Design Thinking as a Solution

Strategy Design Process Overview

 Key Characteristics of Strategy Design
• (1) Top-down approach with a strong
foundation.
• (2) Agile and just-in-time process.
• (3) Focus on designing the future.
• (4) Stakeholder integration early in design.
• (5) No one-size-fits-all: allows for varied
strategies.
• (6) Customer-centric strategy design.
 Design Thinking Explained
• • Method for solving wicked problems.
• • Based on abductive reasoning.
• • Iterative design and validation.
• • Customer at the center of strategy.
• • Deals with openness, complexity, dynamism,
and networking.
 Strategic Mindset and Integration
• • Strategy design is a wicked problem.
• • Requires a networked, adaptive solution.
• • Design thinking works with business models
and game theory.
• • Stakeholder involvement is crucial.
• • Strategy design should be a mindset, not a
procedure.
Wicked Problem and Abductive
Reasoning
Explanation with Example
 What is a Wicked Problem?
• • A wicked problem has no clear solution.
• • It is complex, dynamic, and interconnected.
• • Solutions are not right or wrong but better
or worse.
• • Examples: climate change, healthcare
reform, strategy design.
 What is Abductive Reasoning?
• • A form of logical inference.
• • Starts with observations and seeks the
simplest explanation.
• • Often used in design thinking and
innovation.
• • Example: Doctor sees symptoms and
hypothesizes a likely disease.
Comparison of Inductive, Deductive,
and Abductive Reasoning
With Examples
 Inductive Reasoning
• Definition:
• Inductive reasoning involves drawing general
conclusions from specific observations.

• Example:
• Every time I see a swan, it is white. Therefore, all
swans must be white.

• Note: Conclusions are probable, not certain.

 Deductive Reasoning
• Definition:
• Deductive reasoning starts with a general statement
and examines the possibilities to reach a specific,
logical conclusion.

• Example:
• All humans are mortal. Socrates is a human.
Therefore, Socrates is mortal.

• Note: Conclusions are certain if premises are true.

 Abductive Reasoning
• Definition:
• Abductive reasoning starts with an observation and
seeks the simplest and most likely explanation.

• Example:
• The grass is wet. The most likely explanation is that it
rained.

• Note: It’s an inference to the best explanation;

conclusions are plausible but not guaranteed.
Summary: Comparison of Reasoning Types

• • Inductive: Specific → General | Conclusion:

Probable
• • Deductive: General → Specific | Conclusion:
Certain
• • Abductive: Observation → Best Explanation
| Conclusion: Plausible
Divergent Thinking: Exploratory
Analysis
With Example
 What is Divergent Thinking?
• Divergent thinking is a creative process used
to generate multiple ideas or solutions.

• It is characterized by:
• • Open-ended exploration
• • Multiple possible answers
• • Emphasis on originality and quantity
• • Encouragement of out-of-the-box thinking
Exploratory Analysis in Divergent Thinking

• Exploratory analysis involves investigating data or

problems without a specific hypothesis.

• Purpose:
• • Discover patterns, trends, or insights
• • Identify new questions or directions
• • Support creative problem-solving
• • Inform further focused analysis (convergent
thinking)
 Example: Divergent Thinking in Action
• Scenario: A company wants to improve customer
satisfaction.

• Divergent Thinking Process:

• • Brainstorm various factors affecting satisfaction (e.g., wait
time, product quality, service)
• • Gather customer feedback, reviews, surveys
• • Explore open-ended questions: What makes customers
happy or frustrated?
• • Identify many potential improvement ideas without
judgment
Convergent Thinking –
Confirmatory Synthesis
Focused decision-making through
evaluation and synthesis
 Definition: Convergent Thinking
• Convergent thinking is a logical, analytical
process used to evaluate ideas and narrow
down options to arrive at the best possible
solution.

