12020

Design Thinking: The Future of Business Strategy

Dameon Green

New York University

Greg D'Amico

Capstone Studies

May 3, 2012

Abstract:

A major aim of Design Thinking methodology is to structure creativity to produce innovation. In a way, we are moving away from the linear approach and making the non-linear way more productive. Moreover, companies are being challenged to produced environment that is conducive to innovation. It's participants are more focused on exploring possibilities than poking holes in ideas. Simply stated, Design Thinking takes the focus from the competitor and puts it squarely on innovation. it blur boundaries and wall put between creators and consumers so that they may work together to produce the best solution. Design thinking itself provides us with no roadmap. Rather it provides the tools and principles such that you may create your own roadmap. Its not meant to be a quick fix. It gives us the frame and pieces but we must put the puzzle together for ourselves. Though part of the methodology deals with process optimization, it is primarily concerned with the phenomena of innovation.

Introduction:

What if managers thought more like designers? How is this done? Its as simple as 3 words:Empathy, Invention, and Iteration (Liedtka, J. & Ogilvie, T., 2012). Most executives are convinced that the way they think works. In their minds, it's probably a matter of time, resources, talent or some other input. Brown (2008) believes that thinking like a designer can transform the way you develop products, services, processes and even strategy. While this might not happen overnight, there is a growing recognition that through the effective integration of design and creativity have become practical and attractive propositions for users or customers (Cox, 2005). One may ask Why Design Thinking and why now? The answer, at least partially, lies in the fact that companies are getting comfortable with the idea of creating as we go.

Design colloquially refers to the appearance or styling of a particular product or outcome, but the proper meaning goes beyond that it should be used to refer to a process rather than it's outcome (Stickdorn, M., & Schneider, J., 2010). Global economies are moving fast to build design into their business base as well as utilizing design-influenced approaches in other areas (Design Council, 2007). Design begins by enhancing brand perception through building aesthetically pleasing products and smart evocative advertising. What follows is the creation of ideas that meet consumers need and desires (Brown, 2008). Design is now focused on the interaction between people and technology, and products serve as platforms for experiences, functionality and service offerings . Designs new role is to illustrate and represent the complexity of the system to make it more understandable as well as represent the added value that the product brings to the company. Designers are now charged with responding to the emergence of new environments and user needs (Stickdorn, M., & Schneider, J. ,2010,pg. 56,67).

Actant & Haig (2011) suggest putting aside the false dichotomy between craft and design in favor of viewing design as a form of craft. In addition, design should be considered as a way of connecting ideas. Design is a social process that involves thinking and working across different perspectives. In a way design serves as a bridge to connect people and ideas that move them (Adams, R. S., Daly, S R., Mann, L. M., Dall'Alba, G., 2011).

Design Thinking Defined:

There seems to be a problem with determining a true classification of Design Thinking as an art or science. It is more analogous to a new Liberal art of technological culture (Buchanon, 1992). Placement in liberal arts means it must be shared in the daily lives of men and women. This placement may indeed be fitting as design primarily focus on products and symbols that people interact with daily. Brown (2008) defines Design thinking as a reasoning tool that helps balance the traditional problem solving practice that is highly analytic with the practice of gut feelings and intuition Design thinking, at it's core, is the integration of reliability, mastery of analytic thinking with validity, invention of intuitive thinking. These disciplines are at the core of modern day problem solving.

Design Thinking effectively is to engage in curious, critical and creative dialogues. Further, it is learning process while simultaneously seeking input from multiple, adjacent and un-thought of sources, eliciting inspiration from the stories, experiences and characteristics of people, places and things (Mootee, 2011). Like any process, Design Thinking will be practiced at varying levels by people with different talents and capabilities (Liedtka, J. & Ogilvie, T., 2012). The idea of Design Thinking has typically represented what designers understand about design and how they go about designing based on this understanding. Tackling ill-defined problems and solution focused problem solving are primary goals. In many ways, its a subtle fusion of art, science and technology as parallel disciplines within the production of products and the creation of processes (Buchanon, 1992).

Design Thinking begins with 4 core questions (Liedtka, J. and Ogilvie, T. ,2012):

1) What is? argues that all successful innovation begins with an accurate assessment of the current reality 2) What if?, on the other hand, is focused on the creative generation of new ideas.

