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Design Thinking: 8 Lessons Learned

Andreas Schmitz

A way to bring harmony to discordant teams? A technique for fostering empathy? Or a refuge from “command-and-control” leadership? Researchers from the Hasso Plattner Institute have taken a closer at what design thinking means to the business sector.

It seems as if even the most conservative of companies now has, in some corner or other, one or more of those colorful rooms equipped with jazzy chairs, randomly scattered cubes, wall-mounted screens, flip charts, and a startling array of writing utensils that are supposed not to show any resemblance at all to normal workday surroundings. But having a room like this is only the first step in a change process that needs to pass through many different departments in an organization.

More and more businesses have begun redesigning their work processes and their methods and now regard design thinking as a strategic management resource or, in some cases, even as a comprehensive management concept. A recent study by the Hasso Plattner Institute (HPI) reveals how 235 organizations view design thinking. Here are eight key lessons learned.

More and more businesses now regard design thinking as a strategic management resource.

1. Change outweighs savings

Revenue growth and cost-cutting are popular management goals, but they are not at the forefront of the design thinking concept. While 18% of the study respondents mentioned tangible cost-savings from design thinking, many more reported improved cooperation between employees (71%), more efficient innovation processes (69%), and better user integration (48%). Often, specific and significant changes are the result of incremental improvements to many internal processes and can’t be attributed solely to design thinking.

2. There are many variations

“What we’re increasingly seeing are examples of teams that are cooperating across departments and disciplines and focusing more closely on users and their needs,” is how Holger Rhinow, co-author of the HPI study, describes the current trend in many sectors of industry. But this transformation is not always a smooth one. In practice it doesn’t always follow the clear pattern that the design thinking training courses prescribe.

“At some point, companies need to free themselves from the “d.school” teaching concepts and adapt the methodology to their own contexts,” is the advice given by Jan Schmiedgen, a design expert and the study’s main author. User-centricity, iterative prototyping, and a mindset that is open to new ideas are all components that can make up a company’s individual innovation concept.

3. Research and development in the vanguard

More than 72% of the companies covered by the study limit the use of design thinking to selected business areas or departments, while only one in four (27.2%) has been able to establish it throughout the organization. The method is particularly popular in departments that thrive on reflection and creativity, such as research and development (named by more than 60% of the study respondents), marketing (40%), and consulting for internal support functions (31%).

4. “Command and control” is the death of design thinking

Everyone in a team contributes their own particular skills — an engineer will handle prototyping, for instance, and a social scientist will take on user research. “It’s vital that the leadership function rotates within the team,” says design expert Schmiedgen, who urges that everyone should work together as equals. The manager’s job is merely to describe the challenges, to moderate, and to ensure the team’s autonomy in every possible way.

For design thinking to be successful, it is vital that managers refrain from giving their teams instructions and that they leave them to tackle the problem on their own. “Management control,” says Schmiedgen “spells death to the development of new ideas.”

According to Schmiedgen, what companies wanted was innovation; what they got was team hugging.

5. Design thinking misused as a cure for discordant teams

Because design thinking has a reputation for encouraging collaboration, managers are apt to see the methodology as a way of getting teams and departments that have become embroiled in political intrigues to cooperate.

HPI researcher Schmiedgen has a stark warning about setting unrealistic expectations here: “Getting teams to a point where they’re willing to cooperate at all is a time-consuming process in its own right. But design thinking is first and foremost about encouraging innovation, not about harmonizing discordant teams.”

So, if design thinking is indeed being used as a kind of therapy, then managers should be wary of setting their expectations for innovation too high. In some cases, “What many companies wanted was innovation; what they got was team hugging,” says Schmiedgen. “But that’s not the fault of design thinking per se,” he adds.

6. Managers and employees must want change

For design thinking to become established in an organization, its management should function as an “enabler” of change in the corporate culture. It must also select its design thinking teams carefully.

