Design Thinking – A strategic approach for value creation

EXISTING SCENARIOS
In a world of continuous flux, where markets mature faster, Organizations regard management innovation as the prime driver of sustainable competitive advantage.
Today management as a profession is in a difficult situation. The last few years have been a continuing tale of misdeeds, failures, and embarrassments. Both the fantasies of a new economy and the exuberance of the dot com bubble are the prime events. The pitfalls of management are most directly attributed to a famine of good ideas. Exotic methods of financial analysis do not create value but great ideas from managers do which is something tragically missing from management practices and education today.
Managers, as designers, face situations that they are not the cause, yet for which they are responsible to produce a desirable outcome. They operate in a problem space that has no firm basis for judging any problem-solving method as superior to another, yet they must proceed.
Today, an emphasis on quantitative methods and analytic techniques is fine, as long as you are dealing with best ideas and alternatives. However, the more turbulent and chaotic the environment becomes, the less likely the above criteria to be true. In such conditions, an innovative approach is needed, that will help to define ideas and alternatives for analytic consideration and quantitative assessment.
In the past, design was a downstream step in the product development process, aiming to enhance the appeal of an existing product.
We have become over dependent on analytical thinking. Corporations have become far too analytical, and education systems as well.
TRANSFORMATION
Design thinking is about applying the principles of design to solutions for business. Thinking like a designer can transform the way to develop products, services, processes—and even strategy.
Now, rather than asking designers to make an already developed idea more attractive to consumers, companies are asking them to create ideas that better meet consumers’ needs and desires. The former role is tactical, and results in limited value creation; the latter is strategic, and leads to dramatic new forms of value.
To unlock opportunities, some of them use mindsets and protocols from the field of design to make out unarticulated wants and deliberately imagine, envision, and spawn futures.
In the last five years, design thinking has emerged as the quickest organizational path to innovation and high-performance, changing the way creativity and commerce interact.
The design community is great at two aspects, which make up two-thirds of the concept of design thinking. They are good at deep holistic, ethnographic user understanding and they are obviously very good at visualizing, imagining, and prototyping. The third part is actually relating them to business strategy. Those are the three gears of business design
Design Thinking is a strategic approach to solving business challenges through creative exploration. Design Thinking is the interaction of different people with different views working with a proven and replicable problem-solving and idea-generating method. Design Thinking lets us create better outcomes, not simply choose between existing. It generates ideas that become the experiences and products we could not imagine living without them.
When we use design thinking to balance desirability, feasibility, and viability, we unlock the measures of value creation so desperately sought after by the world of good design.
Design thinking revolves around three key phases, inspiration, ideation, and implementation. During these phases, problems are framed, questions—also about questions—are asked, ideas are generated, and answers are obtained. The phases are not linear; they can be concurrent and can be repeated to build up ideas along the continuum of innovation. The design thinking process allows information and ideas to be organized, choices to be made, situations to be improved, and knowledge to be gained.
