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Design Thinking for Business Strategy

Design Thinking for Business Strategy

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11/20/2011

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University of Chicago – Graduate School of Business

Design Thinking for Business Strategy

Date: January 25th, 2007

Harsh Jawharkar

Background

Harsh Jawharkar (GSB ’06)

http://www.linkedin.com/in/harsh

Management Consultant – A.T. Kearney Previously … • IDEO – Service Innovation & Human Factors • HSBC – Consumer Insights & Experience Modeling • Sapient – User Experience Modeling • IPM – Management Consulting Interests – • Service and product innovation models • Business strategies driven by a design-thinking mindset

January 2007

2

Innovation … Buzzword, Fad, or Bellwether?
innovation Main Entry: in·no·va·tion Pronunciation: "i-n&-'vA-sh&n Function: noun 1 : the introduction of something new 2 : a new idea, method, or device : NOVELTY buzzword Main Entry: buzz·word Pronunciation: 'b&z-"w&rd Function: noun 1 : an important-sounding usually technical word or phrase often of little meaning used chiefly to impress laymen 2 : a voguish word or phrase -- called also buzz phrase Thesaurus: something (as a device) created for the first time through the use of the imagination -- see INVENTION Thesaurus: stock phrases that have become nonsense through endless repetition -- see hokum, nonsense, bunk

Innovation is a process … not an approach
Source: Merriam-Webster Online, thefreedictionary January 2007

3

The BusinessWeek effect … is it like the Sports Illustrated cover jinx?

January 2007

4

Innovation is catalyzed by an opportunity to close the gap
Skillsets • Linear • Data driven Left Brain Sequential Rational Analytical Objective Looks at parts • Outcome oriented • Focused on the ‘end’

OPPORTUNITY
Right Brain Intuitive Holistic Synthesizing Subjective Looks at wholes

Skillsets • Empathic • Observation driven • Experience oriented • Focused on the ‘journey’

January 2007

5

Design thinking is an attitude, an approach – a mindset
Inside Out – Traditional Mindset
Consumers Front-line Personnel Customer Service Sales & Marketing Operations Consumers Front-line Personnel Customer Service Sales & Marketing Operations

Outside In – Design Mindset

C – Level C – Level

A design mindset is critical to successfully solving or creating
January 2007

6

Design firms currently occupy a less demanding space on the value chain, thereby decreasing their leverage in corporate boardrooms

Stimuli

Ideate

Conceptualize

Validate

Operationalize

Value

• Stimuli derived from: • Existing business offerings • Perceived demand for offerings • Market dynamics • Competitive forces

• Ideation requires: • Suspension of disbelief • Ability to crosspollinate • Faith in disruptive technologies

• Conceptualization requires: • Observation & Empathy • Identifying heuristics • Experiential modeling • Visualizing a story or scenarios

• Validation requires: • Prototyping the offerings • Metrics and measurability • Assessment of capabilities and competitive forces

• Operationlization requires: • A data driven approach • Tactical and organizational mindset • Attitudes geared towards measurable outcomes

Design Firms Management Consulting Firms People $$$ Change Management

January 2007

7

Design firms are attempting to develop operational capabilities
Design Focus

IDEO Astro Method Lunar Fitch Herbst Lazar Bell SonicRim Smart Design frog Jump ZIBA Continuum Cheskin

Desired Skill-set and Positioning

Strategos Sapient razorfish Organic Agency.com Booz Allen Monitor Bain Mercer A.T. Kearney BCG McKinsey

Business Focus
Source: Jess McMullin, bplusd.org January 2007

8

What can design-thinking do for you?

January 2007

9

What else can design-thinking do for you?

January 2007

10

Elements of design thinking
Observation Empathy Ideation Conceptualization (Storytelling, Modeling) Prototyping Being T-Shaped

January 2007

11

Observation
Ethnographic Techniques • Ethnography Observing people in their natural environments • Behavioral Mapping Photographing people within a space, such as a hospital waiting room, over two or three days. • Consumer Journey Keeping track of all the interactions a consumer has with a product, service, or space. • Camera Journals Asking consumers to keep visual diaries of their activities and impressions relating to a product. • Storytelling Prompting people to tell personal stories about their consumer experiences.

January 2007

12

Empathy

Simulated - this is not a test participant's desk

1 1. 2. 3.

2

3

Moderately protected Easily accessible Staging area for major objects

January 2007

13

Ideation
Brainstorming • Defer judgment • Build on the ideas of others • Encourage wild ideas • Go for quantity. 100 ideas in 60 minutes • Be visual • Stay focused • One conversation

January 2007

14

Conceptualization (Building a Behavioral Model)
ENVIRONMENTS
Sometimes Online & Often Offline
RETAIL Entrepreneurs inherit behaviors from their Personal Banking experiences Deposit Checks Review Statements Shop for Credit Cards Shop for Deposit Products

Mostly Offline
Apply for Deposit Products

Almost Always Offline
Shop for Loans & LoC's Shop for Service products

Pay Bills Transfer Funds

Apply for Credit Cards

The Bridge Entrepreneurs are credit hungry and this is the point of reference they seek in terms of business legitimacy and sustainability.

