Business Value of Design
A future without innovation isn’t a future at all. A decade ago, successful companies were focused on increasing the efficiency of their existing product lines. Today, companies such as Apple, Amazon, and Google are reaping strategic advantages by disrupting their own products for the sake of competing in a consumer-driven market.
Organizations across all industries, including health care, education, and finance, are faced with challenges related to innovation: How do we differentiate ourselves from the competition? Where can we find opportunities to grow in a new market? We know we need to be more creative ourselves, but how do we acquire these skill sets? Rather than having a clear target in mind, these questions require companies to explore uncharted waters to find the answers. Thus, existing organizations focused on efficiency are not well set up to meet the challenges of today’s mandate for innovation.
So how do we go from a set of unknowns and uncertainties to a new solution? The answer is design thinking. If innovation is about developing new business opportunities, design is about shaping these opportunities to meet the real needs of real people.
The power and value of design thinking continues to grow across the S&P 500. Design Management Institute’s 2015 Design Value Index (DVI) shows a 211% return over the S&P 500. (The DVI is based on a portfolio of 16 publicly traded stocks from companies considered to be “design-centric” and is contingent on a set of criteria that reflects best practices in design management.)
Exploring a sea of unknowns is like staring at the proverbial blank sheet of paper. Design thinking offers methods you can use to go from a set of unknowns and uncertainties to market differentiating solutions. The big difference between design thinking and thinking is the doing (there is a bit of irony in the phrasing of design thinking). The design process can be boiled down to two different aspects: (1) identify the job your customer is hiring you to do, and (2) get ideas into the hands of your users as early as possible. The only way to accomplish these tasks is to get out of the boardroom, roll up your sleeves, and start working alongside your stakeholders.
The Innovative Business
Beer taps, lounge furniture, and sticky notes, often desirable environmental associations, ascribe to an innovative culture that promotes collaboration, failing fast, experimentation, thinking wrong, and nonhierarchical structures. Research supports the idea that these behaviors translate into better innovative performance; however, as desirable as it may seem, a culture of innovation is hard to create and sustain. How can practices apparently so desirable—even fun—be so tricky to implement? These creative qualities are only one side of the coin, as companies who successfully sustain innovation practice a great deal of discipline; that is, counterbalancing each creative quality is a disciplined approach to management:
Implementing a successful innovation strategy requires organizations do more than simply invest ping-pong tables—organizations must redesign individual roles, build diverse teams and provide incentives that promote creativity. The following explains how to use design thinking methods to reorganize around innovation.
As machines help automate our work, value-added jobs are switching from being process based to team based. Individual employees transition from working on a series of tasks to working as part of a collaborative team. Teams need to cocreate, work with others, and learn to navigate the unknown creative process when they don’t know exactly what they will create together but they believe they will create something. At LENS Strategy, our internal teams consist of three to five people, and every team member comes from a different background ranging from design research and digital design to business, architecture, and visual communication. These different backgrounds converge around a shared methodology of design.
Innovation needs space. Sometimes this literally means physical space, in which an innovation lab or incubator becomes the thinking ground for new disruptive strategies to be developed without the confines of the traditional corporate workplace. But often, innovation also needs space to fail. To design failure out of the solution, you must design it into the process. There are two types of failure. 1) Catastrophic failure, this is the kind of failure that teams cannot afford. When catastrophic failure hits, teams have put too many resources into the idea, that it cannot fail, as a result, there is no way forward. This usually happens when teams put too much time and resources into an idea before testing it, the idea becomes precious and it no longer can afford to fail. 2) Failing fast is the kind of failure creative companies promote. When teams build failure into the design process, they maximize learning by finding out what doesn’t work when the cost and consequences of failure are as low as possible.
In the corporate world, organizations often feel they don’t have time for this stuff. Take a look at businesses that are truly successful with innovation, and you’ll see that they take their time to develop ideas. Apple takes years to develop its designs, Google’s Area 120 is an in-house incubator that invites employees to carve off a 20% of their working hours to devote to personal projects that might have value to the company.
We must be clever about how we use time. Most organizations are comfortable with the convergence of ideas, and they pick up the first solid idea and run with it; but this is a very inefficient way of getting to the right solution. If you’re looking for a quick solution, this works. If you’re looking for a differentiating solution, this is a resource gauntlet that won’t get you anywhere.
One of the skills creative people have is the ability to explore more than one idea simultaneously. Teams that explore three to five ideas in parallel are more than twice as likely to launch something at the end of a project.
The Innovative Leader
Who you are, rather than what you do, will make all the difference. Setting goals, measuring and reporting are necessary parts of any organization's operation, but these actions are functions of command and hierarchy, not innovation. You can’t create or cause innovation through authority. Leaders can cultivate a state of being that is innovation, rather than a set of commands about innovation by being the explorer and leading from the front. This takes bravery and vision. Don’t answer the question; ask the question—even if you think you know the answer. Be the player/coach, and know when to boost your team with extra confidence, when to take more risk, and when to play as part of the team.
LENS Strategy is an innovation strategy consultancy that takes a design approach to solving complex challenges related to strategic planning, customer experience, and operational planning.