• In confirmatory synthesis, this approach helps

confirm what works by combining insights into
a clear, cohesive direction.
 Key Traits of Confirmatory Synthesis
• - Validates and refines ideas
• - Focuses on feasibility and logic
• - Synthesizes diverse inputs into one direction
• - Prepares for prototyping or final decisions
 Example: Designing a Fitness App
• 🧠 Divergent Phase: 20 features brainstormed

• ✔️Confirmatory Synthesis:
• - Evaluate user feedback: users want tracking, diet, motivation
• - Assess feasibility: AI coach too costly now
• - Align with goals: focus on retention and engagement

• 🎯 Final Features Selected:

• 1. Step Tracker
• 2. Meal Logging
• 3. Social Challenges

• These form the MVP (minimum viable product).

Design Thinking Overview

An abductive approach to problem

solving
 What is Design Thinking?
• Design thinking is an abductive approach to
problem solving, combining the advantages of
design and thinking.

• Example: Reimagining a city's public transport

by observing commuter behavior instead of
relying solely on past data.
 Origins and Dimensions
• Rooted in architectural and industrial design.
• Two dimensions:
• 1. Thinking process: Divergent or Convergent
• 2. Time period: Past or Future

• Example: Using future trends and

brainstorming to develop a new smart home
product.
 Focus on Problem & Solution
• Design thinking emphasizes both problem
specification and solution finding.
• Targets superiority over optimality.

• Example: Developing multiple versions of a

health app tailored for different user needs
rather than a 'perfect' one-size-fits-all app.
 Example: Design Thinking Application
• • Problem: City experiences traffic congestion.
• • Wicked Problem: Many stakeholders, unclear
boundaries, no single solution.
• • Abductive Reasoning: Observes behavior,
identifies likely causes (e.g., poor timing of signals),
• and tests new solutions like adaptive traffic lights.
• • Iterative validation with feedback refines the
solution.
 Four Steps of Design Thinking
• 1. Observing
• 2. Learning
• 3. Designing
• 4. Validating

• Example: Observing shopper habits, learning

needs, designing new store layout, validating
with feedback.
 Iterative and Agile Process
• Proceeds just-in-time to next step after gaining
enough insight.
• Iterates back if needed to correct or add
information.

• Example: If a prototype fails, revisiting user

research to refine needs before redesigning.
Design Thinking Approach:
Observing
• Observing
• Interviewing
• Mind Mapping
• Answering Five-Why Questions
 Observing Techniques in Design Thinking

• Observing: Watching user behavior in context

• Interviewing: Asking users about their
experiences
• Mind Mapping: Visualizing ideas and
connections
• Five-Why Questions: Identifying root causes by
asking 'Why?' repeatedly
 Observing
• Definition:
• Watching users in their natural environment
to understand behaviors.

• Example:
• A product team watches commuters using a
ticket vending machine and notices confusion
over the payment process.
 Interviewing
• Definition:
• Conducting structured or semi-structured
conversations to understand user needs.

• Example:
• A banking app developer interviews elderly
users to discover pain points in using mobile
banking services.
 Mind Mapping
• Definition:
• Visualizing thoughts, relationships, and ideas
around a central concept.

• Example:
• A UX team creates a mind map to explore all
facets of 'customer frustration' and links it to
causes like delays, unclear instructions, etc.
 Five-Why Technique
• The Five-Why technique involves asking
'Why?' five times (or as needed) to explore the
root cause of a problem.

• Purpose: To dig beneath the surface

symptoms to find the underlying issue.
• Application: Widely used in problem-solving
and product development.
 Example of Five-Why Technique
• Problem: The customer didn’t receive their order.

• 1. Why? – The package was not delivered.

• 2. Why? – It was not dispatched from the warehouse.
• 3. Why? – The system didn’t generate a shipping label.
• 4. Why? – The order wasn't processed by the software.
• 5. Why? – There was a bug in the order processing
module.

• → Root Cause: Bug in order processing software.

