Sections

What Is Design Thinking And Why Should Retailers Care About It?

Maria Morais

The problem with the rat race is that even if you win, you’re still a rat. – Lily Tomlin

There is no single definition of what design thinking is, but most people who use design thinking would probably agree that a design-centric mode of thinking is distinct from a critical mode of thinking as an analytic process.

In a world of constant change and disruptive technology, design thinking is a framework for a human-centric approach to strategic innovation and value creation. And who wouldn’t want this in their organization? Arguably, only companies competing in the rat race.

Design thinking has been oversimplified

The application of design thinking in business is often oversimplified. It’s not about Post-It notes on a wall and creative ways to brainstorm new ideas. It’s a different way of analyzing — more focused on forms, relationships, behavior, and emotions.

The process of understanding how to meet people’s needs isn’t simple. Design thinking helps structure team interactions aligning all participants around specific goals and results.

Why do retailers need to apply design thinking to their business?

For the first time in history, individuals are developing the ability to share information with everyone at any scale and in just a few seconds. The consequence of this is that traditional retail is becoming volatile as a business model and retailers have to adapt their business proposition to a continuous change process that is being led by their customers.

Between 2014 and 2019 total online sales is expected to grow by 82%, which will take the Internet’s share of retail sales to more than 18% in 2019 (Source: Mintel, 2014).

Channels are driving the retail change

In the past, when average-quality products used to be what all customers aspired to acquire, retailers looked at whether or not their distribution channels could manage peaks such as the holiday shopping season. Now the important thing to know is whether retailers are ready to offer customers personalized and consistent experiences across both their online and physical stores.

Channels are driving the retail change, and their composition has an impact across both the revenue and the cost base of the organization. With new online channels emerging every year, all throughout the customer life cycle, there are more interaction options for retailers and their customers.

Experience design as a design thinking approach

Retailers competing in the experience design space are looking to create meaningful contexts of interaction among customers, products, services, and systems on physical and cognitive levels. They know that it’s not just about the interface, integration, usability, or customer service. It’s about the experience; it’s about the customer journey.

For more information about IBM cognitive business, visit: http://www.ibm.com/smarterplanet/us/en/ibmwatson/

Do you hear the voice of your customer? Learn why you should take a customer-centric approach to your business.

You can also discover more about design thinking in the SAP eBook, Digital Disruption: How Digital Technology is Transforming Our World.

For an in-depth look at business innovation in the digital era is, download the SAP eBook, The Digital Economy: Reinventing the Business World.

Digital technology is changing the game for multiple industries. Learn the warning signs of digital disruption.

 

Comments

About Maria Morais

Maria Morais is Customer Engagement and Commerce Retail Lead at IBM GBS. You can follow Maria Morais on Twitter @ceumorais.

Causing Disturbance? Then You’re On The Right Track!

Ansgar Ruhnau

“Disrupt [verb, lat. Disruptus]: interrupt (an event, activity, or process) by causing disturbance or a problem.”

This is the dictionary definition. And this very well reflects what many people think about the constant repetition of the buzzword disruptive. Why do we constantly redefine ourselves and burn down existing systems that are proven and running well?

The answer lies in human nature. The ability to adapt to extreme situations and life-changing events has made us strong and enabled us to dominate the earth. Human beings today live in the desert as well as at the North Pole. No matter how extreme situations are, and no matter what event or change comes our way, sooner or later we adapt and grow comfortable with it. This is called the “Hedonic Treadmill” – the fact that following positive or negative events, human beings tend to quickly return to a stable state of happiness. If you buy a new car, for example, you will be happy for a few days, but very quickly it will become the new normal.

Translating this to business: Any invention, no matter how innovative or game-changing, will become a commodity in a short time. Just think of the smartphone. A great innovation—nowadays everyone has one, and the market is full of competitors. And that defines the speed of today. Businesses are accelerating their development cycles to deliver new innovations and gain a cutting-edge experience for customers. Resting means falling back. It is like an elevator that constantly speeds up.

Thus, optimizing existing structures and building strategies on existing business models is simply not enough. We need to find new business models, think out of the box, and yes: be disruptive. Otherwise, we will not be able to deliver on the growing expectations of our customers. This is all about being confident enough to leave your own comfort zone.

You can tell if you are on the right track if you are causing disturbance.

More resources

Disclaimer: Please note that all statements are my personal views and opinions and do not necessarily reflect the ones of my current employer.

Comments

Ansgar Ruhnau

About Ansgar Ruhnau

Ansgar Ruhnau is an HR business partner at SAP and has a track record in various HR functions. His vision is to build the best organizations for people to live and work together. Ansgar is an upright HR professional that is enthusiastic to discover new things and lead us to the next chapter of how work is performed. He joined SAP in 2010 in a talent program and started his career in Global People Sustainability. He later joined the HR team in Germany as an HR business partner responsible for more than 400 employees. Today, Ansgar is inheriting multiple roles with HR for EMEA and MEE regions at SAP, lately as HR Director for SAP Netherlands and SAP Spain.