Design thinking is, inherently, a prototyping process powering deep understanding of what people want in their lives as well as what they like (or not) about the way that is made, packaged, marketed, sold, and supported. To this end, multidisciplinary teams of T-shaped individuals are encouraged to fail often to succeed sooner through trial and error: innovations do not arise from incremental tweaks. Design success is the integration of design thinking into an organization, at that level; it becomes a powerful tool to solve unpredictable problems.
Potential market value creation should be treated as a generative part of the design process, not as a post rationalized output with suspect causality. At any given time, a team using design thinking should be able to give a sense of how strong a business they are creating. Only inventing and delivering new products, processes, and services that serve human needs can produce the desired outcome.
Put simply, design thinking discipline uses the designer’s sensibility and methods to match people’s needs with what is technologically feasible and what a viable business strategy can convert into customer value and market opportunity. Like Edison’s painstaking innovation process, it often entails a great deal of perspiration.
Search for solutions—not inwardly as experts, but through the lens of consumers and customers and constituents. Conduct research as anthropologists. Explore options by tapping a broad range of people with different skills, disciplines, and mindsets. Include people who understand well the constraints we have to work within, but also include people who do not see any constraints.
Prototype and evaluate a range of ideas to learn, iterate and refine until it is right. Great ideas with small flaws fail. Details are quintessential.
It is fundamentally abductive, even if designers still induce patterns and deduce answers.
Abduction is the process of inference to most likely, or best, explanations from accepted facts. Deduction means determining the conclusion.
In the conceptual age, it is a people first approach to the full spectrum and minutiae of innovation activities that has applications in operations, products, services, strategies, and even management.
DESIRED OUTCOMES
Design thinking can feel chaotic to those experiencing it for the first time. But over the life of a project participants come to see——that the process makes sense and achieves results, even though its architecture differs from the linear, milestone based processes typical of other kinds of business activities.
Lately, design approaches are also being applied to infuse insight into the heart of campaigns and address social and other concerns.
Leaders now look to innovation as a principal source of differentiation and competitive advantage; they would do well to incorporate design thinking into all phases of the process.
Similarly, design is never completely done; a market is always changing, least of all because good ideas are copied, and design must change with it
SCENARIOs
P&G’s journey to become a design thinking organization provides a strong counterpoint to the view that innovation and scale cannot coexist. In 2000, the company’s stock price was declining precipitously, revenue growth had ground to a near halt, acquisitions were slowing down, and most of its biggest brands were losing market share. For the first time in the company’s 165-year history, the board fired the CEO. June 2000, the board promoted A.G. Lafley as the new CEO. Lafley quickly recognized that P&G’s innovation engine was stalling.
To reverse the slide, P&G had to become more innovative, but the expense side of the value equation also had to be addressed. Lafley set about to tackle innovation and efficiency simultaneously by turning P&G into a design organization. In 2001, he appointed Claudia Kotchka as the company’s first-ever vice president for design strategy and innovation, with a mandate to build P&G’s design capability and act as the company’s champion of design thinking. The results speak for themselves. According to P&G’s recent annual report, virtually all-organic sales growth over the past nine years came from new brands and new improved products. P&G has also established significant scale advantage at all levels. These achievements have been accompanied by strong financial results.

