theory, and the self as a

purpose in their work lives. The emergence of the hypothesis. Whatever the final decision, it should B-corp has set new standards for how businesses be, in part, driven by intuition. If this is not the operate. Everyone wants ingredients and

case, then all business and strategy problems behaviors to be healthier and more sustainable.

will continue to be solved by mathematicians and And content—especially that which communicates algorithms. Design thinking teaches us to bring who you are, what you believe in, and what you intuition into the strategy process.

194 —

W E N E E D T O C R E AT E D E S I G N T H I N K I N G C O M PA N I E S

— 195

Minds are like

parachutes; they only

function when open.

—Thomas R. Dewar

Another way is for future business leaders to The Design Thinking

heed the power of the imagination. In “Theory Construction as Disciplined Imagination,”

Paradigm Change

organizational theorist Karl Weick suggests that strategists and others can increase their chances of success by stressing disciplined imagination. By discipline, he is simply referring Portfolio

instead of

Planning

to a balance to the wild side of fantasy. And Practice

instead of

Theory

by imagination, he is referring to the deliberate diversity of thought that is required to successfully Purpose

instead of

Power

formulate a problem, generate alternatives, and evaluate those alternatives. When conducted System

instead of

Objects

on an ongoing, disciplined basis, he argues that organizations will deliver better, truer results Agility

instead of

Structures

consistently. The idea is to balance logic with imagination—or teach designers to think like Fast learning

instead of

Formal education

businesspeople and businesspeople to think like designers—design thinking is the most Rebellion

instead of

Conformity

effective way to apply creative imagination to planning and strategy.

196 —

D E S I G N T H I N K I N G F O R S T R AT E G I C I N N OVAT I O N

Yet another way is to look beyond the immediate that allow inertia to build up while business ecosystems of the business world. The strategic models become outdated. This results in denial planning model used by planning is essentially rather than proactive participation in shaping the reductionist and limiting. By subdividing each future.

part of a business into subparts and having teams organized around their own constituent And finally, the most important way for future parts, managers base their success on and

business leaders to sustain performance is to develop their tactical plans to support those adapt and adopt a human lens. The Industrial options that they have identified as being the Revolution is over. The age of mass marketing is most attractive and most actionable. The end over. Even the age of globalization seems passé.

result is that thousands of PowerPoint slides are Today and tomorrow are the first days in the age circulated around the company that only speak to of kinship. We like. We share. We have friends.

the company in the company’s language. Design We link in. We invite. We endorse. We connect.

thinking can help managers think about wider Companies need to learn to do the same.

systems, interdependencies, interconnectedness, and the patterns of behavior that are emerging in a Design thinking is human-centric. It’s by humans world that will or will not eventually purchase your for humans. And its starting point might best be product based, largely, on those behaviors.

summed up by that great Charles Eames’s quote,

“Recognizing the need is the primary condition The idea of competitive advantage needs to be of design.” Now more than ever, especially in this reconsidered in today’s context. The assumption time of changes and crisis after crisis, business of sustainable competitive advantage is that it can needs a human-centered approach to create real be achieved at a steady state, and this thinking value for the people whose needs ultimately shape encourages all the wrong behaviors and reflexes the size of its profits.

— 197

198 —

D E S I G N T H I N K I N G F O R S T R AT E G I C I N N OVAT I O N

Imagine a business world shaped by intuition, Is it because our education systems have failed imagination, interdependencies, and humanity.

to produce enough businesspeople who are

Those employees, managers, and executives who creative? Is it because creative people don’t can balance and guide the data, metrics, analytics, enroll in business school? Or is it because human strategy, and planning are real examples of resources departments fail to screen and hire their Howard Gardner’s synthesizing minds. Every team candidates for creativity?

would be a multidisciplinary group made up of interdisciplinary people, or design thinkers.