Digital Disruption Transforms The Travel Industry – And Airlines Must Respond

Paul Pessutti

The digital economy is transforming the way the travel industry operates. In nearly every sector, early adopters are leading the way.

By rethinking business models, these innovators are opening up new markets. Leveraged technologies allow different experiences for consumers that disrupt the traditional ways companies do business.

Five components of digital economy

What’s driving the digital economy? There are five technology trends that are propelling this revolutionary evolution.

  • Hyperconnectivity. Objects and people the world over are connected in ways they never were before. Much of this connection is via the Internet of Things. The Internet of Things is the network of objects (things) equipped with sensors and software. When connected with wireless technology, these “things” can capture, analyze, send, and collect data. That information can be sent to computers and devices and be used to evaluate performance and offer insights.
  • Supercomputing. These devices generate large amounts of data. Computing technology allows for better analysis of that information. Networked and in-memory computing provide robust tools to collect and analyze all that data. These analyses allow companies to act on information and trends far faster than previously.
  • Cloud computing. Data and analysis are most effective when they can be used quickly and broadly. With cloud computing, insights are available around the world. Different platforms and devices can access the same information in real time. Decision makers can respond and pivot wherever and whenever they are. Cloud computing makes businesses nimble. Resources can be reallocated and cost savings gained with rapid access.
  • Cybersecurity. With so much data and so much access to that data, protection and security are critical. Fortunately, new tools such as biometrics, multi-factor authentication, and behavioral analytics are available. Such tools protect against attacks from hackers and other parties.
  • Outcomes. As our world becomes smarter, consumer expectations are changing. Outcomes are what consumers expect. Businesses must be able to deliver on what consumers want in the moment of need, regardless of where they are or the device they are using. Delighting consumers with exceptional customer service, hyper-responsivity, and new experiences leads to more market share.

Early adopters are winning

Already we see evidence of companies leveraging these digital tools to create and redefine business models. Taxi companies have no taxis. Lodging companies do not own hotels.

These new models have reshaped major travel industry sectors, and consumers today think very differently about what they represent. Here are a few examples.

Airbnb now offers more rooms than some of the most prominent and successful hotel chains in the world. Uber provides one-touch access to rides and transportation without waiting at an airport taxi stand.

Other emerging companies are providing value-added services to consumers in the traditional leisure travel sectors. Skiplagged is an app that finds “hidden city” fares that are far cheaper than some of the commercially published prices.

Seateroo is another service that leverages the so-called sharing economy. The service lets passengers swap airline seats in exchange for payment. Seateroo serves every aspect of the market, including order entry, negotiation, and electronic payments.

What do these new players have in common? They offer consumers something different. They connect with consumers and offer them goods and services they want, at a price point they are willing to pay.

Travelers are empowered. They can review, select, consume, and experience travel in new ways. They have far more control and influence on the newly emergent players than ever possible previously.

Airlines slow to react

Airlines have been slow to respond to these innovations and embrace the digital economy. As a recent Harvard Business Review article noted, airlines have focused on non-disruptive areas to grow market share. These include an increased focus on efficiency (smaller seats, baggage fees, charging for in-flight meals, and entertainment).

Airlines have also turned to international global alliances to help keep planes full. Finally, airlines are continuing to pursue mergers as a way to gain access to more routes and a larger market share.

The result, as the article states, is “a bunch of companies trapped in their customer layer and unable to grow in revenue – except through external means.”

Instead, airlines should embrace these new digital opportunities. Doing so means taking a broad new approach to their models. Here are a few ways the industry can catch up.

  • Offer better traveler loyalty management with personalized travel experiences for their customers, knowing the passengers’ personal preferences and needs in order to exceed expectations.
  • Think like retailers by offering flyers richer shopping experiences when they purchase travel, giving them more options and flexibility.
  • Create smarter operations that use real-time data to accelerate repair and replacement, and deploy predictive modeling to anticipate and address delays.
  • Use predictive modeling for improved safety and maintenance as opposed to the traditional reactive model. Data modeling creates efficiency by reducing the disconnects between finance, ticket sales, flight, and analytics data sets.

Rich opportunities

Airlines that understand the quickly shifting dynamics are going to thrive in the passenger travel market. Digital innovations will only continue to disrupt the travel industry.

Airlines need to recognize that today, every company is a digital company. The companies that excel in the near future will take a leading role in reinventing their business models by digitizing more business components and passenger engagement and partnering with other market entities to leverage economies of scale.

For more insight on this digital age of airlines, see “Build a Better Customer Journey for the Digital Traveler.”