3) What wows? helps managers to prioritize possibilities and then prototype the most attrac- tive ones. 4) What works? translates ideas into action in the form of small marketplace bets.

Principle Argument:

Design Thinking will become an increasingly important component in business strategy. Businesses are increasingly focused on innovation. Design Thinking is focused on creating the environment and processes for innovation. Companies are beginning to realize that constant innovation is critical so that companies remain competitive. Markets aren't staying the same. The world is constantly changing and there is only one way to keep up. Find ways to get better using available knowledge and expertise. Design Thinking aims to do this using the following:

1. Design Thinking focuses on what is possible as opposed to what has been done successfully before. It thereby produces an environment that fosters innovation in contrast to merely replication and competition.

2. Design Thinking re-enforce the notion that the customer is at the center of any business model or marketing plan thereby humanizing the process.

3. Design Thinking advances the fusion of linear and non-linear thinking in business strategy.

4. Design Thinking empowers businesses and executives to create their own roadmap to success it provides the tools and principles by which they may apply their expertise for maximum competitive advantage.

5. Design Thinking's focus is on prototyping and learning as we progress in the process of creating products, processes and services.

6. Design Thinking advocates constant innovation as the primary method of acquiring and maintaining competitive advantage

Supporting Arguments

1. Design Thinking focuses on what is possible as opposed to what has been done successfully before. It thereby produces an environment that fosters innovation in contrast to merely replication and competition.

People can become quite inspired while immersed in sea of innovation. They become increasingly committed to make a dream become a reality. Innovation is part of human nature. (Meinel, C and Leifer, L., 2011). Creations, ideas, inventions and innovations can only grow and prosper if they are being constantly nourished and placed in the correct environment. (Meinel, C and Leifer, L., 2011). Design Thinking supports this notion by creating a more efficient and structured way of doing it through co-creation. The concept behind co-creation may sound simple, however, it is both an essential element of Design Thinking and highly complex. It is about creating positive synergies for all parties involved. (Buckley, M., Beames, M., Bucolo, S., & Wrigley, C., 2012). Design Thinking provides a new way to think about and put our expertise in action. It optimizes what we already possess the requisite expertise to do.

In the world of service design, practitioners are focused on generating an environment that facilitates idea generation from unique perspectives in the creation of services and a for the development, prototyping and testing of these service. This is the hallmark of co-creation. (Stickdorn, M., & Schneider, J. ,2010). Managing the creation of the new and preserving the best of the present are among the greatest aims of innovation. The clues to the new future lie in the dissatisfaction with the present (Liedtka, J. & Ogilvie, T., 2012).

Design thinking has much to offer a business world in which most management ideas and best practices are freely available to be copied and exploited (Brown, 2008). Indeed its a new way. This new framework should require us to challenge old assumptions and connect to new perspectives. The major accomplishment of such framework is to map an interconnected space of knowing, acting, and being professionals (Adams, R., Daly, S., Mann, L., Dall'Alba, G., 2011) Great design occurs at the intersection of constraint, contingency, and possibility- elements that are central to creating innovative, elegant, and functional designs. (Liedtka, J. & Ogilvie, T., 2012). Today, rather than enlist designers to make an already developed idea more attractive, the most progressive organizations are challenging us to create ideas at the outset of the development process (Brown, 2008).

2. Design Thinking re-enforces the notion that the customer is at the center of any business model or marketing plan thereby humanizing the process.

Design thinking uses Personas as opposed to merely demographic numbers and charts (Stickdorn, M., & Schneider, J.,2010). They give life to groups based on shared interests. I call it humanizing demographics. These groups that marketers study represent real people, however, over time traditional business has removed people from the process. Instead preferring lifeless charts, spreadsheets, and ratios. Design is done by human beings to, for, and with other human beings. Design is also done among objects and the world we live in (Actant & Haig, 2011). Its all about the shared journey. The members of the team and customer all share the pain and glory. Keeping people at the center of the process means getting out into the real world, seeing what people are doing, and figuring out what they want (Brown, 2008). Companies need people to focus on gathering new sources of information. Bring in the Anthropologist. This is a field person who is out in the field to interact with products, services and people. The Anthropologist is known as a primary learning role. People who adopt the learning roles are humble enough to question their own worldview, leaving them open to new insights everyday (Kelley, T & Littman, J.,2005). Anthropologists see things that have gone unnoticed and have a tendency to keep running lists of innovative concepts worth emulating and problems that need solving. They also find inspiration in unusual places (Kelley, T & Littman, J., 2005).