In D-schools around the world, professors have little or no idea how business really works, and That’s a long way from where most companies are the students they are shepherding struggle to today. Although efficiency has been a key win of offer value to employers beyond their mechanical old-world disciplinary specialization, it has also skills. What’s the problem there? Is it because our been a curse. Organizational silos are everywhere, education systems have failed to produce enough and many companies are on autopilot mode.

designers with analytical skills? Is it because They have separated people from each other’s analytical people don’t enroll in design school?

knowledge, created vocabularies that restrict real Or is it because human resources departments communication, put a damper on collaboration, are afraid to hire creative, but qualified, people for cast creativity as crazy, and have opened the analytical positions?

door for management consultants to pour in and propagate the status quo with their data, Ironically, almost everyone in both schools spreadsheets, and PowerPoint slides.

acknowledges that students should be taught in a more interdisciplinary fashion. Business These problems are deep rooted in our school schools such as Columbia and Yale have started systems, including B-schools and D-schools. In to think differently. Columbia has set up two B-schools around the world, professors are barely cross-disciplinary areas of research and teaching, collaborating among themselves or with the one in decision and negotiation and the other outside the world of business, and the students in strategy. The same goes for some design coming out of their programs are exhibiting a schools. Parsons The New School for Design ran serious creativity deficit. What’s the problem?

an MFA in Transdisciplinary Design that applies

W E N E E D T O C R E AT E D E S I G N T H I N K I N G C O M PA N I E S

— 199

design thinking to study the intersection of cities, Our graduates will have to develop a meta-knowledge services, and ecosystems. Jamer Hunt will direct of multiple disciplines and epistemologies. They the new program to teach students to explore must learn how to purposefully and reflectively an impressive range of design problems, from integrate and synthesize different, often competing reinvigorating the public sphere to fostering perspectives in order to deepen their understanding sustainable everyday practices. These are small and effectively frame problems.

steps. We need to see more happen in scale.

Rethinking traditional academic boundaries and The challenges of the future will require

traditional functional boundaries in large companies multidisciplinary thinkers who will think first and is an important mission. We know where we need work on solutions second. Today’s layperson or to go. The challenges are monumental. But the specialist languages whether they are from the transformations are critical. Now is the time to field of business, design, and engineering cannot begin bridging the gaps between education and properly describe who these people will be and employment, between design and business, and what they will do. Ultimately, however, they will between any of the remaining us and them that be synthesists. A design thinker is basically keeps us all from working together to unleash our a synthesist, someone who possesses both

imagination of a better future.

analytical and emotional skills. This person’s job is to pull together and integrate various disciplinary ideas, information, mental models, and methods and apply them to solving big problems.

Hiring people with these skills is not enough.

Organizations need to have them built into their very DNA. If Bill Gates’s call to action is to be realized, the B-schools and D-schools of the world need to be training and equipping young people with the skills that will be required to respond to challenges that transcend specialized disciplines.

200 —

— 201

202 —

— 203

Idris Mootee is an authority in strategic innovation and applied design thinking in business strategy who has a long history of providing top executives with board-level strategic counsel and innovation guidance.

Idris is currently the chief executive officer (CEO) of Idea Couture, a global strategic innovation firm with offices in London, San Francisco, Shanghai, Toronto, Mexico City, and Dubai, where he advises clients in different sectors to design innovation process, identify their highest-value innovation opportunities, and develop innovation capabilities.

He designed and taught the Design Thinking for Business Innovation Executive Education Program at the Harvard Graduate School of Design and is a visiting professor at a number of business and design schools internationally. Idris speaks frequently at the world’s most prestigious management conferences, and is a regular contributor to major media outlets.

204 —

D E S I G N T H I N K I N G F O R S T R AT E G I C I N N OVAT I O N

Special thanks to STUDIO O+A for use of photos on page 10–11, 23, 92–93, 106–107, 139,

146–147, 154–155, 186–187 by photographer

Jasper Sanidad.

All other photos in this book are by Idris Mootee.