Comments

Paul Pessutti

About Paul Pessutti

Paul Pessutti is Senior Vice President and General Manager of the Travel, Transportation, and Hospitality Industry Unit at SAP. Applying over 20 years of experience in this area, Paul is responsible for establishing and maintaining key customer relationships, ensuring customer success, enhancing the solution portfolio, growing the partner ecosystem, and acting as the brand ambassador worldwide. The industry consists of nine industry segments including airlines, airports, passenger transport, hospitality, travel service providers, freight forwarding and third parties, rail cargo, liner shipping, and trucking.

Running Future Cities on Blockchain

Dan Wellers , Raimund Gross and Ulrich Scholl

Building on the Blockchain Framework

Some experts say these seemingly far-future speculations about the possibilities of combining technologies using blockchain are actually both inevitable and imminent:


Democratizing design and manufacturing by enabling individuals and small businesses to buy, sell, share, and digitally remix products affordably while protecting intellectual property rights.
Decentralizing warehousing and logistics by combining autonomous vehicles, 3D printers, and smart contracts to optimize delivery of products and materials, and even to create them on site as needed.
Distributing commerce by mixing virtual reality, 3D scanning and printing, self-driving vehicles, and artificial intelligence into immersive, personalized, on-demand shopping experiences that still protect buyers’ personal and proprietary data.

The City of the Future

Imagine that every agency, building, office, residence, and piece of infrastructure has an entry on a blockchain used as a city’s digital ledger. This “digital twin” could transform the delivery of city services.

For example:

  • Property owners could easily monetize assets by renting rooms, selling solar power back to the grid, and more.
  • Utilities could use customer data and AIs to make energy-saving recommendations, and smart contracts to automatically adjust power usage for greater efficiency.
  • Embedded sensors could sense problems (like a water main break) and alert an AI to send a technician with the right parts, tools, and training.
  • Autonomous vehicles could route themselves to open parking spaces or charging stations, and pay for services safely and automatically.
  • Cities could improve traffic monitoring and routing, saving commuters’ time and fuel while increasing productivity.

Every interaction would be transparent and verifiable, providing more data to analyze for future improvements.


Welcome to the Next Industrial Revolution

When exponential technologies intersect and combine, transformation happens on a massive scale. It’s time to start thinking through outcomes in a disciplined, proactive way to prepare for a future we’re only just beginning to imagine.

Download the executive brief Running Future Cities on Blockchain.


Read the full article Pulling Cities Into The Future With Blockchain

Comments

About Dan Wellers

Dan Wellers is founder and leader of Digital Futures at SAP, a strategic insights and thought leadership discipline that explores how digital technologies drive exponential change in business and society.

Raimund Gross

About Raimund Gross

Raimund Gross is a solution architect and futurist at SAP Innovation Center Network, where he evaluates emerging technologies and trends to address the challenges of businesses arising from digitization. He is currently evaluating the impact of blockchain for SAP and our enterprise customers.

Ulrich Scholl

About Ulrich Scholl

Ulrich Scholl is Vice President of Industry Cloud and Custom Development at SAP. In this role, Ulrich discovers and implements best practices to help further the understanding and adoption of the SAP portfolio of industry cloud innovations.

Tags:

4 Traits Set Digital Leaders Apart From 97% Of The Competition

Vivek Bapat

Like the classic parable of the blind man and the elephant, it seems everyone has a unique take on digital transformation. Some equate digital transformation with emerging technologies, placing their bets on as the Internet of Things, machine learning, and artificial intelligence. Others see it as a way to increase efficiencies and change business processes to accelerate product to market. Some others think of it is a means of strategic differentiation, innovating new business models for serving and engaging their customers. Despite the range of viewpoints, many businesses are still challenged with pragmatically evolving digital in ways that are meaningful, industry-disruptive, and market-leading.

According to a recent study of more than 3,000 senior executives across 17 countries and regions, only a paltry three percent of businesses worldwide have successfully completed enterprise-wide digital transformation initiatives, even though 84% of C-level executives ranks such efforts as “critically important” to the fundamental sustenance of their business.

The most comprehensive global study of its kind, the SAP Center for Business Insight report “SAP Digital Transformation Executive Study: 4 Ways Leaders Set Themselves Apart,” in collaboration with Oxford Economics, identified the challenges, opportunities, value, and key technologies driving digital transformation. The findings specifically analyzed the performance of “digital leaders” – those who are connecting people, things, and businesses more intelligently, more effectively, and creating punctuated change faster than their less advanced rivals.

After analyzing the data, it was eye-opening to see that only three percent of companies (top 100) are successfully realizing their full potential through digital transformation. However, even more remarkable was that these leaders have four fundamental traits in common, regardless of their region of operation, their size, their organizational structure, or their industry.

