HEATHER FRASER on the De­sign Think­ing mind­set

Rotman Management Magazine - - FROM THE EDITOR - By Heather M.A. Fraser

ASK ANY LEADER TO­DAY, and they will tell you that in­no­va­tion is a top pri­or­ity for their en­ter­prise. In the words of Cisco’s John Cham­bers: “Dis­rupt your­self, or be dis­rupted.”

To quote from Pwc’s 2017 CEO Sur­vey report, in­no­va­tion is the most di­rect path to keep­ing an or­ga­ni­za­tion’s offerings fresh and dis­rupt­ing the sta­tus quo. And as that report notes, in­no­va­tion thrives when ex­plo­ration is stim­u­lated, rather than sup­pressed. En­ter De­sign Think­ing — to­day’s pop­u­lar route to ex­plor­ing new hu­man-cen­tered offerings.

The con­cept of De­sign Think­ing is not new — and it wasn’t in­vented by de­sign firms. Pi­o­neers like Her­bert Si­mon, Robert Mckim and Brian Law­son ex­plored this topic as early as 1969. In the last two decades, De­sign Think­ing has been resur­gent, pop­u­lar­ized by thought lead­ers like [for­mer Rot­man School Dean] Roger Martin, who ad­vo­cate De­sign Think­ing as a source of com­pet­i­tive ad­van­tage.

At its best, De­sign Think­ing can help you find creative so­lu­tions to vir­tu­ally any prob­lem; at its worst, it be­comes the ‘fast food of in­no­va­tion’. Mil­lions of dol­lars are be­ing spent on de­sign ‘boot camps’ and sim­pli­fied play­books. While this ap­proach can pro­duce a surge of ideas, in too many cases, no one knows what to do with the bliz­zard of ideas, and they are left on the shelf — or in an aban­doned pile of sticky notes.

Those who com­mit to a deeper in­te­gra­tion of De­sign Think­ing into their way of work­ing have re­al­ized its true value. For ex­am­ple, Proc­ter & Gam­ble has in­te­grated this ap­proach into its prob­lem solv­ing com­pany-wide, with hun­dreds of qual­i­fied De­sign Thinkers through­out the or­ga­ni­za­tion ap­ply­ing it to ev­ery chal­lenge imag­in­able. And In­tuit has es­tab­lished an ex­ten­sive net­work of in-house ‘Cat­a­lysts’ to ig­nite new ideas and in­te­grate them into its dis­ci­plined sys­tem for on­go­ing ex­plo­ration and ex­per­i­men­ta­tion.

These com­pa­nies demon­strate how a com­mit­ment to em­bed­ding De­sign Think­ing into the way peo­ple think and work can cre­ate a sus­tain­able en­ter­prise-wide ca­pac­ity for hu­man-cen­tered ex­plo­ration and in­no­va­tion. But De­sign Think­ing is not enough on its own. Be­yond its gen­er­a­tive and ex­per­i­men­tal as­pects, an en­ter­prise needs to be able to turn ideas into busi­ness ac­tiv­ity. I call this the dis­ci­pline of Busi­ness De­sign — the in­te­gra­tion of De­sign Think­ing with busi­ness acu­men. Three core prin­ci­ples can help to bal­ance the wide­spread ap­petite for De­sign Think­ing with some more fun­da­men­tal busi­ness con­sid­er­a­tions.

PRIN­CI­PLE 1: BUILD A BUSI­NESS CASE

Trans­lat­ing ideas into strat­egy, run­ning mea­sured ex­per­i­ments and rig­or­ously in­te­grat­ing data into your de­ci­sion­mak­ing are crit­i­cal to mak­ing busi­ness sense of big ideas, and build­ing con­fi­dence in in­vest­ments. Let’s ex­am­ine each in turn.

TRANS­LATE IDEAS INTO STRAT­EGY. All of the cre­ativ­ity that goes into the gen­er­a­tion of ideas will be wasted if there is no strat­egy to de­liver and scale new ideas in a sus­tain­able way. Com­pa­nies like Ap­ple and Nike have em­braced in­no­va­tion across the en­ter­prise for decades — in their strat­egy, sys­tems and cul­ture at large — and this has been a crit­i­cal driver of their suc­cess.

Put sim­ply, new pos­si­bil­i­ties are more likely to be re­al­ized if they are strate­gi­cally aligned with your en­ter­prise’s pur­pose and goals. In fact, re­ally big ideas can ac­tu­ally be­come your strat­egy, whereas ideas that don’t fit with your tra­jec­tory will likely be or­phaned. De­sign­ing a strat­egy for a new idea en­tails map­ping out where it re­in­forces your over-arch­ing strat­egy, and know­ing what it will take to scale big ideas — the ca­pa­bil­i­ties you will need to in­vest in, the mea­sured ex­per­i­ments you will need to run and the man­age­ment sys­tems you will need to de­liver the ideas to the mar­ket­place.