— 205

A

technological innovation, effect on, 193

Businessweek, 30

accessibility and value, 123

value redefinition and, 120–123

butterfly effect, 12–14

action-oriented thinking, 64

brand storytelling, 143, 145

Adams, Scott, 4

Branson, Sir Richard, 4

C

adaptability, organizational, 79

Buchanan, Richard, 30

capitalism vs. social good, 192–193

advantageous complexity, 161

Buffett, Warren, 121

capital-light business models, 156

agility vs. structures, 195

Burberry, 59, 130

change and disruption

AllSaints store, 130

bu siness management. See management acceptance of and business, 108

Amazon.com, 59, 122, 158

and leadership

in business models, 156–167

American Girl dolls, 6–7

business model design

butterfly effect and, 12–14

an alytical vs. creative thinking, 29, 39, 165, applied design thinking for, 170–184

chaos of change, 79, 109

198–199

bu siness models vs. strategies,

ma nagement’s inability to respond to,

Anderson, Greg, 129

161–162

55–58

Ansoff, Igor, 101

co mpany revenue models and,

or ganizational change, 82, 109,

anthropologists, 138, 145

166–167, 175, 182–183

113–114

Apple, xi, 59, 158

conceptual metaphors for, 167

ra pid rate of in society, 3–4, 12, 91,

applied design thinking

frameworks for, 165–167

101, 108

for business model design, 170–184

fu nctions and overcomplexity of,

resistance to, 79

design thinking principles, 62–73

160–161, 184

se nse making as solution to change

for problem solving, 60–61

myths about, 158

challenges, 81, 108–114

strategic innovation and, 16–18

old vs. new models and change, 3–4

technological innovation and, 3–4

See also design thinking principles fo r strategy and organization

change initiatives, 108–109

Archie McPhee, 78

challenges, 156–167

chaos of change, 79, 109

assembly lines, 51

systems-level approach to, 184–185

chess, 35, 126

awareness, 112

types of models, 159

chief executive officers (CEOs), 54

va lue creation and, 161–163,

See also management and leadership B

165–167

coffee experiences, 44–45, 141

B-corps, 193

business models, defined, 159

collaboration

Be havioral Theory of the Firm, A (March and bu siness school programs, challenges for, 4, rapid prototyping and, 152

Cyert), 193

198–199

in storytelling, 88

bicycles, 93–94, 119

bu siness solutions. See strategic business Columbia University, 198

big data, 22, 55–56

challenges

commoditization, 126–127, 129

Blockbuster, 95

business strategies

competition

Bloomberg, 30

business models vs. , 161–162

change and crisis in, 4

BMW, 59

competitive strategy, 73, 121, 126

ex perience design as solution to

branding

Se e also management and leadership; challenges for, 126–132

consumer expectations and, 118

strategic thinking

ex treme competition as challenge,

differentiation in, 129

bu siness strategy and planning. See strategic 126–127

experience design for, 129

planning

innovation management and, 16–18

206 —

I N D E X

competition (continued)

creative capitalism, 193

customer journey mapping, 132

objectivity vs. creativity in, 126

“creative class,” 193

customer value, 120–123

competitive advantage

creative confidence, 153

customization, 123, 160

bu siness model design and, 160, 166,

creative culture

Cyert, Richard, 193

184

as business challenge, 146–149

design thinking and, 30–31, 73

ra pid prototyping as solution for,

D

strategic foresight for, 99

150–153

de Botton, Alain, 99

strategic planning and, 196

creative enterprise, 192

debt-fueled growth, 83

wo rk environments supporting change

creative experimentation, 149

decision theories, 54

and, 109

cr eative vs. analytical thinking, 29, 39, 165, defensive vs. offensive actions, 18

competitive differentiation, 138

198–199

De fying the Crowd: Cultivating Creativity in competitive strategies, 73, 121, 126–127, 129

