Rotman Management Magazine - - CONTENTS -

A.M. Mcga­han + M. Le­ung

de­sign think­ing OVER THE PAST 15 YEARS, has had an ex­plo­sive im­pact on in­no­va­tion and com­mer­cial­iza­tion, es­pe­cially within es­tab­lished firms. The Rot­man School’s former Dean, Roger Martin, has con­trib­uted might­ily to these ad­vances, no­tably through his book, The De­sign of Busi­ness. Other au­thors, in­clud­ing David Kel­ley, founder of IDEO, have de­vel­oped and pop­u­lar­ized the ap­proach both in prin­ci­ple and in prac­tice.

The meth­ods and ap­proaches of this dis­ci­pline are var­ied, yet they gen­er­ally boil down to un­leash­ing creativ­ity through an it­er­a­tive series of steps:

1. In a typ­i­cal UN­DER­STAND AND EM­PATHIZE WITH END USERS. de­sign-think­ing ap­proach, prac­ti­tion­ers get out of the or­ga­ni­za­tion and into the field to bet­ter un­der­stand their cus­tomers, em­ploy­ing ethno­graphic re­search tech­niques such as user ob­ser­va­tion and open-ended in­quiry to iden­tify un­met needs.

2. Armed with this pri­maDEFINE THE PROB­LEM(S) TO SOLVE. ry re­search data, they then syn­the­size dif­fer­ent ‘prob­lem frames’.

3. A cross-dis­ci­plinary team then IDEATE POS­SI­BIL­I­TIES. brain­storms pos­si­ble so­lu­tions based on the fram­ing in Step 2. 4. The team then pro­to­types the best PRO­TO­TYPE IDEAS. pos­si­bil­i­ties into tan­gi­ble con­cepts. These may take the form of phys­i­cal mod­els, sto­ry­boards or vi­su­al­iza­tions.

5. The end prod­ucts of Step 4 are then TEST WITH USERS. tested with ac­tual po­ten­tial users. Their feed­back is used to it­er­ate on the idea — and some­times, to re­frame the prob­lem to be solved.

While this ap­proach to in­no­va­tion has been her­alded for its ef­fec­tive­ness in prod­uct and ser­vice de­sign, it has some­times been crit­i­cized when ap­plied to strat­egy prob­lems. The cri­tiques have come on a num­ber of lev­els. One is that the kind of blue-sky think­ing in­volved in con­cep­tu­al­iz­ing user needs of­ten leads the team to­ward ideas that are ul­ti­mately in­fea­si­ble or un­vi­able. An­other cri­tique is that the process of de­sign think­ing can stir ex­cite­ment for change, but doesn’t al­ways lead to a roadmap for its ful­fill­ment. Yet an­other is that the cross-func­tional work­ing groups at the heart of the de­sign think­ing process don’t have the author­ity or abil­ity to drive im­ple­men­ta­tion of their ideas.

In this ar­ti­cle, we take up themes that were first in­tro­duced by Roger Martin and former Proc­ter & Gam­ble CEO A.G. Lafley in their Har­vard Busi­ness Re­view ar­ti­cle, “Bring­ing Science to the Art of Strat­egy.” In this ar­ti­cle, the co-au­thors sug­gest a de­sign think­ing-like ap­proach as a more ef­fec­tive process for con­cep­tu­al­iz­ing and im­ple­ment­ing strat­egy. They be­gin by rec­og­niz­ing that strat­egy pro­cesses in or­ga­ni­za­tions are of­ten strong on the anal­y­sis

of es­tab­lished trends and prob­lems, but lack­ing in novel hy­poth­e­sis gen­er­a­tion and ex­per­i­men­ta­tion.

Martin and Lafley then de­scribe how de­sign think­ing can be im­ple­mented most ef­fec­tively: By gen­er­at­ing and eval­u­at­ing strate­gic op­tions in an ef­fort to re­solve core strate­gic prob­lems in or­ga­ni­za­tions. For in­stance, Step 1, un­der­stand­ing users, is likely to con­trib­ute ad­di­tional strate­gic op­tions not pre­vi­ously con­sid­ered by the team.

By ded­i­cat­ing a num­ber of cross-func­tional teams to work in­de­pen­dently on each of sev­eral op­tions gen­er­ated in Step 3, an or­ga­ni­za­tion can ben­e­fit from the creativ­ity and en­ergy of ded­i­cated en­thu­si­asts work­ing in par­al­lel: Each team fo­cuses on a dis­tinct op­tion that is de­signed to be in­com­pat­i­ble with the oth­ers. A crit­i­cal in­sight in their anal­y­sis is the idea that, once op­tions are gen­er­ated and fleshed out, the strat­egy process then seeks to clar­ify the as­sump­tions that would have to be true in or­der for each op­tion to be ro­bust. Thus, in­stead of en­gag­ing in ad­vo­cacy-driven ar­gu­ments about the var­i­ous op­tions, the process again be­comes pri­mar­ily an­a­lyt­i­cal, with each op­tion rest­ing on as­sump­tions that can be stress-tested. Once as­sump­tions are ver­i­fied, the strat­egy process con­cludes with a com­mit­ment to a de­sign-based op­tion.