“The employees involved must show a willingness to change and to recognize the attendant benefits. As a manager, it’s vital to think very hard about whether you want to muster the energy to convince the skeptics,” says the study’s co-author, Rhinow, who has been supporting workshops and innovation projects for the HPI Academy in Potsdam for many years.

7. No empathy, no results

Design thinking provides scope for “team intelligence,” which has a particularly beneficial impact on the users of products and so on. “The aim is to avoid bombarding users with cartloads of features that they don’t need, but to focus on making their lives easier,” says Rhinow, adding, “To do that, you need empathy for the customer.”

8. Design thinking takes time

You can’t just impose design thinking on a company from one day to the next. “You have to let it develop and grow,” says Rhinow. The new corporate culture needs time to become established. “Once you start using design thinking, you realize that there are other factors to contend with too,” adds Schmiedgen.

Because, as the study also shows, design thinking can’t be introduced in isolation without adjusting existing organizational structures and processes and without applying other management methods too – such as “lean startup” and “agile.”

Want more insight on design thinking? See Competing On Design Thinking.

Image via Shutterstock

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Andreas Schmitz

About Andreas Schmitz

Andreas Schmitz is a Freelance Journalist for SAP, covering a wide range of topics from big data to Internet of Things, HR, business innovation and mobile.

How To Design Your Company’s Digital Transformation

Sam Yen

The September issue of the Harvard Business Review features a cover story on design thinking’s coming of age. We have been applying design thinking within SAP for the past 10 years, and I’ve witnessed the growth of this human-centered approach to innovation first hand.

Design thinking is, as the HBR piece points out, “the best tool we have for … developing a responsive, flexible organizational culture.”

This means businesses are doing more to learn about their customers by interacting directly with them. We’re seeing this change in our work on d.forum — a community of design thinking champions and “disruptors” from across industries.

Meanwhile, technology is making it possible to know exponentially more about a customer. Businesses can now make increasingly accurate predictions about customers’ needs well into the future. The businesses best able to access and pull insights from this growing volume of data will win. That requires a fundamental change for our own industry; it necessitates a digital transformation.

So, how do we design this digital transformation?

It starts with the customer and an application of design thinking throughout an organization – blending business, technology and human values to generate innovation. Business is already incorporating design thinking, as the HBR cover story shows. We in technology need to do the same.

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Design thinking plays an important role because it helps articulate what the end customer’s experience is going to be like. It helps focus all aspects of the business on understanding and articulating that future experience.

Once an organization is able to do that, the insights from that consumer experience need to be drawn down into the business, with the central question becoming: What does this future customer experience mean for us as an organization? What barriers do we need to remove? Do we need to organize ourselves differently? Does our process need to change – if it does, how? What kind of new technology do we need?

Then an organization must look carefully at roles within itself. What does this knowledge of the end customer’s future experience mean for an individual in human resources, for example, or finance? Those roles can then be viewed as end experiences unto themselves, with organizations applying design thinking to learn about the needs inherent to those roles. They can then change roles to better meet the end customer’s future needs. This end customer-centered approach is what drives change.

This also means design thinking is more important than ever for IT organizations.

We, in the IT industry, have been charged with being responsive to business, using technology to solve the problems business presents. Unfortunately, business sometimes views IT as the organization keeping the lights on. If we make the analogy of a store: business is responsible for the front office, focused on growing the business where consumers directly interact with products and marketing; while the perception is that IT focuses on the back office, keeping servers running and the distribution system humming. The key is to have business and IT align to meet the needs of the front office together.

Remember what I said about the growing availability of consumer data? The business best able to access and learn from that data will win. Those of us in IT organizations have the technology to make that win possible, but the way we are seen and our very nature needs to change if we want to remain relevant to business and participate in crafting the winning strategy.

We need to become more front office and less back office, proving to business that we are innovation partners in technology.

This means, in order to communicate with businesses today, we need to take a design thinking approach. We in IT need to show we have an understanding of the end consumer’s needs and experience, and we must align that knowledge and understanding with technological solutions. When this works — when the front office and back office come together in this way — it can lead to solutions that a company could otherwise never have realized.