creativity

a Culture of Conformity (Sternberg and complex business models, 160–161

accepting change and, 109

Lubart), 149

complexity

an alytical vs. creative thinking, 29, 39, Dell, 119

ad vantageous vs. disruptive complexity, 165, 198–199

design language, 35, 143

161

in business and management, lack of,

Design of Business, The (Martin), 56

in business model design, 160–161,

52–54, 157

de sign school programs, challenges for, 4, 184

curiosity and, 86, 148

198–199

gl obalization and speed of change,

design oversimplification and, 38

design thinking

98, 101

enterprise creativity, 72

an alytical vs. creative thinking, 29, 39, in human connections, 14

fear of failure, effect on, 148–149

165, 198–199

scientific management and, 51

imagination, 86, 110, 193, 195–198

bu siness and design schools and, 4,

sense making as solution for, 110

predictability and, 94

198–199

si mplicity and oversimplification vs. , storytelling and, 88–89

business publications on, 30

38–45

in strategic planning, 157, 193,

core capabilities of, 16, 192

simplicity in design thinking vs. , 38–45

195–198

cost advantages of, 30–31

conceptualization, 192

un derstanding and learning of, 148–149

defined, 29–33

conceptual metaphors, 167

crisis-mode thinking, 18–20

in tuition and, 32, 55, 59, 63, 94, 112,

connectedness

Crosby, Philip, 82

193, 198

empathy and emotions for, 69, 86–91

cross-industry scanning, 105

paradigm changes in, 195

hyper-connected age value chain, 160

cultural capital, 141

problem solving in, 63

rise in human connections, 14

cultural touch points and humanization, 141

proto-theories for, 29–30, 54

sense making and, 113

culture, defined, 141

science as inspiration for, 34–35

technology and communication

curiosity, 86, 148

science vs. art of, 34–35

changes, 3

customer experiences

simplicity vs. complexity in, 38–45

Co nscious Capitalism (Mackey and Sisodia), business model design and, 165–166

strategic innovation and, 16–18

193

experience design and, 16, 128–132

versatility of uses for, 39

constructive processes, 68

experience triggers, 131

design thinking principles

consumerism and economic expansion, 83

hu manization and relationships,

about, 62–73

consumption, rise in, 4

140–145

action-oriented thinking, 64

context mapping, 101, 104

loyalty and, 128, 158

comfortably with change, 65

Continental Airlines, 50

meaningful experiences, 130

competitive logic for business

corporate entrepreneurship, 83

un met needs and business model

strategies, 73

Costco, 158

design, 35, 171–174

dynamic constructive processes, 68

I N D E X

— 207

empathy, promotion of, 69

humanization and, 39, 140–145

G

enterprise creativity, 72

sense making and, 111

Gandhi, Mahatma, 151

foresight integration, 67

standardization and empathy, 138

Gardner, Howard, 198

human-centric thinking, 63, 66

storytelling and, 86–87

Gates, Bill, 192, 199

meaningfulness, 71

emotive value, 129

GE, 161

risk reduction, 70

employee relationships, 152

geeky experiences, 130

Design Thinking (Rowe), 30

engagement

George, Bill, 193

deterministic chaos, 13

ex perience design and emotions,

globalization

Diesel, 37

131–132

foresight and rapid rate of, 98

differentiation

storytelling and, 88

growth challenges and, 83

in branding, 129

strategic foresight for, 100

speed of change and complexity of, 98,

in business models, 161–162

enterprise creativity, 72

101

competitive differentiation, 138

enterprise resource planning (ERP), 59

sustainability over profit and, 192–193

lack of in brands, 127

enterprise software systems, 160–161

GM, 156

meaningfulness in design thinking, 16

entrepreneurship, 35, 83

graffiti, 75

digital cameras, 101

environmental scanning, 102, 113

growth

disciplines, defined, 193, 195

Erhard, Werner, 100

acceptance of change and, 108

disruption. See change and disruption Et ernally Successful Organization, The (Crosby), as business challenge, 81–85