U.K’s National Health Service before blowing cash on a logo redesign, a team used design thinking to quickly test the relationship between brand recognition and the ability of the service to help individuals reach healthy outcomes. They would execute a series of quick experiments to generate evidence, and only then they embark on a full rebranding initiative—if that turned out to be the way to create the most value from scarce resources.

Design management in emerging markets

Role of design management in emerging markets

By 2030, according to the World Bank, 93 percent of the global middle class will live in emerging markets. In 20 years, nine out of every 10 people if the global market will live in a country that today we probably do not fully understand. The global market is split into major units, viz., developed market of the west and emerging markets. Huge debt, burdens, and a sluggish recovery slowing growth is the status of the developed  economies. Hence, the businesses are prioritizing consumers in emerging markets in order to capture a piece of the next wave of expansion.
Discussion of emerging markets often blends with discussions about the Base of the pyramid (BoP)
These circumstances clearly present an opportunity for design management. Historically, companies would sell value-engineered or reduced-feature versions of developed-economy products in emerging markets. The conventional wisdom was that on a strict purchasing-power-parity basis, emerging markets consumers had less money to spend, making price the dominant, if not only, factor in their purchase decisions.
Purchasing Power Parity (PPP) is a theory, which states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two markets. This means that the exchange rate between two markets should equal the ratio of the two markets’ price level of a fixed basket of goods and services.
Design had already been paid for and could be further amortized by extending the product into new markets. As spending power in emerging markets increases, consumers in countries like Brazil , Russia, India and China (BRIC) are no longer content with low-cost versions of products designed by the developed nations. For Consumers, the definition of good design is shaped by their own culture and way of life. In order to succeed in the next 20 years, companies need to understand what these consumers value and how they live their lives—and design management is their best chance for articulating a winning vision.  Because designers are the least biased of strategic thinkers. Designers are not inclined for the push of the low cost products or the technology push to emerging markets. Designer and design management has to play an important role to cater to the emerging markets. The role of design management in the emerging markets includes managing various design initiatives for products and services. Innovation emerges from truly understanding the fit between product and person. The design initiatives includes activities like to observe, listen to people with open mind, empathetic to their lives and asking how to make those lives better modestly, Designers need to really focus users in the emerging markets and their experience, and not merely design products by adding some user involvement. However, as the internal markets become increasingly influential in the design of new iterations of products and services.
Companies succeed when design is central to the planning, thinking and execution of new ventures, and that good design in emerging markets is driven by a strong adherence to the following principles.
The Conventions in a specific context exist on both macro and micro levels. These conventions are driven by culture. Conventions need to be considered when designing for people in emerging markets. Although examples can help us reevaluate what we see, there is no substitute for experience. Designers need to begin with an immersion process in emerging markets and thier cultures.
This will help the designers see, hear and taste the local culture and begin to understand the conventions that influence behavior and values. Ultimately, you will need to build a local team with the right blend of capability and native understanding. Many companies have already recognized this and have studios in China, but fewer are seizing opportunities in Brazil or Africa. The more global design becomes the more local it needs to be in order to succeed.
The challenge lays in understanding which differences are meaningful, as the meaningful differences will reveal opportunities for localized design.
Design management for emerging markets outlines key areas of difference—physical, psychological, cultural, environmental and financial—and provides a useful planning and analysis tool for design.
Physical: Anthropological differences like height and weight
Psychological: Mental and emotional states and perceptions of the particular environment.
Cultural: Customs and social norms within societies in emerging markets
Environmental: The spaces, public and private, where they live, work and play
Financial: Economic circumstances
Offering emerging-market consumers low-cost or feature reduced versions of products sold in developed economies is no longer sustainable—and is even risk prone—because it assumes that value is calculated only in terms of cost and the needs and desires are universal. Consumers in merging markets do not have the spending power of their counterparts in developed economies. However, this makes them less likely to purchase products solely based on price.
Design management involves design thinking, which is creating a meaningful solution for billions of emerging-markets consumers with design as their focus. This kind of thinking—design thinking—is the only way to succeed in emerging markets.
In the case of global branding in the emerging markets, the need is to unveil unique cultural and consumer perceptions for the diverse products from retailers’ like Wal-Marts. Design challenges from packaging and images to language and logos that must be addressed in presenting products to these emerging market consumers.  As the emerging market grows, Customers demand experiences designed uniquely for us. No company will succeed with a global product approach. This does not mean there is no value in economies of scale or platform approaches. As economic empowerment democratizes for people in emerging markets, design will represent the smartest, most efficient and most effective means to add value to their lives.  At a certain point, the logic of traditional capitalism reverses— innovation is created in the developing countries and then exported to the developed nations. It is called GLocalism business model developed by GE.  Design in BRIC countries is also influenced by the social diversity of these countries. Creativity is also an inherent characteristic of these cultures due to the lack of resources, which has forced them to find their own methods to solve problems. The design discipline also has much advancing to do. Design schools in these countries will be crucial in preparing their students to lead in the business environment.  They will need to learn to use design methodologies that integrate social sciences, anthropology, and ethnography with business and strategic planning. The world’s creative energy is relocating itself from the developed world to the emerging world, and it is there that companies will find opportunities to grow their businesses.  According to Business Week’ Bruce Nussbaum, Design thinking may have begun as a Western concept, but a reverse flow of concepts is just a matter of time.

Why Design Management

“This collection of work from some of the design industry’s top thought leaders will further stimulate valuable discussion on how, through collaborative and innovative thinking, we can design a better future for all societies and business.”