Design thinking is based on deep empathy with the customer, and commercial customers are

used to relatively fast response times from their partners and suppliers (Allen, K., 2012).

Brown (2008) notes that this empathy, and it is perhaps the most important distinction

between academic thinking and design thinking. in the process we are diving into the

environment and looking to gather new info through first-person experiences. Finding the

"bullseye" is when you have the customer squarely in the center of the process. discussing how

they benefit or could possibly benefit from the service (Stickdorn, M., & Schneider, J. ,2010).

Many companies create breakthrough by developing a deep understanding of customers lives.

Great design satisfies both our needs and our desires and appeals to us both emotionally and

functionally. Therein lies the ultimate key to business success (Brown, 2008).

Understanding user needs is a central element of any business models value proposition,

particularly as such understandings focus on how to predict what users want and how they will

behave (Khalid 2006). Such outcomes arise from the application of such design tools as

ethnographic and activity observations, wherein the designer analyses and interprets the

overarching context of use for an innovation proposal. An important element of a user needs

approach is an understanding that participatory innovation treats the user as a consultant, not a

co-designer. Designers interact directly with users and stakeholders and thus possess the ability

to see a humanised version of each proposal, constantly and powerfully returning the proposal

to a user-centred value proposition (Tether,B, 2010).

Design Thinking puts to use the contextual interview. These are done in ethnographic format to

observe people in their own environment. Contextual interviews allow researchers to gain an

understanding of the social and physical environment surrounding the service being examined. In

other words, we need to understand what motivates customers to take action and why.

Motivation is named as the fundamental concept for designer seeking to understand regulate and

support human behavior. understanding motivation means understanding the individual and his

environment and how these 2 interrelate (Stickdorn, M., & Schneider, J. ,2010).

3. Design Thinking advances the fusion of linear and non-linear thinking in business strategy.

Design thinking is perhaps best thought of as a lineal descendant of pure innovation (Brown, 2008). Through the use of design thinking techniques, facilitators then undertake a development process that mirrors a typical design process to address agreed goals. It's important to note that This process recognizes the role (and sometimes the necessity) of dysfunctional behaviour, non-linear approaches and shifting goals (Cruickshank, L. and Evans, M., 2012, pg 79). The perceptions of the viability of linear innovation were disputed by presenting a case study using of the Design-Led Innovation approach (Bucolo & Matthews 2011). The process of innovation is often seen as being very linear, with research results, new technologies or user insights being channelled, often prematurely, into specific products and process (Kyffin and Gardien 2009).

Consider for a moment. We are human beings; our first responses are dominated not by calculations but by feelings. What we should understand is that if you have an object in your pocket or hand for hours every day, then your relationship with it is profound, human, and emotional. iPods and iPhones are a good example (Liedtka, J. & Ogilvie, T., 2012). Design is done by human beings to, for, and with other human beings. Design is also done among objects and the world we live in. Perhaps craft is best thought of as a verb that represents the material translation of the work of design (Bean, J. & Rosner,D., 2012. In this instance, craft is the act of doing design work where design represent the process.

Design is not a linear process (Brown, 2008). Indeed, the value of design is a different way of thinking, doing things and tackling problems from outside the box (Bucolo & Matthews 2011). While linear, analytical thinking works quite well in predictable environments, it is not well suited to dealing with unpredictable events. Adding linear process models to design is likely done to make it more useful for any given scenario. Design Thinking informally suggests that there are core principles that should be a part of design,creativity and innovation however non-linear they appear in nature. Over the past few years the design-thinking movement has begun to pick up steam, finally coming into its own in these turbulent times. (Allen, K., 2012).

4. Design Thinking empowers businesses and executives to create their own roadmap to success it provides the tools and principles by which they may apply their expertise for maximum competitive advantage.