disruptive complexity, 161

82

consumption and, 4

distribution models, 159

Excel spreadsheets, 71, 151, 184

debt-fueled growth, 83

dolls, 6–9

excessive variation, 52

disruption and effect on, 3

dromology, 3

experience, nature of, 130

emerging markets and, 83

Drucker, Peter F., 95

experience design, 128–132

focus on vs. on excellence, 192

dynamic constructive processes, 68

Experiences in Visual Thinking (McKim), 30

measuring, 82–83

experience triggers, 131

E

experimentation, 149

H

Eames, Charles, 196

extreme competition, 126–127

Hamel, Gary, 59

EasyJet, 122

Handy, Charles, 192

E BITDA (earnings before interest, taxes,

F

Harvard Business Review, 30

depreciation and amortization), 83

“fail fast, fail cheap, fail early” concept, 150

human-centric thinking

economic crises, 4, 18

failure

in design thinking and strategic planning, economic expansion, 83

design principles for reducing, 70

30, 32, 61, 196, 198

efficiency, focus on

fear of risk and, 86, 148–149

as design thinking principle, 63, 66

humanization as solution for, 140–145

stories for fear of, 86

in value redefinition, 120–123

intuition vs. , 109

fictiveness, 89

human experience, 128–132

limitations of, 198

fit, concept of, 161–162, 177

humanization

st andardization and challenges of,

Fitzgerald, F. Scott, 196

capitalism vs. social good, 192–193

136–138

Florida, Richard, 193

cultural and social values, 142

emerging markets, 83

Ford, 51

in design thinking, 192

emotions and empathy

foresight. See strategic foresight language and, 143

connectedness and, 69, 86–91

Fuller, Buckminster, 159

research and human culture, 145

experience design and, 130–132

future-oriented approaches, 61, 98–105

social values and, 141–142

focus on in design thinking, 120

as solution for standardization, 140–145

for gaining insight, 69

See also emotions and empathy

208 —

I N D E X

Hunt, James, 199

journey mapping, 132, 194

risk aversion in, 19–20, 22

hyper-connected age value chain, 160

scientific management, 51

K

tra ditional hierarchies and models in,

I

Kipling, Rudyard, 87

63, 79, 83

ice cream, 125

Kodak, 156

visionary expectations of, 157

Ikea, 122, 158

Kupferberg, Tuli, 16

Mao Zedong, 8–9

illiteracy, 52

March, James, 193

imagination

L

Martin, Roger, 56

curiosity and, 86, 148

language

mass production, 51, 52

importance of, 86, 110

design language, influence of, 35

Matchbox cars, 167

lack of in business planning, 157

humanizing through, 143

McKim, Robert, 30

logic and, 195

leadership. See management and leadership meaningful experiences, 130

in strategic planning, 193, 195–198

“le arn fast, learn cheap, and learn early”

Medtronic, 193

See also creativity

concept, 150

mental models, 113–114

industrial engineering, 51

learning by doing principles, 64

mergers and acquisitions, 54

ING, 158

learning experiences, 130

metaphors, conceptual, 167

innovation

license models, 159

meteorologists, 12–13

bu siness model design and limits to,

listening-based research, 66

Mickey Mouse, 124

138, 158–167

Lorenz, Edward, 13

Mintzberg, Henry, 94

challenges to, 32

loyalty, 128, 158

MISC magazine, 96, 142

creative culture and, 148–149

Lubart, Todd, 149

mission statements, 4

predictability and, 94

modernist movement, 19

st andardization and efficiency vs. , M

136–138

Mackey, Jack, 193

N

strategic foresight and, 98–105

malleability, 94

natural resources crises, 4, 83

strategic innovation, 16–18

management and leadership

Netflix, 59, 122

te chnological innovation and change,

acceptance of change and, 108

Nintendo, 122

3–4, 22, 55–56, 160–161, 193

an alytical vs. creative thinking in, 39, Norman, Don, 32

variation and, 52

165, 198–199

innovation management, 16–18

ap plied design thinking for problem

O

insights

solving, 60–61

offensive vs. defensive actions, 18

in constructive design process, 68

balanced cultures and decision making,

optimization, 192

creating meaning and, 71

55

organizational change, 82, 109, 113–114

empathy for understanding, 69

CEOs and topple rate, 54

organizational design

rapid prototyping to improve, 152

ch ange initiatives, successes of,

design thinking and culture, 32

storytelling and, 87

108–109

growth challenges and, 82

we ak signals and foresight for, 98,

changing management paradigms, 22

storytelling and, 86–87

101–103, 112–113

creativity, lack of in, 19–20, 22, 54

organizational silos, 198

inspirationalization, 88, 192

crisis-mode thinking and, 18–20

o rganizational structure. See business model intuition, 32, 55, 59, 63, 94, 112, 193, 198