     —Stefano Marzano,
CEO & Chief Creative Director, Philips Design

Approaching management problems similar to that of the way designers approach design problems—may have important implications for management, and is an emerging prospect that has begun to gain recognition. Companies have to become more like design organizations in their attitude and work methods. We believe that if managers adopted design oriented approach, the world of business would be different and better. Managers would approach problems with a sensibility that swept in the broadest array of influences to shape inspiring and energizing designs for products, services, and processes that are both profitable and humanly satisfying.

Superior business outcomes—especially when the goal is to create new sources of value in the world—are most often achieved through a well-structured design process that is more holistic and inclusive. Design is critical to achieving corporate mission and vision. Companies succeed in
sustainable product design, in the short term by developing a more integrated design process. Rather than just focusing on acquiring new skill sets, they create new cross-functional interactions in their organizations that enable them to design and commercialize breakthrough products.

The past decade design has developed in completely new directions, mainly because of digital and technological developments. Design is no longer simply a competence that is used in connection with product development and styling. Today, design is central to all industries and used to create competitive solutions in relation to communication, services, products etc. Designers should look beyond the conventional activities, like that of packaging, graphics, and product design. In addition, design is used to address societal challenges in relation to welfare, climate and  environmental issues, etc and thus appears more widely integrated than before.

Design Management

The complexity of the design process requires it to be managed effectively. Everything designed, be it a product, identity, interface, environment, or communication, has to be managed. Like any other corporate function, design requires management practices to be applied to the design and
innovation process. The effectiveness is improved by empowering design to enhance collaboration and synergy between design and business.

Integrating the creative side (intuitive, visual thinking, designing) with the analytical side (deductive, measurable, business management) is the
core of design management.

Design Management knowledge can be in the form of maxims, which includes management principles, best practices, guidelines, etc. As the role of design in the world continues to broaden, organizations are increasingly viewing design as being integral to their decision-making rocesses.
Design Management is applied in a company not only depends on the importance and integration of design in the company, but also on industry type, company size, ownership for design and type of competitive competence.
Teaching design to managers is pioneered at the London Business School in 1976 and has been taught on a full-time basis since 1982.

Design management connects a company with the world around it. Design management requires a delicate balance between art and commerce. Successful design management demands structure and discipline. There is considerable body of research, which examines the dimensions of significance of the design management.

To be successful, design should span all business processes of the enterprise. From architecture to service delivery, design should be used to shape human experience. Communication is the essence of design management. Products, uniforms, buildings, Web sites—design management can make a contribution in any arena in which communication takes place. The newest frontier is process design.

Maxims refers to succinct formulation of a fundamental principles, general truth, or rules of conduct. We have identified maxims, which refer to many different aspects of the design management. Maxims are defined into categories.

Design-inspired Management (Design Thinking)

We discover new and interesting ways of using design to create value for business and society. Managers can excel in their work if they adopt design principles and practices in their jobs.

They include, Embrace restraints, take risks, Ask relevant questions, and ensure the tools do not get in the way of ideas. Design is increasingly seen as a competitive tool by businesses.

Design concepts like hierarchy, balance, contrast, clear space, and harmony are very much applied in management. Design inspired management uses abductive reasoning, drawing on logic, as well as imagination and intuition, to explore all possibilities. It is linked to creating an improved future and desired outcomes that benefit the customer. Design inspired management will help you perceive business, products, and customers in new ways and generate ideas for innovation. Business leaders need to balance analysis and intuition, exploration and exploitation. It is a productive combination of analytics and intuition

 Embrace restraints.

Designers are all about working with restraints (time, budget, location, materials). Managers need to identify limitations and then create not the perfect solution, but the best solution given the restraints. The tasks can be completed with fewer resources. Restraints magnify the challenge and increase excitement

Experiment, take risks,

Change does not happen without taking some chances. Designers are comfortable with the notion that they have to do trial and error hence they experiment and try new approaches. Leaders shall inspire the ‘logical leaps of the mind’ that allow for new ideas, and create incentive systems that encourage imagination and innovation.

