Design Thinking For Business Strategy
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Design Thinking for Business Strategy - Lecture at the Chicago GSB New Product Development class
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Design Thinking For Business Strategy
- 1. Date: January 25th, 2007 Harsh Jawharkar University of Chicago – Graduate School of Business Design Thinking for Business Strategy
- 2. 2 January 2007 Background Management Consultant – A.T. Kearney Previously … • IDEO – Service Innovation Human Factors • HSBC – Consumer Insights Experience Modeling • Sapient – User Experience Modeling • IPM – Management Consulting Interests – • Service and product innovation models • Business strategies driven by a design-thinking mindset Harsh Jawharkar (GSB ’06) http://www.linkedin.com/in/harsh
- 3. 3 January 2007 Innovation … Buzzword, Fad, or Bellwether? innovation Main Entry: in·no·va·tion Pronunciation: i-n-'vA-shn Function: noun 1 : the introduction of something new 2 : a new idea, method, or device : NOVELTY Thesaurus: something (as a device) created for the first time through the use of the imagination -- see INVENTION buzzword Main Entry: buzz·word Pronunciation: 'bz-wrd Function: noun 1 : an important-sounding usually technical word or phrase often of little meaning used chiefly to impress laymen 2 : a voguish word or phrase -- called also buzz phrase Thesaurus: stock phrases that have become nonsense through endless repetition -- see hokum, nonsense, bunk Source: Merriam-Webster Online, thefreedictionary Innovation is a process … not an approach
- 4. 4 January 2007 The BusinessWeek effect … is it like the Sports Illustrated cover jinx?
- 5. 5 January 2007 Innovation is catalyzed by an opportunity to close the gap Left Brain Sequential Rational Analytical Objective Looks at parts Right Brain Intuitive Holistic Synthesizing Subjective Looks at wholes Skillsets • Linear • Data driven • Outcome oriented • Focused on the ‘end’ Skillsets • Empathic • Observation driven • Experience oriented • Focused on the ‘journey’ OPPORTUNITY
- 6. 6 January 2007 Design thinking is an attitude, an approach – a mindset Inside Out – Traditional Mindset Outside In – Design Mindset Consumers Front-line Personnel Operations Sales Marketing Customer Service C – Level Consumers Front-line Personnel Operations Sales Marketing Customer Service C – Level A design mindset is critical to successfully solving or creating
- 7. 7 January 2007 Design firms currently occupy a less demanding space on the value chain, thereby decreasing their leverage in corporate boardrooms Value Stimuli Ideate Conceptualize Validate Operationalize • Stimuli derived from: • Existing business offerings • Perceived demand for offerings • Market dynamics • Competitive forces • Ideation requires: • Suspension of disbelief • Ability to cross- pollinate • Faith in disruptive technologies • Conceptualization requires: • Observation Empathy • Identifying heuristics • Experiential modeling • Visualizing a story or scenarios • Validation requires: • Prototyping the offerings • Metrics and measurability • Assessment of capabilities and competitive forces • Operationlization requires: • A data driven approach • Tactical and organizational mindset • Attitudes geared towards measurable outcomes Design Firms Management Consulting Firms People $$$ Change Management
- 8. 8 January 2007 Design firms are attempting to develop operational capabilities IDEO Design Focus Business Focus Source: Jess McMullin, bplusd.org McKinsey A.T. Kearney BCG Bain Booz Allen Monitor Strategos Mercer frog ZIBA Continuum Cheskin Method Smart Design Jump Herbst Lazar Bell Astro Lunar Sapient razorfish Organic Agency.com Fitch Desired Skill-set and Positioning SonicRim
- 9. 9 January 2007 What can design-thinking do for you?
- 10. 10 January 2007 What else can design-thinking do for you?
- 11. 11 January 2007 Elements of design thinking Observation Empathy Ideation Conceptualization (Storytelling, Modeling) Prototyping Being T-Shaped
- 12. 12 January 2007 Observation Ethnographic Techniques • Ethnography Observing people in their natural environments • Behavioral Mapping Photographing people within a space, such as a hospital waiting room, over two or three days. • Consumer Journey Keeping track of all the interactions a consumer has with a product, service, or space. • Camera Journals Asking consumers to keep visual diaries of their activities and impressions relating to a product. • Storytelling Prompting people to tell personal stories about their consumer experiences.
- 13. 13 January 2007 Empathy 1. Moderately protected 2. Easily accessible 3. Staging area for major objects 1 2 3 Simulated - this is not a test participant's desk
- 14. 14 January 2007 Ideation Brainstorming • Defer judgment • Build on the ideas of others • Encourage wild ideas • Go for quantity. 100 ideas in 60 minutes • Be visual • Stay focused • One conversation
- 15. 15 January 2007 Conceptualization (Building a Behavioral Model) Deposit Checks Review Statements Pay Bills Transfer Funds Shop for Deposit Products Shop for Credit Cards Shop for Loans LoC's Apply for Deposit Products Apply for Credit Cards Apply for Loans LoC's Shop for Service products Apply for Service products HIGH Deposit Checks Review Statements Pay Bills Transfer Funds Shop for Deposit Products Shop for Credit Cards Shop for Loans LoC's Apply for Deposit Products Apply for Credit Cards Apply for Loans LoC's Shop for Service products Apply for Service products RETAIL The Bridge Entrepreneurs are credit hungry and this is the point of reference they seek in terms of business legitimacy and sustainability. Sometimes Online Often Offline Mostly Offline Almost Always Offline Need to transform into online conducive activities COMMERCIAL LOW Time to Make Decisions Need to Validate Decision The Need for : Need to Protect Privacy (Security) Level of Complexity Paperwork Clear Path Choices Simple Presentation Usable Experience Entrepreneurs inherit behaviors from their Personal Banking experiences ENVIRONMENTS Checking Savings Credit Card Line of Credit Loan Insurance Retirement Employee Benefit Low Touch High Touch Commodity Differentiated Fast Decision Slow Decision CORE PRODUCT BUNDLE GROWTH PRODUCT BUNDLE Price Parity Negotiable Infancy Adolescence Maturity
- 16. 16 January 2007 Prototyping (Test and Validate) OR But which way is up ? Is that a button or not? 0, 1, 2, 5, 6, 8, 9 - all digits look identical upside down Most people were unable to identify how to hold the device.