There’s different qualities, of course, between front office and back office requirements. The back office is the foundation of a company and requires robustness, stability, and reliability. The front office, on the other hand, moves much more quickly. It is always changing with new product offerings and marketing campaigns. Technology must also show agility, flexibility, and speed. The business needs both functions to survive. This is a challenge for IT organizations, but it is not an impossible shift for us to make.

Here’s the breakdown of our challenge.

1. We need to better understand the real needs of the business.

This means learning more about the experience and needs of the end customer and then translating that information into technological solutions.

2. We need to be involved in more of the strategic discussions of the business.

Use the regular invitations to meetings with business as an opportunity to surface the deeper learning about the end consumer and the technology solutions that business may otherwise not know to ask for or how to implement.

The IT industry overall may not have a track record of operating in this way, but if we are not involved in the strategic direction of companies and shedding light on the future path, we risk not being considered innovation partners for the business.

We must collaborate with business, understand the strategic direction and highlight the technical challenges and opportunities. When we do, IT will become a hybrid organization – able to maintain the back office while capitalizing on the front office’s growing technical needs. We will highlight solutions that business could otherwise have missed, ushering in a digital transformation.

Digital transformation goes beyond just technology; it requires a mindset. See What It Really Means To Be A Digital Organization.

This story originally appeared on SAP Business Trends.

Top image via Shutterstock

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Sam Yen

About Sam Yen

Sam Yen is the Chief Design Officer for SAP and the Managing Director of SAP Labs Silicon Valley. He is focused on driving a renewed commitment to design and user experience at SAP. Under his leadership, SAP further strengthens its mission of listening to customers´ needs leading to tangible results, including SAP Fiori, SAP Screen Personas and SAP´s UX design services.

How Productive Could You Be With 45 Minutes More Per Day?

Michael Rander

Chances are that you are already feeling your fair share of organizational complexity when navigating your current company, but have you ever considered just how much time is spent across all companies on managing complexity? According to a recent study by the Economist Intelligence Unit (EIU), the global impact of complexity is mind-blowing – and not in a good way.

The study revealed that 38% of respondents spent 16%-25% of their time just dealing with organizational complexity, and 17% spent a staggering 26%-50% of their time doing so. To put that into more concrete numbers, in the US alone, if executives could cut their time spent managing complexity in half, an estimated 8.6 million hours could be saved a week. That corresponds to 45 minutes per executive per day.

The potential productivity impact of every executive having 45 minutes more to work every single day is clearly significant, and considering that 55% say that their organization is either very or extremely complex, why are we then not making the reduction of complexity one or our top of mind issues?

The problem is that identifying the sources of complexity is complex in of itself. Key sources of complexity include organizational size, executive priorities, pace of innovation, decision-making processes, vastly increasing amounts of data to manage, organizational structures, and the pure culture of the company. As a consequence, answers are not universal by any means.

That being said, the negative productivity impact of complexity, regardless of the specific source, is felt similarly across a very large segment of the respondents, with 55% stating that complexity has taken a direct toll on profitability over the past three years.  This is such a serious problem that 8% of respondents actually slowed down their company growth in order to deal with complexity.

So, if complexity oftentimes impacts productivity and subsequently profitability, what are some of the more successful initiatives that companies are taking to combat these effects? Among the answers from the EIU survey, the following were highlighted among the most likely initiatives to reduce complexity and ultimately increase productivity:

  • Making it a company-wide goal to reduce complexity means that the executive level has to live and breathe simplification in order for the rest of the organization to get behind it. Changing behaviors across the organization requires strong leadership, commitment, and change management, and these initiatives ultimately lead to improved decision-making processes, which was reported by respondents as the top benefit of reducing complexity. From a leadership perspective this also requires setting appropriate metrics for measuring outcomes, and for metrics, productivity and efficiency were by far the most popular choices amongst respondents though strangely collaboration related metrics where not ranking high in spite of collaboration being a high level priority.
  • Promoting a culture of collaboration means enabling employees and management alike to collaborate not only within their teams but also across the organization, with partners, and with customers. Creating cross-functional roles to facilitate collaboration was cited by 56% as the most helpful strategy in achieving this goal.
  • More than half (54%) of respondents found the implementation of new technology and tools to be a successful step towards reducing complexity and improving productivity. Enabling collaboration, reducing information overload, building scenarios and prognoses, and enabling real-time decision-making are all key issues that technology can help to reduce complexity at all levels of the organization.