Apply for Loans & LoC's

Apply for Service products

COMMERCIAL

Deposit Checks

Review Statements Need to transform into online conducive activities

Pay Bills Transfer Funds

Shop for Deposit Products

Shop for Credit Cards Apply for Credit Cards

Shop for Loans & LoC's

Shop for Service products

Apply for Deposit Products

Apply for Loans & LoC's

Apply for Service products

LOW

Time to Make Decisions Need to Validate Decision

Need to Protect Privacy (Security) Level of Complexity & Paperwork

The Need for :

Clear Path & Choices Simple Presentation Usable Experience

HIGH

Low Touch Commodity Fast Decision Price Parity

Infancy

Adolescence

Maturity

High Touch Differentiated Slow Decision

Checking Savings CORE PRODUCT BUNDLE Credit Card Line of Credit Loan GROWTH PRODUCT BUNDLE Insurance Retirement Employee Benefit

Negotiable

January 2007

15

Prototyping (Test and Validate)

OR

But which way is up ? Is that a button or not? 0, 1, 2, 5, 6, 8, 9 - all digits look identical upside down Most people were unable to identify how to hold the device.

January 2007

16

Being T-Shaped
Thinking Linking Doing

Observing Empathizing Divergent thinking Brainstorming

Matchmaking Cross-pollinating Synthesizing Facilitating

Executing Implementing Specializing

Source:

Creative Generalist blog, Steve Hardy

January 2007

17

Design-thinking Frameworks
ALTERNATIVES:
ACTIVITIES are goal directed sets of actions-things which people want to accomplish

POEMS – • • • • • People Objects Environments Messages Services

OBJECTS are building blocks of the environment, key elements sometimes put to complex or unintended uses, changing their function, meaning and context

USERS

ENVIRONMENTS include the entire arena where activities take place

Experiential Framework1: • • Physical (e.g. small vs. big) Cognitive (e.g. understandable vs. confusing) Social (e.g. informal vs. formal) Cultural (e.g. acceptable vs. problematic, or shared vs. conflict) Emotional (e.g. bored vs. engaged, or anxious vs. calm)

• •
INTERACTIONS are between a person and someone or something else, and are the building blocks of activities

Source:

1. User Insight Tool, Vijay Kumar 2. Ethnography in the field of design, Christina Wasson

January 2007

18

Anatomy of a design firm
About IDEO • Pronounced “Eye-dee-oh” • 500 designers • HQ in Palo Alto • Offices in San Francisco, Chicago, Boston, London, Munich, and Shanghai • CEO – Tim Brown • Cofounders – David Kelley (Stanford) and Bill Moggridge • Notable concepts – – The first mouse – Palm V – Handspring Treo

January 2007

19

Environment

OFFICE

Informal Customizable Stimulating Collaborative

January 2007

20

People
Eclectic Unusual Diverse Right-brained

January 2007

21

Capabilities

Product Design Service & Environment Design Human Factors Industrial Design and Engineering Interface Design
January 2007

22

Innovation requires going beyond the realm of ‘pushing’ products
Wal-mart X Bank X Grocery Store The Gap Trader Joe’s Target JetBlue Commerce Bank Volkswagen In ‘n Out Burger Zara Toyota Dunkin Donuts Samsung

Products (Attributes)

Experiences (Consequences)

Apple Whole Foods Starbucks TiVo

Blackberry Harley Davidson Google IKEA

Lifestyles (Values)

January 2007

23

Windows Mobile vs. the potential iPhone

FEATURE SMS Camera Maps Browser Music/Video Email Widgets

A collection of features does not ensure successful innovation
January 2007

24

Wal-mart

vs.

Trader Joe’s

January 2007

25

Project Examples
Large Healthcare Insurer • How do we engage our customers to take ownership of their health? • Is there a mutually beneficial way to reduce healthcare costs? Large consumer goods manufacturer – China strategy • How do we re-launch our car care business in China? • What options can we generate to create services based on our products? Largest service employees union in North America • How do we motivate our base? • Can we reignite the grassroots movement? HSBC Commercial Banking study • Should we develop and launch this idea? • How receptive (or not) will consumers be? • What are the impacts to our brand?

January 2007

26

Case in Point – The Gap
Background • Opened in the summer of ’69 in San Francisco • More than 3000 stores and $16 B in revenues • Profit margins (6.5%) – half of industry average • Same-store sales are 8% lower (Dec 2005-2006) • Healthy Banana, sinking Navy, wider Gap • Called Goldman Sachs to “explore all options”

How would you approach this? • Traditional vs. Design Thinking

January 2007

27

Traditional Approach
• Pricing pressure • Volumes • Penetration • Purchase frequency • Transaction size • Transaction value • Product mix • Customer mix & segmentation

Revenues

Costs

• Fixed real-estate footprint • Size of stores • Portfolio rationalization (Gap, Banana, Old Navy) • Variable labor costs • Material costs and sourcing strategies

• Generate hypotheses • Define data requirements • Gather and organize data • Analyze data to identify key issues

January 2007

28

Design-thinking Approach
Environments, Interactions, & Objects
• How do you plan a trip to The Gap? • Is it scheduled or impulsive?
ENVIRONMENTS

INTERACTIONS

OBJECTS

• What’s the trail between the desire and the purchase? – Is it direct or does it involve browsing? – Should it be accelerated or indulged? • How do users interact within the store? – With the merchandise? – With other shoppers, store personnel? – With stimuli (light, sound, sense, smell)?

USERS

ACTIVITIES

Users & Activities
• Who wants to shop at The Gap? – Why? • When would you go to The Gap? – Why? • What would trigger a trip? – How? – Who else is involved? – Who influences this desire? Why?
January 2007

29

Resources
My Google Reader ‘Design’ Feed can be accessed from – • http://harshlogic.blogspot.com Comprised of the following blogs – • Brand Autopsy • Influx Insights • Nussbaum On Design • Putting People First • Seth’s Blog • CPH127 • Core 77

January 2007

30

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