Design Thinking Approach:
Learning
Understanding the context and
framing the insights
▪ Classifying information
▪ Determining analogies
▪ Identifying personas
▪ Documenting customer
journeys and value chains
 Purpose of the Learning Phase
• The 'Learning' phase in design thinking focuses
on making sense of observations by:
• - Classifying gathered information
• - Drawing meaningful analogies
• - Identifying key personas
• - Mapping customer journeys and value chains
 Classifying Information
• Organizing data into categories helps reveal
patterns and insights.

• Example: Grouping customer feedback by

emotional tone, usability issues, and feature
requests.
 Determining Analogies
• Using parallels from different industries or
contexts to inspire innovation.

• Example: A hospital improves its patient

check-in process by adopting techniques used
in airport boarding.
 Identifying Personas
• Creating representative profiles of user types
based on behavior and needs.

• Example: 'Busy Ben' – a working professional

who needs fast, mobile-first banking solutions.
Customer Journeys & Value Chains
• Mapping out user interactions with a
product/service to identify pain points and
opportunities.

• Example: A telecom company maps a

customer's journey from plan selection to
service support, identifying friction in the
support phase.
Design Thinking Approach:
Designing
Ideating, Brainstorming, Prototyping,
Building Mock-ups
 Designing in Design Thinking
• Designing is a critical phase in the Design
Thinking process where ideas are generated
and turned into tangible representations. It
involves:
• - Ideating
• - Brainstorming
• - Prototyping
• - Building mock-ups
 Ideating
• Ideating involves generating a wide range of
ideas to solve a specific problem.

• Example: For improving urban mobility, a

team might ideate solutions such as bike-
sharing apps, smart traffic lights, or ride-
pooling services.
 Brainstorming
• Brainstorming is a collaborative process to
expand on ideas without judgment.

• Example: In a session to improve public

transport, participants suggest ideas like real-
time tracking, interactive route maps, or
feedback systems.
 Prototyping
• Prototyping is about creating a preliminary
model of a product to explore solutions.

• Example: A low-fidelity paper prototype of a

new mobile ticketing app for buses is created
to test user flow.
 Building Mock-ups
• Mock-ups are more detailed representations
of the final product.

• Example: A clickable digital mock-up of the

ticketing app with design elements, interactive
buttons, and realistic data is created using
Figma or Adobe XD.
Design Thinking Approach:
Validating
Hypothesizing, Experimenting,
Running Simulations, A/B Testing
 Design Thinking Approach: Validating
• Validating helps confirm assumptions and solutions
before scaling. Key components include:

• Hypothesizing
• Experimenting
• Running Simulations
• A/B Testing

• Each helps reduce risk and ensure user-centered

design.
 Hypothesizing
• Definition:
• Formulating assumptions that can be tested.

• Example:
• A food delivery startup hypothesizes that
reducing delivery time by 10 minutes will
increase customer satisfaction.
 Experimenting
• Definition:
• Testing hypotheses in a controlled environment.

• Example:
• The startup offers a 10-minute faster delivery
service to 1000 selected customers for a month and
gathers feedback.
 Running Simulations
• Definition:
• Creating a virtual environment to mimic real-world
behavior.

• Example:
• An urban planning firm simulates traffic patterns
using a new intersection design before actual
construction.
This helps predict congestion points and optimize
flow.
 A/B Testing
• Definition:
• Comparing two versions (A and B) to identify what
works better.

• Example:
• An e-commerce website shows two versions of a
product page (one with video, one without) to
different users to see which leads to more
purchases.
 Delivering Value to Customers
• Successful innovation delivers value through four
critical Parameters:
• Desirable
• Feasible
• Viable
• Distinct

• Each ensures the solution meets user needs, can be

built, is sustainable, and stands out.
 Desirable
• Definition:
• Addresses real user needs and fits naturally into
their lives.

• Example:
• A wearable fitness tracker helps users monitor
activity and sleep. It's desirable because it
solves the user's health tracking needs in a
convenient way.
 Feasible
• Definition:
• Can be realistically developed with available
technology and resources.