Great designs inspire and grab us at an emotional level. Design is the process of invention. Managers who think like designers tend to think of themselves as Creators. This bodes well for long term competitive advantage in any sector. (Liedtka, J. & Ogilvie, T., 2012). According to (Brown, 2008), the interdisciplinary approach of design thinking allows companies to create new forms of value by focusing their strategic efforts on fulfilling costumer desires and needs. Companies have the right expertise, they simple need to use the right procedures such that it becomes useful to their customer. Innovation is no longer limited to the production of new physical products, but to but also new sorts of processes, services, interactions, entertainment forms, and ways of communicating and collaborating (Brown, 2008).

Todays business are people hungry for new approaches to help them deal with their increasingly complex challenges. The language of Design Thinking is starting to become de-mystiied such that it becomes useful for traditional managers. Offering a simple process and tool-based approach to make design thinking is a great first step. Many of the tools designers use to develop a deeper understanding of their customers needs can be used to help managers create better value for their customers (Liedtka, J. & Ogilvie, T. ,2012). Many managers need this sort of program. a step by step set of tools. It isn't because they can't understand or see the design world but rather this their flavor of risk management as it applies to Design Thinking. Its how they prepare for the unknown.

Design expertise contributes by conceiving high value projects, building differentiation, exploring uncertainty, stimulating creativity and shaping internal culture (Stevens, J., Moultrie, J., & Crilly, N. ,2008). The goal is to reate value that cant be competed away by competitors. When company see to create unique value propositions based on creative use of their inherent intellectual capital, they are left with an act that is hard to imitate. The Design-Led Innovation approach works on the promise of creating a sustainable competitive advantage by radically changing the customer value proposition (Bucolo & Matthews 2011). By this we mean that new forms of value are present in any company's intellectual capital. Innovation practices and design thinking specifically act to unlock such potential.

If an organization has put in place policies and a structure that enable faster opportunity decisions and equally quick abandonment decisions, it will do a more effective job of managing and allocating its resources in uncertain times. (Allen, K., 2012). Companies must first create structural resilience before implementing new procedures as things may move fast. If policies and procedures get in the way of fulfilling customer needs, that may be a problem as well. Often, the traditional structure happens to be the biggest barrier to new solutions and innovative practices (Allen, K., 2012).

5. Design Thinking's focus is on prototyping and learning as we progress in the process of creating products, processes and services.

Design insists that we prepare ourselves to iterate our way to a solution, so managers who thought like designers would see themselves as learners(Liedtka, J. & Ogilvie, T., 2012). Design thinking is a process that is highly interactive and incremental. People with different backgrounds and experiences are crucial to drive it. By using prototypes to elicit or provoke feedback about assumptions gathered beforehand or manifestations of design ideas, it becomes possible to validate the assumptions and the resulting design choices (Gabrysiak, G., Giese, H. & Seibel, A., 2012). Designers understand that successful invention takes experimentation and that empathy is hard won. They go seek it out anyway. Regard every problem as a possibility and your perspective will change forever. Focus less on control and getting it right the first time and more on seeing and responding to opportunities as they come. (Liedtka, J. & Ogilvie, T., 2012).

Meinel & Leifer (2011) introduce the Hunter-Gatherer model. It suggest that we can achieve more success from research and marketing activities if we are taught to be better with handling business spontaneity. its about learning on the fly in uncertainty territory. Using solid principles, Design thinkers move forward along the hunt knowing that they will find gold and know it when they see it. The Hunter-Gatherer model is all about actions, activities, and movements, what we do in the moment, what we learn on the fly, and how we discover the unknown in unfamiliar terrain. There is no roadmap or fixed model of how innovation is produced.

The Hunter-Gatherer Model revolves around enfolding events, awareness, observation, and real time intervention. We are hunting for an idea that sells, and it had better be big. We want to solve a problem, perhaps remove the problem itself through design thinking, new products, and/or remarkable services. We find that the designer-ly ways of approaching design research are decidedly different than the approach derived from the physical sciences (Haig, 2011).