We distilled these traits in the hope that others in the early stages of transformation or that are still struggling to find their bearings can embrace these principles in order to succeed. Ultimately I see these leaders as true ambidextrous organizations, managing evolutionary and revolutionary change simultaneously, willing to embrace innovation – not just on the edges of their business, but firmly into their core.

Here are the four traits that set these leaders apart from the rest:

Trait #1: They see digital transformation as truly transformational

An overwhelming majority (96%) of digital leaders view digital transformation as a core business goal that requires a unified digital mindset across the entire enterprise. But instead of allowing individual functions to change at their own pace, digital leaders prefer to evolve the organization to help ensure the success of their digital strategies.

The study found that 56% of these businesses regularly shift their organizational structure, which includes processes, partners, suppliers, and customers, compared to 10% of remaining companies. Plus, 70% actively bring lines of business together through cross-functional processes and technologies.

By creating a firm foundation for transformation, digital leaders are further widening the gap between themselves and their less advanced competitors as they innovate business models that can mitigate emerging risks and seize new opportunities quickly.

Trait #2: They focus on transforming customer-facing functions first

Although most companies believe technology, the pace of change, and growing global competition are the key global trends that will affect everything for years to come, digital leaders are expanding their frame of mind to consider the influence of customer empowerment. Executives who build a momentum of breakthrough innovation and industry transformation are the ones that are moving beyond the high stakes of the market to the activation of complete, end-to-end customer experiences.

In fact, 92% of digital leaders have established sophisticated digital transformation strategies and processes to drive transformational change in customer satisfaction and engagement, compared to 22% of their less mature counterparts. As a result, 70% have realized significant or transformational value from these efforts.

Trait #3: They create a virtuous cycle of digital talent

There’s little doubt that the competition for qualified talent is fierce. But for nearly three-quarters of companies that demonstrate digital-transformation leadership, it is easier to attract and retain talent because they are five times more likely to leverage digitization to change their talent management efforts.

The impact of their efforts goes beyond empowering recruiters to identify best-fit candidates, highlight risk factors and hiring errors, and predict long-term talent needs. Nearly half (48%) of digital leaders understand that they must invest heavily in the development of digital skills and technology to drive revenue, retain productive employees, and create new roles to keep up with their digital maturity over the next two years, compared to 30% of all surveyed executives.

Trait #4: They invest in next-generation technology using a bimodal architecture

A couple years ago, Peter Sondergaard, senior vice president at Gartner and global head of research, observed that “CIOs can’t transform their old IT organization into a digital startup, but they can turn it into a bi-modal IT organization. Forty-five percent of CIOs state they currently have a fast mode of operation, and we predict that 75% of IT organizations will be bimodal in some way by 2017.”

Based on the results of the SAP Center for Business Insight study, Sondergaard’s prediction was spot on. As digital leaders dive into advanced technologies, 72% are using a digital twin of the conventional IT organization to operate efficiently without disruption while refining innovative scenarios to resolve business challenges and integrate them to stay ahead of the competition. Unfortunately, only 30% of less advanced businesses embrace this view.

Working within this bimodal architecture is emboldening digital leaders to take on incredibly progressive technology. For example, the study found that 50% of these firms are using artificial intelligence and machine learning, compared to seven percent of all respondents. They are also leading the adoption curve of Big Data solutions and analytics (94% vs. 60%) and the Internet of Things (76% vs. 52%).

Digital leadership is a practice of balance, not pure digitization

Most executives understand that digital transformation is a critical driver of revenue growth, profitability, and business expansion. However, as digital leaders are proving, digital strategies must deliver a balance of organizational flexibility, forward-looking technology adoption, and bold change. And clearly, this approach is paying dividends for them. They are growing market share, increasing customer satisfaction, improving employee engagement, and, perhaps more important, achieving more profitability than ever before.

For any company looking to catch up to digital leaders, the conversation around digital transformation needs to change immediately to combat three deadly sins: Stop investing in one-off, isolated projects hidden in a single organization. Stop viewing IT as an enabler instead of a strategic partner. Stop walling off the rest of the business from siloed digital successes.

As our study shows, companies that treat their digital transformation as an all-encompassing, all-sharing, and all-knowing business imperative will be the ones that disrupt the competitive landscape and stay ahead of a constantly evolving economy.

Follow me on twitter @vivek_bapat 

For more insight on digital leaders, check out the SAP Center for Business Insight report, conducted in collaboration with Oxford Economics,SAP Digital Transformation Executive Study: 4 Ways Leaders Set Themselves Apart.”

Comments

About Vivek Bapat

Vivek Bapat is the Senior Vice President, Global Head of Marketing Strategy and Thought Leadership, at SAP. He leads SAP's Global Marketing Strategy, Messaging, Positioning and related Thought Leadership initiatives.