• Example:
• The fitness tracker is feasible as the company
has access to sensors, mobile platforms, and
development skills required to build and
maintain the product.
 Viable
• Definition:
• Sustainable from a business standpoint—
profitable and scalable.

• Example:
• The fitness tracker can be priced competitively,
has a growing market, and includes optional
premium features to generate recurring
revenue.
 Distinct
• Definition:
• Clearly differentiated from competitors with
unique features or positioning.

• Example:
• The fitness tracker stands out by offering
personalized coaching based on AI-driven
insights, unlike other trackers which only collect
data.
 A Common Language for Strategy Design

• When individuals from diverse departments

(marketing, product development, operations, legal,
compliance, finance) collaborate, a common
language is essential.
• The Business Model Canvas (Osterwalder & Pigneur,
2010) provides a shared framework for:
• Fact finding
• Designing
• Validating strategies
 Business Model Canvas Overview
• The Canvas has four major components:
• 1. Customers
• 2. Offerings
• 3. Capabilities
• 4. Financials

• It supports a top-down, holistic approach to

strategy design, helping all stakeholders align
through shared language and abstraction.
 Customers
• Definition:
• Defines customer segments and relationships.

• Example:
• An edtech startup identifies university
students as its primary customer segment and
builds relationships through online
communities and student ambassadors.
 Offerings
• Definition:
• Describes value propositions and
products/services offered.

• Example:
• The edtech startup offers personalized, AI-
driven learning modules and certification
programs to help students skill up for job
readiness.
 Capabilities
• Definition:
• Focuses on key resources, activities, and
partnerships required.

• Example:
• The startup builds partnerships with universities
and tech providers, and invests in machine
learning talent for personalized learning
models.
 Financials
• Definition:
• Covers revenue streams and cost structures.

• Example:
• Revenue comes from course subscriptions and
partner licensing; key costs include platform
maintenance, content development, and
marketing.
Integrating Stakeholders in Strategy Design

• A strategy is only as valuable as the belief

senior management, executives, and the
board place in it.

• Design thinking ensures stakeholder

integration from the start, promoting buy-in
and strategic success.
 Why Integration Matters
• Involves key decision-makers early
• Enhances strategy credibility and adoption
• Ensures alignment between design and execution

• Senior managers contribute:

• During fact-finding (observing and learning)
• Through active collaboration in designing
• By validating assumptions and outcomes
 Example: Observing & Learning
• Example:
• In a healthcare firm, senior executives join
frontline staff in shadowing patient journeys.
This helps understand pain points directly and
shapes strategic priorities around patient
experience.
Example: Designing Collaboratively
• Example:
• During a digital banking transformation,
executives, IT, compliance, and customer
support co-create solutions in workshops. This
fosters alignment across departments and
ensures feasibility and regulatory compliance.
 Example: Validating Assumptions
• Example:
• Before launching a new logistics platform, the
board participates in pilot reviews and
customer interviews, giving feedback and
greenlighting further investment based on
real-world validation.
Three Layers Process in Strategy
Design
Foundation Layer, Business Model
Layer, and Competition Layer
 1. Foundation Layer
• The foundation layer sets the strategic
groundwork by defining vision, mission, and
core values.

• Example: A healthcare startup defines its

mission to 'make healthcare accessible to rural
communities,' establishing its guiding principle
for all strategic decisions.
 2. Business Model Layer
• This layer focuses on how the organization
creates, delivers, and captures value through
its operations and customer interactions.

• Example: An e-learning company designs a

subscription-based model where students pay
monthly to access digital courses and
interactive tutoring.
 3. Competition Layer
• This layer addresses how the organization
competes in the market—defining positioning,
differentiation, and strategic advantage.

• Example: A smartphone brand positions itself

as a camera-focused device for social media
influencers, offering high-quality lenses and
editing tools as its unique selling proposition.
 Recognizing Key Insights That Make Design Thinking Valuable to
Strategy

• Design Thinking helps uncover deep customer

needs and reframe problems in innovative ways,

leading to strategies grounded in real-world insights

and empathy.
 Recognizing Key Insights That Make Design Thinking Valuable to
Strategy

• Example: A healthcare startup used Design Thinking

to interview patients and discovered that waiting
time caused more anxiety than the diagnosis.

