Core magazine: Design enters the C-suite

11 January 2017

  • Exclusive article from Warwick Business School's magazine Core
  • WBS academics Pietro Micheli and Scott Dacko discuss design in business
  • Design thinking can be a process for virtually anything according to Dr Micheli
  • Dr Dacko believes design thinking can even help cut down waste

Traditional management theory that has dominated boardroom thinking for so long has finally got a rival. And it’s called ‘design thinking’.

Approaches that used to reside within product design and R&D departments are being turned inward, and helping to reshape organisational structures and processes.

Related Course: Executive MBA

Ayse Birsel, co-founder of Birsel + Seck, a design and innovation studio in New York that works with multinationals including GE, Johnson & Johnson, and Hewlett Packard, defines design thinking as “thinking like a designer, holistically, optimistically, collaboratively, with empathy and asking ‘what if’ questions to inform business practices. In other words, the design process is inclusive, it gets people to see the big picture, put themselves in other people’s shoes, be open to new ideas and provide the tools to think differently and creatively about the same old problems.

“Traditional management tools don’t allow for leaps of imagination and problem solving – design thinking brings creativity, business logic and intuition together.”

The notion of design thinking as a holistic business approach was first popularised in 2008 by Tim Brown, CEO and President of IDEO, the Californian innovation and design consultancy.

“Historically, design has been treated as a downstream step in the development process”, said Brown. “Now, however, 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.”

Markus Hohl, London CEO for Finnish service design agency Hellon, believes the emergence of design thinking parallels a significant social change.

“We are moving from B2B and B2C to H2H: the Human to Human era,” he says. “B2B and B2C thinking worked until recently as markets moved at speeds that allowed a considered response, the direction of market development was predictable, the competitors known.

“But today’s markets move at rapid speeds, it’s hard to know which direction the competitive disruption will come from, and employees often have to respond immediately.”

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This volatile business climate, argues Joe Ferry, Visiting Tutor at the Royal College of Art and former Head of Design for Virgin Atlantic, means that “the relevance of embedding design thinking into a company's culture has never been more relevant.”

He adds: “It can be used to establish possible future states for businesses and therefore help develop strategies. Or it can be used by a business that wants to be the disruptor to the market.”

Warwick Business School and the Design Council formed a collaboration in 2013, headed by Pietro Micheli, Associate Professor of Organisational Performance, to examine how businesses – including organisations not traditionally associated with design – can benefit from design thinking.

“At its simplest level, design thinking is a process”, explains Micheli. “One that you can use for virtually anything around you – when buying a new home, or preparing a room for a new child, whatever it may be. It’s essentially a sequence to approach a problem by asking ‘what if’ questions, through exploration, iteration, and a strong focus on the user. You’re not going to understand people just by asking them what they think. You observe people and their unconscious habits.”

This can be utilised not only to improve product design but also the services and internal workings of companies says Micheli.

The future of intelligent homes? Nest Thermostat
Smart: The Nest thermostat was born out of design thinking

“The big difference is that service design happens from many touch points,” he says. “If you think about your relationship with your bank, it’s not that you go into a branch, buy something, and never hear from them again as you would do if you buy a washing machine.

“Instead you set up a relationship through internet banking, you may have separate accounts and investments – so they design a service to accommodate your needs. But most banks don’t look at it from a user point of view and a holistic experience.”

One bank that has attempted such an approach, as uncovered by Micheli’s research, is Barclays and its dedicated Chief Design Officer under the tenure of the retail-centric CEO Antony Jenkins.

At Barclays a new way of setting up project teams was being trialled. Known as ‘hoppers’, cross-functional, mixed hierarchy teams were assigned specific tasks related to customer experience and allocated a space to work away from their day jobs to work solely on that project.

The bank’s successful Pingit mobile payment service, for example, was launched like a start-up, utilising a dedicated hopper team.

Micheli’s research found that this collaborative approach allowed for a much faster time to market with development much more grounded in customer insight. The hopper teams observed how customers used the app, rather than asking them via questionnaires.