RUN MEA­SURED EX­PER­I­MENTS. In­no­va­tion is not risky; not in­no­vat­ing is the greater risk. The role of ex­per­i­ments is to mit­i­gate risk and learn, while gath­er­ing ev­i­dence to build con­fi­dence in your build-out. We see a lot of pop­u­lar press about em­brac­ing fail­ure; but is fail­ure re­ally an op­tion? In the worst case, a tol­er­ance for fail­ure can un­der­mine dis­ci­pline, and the im­por­tance of stay­ing the course in a mea­sured way. In my ex­pe­ri­ence, the smartest com­pa­nies put an em­pha­sis on learn­ing rather than fail­ing. For ex­am­ple, In­tuit’s sys­tem­atic ap­proach to ex­per­i­men­ta­tion links early ideas to mar­ket im­ple­men­ta­tion: teams gen­er­ate ideas and put them through a dis­ci­plined process of mea­sur­ing and ad­vanc­ing ex­per­i­ments through NPS [Net Pro­moter Score] scor­ing.

Ad­di­tion­ally, while Ne­spresso cre­ated a world­wide phe­nom­e­non with its unique and pro­pri­etary cof­fee sys- tem and in­spired vi­sion, it didn’t get there overnight. Over many years, it man­aged risk through hun­dreds of learn­ing ex­per­i­ments — from sim­ply putting 100 ma­chines on dis­play in a lo­cal re­tailer, to boot­strap­ping its early at-home ex­pan­sion through Club Mem­ber re­fer­rals, to ex­per­i­ment­ing with early café pro­to­types. All of these ex­per­i­ments in­formed their de­ci­sions and mea­sured scale-ups along the way to global suc­cess — with over 250 stores around the world, bil­lions in rev­enue and over 10 mil­lion Club Mem­bers.

BE RIG­OR­OUS IN DATA-GATH­ER­ING. Of course, there can be no ‘proof ’ for new-to-the-world ideas, but in­no­va­tion cham­pi­ons must con­tin­u­ously search for rea­sons to be­lieve. That be­gins with how you frame the size of the op­por­tu­nity and as­cer­tain cus­tomer op­por­tu­ni­ties (in terms of un­met needs and sat­is­fac­tion gaps), through to run­ning a se­ries of mea­sured ex­per­i­ments, pro­to­typ­ing al­ter­nate busi­ness mod­els and run­ning fi­nan­cial sce­nar­ios to op­ti­mize your choices. You will need com­pelling facts to jus­tify in­vest­ing in big ideas. The good news is, most or­ga­ni­za­tions to­day have lots of cus­tomer, op­er­a­tional and mar­ket­place data at their fin­ger­tips.

There are also many ways to val­i­date qual­i­ta­tive re­search and as­cer­tain cus­tomer ap­peal. For ex­am­ple, you might con­duct need-find­ing re­search to build a case for the pri­or­i­ti­za­tion of in­vest­ments based on what mat­ters most to your stake­hold­ers.

PRIN­CI­PLE 2: EN­GAGE THE RIGHT PEO­PLE

At some point in the pur­suit of in­no­va­tion, some­one will ask: Who is go­ing to make this hap­pen? A de­lib­er­ate en­gage­ment strat­egy will de­ter­mine the ex­tent of in­ter­nal own­er­ship and sup­port you can cul­ti­vate, the speed at which ideas work their way through your in­ter­nal sys­tems and ul­ti­mately, which ideas make their way to mar­ket. There are many stake­hold­ers to con­sider: the CEO, CFO, busi­ness unit lead­ers, devel­op­ment team mem­bers across func­tions, and even ex­ter­nal stake­hold­ers who can be im­por­tant in­flu­encers and en­ablers. The time to con­sider how and when to in­volve these im­por­tant play­ers is at the start of your jour­ney.

As you craft your en­gage­ment strat­egy, there are three im­por­tant ar­eas to con­sider.

The ‘front line’ in any or­ga­ni­za­tion can bring in crit­i­cal in­sights that in­form new op­por­tu­ni­ties.