This insight led them to redesign the check-in

experience,

reducing stress and improving satisfaction—shaping a

winning strategic approach.
 The Value of Design Thinking

Design Thinking fosters innovation

by deeply understanding user needs and

creatively solving problems,

leading to impactful, user-centered strategies.

 The Value of Design Thinking

Example:

A travel app used Design Thinking to learn that users

feared missing flights due to poor navigation.

They redesigned the app with real-time gate

directions, boosting user trust and retention.
Key Design Thinking Traits and
Their Value to Strategy
With Examples
 Customer-centric approach, putting
customers at the forefront
• Value to Strategy:
• - Ensures customer needs are identified and met
• - Addresses customer pains and delivers sought-after gains
• - Creates unique and appreciated added value
• - Secures a willingness to pay

• Example:
• An e-commerce platform redesigned its interface after
observing user behavior, making it more intuitive. As a
result, customer satisfaction and conversion rates
significantly increased.
 Iterative process, based on observing,
learning, designing, and validating
• Value to Strategy:
• - Defines a systematic process leading to validated results
• - Focuses on value-added activities, avoiding unnecessary
data analysis
• - Enables agility due to its iterative nature

• Example:
• A fintech company tested multiple dashboard designs
through rapid iterations, selecting one based on direct user
feedback. This led to higher user engagement with new
features.
Prototyped options, designed and validated
jointly with stakeholders
• Value to Strategy:
• - Aligns strategic options with stakeholder
expectations
• - Ensures identified needs are effectively met

• Example:
• A public transport authority co-developed a new app
with frequent commuters, ensuring real-time features
addressed their actual needs, boosting adoption
rates.
 Approach combining analytical and intuitive
thinking
• Value to Strategy:
• - Uses resources (time and money) consciously
• - Maintains alignment with strategic priorities
• - Adopts 'fail fast to succeed faster' by learning from early
mistakes
• Design thinking combines the best of the two worlds of
analytical and intuitive thinking, resulting in a so-called
abductive reasoning approach.
• Example:
• A food delivery startup combined user data and intuition to
test a subscription model early. Initial failures taught them
what customers truly valued, guiding a successful re-launch.
History of Design Thinking (Timeline Diagram)

1950s–
1970s 1980s 1990s 2000s+ 2010s+
60s
 1950s–60s
• • Roots in industrial and participatory design.
• • Emphasis on user feedback and fast
prototyping cycles.
 1970s
• • Herbert Simon introduced a 3-step linear
decision process.
• • Koberg & Bagnall explored non-linear
problem solving.
• • Visual thinking emerged to solve complex
design issues.
 1980s
• • Lawson coined 'Design Thinking' in
architecture context.
• • Cross introduced 'designerly ways of
knowing'.
• • Design focused on modeling, synthesis, and
future outcomes.
 1990s
• • IDEO founded as a design thinking
consultancy.
• • Design thinking applied to business and
wicked problems (Buchanan).
 2000s+
• • Stanford d.School introduced 5-step process:
Empathize, Define, Ideate, Prototype, Test.
• • British Design Council proposed the Double
Diamond model.
 2010s+

• Hasso Plattner Institute of the University of Potsdam

(HPI) added 'implement' as a 6th step.
• Eppinger’s engineering-rooted model emphasized
analytical rigor.
• Service-specific approaches and question-driven
methods emerged (Liedtka & Ogilvie).
Design Thinking for Strategy
(DTS) Process
Summary with Examples
 Step 1: Observing
• Observing involves gathering insights without
interference.

• Example: A team observes how customers

interact with a store layout without
influencing them.
 Step 2: Learning
• Learning involves processing and clustering
insights into useful knowledge.