design principles for, 62–73

design

growth challenges and, 83

Orwell, George, 142

J

inefficiency in, 59

Japan, 57

ne ed for new approaches to, 4, 19–22,

P

Jobs, Steve, 88

55–59

Palm, 156

I N D E X

— 209

Pa rsons The New School for Design, 59,

design thinking for, 29–31

scientific management, 51

198–199

price, defined, 121

sense making

phrenology, 17

standardization and, 136–138

context mapping and, 101, 104

Pixar, 148

prototyping, 150–153

defined, 110–111

planning, defined, 191

purpose vs. power, 195

intuition and, 112

See also strategic planning

social media and, 113

Porter, Michael, 73, 162

Q

as solution for change challenges,

portfolios vs. planning, 195

questions, embracing, 72

110–117

Po st-It Notes, 17, 30, 38, 114–115,

Quid, Inc., 10–11

sensors, employees as, 113

168–169

signal processing, 98, 101–103, 111–113

poverty reduction, 192

R

signals, defined, 102

Po werPoint slides, 71, 86, 88, 151, 184,

rapid prototyping, 150–153

silos, organizational, 198

196, 198

rat race, 19

Simon, Herbert, 29–30, 54

P2P file sharing, 101

reactive vs. proactive actions, 18

simplicity vs. complexity, 38–45

practices vs. theories, 195

rebellion vs. conformity, 195

Sisodia, Raj, 193

predictability

Reflective Practitioner, The (Schön), 35

Six Sigma management, 52, 59

as business challenge, 94–95

relationship building, 56, 140–145, 152

social entrepreneurship, 35

defined, 94

relevance, maintaining

social experiences, 130

focus on vs. on change, 109

as business challenge, 118

social good, 141–142, 192–193

fu ture-oriented approaches and, 61,

va lue redefinition as solution for,

social media, 4, 113, 129, 130, 193

98–105

120–123

social values, 141–142

intuition vs., 109

research and data collection

sociologists, 35, 145

malleability vs., 94

big data and, 22, 55–56

software systems, 160–161

rapid prototyping to improve, 152

customer journey mapping, 132

Sony, 156

st rategic foresight as solution for,

human culture and, 145

standardization

98–105

rapid prototyping, 150–153

as business challenge, 136–138

strategic planning and, 12–14

sense making and, 113

humanization as solution for, 140–145

weather predictions, 12–13

we ak signals and foresight, 98,

STEEP analysis, 102

price, defined, 121

101–103, 112–113

Sternberg, Robert, 149

“Pr inciples of Scientific Management, The”