- 17. 17 January 2007 Being T-Shaped Source: Creative Generalist blog, Steve Hardy Thinking Linking Doing Observing Empathizing Divergent thinking Brainstorming Matchmaking Cross-pollinating Synthesizing Facilitating Executing Implementing Specializing
- 18. 18 January 2007 Design-thinking Frameworks USERS ACTIVITIES are goal directed sets of actions-things which people want to accomplish OBJECTS are building blocks of the environment, key elements sometimes put to complex or unintended uses, changing their function, meaning and context ENVIRONMENTS include the entire arena where activities take place INTERACTIONS are between a person and someone or something else, and are the building blocks of activities Source: 1. User Insight Tool, Vijay Kumar 2. Ethnography in the field of design, Christina Wasson ALTERNATIVES: POEMS – • People • Objects • Environments • Messages • Services Experiential Framework1: • Physical (e.g. small vs. big) • Cognitive (e.g. understandable vs. confusing) • Social (e.g. informal vs. formal) • Cultural (e.g. acceptable vs. problematic, or shared vs. conflict) • Emotional (e.g. bored vs. engaged, or anxious vs. calm)
- 19. 19 January 2007 Anatomy of a design firm About IDEO • Pronounced “Eye-dee-oh” • 500 designers • HQ in Palo Alto • Offices in San Francisco, Chicago, Boston, London, Munich, and Shanghai • CEO – Tim Brown • Cofounders – David Kelley (Stanford) and Bill Moggridge • Notable concepts – – The first mouse – Palm V – Handspring Treo
- 20. 20 January 2007 Environment Informal Customizable Stimulating Collaborative OFFICE
- 21. 21 January 2007 People Eclectic Unusual Diverse Right-brained
- 22. 22 January 2007 Capabilities Product Design Service Environment Design Human Factors Industrial Design and Engineering Interface Design
- 23. 23 January 2007 Innovation requires going beyond the realm of ‘pushing’ products Products (Attributes) Experiences (Consequences) Lifestyles (Values) Wal-mart X Bank X Grocery Store The Gap Trader Joe’s Target JetBlue Commerce Bank Apple Whole Foods Starbucks TiVo Blackberry Harley Davidson Google IKEA Volkswagen In ‘n Out Burger Zara Toyota Dunkin Donuts Samsung
- 24. 24 January 2007 Windows Mobile vs. the potential iPhone Widgets Email Music/Video Browser Maps Camera SMS FEATURE A collection of features does not ensure successful innovation
- 25. 25 January 2007 Wal-mart vs. Trader Joe’s
- 26. 26 January 2007 Project Examples Large Healthcare Insurer • How do we engage our customers to take ownership of their health? • Is there a mutually beneficial way to reduce healthcare costs? Large consumer goods manufacturer – China strategy • How do we re-launch our car care business in China? • What options can we generate to create services based on our products? Largest service employees union in North America • How do we motivate our base? • Can we reignite the grassroots movement? HSBC Commercial Banking study • Should we develop and launch this idea? • How receptive (or not) will consumers be? • What are the impacts to our brand?
- 27. 27 January 2007 Case in Point – The Gap Background • Opened in the summer of ’69 in San Francisco • More than 3000 stores and $16 B in revenues • Profit margins (6.5%) – half of industry average • Same-store sales are 8% lower (Dec 2005-2006) • Healthy Banana, sinking Navy, wider Gap • Called Goldman Sachs to “explore all options” How would you approach this? • Traditional vs. Design Thinking
- 28. 28 January 2007 Traditional Approach Revenues • Pricing pressure • Volumes • Penetration • Purchase frequency • Transaction size • Transaction value • Product mix • Customer mix segmentation Costs • Fixed real-estate footprint • Size of stores • Portfolio rationalization (Gap, Banana, Old Navy) • Variable labor costs • Material costs and sourcing strategies • Generate hypotheses • Define data requirements • Gather and organize data • Analyze data to identify key issues
- 29. 29 January 2007 Design-thinking Approach OBJECTS ENVIRONMENTS INTERACTIONS USERS ACTIVITIES Environments, Interactions, Objects • How do you plan a trip to The Gap? • Is it scheduled or impulsive? • What’s the trail between the desire and the purchase? – Is it direct or does it involve browsing? – Should it be accelerated or indulged? • How do users interact within the store? – With the merchandise? – With other shoppers, store personnel? – With stimuli (light, sound, sense, smell)? Users Activities • Who wants to shop at The Gap? – Why? • When would you go to The Gap? – Why? • What would trigger a trip? – How? – Who else is involved? – Who influences this desire? Why?
- 30. 30 January 2007 Resources My Google Reader ‘Design’ Feed can be accessed from – • http://harshlogic.blogspot.com Comprised of the following blogs – • Brand Autopsy • Influx Insights • Nussbaum On Design • Putting People First • Seth’s Blog • CPH127 • Core 77