The Martin and Lafley ad­vances con­sti­tute a re­mark­able break­through be­cause they demon­strate the rel­e­vance of de­sign think­ing to the process rather than only to the sub­stance of strat­egy. Blend­ing art with science, they show that or­ga­ni­za­tions can ben­e­fit from both creativ­ity and anal­y­sis. In­stead of pur­su­ing use­less ar­gu­ments about the ‘fluffi­ness’ of in­tu­itive rea­son­ing, strate­gists can in­te­grate de­sign think­ing and an­a­lyt­ics to achieve more than what can achieved on each in­de­pen­dent path alone. These ideas are im­por­tant be­cause the process that they out­line over­comes the three ob­jec­tions that we out­lined ear­lier: in­fea­si­bil­ity, dead ends, and lack of author­ity.

We seek to build on this suc­cess by point­ing to the im­por­tance of de­sign think­ing for ad­dress­ing strat­egy at an­other level — one that has emerged re­cently as cen­tral to the field of strat­egy, and that we be­lieve will be­come even more im­por­tant in the near fu­ture. It is be­com­ing abun­dantly clear that a large class of strat­egy prob­lems in­volve chal­lenges to the fun­da­men­tal ar­chi­tec­ture of or­ga­ni­za­tions. Many of these prob­lems (and so­lu­tions) are de­scribed as ‘dis­rup­tive’, and are equally dis­rup­tive to the peo­ple as­so­ci­ated with the or­ga­ni­za­tion.

As a re­sult, ad­dress­ing the chal­lenge of dis­rup­tive in­no­va­tion re­quires re­think­ing the way that all stake­hold­ers as­so­ci­ated with the or­ga­ni­za­tion — both di­rectly and in­di­rectly — are rel­e­vant to value cre­ation, and then assess­ing how value can be al­lo­cated to each stake­holder in a way that is both fair and af­ford­able.

The essence of our ar­gu­ment is that the great­est po­ten­tial for the process of de­sign think­ing in strat­egy lies in ex­pand­ing be­yond users to an ori­en­ta­tion to­ward each of the ma­jor stake­holder groups. All too of­ten, novel strate­gies and user-cen­tric ideas never get im­ple­mented be­cause they fail to meet the needs of the or­ga­ni­za­tion and the peo­ple as­so­ci­ated with it. Hence, we see mas­sive op­por­tu­ni­ties to ap­ply de­sign think­ing at a much broader scale.

This shift raises ques­tions about which stake­hold­ers are rel­e­vant to the on­go­ing mis­sion of the or­ga­ni­za­tion — and par­tic­u­larly, as to whether some stake­holder groups that were pre­vi­ously in­volved must now be let go, while other groups are en­fran­chised. Put sim­ply, the unit of anal­y­sis moves from the user to the mis­sion of the or­ga­ni­za­tion, with the strat­egy process grounded in the ques­tion, What will it take to suc­ceed in ful­fill­ing our mis­sion?

Af­ter a com­pre­hen­sive anal­y­sis of the pos­si­ble an­swers to this ques­tion, the de­sign think­ing ef­fort ad­dresses not only user-based con­cerns, but the chal­lenges fac­ing ev­ery stake­holder group that is en­gaged with the or­ga­ni­za­tion — as well as those that must be en­gaged in the fu­ture.

We would ar­gue that the same kind of em­pathic un­der­stand­ing that is at the heart of user-based de­sign is rel­e­vant for ev­ery or­ga­ni­za­tional stake­holder, in­clud­ing em­ploy­ees, dis­trib­u­tors, sup­pli­ers, cus­tomers and in­vestors. The goal is to use the process of de­sign think­ing to put your­self in the shoes of each stake­holder — and to think about the same ques­tions of busi­ness value, user ex­pe­ri­ence, and ac­tu­al­iza­tion that have char­ac­ter­ized user­based de­sign think­ing.

This means broad­en­ing our ap­pli­ca­tion of de­sign think­ing to a more in­clu­sive and par­tic­i­pa­tory model, as fol­lows:

Ad­dress­ing the chal­lenge of dis­rup­tive in­no­va­tion re­quires re­think­ing the way that all stake­hold­ers as­so­ci­ated with the or­ga­ni­za­tion.