risk reduction, 70

storytelling

(Taylor), 51

risk taking and creativity, 148–149

brand storytelling, 143, 145

proactive vs. reactive actions, 18

Rittel, Horst, 35

fictiveness of stories, 89

problem solving

Rowe, Peter, 30

narrative structures in, 87–91

applied design thinking for, 60–61

purpose of stories, 86

customer value and, 120–123

S

scenario development, 104–105

in design thinking, 63

Salesforce.com, 122

as solution for growth challenges,

focus on past vs. creativity, 54

Samsung, 59

84–91

planning for change and, 108

scenario development, 104–105

strategic business challenges

scientific approach to, 34–35

Schoemaker, Paul, 54

about, 79–81

“wicked” problems, 35, 101

Schön, Donald, 35

change and sensing for, 81, 108–114

See also deign thinking principles sc hool programs, challenges for, 4, 59,

cr eative culture and prototyping for, 81, profit and cost saving

198–199

146–153

business focus on, 4, 51–52, 82–83

science, as inspiration, 34–35

ex treme competition and experience

capitalism vs. social good, 192–193

Sciences of the Artificial, The (Simon), 29, 54

design for, 81, 126–132

210 —

I N D E X

strategic business challenges (continued) sustainability

design thinking for, 16

growth and storytelling for, 81–91

de sign and business school programs

lack of in management, 59

pr edictability and story strategic

and, 199

value-capture vs., 59

foresight for, 81, 94–105

growth and balance of resources, 83

value mapping, 122

re levance and value redefinition for, 81, natural resources crises, 4

value redefinition, 120–123

118–125

systems-level thinking

value redefinition and branding, 120–123

st andardization and humanization for,

crisis-mode thinking vs., 18–20

variation, 52

81, 136–145

for solving business problems, 51

Virilio, Paul, 3

st rategy and organization and business

strategic foresight and, 103

visibility and prototyping, 152

models for, 81, 156–167

tr aditional management approaches

vision and visioning

strategic foresight

and, 39, 51–52

growth and need for, 84–85, 87

context mapping, 101, 104

systems vs. objects, 195

sense making and, 110

defined, 99

standardization and, 138

foresight defined, 101

T

See also storytelling; strategic foresight planning vs., 98

tape guns, 78

visualization

portfolios vs. planning, 195

Taylor, Frederick, 51

business model design and, 165, 184

scenario development, 104–105

team ownership, 152

in constructive design process, 68

single-point forecasting, 105

technological innovation

predictability and, 95

as solution for predictability challenges, big data, 22, 55–56

sense making and, 114

94, 98–105

change and disruption due to, 3–4

visual mapping, 104, 122

we ak signals and, 98, 101–103,

connections to brands and, 193

111–113

software systems, 160–161

W

strategic innovation, 16–18

technology scanning, 105

weak signals, 98, 101–103, 112–113

strategic planning

“T heory Construction as Disciplined

weak signal scanning, 102, 105, 113

big data, 22, 55–56

Imagination” (Weick), 193, 195

weather predictions, 12–13, 51

ch ange and disruption in business

Toffler, Alvin, 52

Weick, Karl, 111, 193, 195

and,156–157

Tomlin, Lily, 19

Whole Foods, 193

cr eativity and imagination in, 157, 193,

topple rate, 51

“wicked” problems, 35, 101

195–198

total quality management (TQM), 59

“W icked Problems in Design Thinking”

defined, 191

Toyota, 161

(Buchanan), 30

failures in, reasons for, 54–55

transdisciplinary design, 198–199

innovation management and, 16–18

triggers, experience, 131

Y

in tuition and, 32–33, 55, 59, 63, 94,

trust and credibility, 4

Yale, 198

112, 193, 198

Twitter, 161

Young, F. M., 54

old vs. new approaches to, 16

Yu, Gang, 39, 40

predictability and, 12–14

U

strategic thinking vs., 94

uncertainty and foresight, 67

Z

strategic thinking, 94

Zappos, 122

strategy, defined, 191

V

Zara, 158

strategy and organization

value chains, 160

Zipcar, 122

as business challenge, 156–157

value creation

bu siness model design as solution for,

ap plied business model design and,

158–167

170–184

subscription models, 159

in business models, 161–163, 165–167

Document Outline

- Design Thinking for Strategic Innovation

- Copyright

- Contents

- Acknowldgments

- Forword

- Scene 01: There’s No More Business As Usual

- The Butterfly Effect and Long-Range Planning

- Applied Design Thinking Is Strategic Innovation

- Time to Think beyond Crisis Mode

- Changing Management Paradigms

- Scene 02: What Is Design Thinking, Really?

- Is Design Thinking a Science or an Art?

- Design Thinking Has Been Oversimplified

- Scene 03: Applied Design Thinking in Business and Strategy

- Design Thinking to the Rescue

- We’ve Lost Touch with What’s around Us

- Every Future Business Leader Needs to Be a Good Design Thinker

- The 10 Design Thinking Principles That Redefine Business Management

- 01 Design Thinking Is Action – Oriented

- 02 Design Thinking Is Comfortable with Change

- 03 Design Thinking Is Human – Centric –

- 04 Design Thinking Integrates Foresight

- 05 Design Thinking Is a Dynamic Constructive Process

- 06 Design Thinking Promotes EMpathy

- 07 Design Thinking Reduces Risks

- 08 Design Thinking Can Create Meaning

- 09 Design Thinking Can Bring Enterprise Creativity to Next Level

- 10 Design Thinking Is The New Competitive Logic of Business Strategy

- Scene 04: Introducing the Design Thinking MBA

- Business Challenge 01: Growth

- Growth Needs a Strategy, and Every Strategy Needs a Story

- Design Thinking Approach 01: Storytelling

- Building Empathy and Empowering Transformation

- Business Challenge 02: Predictability

- Design Thinking Approach 02: Strategic Foresight

- Why Does Business Need Strategic Foresight?