OUT­SOURC­ING VS. INSOURCING. There was a time when com­pa­nies in­vested heav­ily in ex­ter­nal in­no­va­tion con­sul­tants, but to­day, that trend is re­vers­ing: More and more or­ga­ni­za­tions are build­ing out their in­ter­nal tal­ent base, with a re­sult­ing surge in the hir­ing of de­sign­ers of all kinds. For ex­am­ple, IBM now boasts one of the largest de­sign pools in the world. Be­yond de­sign­ers, ev­ery or­ga­ni­za­tion is filled with peo­ple who have in­sights, imag­i­na­tion and know-how. While ex­ter­nal ex­perts can cer­tainly bring big ideas to the ta­ble, how they do so in con­cert with your in­ter­nal ex­per­tise is crit­i­cal. An en­gage­ment strat­egy that taps into your in­ter­nal tal­ent will help to boost the odds of big ideas from the out­side be­ing re­al­ized.

BUILD OWN­ER­SHIP THROUGH IN­TER­NAL EN­GAGE­MENT. There is no bet­ter way to mo­ti­vate smart peo­ple than to en­gage them in the process of cre­at­ing a fu­ture that they can own. Har­ness­ing the in­sights and know-how of peo­ple across your or­ga­ni­za­tion will en­sure that they ‘own’ in­no­va­tive so­lu­tions and are able to bring new ideas to life (vs. block­ing them). The first edi­tion of my book [ De­sign Works: How to Tackle Your Tough­est In­no­va­tion Chal­lenges through Busi­ness De­sign] pre­sented a case study of a re­design of the chemo­ther­apy pa­tient ex­pe­ri­ence at Toronto’s renowned Princess Margaret Hos­pi­tal. Based on pa­tient need-find­ing re­search, a cross-func­tional team was en­gaged in reimag­in­ing a to­tal trans­for­ma­tion of the pa­tient ex­pe­ri­ence. This formed the ba­sis of an in­spir­ing ar­chi­tec­tural brief, and served as a ‘light­house vi­sion’ for a ma­jor fundrais­ing cam­paign. In an en­vi­ron­ment where there might nor­mally be re­sis­tance to change, there was wide­spread en­thu­si­asm for the con­cept of progress, with the or­ga­ni­za­tion own­ing the vi­sion and work­ing to­ward re­al­iza­tion through an in­clu­sive process of it­er­a­tion and build-out.

AVOID ‘TRO­PHY LABS’. In­ter­nal in­no­va­tion labs and in­cu­ba­tors have been set up in cor­po­ra­tions all over the world, with great in­ten­tions. Un­for­tu­nately, they of­ten be­come ghet­toized and in­ef­fec­tive in bring­ing about en­ter­prise-wide in­no­va­tion. I am shocked by the num­ber of ex­ec­u­tives I meet who have ei­ther not heard about their own lab or have no idea what is go­ing on there. A re­cent ar­ti­cle in Forbes by Ten­dayi Viki (“Five Rea­sons Your Boss was right to Shut Down Your In­no­va­tion Lab”) presents an alarm­ing trend on the clos­ing of labs that de­liv­ered zero re­turn on in­vest­ment due to a lack of strate­gic align­ment, fo­cus, link to busi­ness in­no­va­tion and pay­out. These ‘Tro­phy Labs’ might look im­pres­sive to in­vestors and me­dia, but too of­ten don’t de­liver a re­turn, be­cause they don’t con­nect to the rest of the en­ter­prise and demon­strate a re­turn on in­vest­ment.

PRIN­CI­PLE 3: CRE­ATE THE CON­DI­TIONS FOR SUC­CESS

It takes an en­tire en­ter­prise to de­liver new value. Fol­low­ing are three con­sid­er­a­tions for cre­at­ing the con­di­tions for suc­cess.

AC­TI­VATE LEAD­ER­SHIP AT ALL LEV­ELS. Se­nior lead­ers guide the en­ter­prise’s pur­pose, vi­sion and strat­egy, while the ‘front line’ brings in crit­i­cal in­sights that can in­form new op­por­tu­ni­ties. Nav­i­gat­ing the path for­ward re­quires a dis­ci­plined bal­ance of three things: Man­ag­ing your present busi­ness, cre­at­ing your fu­ture, and se­lec­tively un-learn­ing the past. I of­ten find that while ex­ec­u­tive teams are ex­cited by big ideas, they are slightly over­whelmed by what it will take to bring the fu­ture to life. They have built a highly suc­cess­ful en­ter­prise, but what is on the hori­zon might look quite dif­fer­ent — par­tic­u­larly in a dig­i­tal age. That points to the im­por­tance of em­pow­er­ing emerg­ing lead­ers. In my teach­ing at the Rot­man School, I am al­ways in­spired by the in­sights, en­ergy and am­bi­tion of our stu­dents for cre­at­ing a new fu­ture. As lead­ers, we have to har­ness that. The key is to lis­ten to and em­power your emerg­ing lead­ers. They have fresh in­sights into the fu­ture, bound­less en­ergy, and they want to make a mean­ing­ful im­pact.

