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What Is Design Thinking?

Design thinking plays a pivotal role in innovation but is often misunderstood. This document

provides a brief explanation of what design

thinking is and how it is applied.

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The Basics: What is design thinking? 4

The Mindset: How is design thinking different? 5

The Process: How does design thinking work? 6

The Results: What does design thinking achieve? 8

In the Wild: What does design thinking look like in practice? 9

CONTENTSIN THIS DOCUMENT

Design thinking is a human-centered approach to innovation that draws

from the designer's toolkit to integrate the needs of people, the possibilities of technology, and the requirements for

business success.

Tim Brown of IDEO

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Design thinking is a problem solving approach. It blends a user-focused mindset and an iterative process to produce high quality, consistent innovation

THE BASICS

While ideas inherent to design thinking have roots in architecture and the sciences, design thinking as a discipline is most commonly associated with IDEO founder David Kelley and with Stanford’s Hasso PlattnerInstitute of Design, which has taught human-centered design since the early 2000s.

The core idea is that problem-solving is more effective when design is an integral part of the process, which implies both a particular way of thinking about problems and a particular way of seeking solutions.

As a result, at Credera we think of design thinking as both a mindset and an accompanying process.

Design thinking advocates a user-focused, experimentation-

oriented mindset

Design thinking utilizes an iterative process of understanding, ideating,

and testing

The result is higher quality, more consistent solutions to

complex problems

ITERATIVE PROCESSUSER MINDSET BETTER INNOVATION

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THE MINDSETThe design thinking mindset emphasizes two things: empathy and experimentation

1 See, for example, https://www.ideo.com/post/reimagining-the-shopping-cart2 John Kolko, “Design Thinking Comes of Age,” Harvard Business Review (2015)

EMPATHY

Design thinking starts with the user. As a methodology, design thinking advocates developing empathy with users through the study of user behavior patterns, stated feedback, and feelings. In turn, user empathy helps design thinking practitioners to develop solutions that will better meet the needs (stated or otherwise) of customers. IDEO is famous for this, as the well-known Nightlinesegment on IDEO’s user-focused shopping cart redesign demonstrates.1

EXPERIMENTATION

Just as important as user empathy is the idea that great solutions require experimentation. Design thinking therefore emphasizes exploring solutions that may or may not prove viable, with the expectation that the process of investigating unconventional ideas will ultimately lead to important discoveries. As a result, design thinking is naturally cyclical, with experiments leading to insights that in turn drive further experiments and further insights.2

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THE PROCESSWhile specific frameworks differ slightly, most design thinking-based processes advocate four basic steps: understand, ideate, prototype, and test

Numerous design thinking frameworks exist. Among the most well-known are those of Stanford’s d.school, IDEO, and the Nielsen Norman Group. Another popular variant gaining popularity is the Design Sprint, a concept associated with Jake Knapp of Google Ventures.

While the steps vary slightly from process to process, four foundational steps exist:

• Understand users and their needs through observation, research, and/or interviews

• Ideate solutions to user needs, drawing inspiration from outside domains and seeking creative solutions

• Prototype promising ideas so users can interact with them physically and provide feedback

• Test ideas with users and iterate based on user feedback

Perhaps most importantly, design thinking advocates an iterative process. The steps may not flow linearly one to another through the process; testing a prototype with users, for example, may generate ideas for a better solution or may uncover user needs not previously understood.

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THE PROCESSAmong the best-known design thinking processes are those of Stanford’s d.school, IDEO, Nielsen Norman Group, and Google Ventures

D.SCHOOL GOOGLE VENTURES

NN/g IDEO

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THE RESULTSBecause design thinking can produce better solutions to problems, companies that leverage its methodologies have an innovation advantage

It’s no secret that companies struggle to consistently develop innovative ideas, whether for new or existing markets—often launching products without first fully exploring whether they adequately meet users’ needs. Design thinking provides a mindset and process to create solutions in better alignment with the needs of users, thereby increasing the likelihood of product success and decreasing some of the risk associated with innovation.

THE ARGUMENT FOR DESIGN THINKING

• Design-driven companies have outperformed the S&P 500 by 219% over the past 10 years, according to data from the Design Management Institute1

• Companies that foster creativity enjoy 1.5 times greater market share, per Adobe research1

• Design-led companies report more loyal customers than their peers, again based on Adobe research

1 “Fifteen Mind-blowing Stats about Design Thinking,” CMO.com by Adobe

Bank of America focused closely on user behavior patterns when designing its popular Keep the Change savings program

91 “Design Thinking Handbook,” Designbetter.co

IN THE WILD

When Bank of America sought to create a new savings offering for its low-income customers, its researchers spent significant time interviewing families and analyzing customer data. Two insights emerged: First, individuals concerned with their basic needs (for example, keeping their electricity on) consistently found it difficult to invest the time needed to set up savings accounts. Second, when tracking finances, customers typically rounded-up their purchases to make budgeting easier.

With this understanding, Bank of America created the Keep the Change program, in which participants’ purchases were automatically rounded up and the change from each purchase placed into a separate savings account. The program allowed low-income customers to save more easily and aligned with their existing habits.

The program drew over 12 million participants, who collectively saved more than $2 billion.1

BANK OF AMERICA KEEP THE CHANGE

101 “How Design Thinking Transformed Airbnb from a Failing Startup to a Billion Dollar Business,” The First Round Review

IN THE WILD

In 2009, Airbnb was a one-year old startup struggling with revenue that had flat-lined at approximately $200 per week. In an attempt to discern the cause, Airbnb’s founders searched their own website attempting to think like potential customers. They realized that their key problem wasn’t technical; instead, it was that every listing had a limited set of poor-quality photos—leaving potential renters to question what they were purchasing.

The next week, Airbnb’s founders took high-quality photos of each listing and uploaded them to the website. Within days, the startup saw their revenue improve and bookings increase for the first time in over 8 months.

Today Airbnb—now valued at over $30 billion—continues to value the design thinking approach. New employees are required to take “a vacation” during their first week at the company, in order to better understand Airbnb’s customers and inspire new ways to improve the product.1

AIRBNB LISTING PHOTOS

Airbnb founders sought customer empathy, and in so doing identified a critical factor that was hampering the site’s online bookings

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