- Design Thinking and Strategic Foresight?

- What Are Weak Signals?

- Business Challenge 03: Change

- Design Thinking Approach 03: Sense making

- From Sensing to Sense Making

- Business Challenge 04: Maintaining Relevance

- Design Thinking Approach 04: Value Redefinition

- Business Challenge 05: Extreme Competition

- Design Thinking Approach 05: Experience Design

- Understanding the Four Key Dimensions of Experience Design

- Business Challenge 06: Standardization

- Design Thinking Approach 06: Humanization

- Humanization From and Within Culture

- Humanizing Through Language

- Business Challenge 07: Creative Culture

- Design Thinking Approach 07: Rapid Prototyping

- The Benefits of Prototyping in Business Design

- Building, Fostering, and Embedding Creative Confidence

- Business Challenge 08: Strategy and Organization

- Design Thinking Approach 08: Business Model Design

- The Functions and Overcomplexity of Business Models

- What’s the Difference Between Business Model and Business Strategy?

- Business Model Versus Business Strategy

- Business Model Design Framework

- Starting with the Concept Metaphor

- Scene 05: Hiring Design Thinkers Is Not Enough; We Need to Create Design Thinking Companies

- About the Author

- Photo Credits

- Index

Table of Contents

Design Thinking for Strategic Innovation

Copyright

Contents

Acknowldgments

Forword

Scene 01: There’s No More Business As Usual

The Butterfly Effect and Long-Range Planning

Applied Design Thinking Is Strategic Innovation

Time to Think beyond Crisis Mode

Changing Management Paradigms

Scene 02: What Is Design Thinking, Really?

Is Design Thinking a Science or an Art?

Design Thinking Has Been Oversimplified

Scene 03: Applied Design Thinking in Business and Strategy

Design Thinking to the Rescue

We’ve Lost Touch with What’s around Us

Every Future Business Leader Needs to Be a Good Design Thinker

The 10 Design Thinking Principles That Redefine Business Management

01 Design Thinking Is Action – Oriented

02 Design Thinking Is Comfortable with Change

03 Design Thinking Is Human – Centric –

04 Design Thinking Integrates Foresight

05 Design Thinking Is a Dynamic Constructive Process

06 Design Thinking Promotes EMpathy

07 Design Thinking Reduces Risks

08 Design Thinking Can Create Meaning

09 Design Thinking Can Bring Enterprise Creativity to Next Level

10 Design Thinking Is The New Competitive Logic of Business Strategy

Scene 04: Introducing the Design Thinking MBA

Business Challenge 01: Growth

Growth Needs a Strategy, and Every Strategy Needs a Story

Design Thinking Approach 01: Storytelling

Building Empathy and Empowering Transformation

Business Challenge 02: Predictability

Design Thinking Approach 02: Strategic Foresight

Why Does Business Need Strategic Foresight?

Design Thinking and Strategic Foresight?

What Are Weak Signals?

Business Challenge 03: Change

Design Thinking Approach 03: Sense making

From Sensing to Sense Making

Business Challenge 04: Maintaining Relevance

Design Thinking Approach 04: Value Redefinition

Business Challenge 05: Extreme Competition

Design Thinking Approach 05: Experience Design

Understanding the Four Key Dimensions of Experience Design

Business Challenge 06: Standardization

Design Thinking Approach 06: Humanization

Humanization From and Within Culture

Humanizing Through Language

Business Challenge 07: Creative Culture

Design Thinking Approach 07: Rapid Prototyping

The Benefits of Prototyping in Business Design

Building, Fostering, and Embedding Creative Confidence

Business Challenge 08: Strategy and Organization

Design Thinking Approach 08: Business Model Design

The Functions and Overcomplexity of Business Models

What’s the Difference Between Business Model and Business Strategy?

Business Model Versus Business Strategy

Business Model Design Framework

Starting with the Concept Metaphor

Scene 05: Hiring Design Thinkers Is Not Enough; We Need to Create Design Thinking Companies

About the Author

Photo Credits

Index