While these initiatives won’t help everyone, it is interesting to see that more than half of companies believe that if they could cut complexity in half they could be at least 11%-25% more productive. That nearly one in five respondents indicated that they could be 26%-50% more productive is a massive improvement.

The question then becomes whether we can make complexity and its impact on productivity not only more visible as a key issue for companies to address, but (even more importantly) also something that every company and every employee should be actively working to reduce. The potential productivity gains listed by respondents certainly provide food for thought, and few other corporate activities are likely to gain that level of ROI.

Just imagine having 45 minutes each and every day for actively pursuing new projects, getting innovative, collaborating, mentoring, learning, reducing stress, etc. What would you do? The vision is certainly compelling, and the question is are we as companies, leaders, and employees going to do something about it?

To read more about the EIU study, please see:

Feel free to follow me on Twitter: @michaelrander

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Michael Rander

About Michael Rander

Michael Rander is the Global Program Director for Future Of Work at SAP. He is an experienced project manager, strategic and competitive market researcher, operations manager as well as an avid photographer, athlete, traveler and entrepreneur.

How Much Will Digital Cannibalization Eat into Your Business?

Fawn Fitter

Former Cisco CEO John Chambers predicts that 40% of companies will crumble when they fail to complete a successful digital transformation.

These legacy companies may be trying to keep up with insurgent companies that are introducing disruptive technologies, but they’re being held back by the ease of doing business the way they always have – or by how vehemently their customers object to change.

Most organizations today know that they have to embrace innovation. The question is whether they can put a digital business model in place without damaging their existing business so badly that they don’t survive the transition. We gathered a panel of experts to discuss the fine line between disruption and destruction.

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qa_qIn 2011, when Netflix hiked prices and tried to split its streaming and DVD-bymail services, it lost 3.25% of its customer base and 75% of its market capitalization.²︐³ What can we learn from that?

Scott Anthony: That debacle shows that sometimes you can get ahead of your customers. The key is to manage things at the pace of the market, not at your internal speed. You need to know what your customers are looking for and what they’re willing to tolerate. Sometimes companies forget what their customers want and care about, and they try to push things on them before they’re ready.

R. “Ray” Wang: You need to be able to split your traditional business and your growth business so that you can focus on big shifts instead of moving the needle 2%. Netflix was responding to its customers – by deciding not to define its brand too narrowly.

qa_qDoes disruption always involve cannibalizing your own business?

Wang: You can’t design new experiences in existing systems. But you have to make sure you manage the revenue stream on the way down in the old business model while managing the growth of the new one.

Merijn Helle: Traditional brick-and-mortar stores are putting a lot of capital into digital initiatives that aren’t paying enough back yet in the form of online sales, and they’re cannibalizing their profits so they can deliver a single authentic experience. Customers don’t see channels, they see brands; and they want to interact with brands seamlessly in real time, regardless of channel or format.

Lars Bastian: In manufacturing, new technologies aren’t about disrupting your business model as much as they are about expanding it. Think about predictive maintenance, the ability to warn customers when the product they’ve purchased will need service. You’re not going to lose customers by introducing new processes. You have to add these digitized services to remain competitive.

qa_qIs cannibalizing your own business better or worse than losing market share to a more innovative competitor?

Michael Liebhold: You have to create that digital business and mandate it to grow. If you cannibalize the existing business, that’s just the price you have to pay.

Wang: Companies that cannibalize their own businesses are the ones that survive. If you don’t do it, someone else will. What we’re really talking about is “Why do you exist? Why does anyone want to buy from you?”

