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University of Chicago – Graduate School of Business

Design Thinking for Business Strategy

Date: January 25 th , 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

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

Thesaurus:

something (as a device) created for the first time through the use of the imagination

-- see INVENTION

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:

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?

The BusinessWeek effect … is it like the Sports Illustrated cover jinx? January 2007 4

Innovation is catalyzed by an opportunity to close the gap

Left Brain Sequential Rational Analytical Objective Looks at parts

Skillsets

Linear

Data driven

Outcome oriented

Focused on the ‘end’

OPPORTUNITY
OPPORTUNITY

Skillsets

Empathic

Observation driven

Experience oriented

Focused on the ‘journey’

Right Brain Intuitive Holistic Synthesizing Subjective Looks at wholes

Design thinking is an attitude, an approach – a mindset

Inside Out – Traditional Mindset

Consumers Front-line Personnel Customer Service Sales & Marketing Operations C – Level
Consumers
Front-line Personnel
Customer Service
Sales & Marketing
Operations
C – Level

Outside In – Design Mindset

Consumers Front-line Personnel Customer Service Sales & Marketing Operations C – Level
Consumers
Front-line Personnel
Customer Service
Sales & Marketing
Operations
C – Level

A design mindset is critical to successfully solving or creating

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

Stimuli Ideate Conceptualize Validate Operationalize
Stimuli
Ideate
Conceptualize
Validate
Operationalize

Stimuli derived

from:

Existing

business

offerings

Perceived

Ideation requires:

Suspension of

disbelief

Ability to cross-

pollinate

Conceptualization requires:

Observation &

Empathy

Identifying

heuristics

Validation requires:

Prototyping the

offerings

Metrics and

measurability

Operationlization requires:

A data driven

approach

Tactical and

organizational

Value
Value
demand for mindset • Faith in • Experiential offerings disruptive modeling • Assessment of capabilities
demand for
mindset
• Faith in
• Experiential
offerings
disruptive
modeling
• Assessment of
capabilities and
• Market dynamics
technologies
competitive
• Visualizing a
forces
• Competitive
story or
• Attitudes geared
towards
measurable
outcomes
forces
scenarios

Design Firms

Design Firms Management Consulting Firms
Design Firms Management Consulting Firms

Management Consulting Firms

outcomes forces scenarios Design Firms Management Consulting Firms People $$$ Change Management January 2007 7

People

$$$

Change

Management

Design firms are attempting to develop operational capabilities

Design Focus

IDEO Astro frog Smart Design Jump Method ZIBA Herbst Lazar Bell Continuum Lunar Desired Skill-set
IDEO
Astro
frog
Smart Design
Jump
Method
ZIBA
Herbst Lazar Bell
Continuum
Lunar
Desired Skill-set
and
Positioning
Cheskin
SonicRim
Fitch
Strategos
Sapient
Organic
Booz Allen
A.T. Kearney
razorfish
Agency.com
Bain
BCG
Monitor
McKinsey
Mercer

Source:

Jess McMullin, bplusd.org

Business Focus

January 2007

8

What can design-thinking do for you?

What can design-thinking do for you? January 2007 9
What can design-thinking do for you? January 2007 9
What can design-thinking do for you? January 2007 9
What can design-thinking do for you? January 2007 9
What can design-thinking do for you? January 2007 9
What can design-thinking do for you? January 2007 9

What else can design-thinking do for you?

What else can design-thinking do for you? January 2007 1 0

Elements of design thinking

Observation

Empathy

Ideation

Conceptualization (Storytelling, Modeling)

Prototyping

Being T-Shaped

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.

• Storytelling Prompting people to tell personal stories about their consumer experiences. January 2007 1 2

Empathy

Simulated - this is not a test participant's desk 1 2 3 1. Moderately protected
Simulated - this is not a test participant's desk
1
2
3
1. Moderately protected
2. Easily accessible
3. Staging area for major objects

Ideation

Ideation Brainstorming • Defer judgment • Build on the ideas of others • Encourage wild ideas

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

Conceptualization (Building a Behavioral Model) ENVIRONMENTS Sometimes Online & Often Offline Mostly Offline
Conceptualization (Building a Behavioral Model)
ENVIRONMENTS
Sometimes Online & Often Offline
Mostly Offline
Almost Always Offline
RETAIL
Shop for
Shop for
Shop for
Shop for
Apply for
Deposit
Review
Credit
Deposit
Deposit
Cards
Products
The Bridge
Entrepreneurs are credit hungry and
this is the point of reference they
seek in terms of business legitimacy
and sustainability.
Loans &
Service
Checks
Statements
LoC's
products
Entrepreneurs
Products
inherit behaviors
from their
Apply for
Personal Banking
Pay Bills
Apply for
Apply for
Service
experiences
Transfer
Credit
Loans &
products
Funds
Cards
LoC's
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
online conducive activities
LoC's
products
Apply for
Apply for
Credit Cards
Apply for
Apply for
Deposit
Loans &
Service
Products
LoC's
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 Infancy Adolescence Maturity High Touch Commodity Differentiated Fast Decision Slow Decision Price
Low Touch
Infancy
Adolescence
Maturity
High Touch
Commodity
Differentiated
Fast Decision
Slow Decision
Price Parity
Negotiable
Checking
CORE
Credit Card
Insurance
PRODUCT
Savings
BUNDLE
GROWTH
Line of Credit
PRODUCT
Retirement
BUNDLE
Loan
Employee Benefit