Within the the Design Thinking Paradigm, Prototyping is paramount. It's goal is to learn about the strengths and weaknesses of an idea before you spend tons of money producing the product or delivering the service (Brown, 2008). Its more about learning as we go through uncharted terrain using solid principles such that we find gold in our search and we know it when we see it (Meinel, C and Leifer, L., 2011). The Business Model Canvas (Pigneur & Osterwalder 2010) is prescribed to design teams as a tool for quickly and intuitively prototyping possible business models during early-stage generative and evaluative exercises. This is indeed a major step forward being that it fuses the Design Thinking approach into something that traditional businesses view as familiar. A somewhat non-intrusive template for innovative practice.

6. Design Thinking advocates constant innovation as the primary method of acquiring and maintaining competitive advantage.

The very core of many management theories are being questioned and management is close to a point of failure. Many corporations are facing crises on several fronts and not only from the obvious such as low cost competition, disruptive technologies, economic sustainability, and social development. Business leaders need to find new things to handle new opportunities and to organize for a future of unprecedented uncertainties (Mootee, 2011). Weve come to the end of the runway on maximizing productivity and re-engineering processes. The tools of design, including post-it notes and whiteboards, have become ubiquitous (Brown, 2008). Employees are now being bred to innovate. Innovation is the key to success in this period of uncertainty. Further, innovation is commonly held as a profession that is a blend of art, craft, science, business savvy and understanding of customers. It is now the principle method of competitive advantage. Companies that fail to adopt this view are getting left behind (Brown, 2008).

Proactively dealing with uncertainty has become as important as technological genius. The ability to anticipate and resist or adapt to unpredictable events of enormous impact. In short, a resilient organization will thrive in both good times and bad. For decades- 5 year strategic plans were the thing. Many executives did these plans as if nothing would deviate from what had been predicted to the detriment of the company. The financial crisis saw modern business come to the end of a relatively stable and predictable cycle. Turbulent economic times are indeed a catalyst for the design thinking movement as no one wants to be caught off guard. (Allen, K., 2012).

Traditional vs. Design

Traditional approaches are much better at poking holes in ideas than exploring possibilities. In traditional office environment employees take turns playing the devil advocate. There seems to be a bigger prize for those are better at tearing down ideas than there is for those who develop innovative ones. Design Thinking starts with what's possible. The design process is a system of spaces, not a set of orderly steps (Brown, 2008). The process is different for every company and should be different every time.

The differences between the traditional business approach and a design approach are profound yet the 2 are potentially very complimentary. Either can be used to optimize the other. The design thinking attitude says that executives should develop scenarios of possible future outcomes instead of spreadsheets. Design Thinkers use methods to structure creativity so that it counterbalances the devil's advocate and produces a more constructive force. Effectively, the 2 approaches differ primarily in the principle assumptions made. Traditional business thinking assumes rationality and objectivity having its decisions driven by cold logic. Design assumes instead human experience sees true objectivity as an illusion. There is only individual truthand answers are only better or worse (Liedtka, J. & Ogilvie, T., 2012).

Conclusion:

The natural evolution from design to design thinking reflects the growing recognition on the part of todays business leaders that design has become too important to be left to designers (Brown, 2008). It is time to take design thinking to the next level: Action in a professional environment. We must first use design thinking to conceptualize and plan how to make our products and processes better. Then, we must act upon this new knowledge. Further, it needs to become a way of being and move beyond a short-term experiment (Adams, R. S., Daly, S., Mann, L., Dall'Alba, G., 2011).

Fundamentally, Design Thinking is all about problem solving. Jonassen, (2000) says we are inept at teaching problem solving because we don't understand problem solving activities. Thus, it isn't included in mainstream curricula. this is quite ironic being that it is probably the most useful skill in any profession. It's about being able to make a major cul- tural shift. Companies must incorporate three elements to maximize its chances of success: 1) employ a design thinking approach to problem solving 2) develop structural resilience before strategy 3) Create options to reduce the impact of uncertainty (Allen, K., 2012).

The key is to recognize designs purpose as evolving from industrial practice in operations to a theoretical strategic purpose. It requires full integration of design into strategic direction (Stevens, J., Moultrie, J., & Crilly, N. , 2008). Every Manager needs design even-though Design is a mysterious no-man land where only the brave and brilliant dare tread"(brown, 2008). It's about going into the depths of everyday lives of people so that we may produce better products and services (Stickdorn, M., & Schneider, J. , 2010). What this means for business leaders today is that they need a new way of thinking. They need Design Thinking.