• Example: The team analyzes observations to

identify which store areas attract the most
attention.
 Step 3: Designing
• Designing generates ideas and prototypes
based on learned knowledge.

• Example: The team uses LEGO® SERIOUS

PLAY® to prototype a new store layout.
 Step 4: Validating
• Validating tests the strategy through
experiments.

• Example: The team sets up a temporary new

layout and observes customer reactions.
Figure 1: Linearized DTS Process
Figure 2: Graphical Representation of DTS
 Four Core Principles of Successful Innovation

• Four principles successful innovators tend to follow.

• With these principles as a foundation,

• Organizations can begin to develop mastery of a

new, effective innovation practice.
 Four Core Principles of Successful Innovation

• Principle 1: Build Innovations Around Experiences

• Focus on user behaviors and motivations rather

than just products.

• Example: Apple’s iPhone design prioritizing user

experience over hardware specs.
 Four Core Principles of Successful Innovation

• Principle 2: Think of Innovations as Systems

• Understand offerings within larger systems to

uncover new opportunities

• Example: Tesla’s electric cars integrated with

Supercharger networks and software updates.
 Four Core Principles of Successful Innovation

• Principle 3: Cultivate an Innovation Culture

• Foster collaboration and user-centered design

across the organization

• Example: Google’s “20% time” policy encouraging

employees to work on side projects.
 Four Core Principles of Successful Innovation

• Principle 4: Adopt a Disciplined Innovation Process

• Plan and manage innovation systematically

• Example: Toyota’s lean product development and

Kaizen continuous improvement.
 A Model of the Design Innovation Process
• Overview:
This process emphasizes moving fluidly between
reality and abstraction, and between understanding
and making. It's structured into four main quadrants:
• Research – Grounded in the real world; observing
people, context, and interactions.
• Analysis – Creating mental models and reframing
problems.
• Synthesis – Using models to generate new concepts
and opportunities.
• Realization – Transforming concepts into viable
offerings and implementing them.
 A Model of the Design Innovation Process
• Key Insight:

• Innovation is non-linear and iterative.

• It involves cycling through these quadrants multiple

times, fine-tuning understanding and prototypes.
 A Model of the Design Innovation Process
• Example:
A company creating smart home devices begins by
observing user behavior with existing tech
(Research).
• It then analyzes patterns—e.g., users struggle with
fragmented controls (Analysis).
• Next, it synthesizes a concept: a unified voice
dashboard for all devices (Synthesis).
• Finally, it creates and tests the dashboard with
actual users (Realization), tweaking features based
on feedback.
 A Model of the Design Innovation Process
• The Design Innovation Process
Seven Modes of Innovation:
1. Sense Intent – Reframing challenges using trends and
changes in business, tech, or culture. (Analysis
Quadrant)
2. Know Context – Studying market conditions,
competitors, and system dynamics. (Research
Quadrant)
3. Know People – Deep dive into user behaviors using
ethnographic methods. (Research Quadrant)
4. Frame Insights – Organizing research to extract
 A Model of the Design Innovation Process
• The Design Innovation Process
Seven Modes of Innovation:

5. Explore Concepts – Brainstorming and visualizing

bold ideas based on insights. (Synthesis Quadrant)
6. Frame Solutions – Evaluating and combining
concepts into holistic solutions. (Synthesis Quadrant)
7. Realize Offerings – Prototyping, building business
models, and planning implementation. (Realization
Quadrant)
 Seven Modes of Innovation Example
Imagine designing a fitness app for seniors:
• Sense Intent: Spot increasing interest in active aging.
• Know Context: Assess competitors like Fitbit and
SilverSneakers.
• Know People: Interview seniors and observe their tech habits.
• Frame Insights: Discover that simplicity and encouragement
matter most.
• Explore Concepts: Ideate features like voice guidance and
community challenges.
• Frame Solutions: Combine features into a clear, easy-to-use
app.
• Realize Offerings: Test prototypes with users and adjust based
on feedback.