Prototyping (Test and Validate)

Prototyping (Test and Validate) OR But which way is up ? Is that a button or
Prototyping (Test and Validate) OR But which way is up ? Is that a button or
Prototyping (Test and Validate) OR But which way is up ? Is that a button or
Prototyping (Test and Validate) OR But which way is up ? Is that a button or
Prototyping (Test and Validate) OR But which way is up ? Is that a button or
OR But which way is up ? Is that a button or not? 0, 1,

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.

- all digits look identical upside down Most people were unable to identify how to hold
- all digits look identical upside down Most people were unable to identify how to hold

Being T-Shaped

Thinking

Being T-Shaped Thinking Linking Doing Observing Matchmaking Executing Empathizing Cross-pollinating

Linking

Being T-Shaped Thinking Linking Doing Observing Matchmaking Executing Empathizing Cross-pollinating

Doing

Being T-Shaped Thinking Linking Doing Observing Matchmaking Executing Empathizing Cross-pollinating

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

OBJECTS

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

uses, changing their function, meaning and context ACTIVITIES are goal directed sets of actions-things which

ACTIVITIES are goal directed sets of actions-things which people want to accomplish

sets of actions-things which people want to accomplish USERS INTERACTIONS are between a person and someone
USERS
USERS
sets of actions-things which people want to accomplish USERS INTERACTIONS are between a person and someone

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

2. Ethnography in the field of design, Christina Wasson ENVIRONMENTS include the entire arena where activities

ENVIRONMENTS

include the entire arena where activities take place

ALTERNATIVES:

POEMS –

People

Objects

Environments

Messages

Services

Experiential Framework 1 :

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)

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

and Bill Moggridge • Notable concepts – – The first mouse – Palm V – Handspring

Environment

OFFICE Informal Customizable Stimulating Collaborative
OFFICE
Informal
Customizable
Stimulating
Collaborative

People

People Eclectic Unusual Diverse Right-brained January 2007 2 1

Eclectic

Unusual

Diverse

Right-brained

Capabilities

Capabilities Product Design Service & Environment Design Human Factors Industrial Design and Engineering Interface

Product Design

Service & Environment Design

Human Factors

Industrial Design and Engineering

Interface Design

Service & Environment Design Human Factors Industrial Design and Engineering Interface Design January 2007 2 2

Innovation requires going beyond the realm of ‘pushing’ products

Products (Attributes) Experiences (Consequences) Lifestyles (Values)
Products
(Attributes)
Experiences
(Consequences)
Lifestyles
(Values)

Wal-mart

Toyota

X

Bank

Dunkin

X

Grocery

Donuts

Store

Samsung

The Gap

Trader Joe’s

Volkswagen

Target

In ‘n Out Burger

JetBlue

Commerce

Zara

 

Bank

Apple

Blackberry

Whole Foods

Harley

Starbucks

Davidson

TiVo

Google

IKEA

Windows Mobile vs. the potential iPhone

Windows Mobile vs. the potential iPhone FEATURE SMS Camera Maps Browser Music/Video Email Widgets A collection

FEATURE

SMS

Camera

Maps

Browser

Music/Video

Email

Widgets

FEATURE SMS Camera Maps Browser Music/Video Email Widgets A collection of features does not ensure successful

Wal-mart

Wal-mart vs. Trader Joe’s January 2007 2 5
Wal-mart vs. Trader Joe’s January 2007 2 5
Wal-mart vs. Trader Joe’s January 2007 2 5

vs.

Trader Joe’s

Wal-mart vs. Trader Joe’s January 2007 2 5

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?

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

Sachs to “explore all options” How would you approach this? • Traditional vs. Design Thinking January

Traditional Approach

Revenues
Revenues

Pricing pressure

Volumes

Penetration

Purchase frequency

Transaction size

Transaction value

Product mix

Customer mix & segmentation

Costs
Costs

Fixed real-estate footprint

Size of stores

Portfolio rationalization (Gap, Banana, Old Navy)

Variable labor costs

Material costs and sourcing strategies

labor costs • Material costs and sourcing strategies • Generate hypotheses • Define data requirements

Generate hypotheses

Define data requirements

Gather and organize data

Analyze data to identify key issues

Design-thinking Approach

ENVIRONMENTS OBJECTS INTERACTIONS USERS ACTIVITIES
ENVIRONMENTS
OBJECTS
INTERACTIONS
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?

Environments, Interactions, & Objects

How do you plan a trip to The Gap?

Is it scheduled or impulsive?

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)?

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