Anthony: I’m not sure that’s the right question. The fundamental question is what you’re using disruption to do. How do you use it to strengthen what you’re doing today, and what new things does it enable? I think you can get so consumed with all the changes that reconfigure what you’re doing today that you do only that. And if you do only that, your business becomes smaller, less significant, and less interesting.

qa_qSo how should companies think about smart disruption?

Anthony: Leaders have to reconfigure today and imagine tomorrow at the same time. It’s not either/or. Every disruptive threat has an equal, if not greater, opportunity. When disruption strikes, it’s a mistake only to feel the threat to your legacy business. It’s an opportunity to expand into a different marke.

SAP_Disruption_QA_images2400x1600_4Liebhold: It starts at the top. You can’t ask a CEO for an eight-figure budget to upgrade a cloud analytics system if the C-suite doesn’t understand the power of integrating data from across all the legacy systems. So the first task is to educate the senior team so it can approve the budgets.

Scott Underwood: Some of the most interesting questions are internal organizational questions, keeping people from feeling that their livelihoods are in danger or introducing ways to keep them engaged.

Leon Segal: Absolutely. If you want to enter a new market or introduce a new product, there’s a whole chain of stakeholders – including your own employees and the distribution chain. Their experiences are also new. Once you start looking for things that affect their experience, you can’t help doing it. You walk around the office and say, “That doesn’t look right, they don’t look happy. Maybe we should change that around.”

Fawn Fitter is a freelance writer specializing in business and technology. 

To learn more about how to disrupt your business without destroying it, read the in-depth report Digital Disruption: When to Cook the Golden Goose.

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Why Companies Don’t Need Knowledge Workers Anymore

Michael Rander

The days of the knowledge worker are coming to an end. As businesses are gearing up to handle a mind-blowing amount of information, the sheer amount of data, the speed at which we need to process it, and the way we need to act on it to stay competitive is vastly surpassing the ability of traditional knowledge workers. For years, they have gathered information, analyzed it, disseminated it, and enabled organizational decision making, but the future of work is rapidly evolving as new technology emerges. And the job roles that cannot fully embrace and adapt to these changes are quickly becoming obsolete.

When Peter Drucker  established the concept of the knowledge worker, his foresight that information-driven employees would be the key to the future development of successful and innovative companies was spot on. In fact, it still holds true today when you consider that relevant, actionable information will remain the essential competitive parameter for businesses of the future.

What has changed since Drucker first formulated this concept is the growth of data, which exceeds a volume that any given group of employees can possibly analyze on their own. At the same, global businesses need to consistently react in real time. So while the underlying construct of the knowledge worker has been exceptionally important and valuable, companies now demand a new type of employee that can replace the knowledge worker and enable business decisions in the moment.

Enter the digital worker

The digital worker assumes a role enabled and driven by technology. With anytime, anywhere access to actionable, live data in a hyperconnected economy, the benefit of running a Live Businesses can be realized, where internal and external factors and influences are acted on exactly when needed for maximum competitive advantage.

how digital transformation changes the nature of work

Digital workers can bring a new level of operational speed, flexibility, and insight, which, in turn, frees up time to take on new responsibilities in the organization and to become a critical resource for decision making, learning, productivity, and management. From an executive perspective, this also provides an opportunity to delegate strategic decision making throughout the organization; reduce organizational bottlenecks, and complexity; and increase time spent on innovation.

Whether you are a knowledge worker and run an organization that employs a few, now is the time to consider their impact on overall goals and transition them into digital workers. If not, your competition surely will.

To read more on the major trends affecting the future of work and the impact of the digital worker, see my white paper on “Live Business: The Rise of the Digital Workforce.”

 

 

 

 

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Michael Rander

About Michael Rander

Michael Rander is the Global Program Director for Future Of Work at SAP. He is an experienced project manager, strategic and competitive market researcher, operations manager as well as an avid photographer, athlete, traveler and entrepreneur.