References:

Adams, R. S., Daly, S R., Mann, L. M., Dall'Alba, G. (2011). Being a professional: three lenses into design thinking, acting, and being. Design Studies, Vol. 32, No. 6., pp. 588-607

Allen, K. (2012), Change leaders: Creating resilience in uncertain times. Leader to Leader, 2012: 1318. doi: 10.1002/ltl.20004

Bean, J. & Rosner,D., (2012). Old hat: craft versus design?. interactions 19, 1 , 86-88. DOI=10.1145/2065327.2065344 http://doi.acm.org/10.1145/2065327.2065344

Brown, T. and Katz, B. (2011), Change by Design. Journal of Product Innovation Management, 28:381383. doi:10.1111/j.1540-5885.2011.00806.x

Buckley, M., Beames, M., Bucolo, S., & Wrigley, C. (2012) Designing radical business model innovation : a case study. In Participa-tory Innovation Conference 2012, 12-14 January 2012, Swinburne Lilydale Conference Centre, Melbourne, VIC.Brown, T. (2008) Design thinking, Harvard Business Review, June, pp.8495.

Buchanan, R. (1992)Wicked Problems in Design Thinking Author(s): Source: Design Issues, Vol. 8, No. 2 (Spring, 1992), pp. 5-21 Published by: The MIT Press Stable

Cox, G. (2005) The Cox Review of Creativity in Business. London: HM Treasury.

Cruickshank, L. and Evans, M. (2012) Designing creative frameworks: design thinking as an engine for new facilitation approaches, Int. J. Arts and Technology, Vol. 5, No. 1, pp.73-85.

Design Council (2007) Invest to Compete. London: The Design Council, Available at: http://www.designcouncil.org.uk/en/Design-Council/3/Publications/. Accessed on November 2008.

Gregor G., Holger, G. & Seibel,A. (2012). Towards Next-Generation Design Thinking II: Virtual Multi-user Software Prototypes. Design Thinking Research Understanding Innovation, 2012, Part 2, 107-126, DOI: 10.1007/978-3-642-21643-5_7

Haig, T. (2011). Design Thinking and Big Society.

Jonassen, D. H.(2000) "Toward a Design Theory of Problem Solving." Educational Technology Research and Development 48.4 (2000): 63-85.

Kelley, T & Littman, J.(2005). The Ten Faces of Innovation: IDEO's Strategies for Beating the Devil's Advocate & Driving Creativity throughout Your Organization. New York: Currency/Doubleday, 2005. Print.

Lee,J., Baskerville, R., Pries-Heje, J.(2012), "The Creativity Passdown Effect: Sharing Design Thinking Processes with Design Theory," hicss, pp.4119-4127, 2012 45th Hawaii International Conference on System Sciences, 2012

Liedtka, J. & Ogilvie, T. (2012), Helping Business Managers Discover Their Appetite for Design Thinking. Design Management Review, 23: 613.

Liedtka, J., & Ogilvie, T. (2011). Designing for growth: A design thinking toolkit for managers. New York:Columbia Business School Publishing.

Meinel, C and Leifer, L (2011) Design Thinking Research. In H. Plattner, C. Meinel, L. Leifer (Eds.), Design Thinking: UnderstandImproveApply (pp. xiii-xxi). Heidelberg: Springer.

Mootee, I. (2011) Innovation Playground. http://mootee.typepad.com/innovation_playground/Stevens, J., Moultrie, J., & Crilly, N. (2008). Designing and design thinking in strategy concepts : frameworks towards an intervention tool Designing and design thinking in strategy concepts. International DMI Education Conference, (April 2008), 1-17.

Stickdorn, M., & Schneider, J. (2010). This is service design thinking: Basics--tools--cases. Amsterdam: BIS Publishers.

Stickdorn, M., & Schneider, J. (2012). This is service design thinking, basics, tools, cases. Netherlands: BIS Publishers.

Tether, B. (2010), Design-Driven Innovation. By Roberto Verganti. R&D Management, 40: 512513.