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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 buzzword

Main Entry: innovation Main Entry: buzzword


Pronunciation: "i-n&-'vA-sh&n Pronunciation: 'b&z-"w&rd

Function: noun Function: noun

1 : the introduction of something new 1 : an important-sounding usually technical word or


phrase often of little meaning used chiefly to
2 : a new idea, method, or device : NOVELTY impress laymen

2 : a voguish word or phrase -- called also buzz


phrase

Thesaurus: Thesaurus:
something (as a device) created for the first time stock phrases that have become nonsense through
through the use of the imagination endless repetition

-- see INVENTION -- 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 Outcome oriented
Sequential Focused on the end
Rational
Analytical
Objective
Looks at parts

OPPORTUNITY
 Right Brain
Intuitive
Holistic
Synthesizing
 Skillsets Subjective
Empathic Looks at wholes
Observation driven
Experience oriented
Focused on the journey

January 2007 5
Design thinking is an attitude, an approach a mindset

Inside Out Traditional Mindset Outside In Design Mindset

Consumers Consumers
Front-line Personnel Front-line Personnel
Customer Service Customer Service
Sales & Marketing Sales & Marketing
Operations Operations

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 Ideation requires: Conceptualization Validation requires: Operationlization


from: requires: requires:
Existing Suspension of Observation & Prototyping the A data driven
business disbelief Empathy offerings approach
offerings
Ability to cross- Identifying Metrics and Tactical and
Perceived pollinate heuristics measurability organizational
demand for mindset
offerings Faith in Experiential Assessment of
disruptive modeling capabilities and Attitudes geared
Market dynamics technologies competitive towards
Visualizing a forces measurable
Competitive story or outcomes
forces scenarios

Design Firms

Management Consulting Firms

People
$$$
Change
Management

January 2007 7
Design firms are attempting to develop operational capabilities

Design Focus

IDEO
Astro frog
Smart Design Jump Desired Skill-set
Method
Herbst Lazar Bell ZIBA Continuum and
Lunar Positioning
Cheskin
SonicRim
Fitch

Strategos

Sapient Organic

Booz Allen A.T. Kearney


razorfish Agency.com

Monitor Bain BCG

Mercer 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 2 3

1. Moderately protected
2. Easily accessible
3. 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 Mostly Offline Almost Always Offline
RETAIL
Shop for Shop for Apply for Shop for Shop for
Deposit Review
Credit Deposit Deposit The Bridge Loans & Service
Checks Statements
Entrepreneurs Cards Products Products Entrepreneurs are credit hungry and LoC's products
inherit behaviors this is the point of reference they
from their seek in terms of business legitimacy
Personal Banking Pay Bills Apply for Apply for Apply for
and sustainability. Service
experiences Transfer Credit Loans &
Funds Cards LoC's products

Pay Bills Shop for


COMMERCIAL Deposit Review Shop for Shop for Shop for
Transfer Deposit
Checks Statements Credit Cards Loans & Service
Funds Products
Need to transform into LoC's products
online conducive activities
Apply for
Apply for Credit Cards Apply for Apply for
Deposit
Loans & Service
Products
LoC's products

Time to Make Need to Protect Privacy Clear Path & Choices


LOW The Need for : Simple Presentation HIGH
Decisions (Security)
Need to Validate Level of Complexity & Usable Experience
Decision Paperwork

Low Touch Infancy Adolescence Maturity High Touch


Commodity Differentiated
Fast Decision Slow Decision
Price Parity Checking Negotiable
CORE
Credit Card Insurance
PRODUCT
Savings BUNDLE GROWTH
Line of Credit PRODUCT Retirement
BUNDLE

Loan Employee Benefit

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  Matchmaking  Executing

 Empathizing  Cross-pollinating  Implementing

 Divergent thinking  Synthesizing  Specializing

 Brainstorming  Facilitating

Source: Creative Generalist blog, Steve Hardy January 2007 17


Design-thinking Frameworks

ALTERNATIVES:
ACTIVITIES
are goal directed sets  POEMS
of actions-things
which people want to People
accomplish Objects
Environments
Messages
Services

OBJECTS USERS ENVIRONMENTS  Experiential Framework1:


are building blocks of include the entire Physical (e.g. small
the environment, key arena where vs. big)
elements sometimes activities take
put to complex or place Cognitive (e.g.
unintended uses, understandable vs.
changing their confusing)
function, meaning and
context Social (e.g. informal
vs. formal)
Cultural (e.g.
INTERACTIONS acceptable vs.
problematic, or
are between a shared vs. conflict)
person and someone
or something else, Emotional (e.g. bored
and are the building
blocks of activities
vs. engaged, or
anxious vs. calm)

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 Toyota
X Bank Dunkin
Donuts
Products X Grocery
Store Samsung
(Attributes)
The Gap

Trader Joes Volkswagen


Target In n Out
Burger
JetBlue
Experiences Zara
(Consequences) Commerce
Bank

Apple Blackberry
Whole Foods Harley
Davidson
Starbucks
Lifestyles Google
(Values) TiVo
IKEA

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 Joes

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
Revenues
Transaction size
Transaction value
Product mix
Customer mix & segmentation Generate hypotheses
Define data requirements
Gather and organize data
Analyze data to identify key
issues
Fixed real-estate footprint
Size of stores
Portfolio rationalization
Costs (Gap, Banana, Old Navy)
Variable labor costs
Material costs and sourcing
strategies

January 2007 28
Design-thinking Approach
 Environments, Interactions, & Objects
How do you plan a trip to The Gap?
Is it scheduled or impulsive?
ENVIRONMENTS
Whats the trail between the desire and the
purchase?
Is it direct or does it involve browsing?
INTERACTIONS
OBJECTS Should it be accelerated or indulged?
How do users interact within the store?
With the merchandise?
USERS With other shoppers, store personnel?
With stimuli (light, sound, sense, smell)?

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
Seths Blog
CPH127
Core 77

January 2007 30

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