Ask Questions.

Designers are used to asking myriad questions that may lead to the right question — which will lead to the right answer.

Ideas

It is not about tools, it is about ideas. Designers from various fields spend a lot of time away from new technology tools, using pencil and paper to sketch out their ideas. Generate ideas that are relevant by considering current economic, social, and business trends. Design inspired management defines an organizational environment as a place that welcomes new ideas, rather than a hostile environment that punishes changes. It revolves around three key phases, inspiration, ideation, and implementation. The phases are non-linear.

Metaphors

A newly invented metaphor assists thought by evoking a visual image. Managers in order to illustrate and clarify ideas can use metaphors. Personal stories can also be incredibly effective in helping to create context and meaning. Personal stories are often tied to personal values, and using these to frame a problem or goal can give the management team a sense of the values associated and their priorities.

The primary principles of design are eminently applicable to management science. They are guides to a state of being that makes sense for all types of organizations. Metaphors are a comfortable and flexible starting point for managers and they leave open the chance to use the metonymy that is provided by patters.

Hierarchy

Hierarchy brings order and meaning to messages and organizations alike. Priorities have to be defined clearly and managed for the most frequent or important. Temporary projects can be initiated with associated tasks and flexible hours.

Balance

Encourages cross-disciplinary, cross-functional, and cross-cultural research perspectives.

Contrast

Contrast focuses attention or highlights differences. Conceived as a guiding philosophy for business, design inspired management explores the contrast between explorations – defining a problem then finding the solution – and exploitation – refers continuing  in what you are already doing. Design inspired management values diversity of thoughts well uncovers brilliant insights.

Clear space

Clear space often maligned, is one of the most important elements of design. Percentage time for innovation.

Harmony

Harmony brings together hierarchy, balance, contrast, and clear space in a meaningful way. Harmony persists when goals are agreed upon communicated well and acted on with conviction.

Simplicity

Managers usually wary to assume simplicity. KISS principle. Simple solutions are often the best approach. Small teams are the best.

Global awareness:

Design inspired management enables understanding how changes around the world are affecting the customers and markets. Design approaches are also being applied to infuse insight into the heart of campaigns and address social and other concerns.

Customer Focus

Focus is on an understanding of customer activities. Design inspired management continuously evolves with customer. Validation though what customers do, typically by means of direct observation.

The greatest payout of design Inspired management lies in the design of strategies and business models for organizational performance that creates both economic and human value. Broadening the definition of design,  it can be the path to understanding stakeholder needs, the tool for visualizing new solutions, and the process for translating cutting-edge ideas into effective strategies.

Business Model Design

The following draws, sees three iterative gears in business design. Anchored in the needs of stakeholders, they apply deep user understanding to stimulate high-value conceptual visualizations and extract from these the strategic intent needed to reform business models.

Gear One: Deep User Understanding. The first step is to turn the telescope around to reframe the Organization and view its business entirely through the eyes of the customer (and, of course, other critical stakeholders). It is necessary to look beyond the direct use of an organization’s products or services to the contexts in which they are located, in terms of the activities surrounding their utilization, to gain deeper insight and broader behavioral and psychographic perspectives. It is also critical to understand the ‘‘whole person’’ engaged in any given activity—not just what they do, but how they feel and how their needs surrounding their activities link to other parts of their lives.

Gear Two: Concept Visualization. With renewed empathy and a broader set of criteria for innovation serving as springboard, creativity can be unleashed and move through multiple-prototyping and concept enrichment, ideally with users. It is vital to look beyond what is to what could be, using imagination to generate altogether new-to-the-world solutions. At this stage, there are no constraints, only possibilities.