1. Em­pathize with key stake­hold­ers and users

2. De­fine the prob­lems to solve from mul­ti­ple per­spec­tives

3. Ideate pos­si­bil­i­ties with key stake­hold­ers

4. Pro­to­type Ideas, strate­gies and mod­els

5. Test with stake­hold­ers and users

Al­though more com­plex, this ex­panded process gen­er­ates in­sights not only into the op­tions avail­able to an or­ga­ni­za­tion, but it also ad­dresses one of the cru­cial chal­lenges of con­ven­tional de­sign think­ing, which is the vi­a­bil­ity of the op­tions avail­able to the or­ga­ni­za­tion for achiev­ing trans­for­ma­tion. This is be­cause em­pathic con­sid­er­a­tion of the needs of each stake­holder group gen­er­ates an as­sess­ment of each stake­holder’s next-best al­ter­na­tive to par­tic­i­pa­tion. By an­a­lyz­ing the re­sults across all stake­holder groups, the strate­gist can then as­sess whether suf­fi­cient value is cre­ated to com­pen­sate all stake­hold­ers in ways that are fair and sus­tain­able.

Most im­por­tantly, de­sign think­ing drives a firm to­wards an ex­ter­nal ori­en­ta­tion dur­ing cru­cial pe­ri­ods of strate­giz­ing. In­stead of seek­ing com­pro­mise on in­ter­nal is­sues that are of­ten po­lit­i­cal and per­sonal, the process stresses value cre­ation, with the ful­fill­ment of the en­ter­prise’s mis­sion front and cen­tre. As Lafley and Martin sug­gest, anal­y­sis and creativ­ity can be in­te­grated through it­er­a­tive pro­cesses that take the out­put of work­ing groups as fod­der for ex­per­i­ments that gen­er­ate in­for­ma­tion that can be an­a­lyzed rig­or­ously.

Ex­hibit A: TELUS

TELUS is a Cana­dian telecom­mu­ni­ca­tions com­pany that prides it­self on its cus­tomer cen­tric­ity, as ev­i­denced by its cus­tomer sat­is­fac­tion and loy­alty met­rics. The com­pany’s Ser­vice De­sign In­no­va­tion and Strat­egy Group helps its mul­ti­ple prod­uct line di­vi­sions de­liver an in­te­grated and seam­less cus­tomer ex­pe­ri­ence.

‘Stake­holder-cen­tric de­sign’ is at the core of what Ser­vice De­sign Direc­tor Judy Mel­lett and her group do. This en­tails first un­der­stand­ing the cur­rent strat­egy and the needs of in­ter­nal stake­hold­ers — whether it be sup­ply chain, re­pairs or re­tail; then go­ing out into the field to ob­serve cus­tomers in their homes and in stores to un­der­stand their per­spec­tive; run­ning co-cre­ation ses­sions with users and key stake­hold­ers to gen­er­ate and test new ideas; and ex­per­i­ment­ing within the busi­ness to val­i­date new strate­gies and so­lu­tions.

This multi-stake­holder ap­proach drives both in­ter­nal buy-in and new per­spec­tives and has led to the re­design of many of the in­ter­nal pro­cesses and ex­ter­nal ex­pe­ri­ences at TELUS. Ac­cord­ing to Mel­lett, “Broad stake­holder en­gage­ment not only garn­ers di­ver­sity of in­put and builds ad­vo­cacy for re­sult­ing so­lu­tions and strate­gies, it also iden­ti­fies link­ages that were pre­vi­ously unar­tic­u­lated — ul­ti­mately low­er­ing un­cer­tainty and risk.”

This ap­proach lends depth to the anal­y­sis and ex­per­i­men­tal con­cepts when assess­ing the range of pos­si­bil­i­ties, she says, and be­yond the quan­tifi­able out­comes, “the co­he­sion peo­ple de­velop in a col­lab­o­ra­tive work­ing model is a true ben­e­fit of a stake­holder-cen­tric ap­proach.”

In clos­ing

By ap­ply­ing pro­cesses of de­sign think­ing across all stake­holder groups rel­e­vant to the ful­fill­ment of your or­ga­ni­za­tion’s mis­sion, the tool­kit avail­able to the strate­gist ex­pands sig­nif­i­cantly. The re­sult: A strate­gic out­come that is much more likely to suc­ceed.

A large class of strat­egy prob­lems in­volve chal­lenges to the fun­da­men­tal ar­chi­tec­ture of or­ga­ni­za­tions.

Anita M. Mcga­han is the Rot­man Chair in Man­age­ment and Pro­fes­sor of Strate­gic Man­age­ment at the Rot­man School of Man­age­ment, with cross-ap­point­ments to the Munk School of Global Af­fairs and the Univer­sity of Toronto’s Fac­ulty of Medicine. Mark Le­ung (Rot­man MBA ‘06) is the Direc­tor of Rot­man De­sign­works, the Busi­ness De­sign Cen­tre at the Rot­man School of Man­age­ment — his ex­per­tise is in de­sign and in­no­va­tion.

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