RE­THINK SUP­PORT SYS­TEMS. New ideas need sup­port sys­tems to en­sure a path to mar­ket. That means de­sign­ing how peo­ple work (or­ga­ni­za­tional team­ing and struc­tures), pro­cesses (sys­tems to move ideas through to im­ple­men­ta­tion) and mea­sure­ment (e.g., KPIS). In my days at Proc­ter & Gam­ble, we had a very so­phis­ti­cated go-to-mar­ket sys­tem based on a vol­ume-based man­u­fac­tur­ing model. While the beauty of it

was that you could es­sen­tially ‘drop an idea into the hop­per’ and it would make its way to the mar­ket, it also made it dif­fi­cult to ‘bend’ the sys­tem to get through ideas that weren’t all about max­i­miz­ing ca­pac­ity. Premium brands like Oil of Olay and ser­vice ini­tia­tives like Mr. Clean Car Washes and Tide Dry Clean­ers called for en­tirely new sys­tems, struc­tures and mea­sure­ments of suc­cess. Al­ways re­mem­ber that with new ideas comes a need to re­think your sys­tems and struc­tures.

MEA­SURE AND BUILD YOUR EN­TER­PRISE READI­NESS. While orga- niza­tions of­ten start their jour­ney by in­vest­ing in train­ing, ded­i­cated spa­ces or in­no­va­tion teams with special projects, they must re­al­ize that in­no­va­tion is an en­ter­prise-wide pur­suit: Sus­tain­able in­no­va­tion re­quires strate­gic in­tent, proper struc­tures and sys­tems and, ul­ti­mately, en­ter­prise agility.

With to­day’s tools, your en­ter­prise’s in­no­va­tion-readi­ness is some­thing you can mea­sure, di­ag­nose and act upon. There are a num­ber of pro­fil­ing tools that gauge how ready an or­ga­ni­za­tion is to de­liver in­no­va­tion, in­clud­ing in­no­va­tion as­sess­ment tools, en­gage­ment sur­veys and or­ga­ni­za­tional cul­ture sur­veys. My col­leagues at Vuka In­no­va­tion have de­vel­oped an In­no­va­tion Readi­ness Tool to di­ag­nose how pre­pared an or­ga­ni­za­tion re­ally is from the stand­point of strat­egy, in­no­va­tion prac­tices, sys­tems and struc­tures, and cul­ture. How­ever you gauge en­ter­prise readi­ness, it’s im­por­tant to take a holis­tic view of your busi­ness strat­egy, ev­ery­day mind­set and prac­tices, sys­tems and struc­tures and ul­ti­mately, the cul­ture that you aim to cul­ti­vate.

In clos­ing

De­sign Think­ing has reignited cre­ativ­ity and re­in­forced the im­por­tant hu­man di­men­sion to in­no­va­tion in many or­ga­ni­za­tions. Ex­plor­ing, try­ing new ap­proaches and learn­ing is far more im­por­tant than try­ing to be per­fect right out of the gate. At the same time, it is help­ful to pause and re­flect on how your in­no­va­tion ef­forts link to your busi­ness more ex­plic­itly, how to en­gage your or­ga­ni­za­tion more broadly, and how you cre­ate the con­di­tions for suc­cess.

If you de­cide to adopt De­sign Think­ing, you will ben­e­fit most if you em­bed it deeply and broadly into your way of work­ing. More­over, in keep­ing with the ide­ol­ogy of Busi­ness De­sign, link these ef­forts more ex­plic­itly to your busi­ness goals and lever­age your an­a­lyt­i­cal prow­ess into mak­ing a com­pelling busi­ness case to en­hance the ROI on your in­vest­ments. Most im­por­tantly, it takes an en­ter­prise to de­liver in­no­va­tion: En­gage your peo­ple as ex­ten­sively as you can to cul­ti­vate own­er­ship, cre­ate con­di­tions for suc­cess and build mo­men­tum for your in­no­va­tion jour­ney.

Heather M.A. Fraser is the co-founder of Rot­man De­sign­works and Ad­junct Pro­fes­sor at the Rot­man School of Man­age­ment, and the founder of Vuka In­no­va­tion. She is the au­thor of De­sign Works: How to Tackle Your Tough­est In­no­va­tion Chal­lenges Through Busi­ness De­sign (Rot­man-utp Pub­lish­ing 2017, sec­ond edi­tion).

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