Engaging all functions and disciplines on the team infuses ideas into the process, fortifies team alignment, and prepares the traction that will lock down strategies and activate them later.

Gear Three: Strategic Business Design. With well-defined, user-inspired solutions , the third gear aligns broad concepts with future reality. This entails prototyping business models to integrate their parts and assess the impact of the activity system as a whole. It is imperative to identify what will drive the success of the solutions; prioritize what activities an organization must undertake to deliver related strategies;

Define relationships strategically, operationally, and economically; and determine what net impacts the new business models will have.

Bridging Designers and Managers

As a group, designers possess a powerful set of talents, beliefs and aptitudes that are often lacking in today’s average corporate culture, but that is uniquely suited to effecting change for more responsible, humane, and sustainable business practices.

Designers are innovators, problem solvers, and implementors. They are empathetic, focused, and keen observers of environment, and they put challenges and assignments into a context that allows for effective, appropriate holistic solutions. However, they typically eschew corporate politics, bureaucracy, and territoriality.

Following are few insights to bridge the gap between designer and management executives.

• A designer applies knowledge about physical, cognitive, social, and cultural human factors to communication planning and the creation of an appropriate form that interprets, informs, instructs or persuades.
• Designers successfully aspired for open-office architecture—and the accompanying collaborative ethic it encourages. The key to this is establishing clear positive open communications , and then maintaining full mutual understanding at all times, irrespective of how much freedom is delegated.
• To work with other organizations (competitor’s) to share effective proofing and regulatory compliance practices—an important process that benefited consumers.
• Designers empowered to shape the focus of major strategic initiatives, as needed to uphold sustainable and socially responsible standards.
• Designers shall be capable enough to lead the major product development team as product directors.
• A designer aspires to ensure the highest level of strategic design, ensuring a higher return on investment and shall demonstrate the integrity and honor.
• Need a paradigm shift in the Role of Designers in Strategic management.
• The principles and practices of design are often unfamiliar to managers trained or experienced in other domains. Incorporate design thinking to managers. Design thinking is the way designers think, the mind processes they use to design objects, services, or systems, as distinct from the result of elegant and useful products.
• Design thinking results from the nature of design work, a project based workflow around wicked problems.

Feature	Managers	Designers
Flow of work	Mostly Ongoing tasksPermanent assignments	ProjectsDefined terms
Style of Work	Defined roles,Wait until it is right	Collaborative, Iterative
Mode of Thinking	Deductive, Inductive	Deductive,Inductive,Abductive
Status of source	massive budgets, large staff	Solve wicked problems
Attitude	Limited by budgets, constraints are unwanted.	can do attitude
Constraints	Constraints are  hindrances	Constraints are challenges

In the early days of industrial design, the work was primarily focused upon physical products. Today, however, designers work on organizational networks structure and social problems, on interaction, service, and experience design. Many problems involve complex social, behavioral, and political issues. As a result, designers have transformed into applied behavioral scientists, but their capability on social and behavior discipline has to be more intense. Design schools do not focus on complex issues interlocking complexities of human and social behavior and about the behavioral sciences. Many designers are ignorant of the complexity of social and organizational problems.

• Designers often have  inadequate knowledge in social and behavioral sciences.
• In addition, designers are often ignorant of the biases that can be introduced into experimental designs and the dangers of in-appropriate generalization.
• Designers are practitioners, which mean they are not trying to extend the knowledge base of science but instead, to apply the knowledge.
• Design forms part of Architecture / Design / Anthropology (A/D/A) paradigm,where as management forms part of Mathematics / Economics / Psychology (M/E/P) management paradigm.
• Design education has to be enhanced in the schools of management education.
• Vital need exists is for new kind of designers T shaped individuals,  who can work across disciplines, who understand society, business, and technology and the appropriate means of validation. Service design, interaction design, and experience design require knowledge of the social sciences, stories, back-stage operations, and interactions.