“It’s the observation of their behaviours in their environment that we try to design around," Chief Design Officer Derek White told Micheli. “Not necessarily what they tell us in focus groups.”

Related article: How car firms are creating an experience and not just a car

At the time of the study Pingit had been downloaded by more than two million customers and won more than 20 awards for innovation. Another example is the Nest smart thermostat.

Micheli says: “If somebody had come to you and said ‘do you want a new thermostat?’ It may not have been something you’d really thought about before. However, this has become a super-selling product because, although it may not have been labelled as such, it followed a design thinking process.”

This, in essence, was to observe and understand the habits of energy consumption within people’s daily lives, as a credible alternative to the traditional, linear, incremental optimisation-driven process that is the norm in product design.

“I’m not saying that market research is wrong,” says Micheli. “But what you find out from that is what people can tell you. It can give you some kind of trend or average. But if you want to know something new that is going to trigger something different, it’s unlikely to emerge from traditional processes.”

The famous phrase from Henry Ford - “if I’d asked people what they wanted, they would have asked for faster horses” - rings true almost a century on.

Hohl, who features in Micheli’s research, describes the user as “the starting point and centre of design thinking”.

“Unless a business addresses the user’s need with their offer it’s unlikely to succeed,” says Hohl. “It sounds obvious but you need to know how to ‘get to’ the user’s real needs, requiring expert research techniques and interpretation, you can’t just ask them.

“It often seems easier for businesses to speculate on user needs and then settle for a solution – the ‘build it and they’ll come’ syndrome.  Or marketing - ‘if we just tell everyone or make it cheap enough they’ll surely buy it’. While there is some mileage in those, the maximum value can be extracted from an investment if you know what really meets the customer’s needs and wants.”

The observational approach – also known as ethnography – is also integral to the recent collaboration between Scott Dacko, Associate Professor of Marketing and Strategic Management at Warwick Business School, and Rosanna Garcia, of North Carolina State University, looking at design thinking for sustainability.

Their chapter in the recent book Design Thinking: New Product Development Essentials from the PDMA, posits that design thinkers have the potential to slow down environmental and social degradation more so than economists or even engineers.

By creating products and services that incorporate empathy for consumers’ wants and needs into product and service design, waste can be reduced and resources better utilised.

Currently 80 per cent of products are discarded after a single use and 99 per cent of materials are discarded in the first six weeks of use. Consumers and regulators are demanding new alternatives, says Dacko, namely products and services which have a whole lifecycle, cradle-to-grave approach, with re-use and recycling considered from the start.

The sportswear company PUMA is cited as a best practice in Garcia and Dacko’s chapter for its InCycle range of footwear and apparel, which are made from materials that are relatively easily turned back into both biological and technical nutrients at the end of their useful lives.

PUMA’s in-store bins also make it convenient for consumers to return them. Xerox is another example, being far ahead of the curve in 1991 when it began designing photocopiers for ease of disassembly and recovery for re-manufacture, re-use and recycling, diverting tonnes of waste from landfill and savings billions of dollars in raw material costs.

A key phrase in Garcia and Dacko’s writing is that “users contribute as co-creators”, ideally through a process called rapid prototyping - creating visual manifestations of a concept, and giving it to consumers to see what they think and how they would use it in their everyday lives.

Extracting toners from old printer cartridges, Guiyu, China
Any old iron: Xerox designed their photocopiers to be re-cycled

“You say to users, here’s a prototype, it’s tangible, you can interact with it, talk about it, and they have ideas and offer feedback”, says Dacko. “It fits with crowdsourcing - a company can’t have all the ideas. The net effect is you create empathy, you co-create, and end up with something that’s more sustainable.”

While focus groups can be useful to garner ideas and contributions, an ethnographic process can be especially useful in sustainability design because it can uncover real world, unconscious habits. 

“There’s an issue now for example with single use espresso machine coffee pods”, says Dacko. “Increasingly the users of these machines care about recycling but their actions are inconsistent with their concern. It’s too easy to throw away, even where a company gives users a bag to recycle. You capture that behaviour and reasoning far more in observation than you would in a focus group.”

Procter & Gamble is a past master at ethnographic observation of customers.  Dacko says: “They will ask customers, ‘can we come into your homes and watch you do the laundry?’ Tesco also went to the US and asked if it could observe how people prepare meals at home.”

This may be time consuming and costly, but it should lead to enhanced product or service design because Dacko argues “customers are good at identifying problems far more easily than solutions”.

Related article: John Lewis innovation boss: "Emotion key not technology"

He adds: “It can lead to a design process that addresses the prevention or reduction of a negative consumer outcome by changing behaviour.

“It is rarely a case of ‘I have observed, therefore I now know what to do’, it is often quite challenging. But it should lead to several ideas that can then be shortlisted and evaluated.”

Garcia and Dacko’s chapter offers a method for organisations and practitioners to follow. The ‘what if’ questions mentioned by Micheli are broken down by Garcia and Dacko into specific stages, including identifying a specific goal, imagining what such a product or service might look like that could deliver this, and then discussing the milestones needed to achieve this.

That should then be followed by ‘what wows’ to “determine if the sustainable product or service designed in ‘what if’ actually enchants the consumer as intended”, says Dacko.

This can be assessed via sustainability assumption testing – testing each touch point that the consumer has with the firm and the product, including packaging, supplementary products and end-of-life as well as rapid prototyping. This eventually leads to ‘what works’, which is observing of consumer behaviour to determine if the resulting design actually meets its goals.

To work in practice this process needs to be part of the organisation’s culture, not “a bolt-on, take it or leave it option”, argues Dacko. In the long run, he believes design thinking for sustainability will be the norm, and sustainability measures will be standard indicators that all firms track.

A snapshot of today’s business environment, however, suggests this is still some way off. Cheaper, linear models still dominate, and a throw-away society remains the Western norm. But there are signs and trends that lead Micheli to be optimistic.

He says: “If I were to make two bold claims, I would say one is: the way we, as consumers or users, relate to a product or service is changing.

“We are valuing the experiential part much more than we used to. In the past the fact that a car started was already quite something; now, you are definitely expecting a lot more from an automobile. Our expectations and what we value is much broader than just buying a product.

“The second is the ‘humanisation’ of technology as technology becomes all pervasive, through intelligent homes, wearable technology and the internet of things. What design promises is to make it human and relatable to human needs.”

Gretchen Gscheidle, Director of Insight and Exploration at Herman Miller, agrees that the opportunities to “delight customers are stronger than ever before – and the rewards for doing so ever greater”.

Related article: Design in Business - Relive the event here

She says: “We’re also seeing a generation of workers who have grown up in a culture where collaborative work is a regular part of their education experience. It’s a new normal for them and will only intensify as I know there are an increasing number of schools deploying design thinking explicitly in their curriculum.”

Dacko sees an increasing interest in sustainability and user-focused design amongst the latest crop of MBA students.

“They see sustainability as a key success factor now,” says Dacko. “Certainly those I teach are motivated, they are committed, they see a need and they want to be responsible. I’m relatively optimistic that the direction will be a greater take up of design thinking for sustainability over time.”

Another cause for optimism is arguably the greatest proponent of design thinking: Apple.

“Whenever you go to any event, I always count how many seconds – not even minutes – it takes for somebody to say Apple and Steve Jobs,” groans Micheli. “But yes, if you buy an Apple product it is obsessive with the level of detail, right down to how you open the box and how it feels to enter an Apple store.

“Apple has been fantastic in interpreting the idea of what design means in terms of shape and aesthetics, ease of use, the intention to be intuitive, and relatability - the whole experience. It almost makes you feel unique despite the fact that hundreds of millions of people have brought the exact same product. That is quite something.”

If it’s the driving force behind the world’s most successful company, that’s reason enough for others to copy it. 

Pietro Micheli teaches Managing Organisational Performance on the Executive MBA and Executive MBA (London). He also teaches Design in Business on MSc Management and Leading the Knowledge Based Organisation on the suite of MSc Business courses.

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