User Centricity Through Systemic Innovation

I just finished reading Bad Blood by John Carreyrou. It’s a fascinating account of the rise & fall of Theranos, the “innovative” blood testing company that mistook innovation for a public relations campaign.

Besides its psychotically-focused leaders and their enablers, what struck me most about the story is Theranos’ approach to innovation: the siloed, need-to-know-basis of information flow; the detrimental secretiveness that  disempowered and terrified the workforce into silence; the persistent belief that innovation is only reserved for cult personalities with black turtleneck sweaters.

Theranos is an extreme example of siloed innovation. We can easily point to it and say, “That’s crazy-town. That’s not us.”

And yet, look around.

Siloed innovation is still the norm. Organizations have created innovation teams whose mission is to come up with something new, or at least find ways to improve the status quo. They are allocated fun “innovation lab” rooms with squishy balls and cushy chairs in fun colors does one innovate without a slinky (??).

We love working with these teams. They’re full of the best people who do great things for the company. They explore. They succeed. They fail, and then try again.

The rest of the workforce - separated from these teams - looks at “those innovation” people as some creative, experimental task force working on inventing new things. Mostly, the rest of the workforce doesn’t know what these people do. Sometimes, as an afterthought, there’s minimal organized effort to share the innovation mindset with the rest company. That generates some excitement. And, then mostly everyone just goes back to work.

We are back to the need-to-know-basis (albeit less extreme) of Theranos.

From the business perspective, acknowledging the need to think different and providing a safe space to experiment is a great first step. It doesn’t, however, solve the siloed innovation problem because innovation in this case is still in the hands of the few, even though “cross-functional” teams are formed from time to time to “ideate.”  

Even more than that, the idea of an “innovation team” implies that innovation is not a mindset everyone needs to practice, but more of a task for the select few with access to slinkys.

An accountant for example can join a “cross-functional” ideation workshop run by the innovation team. He arrives, contributes, and then goes back to his regular work. He is not guided to take the innovation mindset with him into accounting. His ideas contributed; his job here is done.

For a company to be “innovative,” innovation - this idea of connecting the dots in a way that produces new methods, ideas, products, services that resonate with your target audience - has to be systemic.

What does that mean?

There are many nuanced definitions of “systemic innovation.” In this context, we’ll define it as:

a non-siloed, iterative innovation process practiced by ALL people within the business organization.

This definition implies that to gain an “innovative edge,” the organization needs to ensure that innovation permeates company culture beyond a specific team or a black turtleneck sporting innovation evangelist. The organization’s policies and processes have to nurture an innovation mindset in all of its human capital.

By default, systemic innovation changes the company's DNA by cultivating a human-centered mindset as a way of life for all employees.

As designers we design things (products & services), but we also design organizations and cultures; the employee experience, as well as the customer experience. With strategy and management-led projects, we often wrestle with questions like: what would happen if the organizations employees were taught the innovation mindset as a way of life at work? How do we democratize innovation so that even the accountant feels inspired to solve problems for the business?

Figuring out a way to navigate that transformation is tricky, and I’ll explore that in future posts. Suffice to say, in practicing systemic innovation, the organization becomes one (albeit very large) innovation team.

No slinkys required.

Selling Design Thinking To Management: Metrics to include in your pitch.

In selling the idea of Design Thinking to management, it’s often helpful to back it up with some research. However, as Jeanne Liedtka points out in Exploring The Impact of Design Thinking in Action, “rigorous academic research in scholarly management journals on the impact of the methodology on organizational outcomes remains scant, though anecdotal data is plentiful concerning its ability to improve outcomes when innovation is the goal.” 

Forrester recently did a comprehensive study of the impact of Design Thinking at IBM. We’ve found that the “numbers-heavy” results are useful in getting reluctant management teams on board. Here’s a summary:  

1. Project teams doubled design and execution speed with IBM Design Thinking. Profits from faster releases combined with reduced design, development, and maintenance costs to deliver $678K per minor project and $3.2M per major project, for $20.6M in total value. 

  • Organizations slashed the time required for initial design and alignment by 75%. The model demonstrates cost savings of $196K per minor project and $872K per major project.

  • Project teams leveraged better designs and user understanding to reduce development and testing time by at 33% This equates to cost savings of $223K per minor project and $1.1M per major project.

  • IBM’s Design Thinking practice helped projects cut design defects in half. Projects were more successful in meeting user needs, thereby reducing design defects and subsequent rework to save $77K per minor project and $153K per major project.

  • Faster time-to-market enabled increased profits from net- new customers and the higher present value of expected profits. Faster time-to-market increased profits by $182K per minor project and $1.1M per major project.

2. Human-centered design improved product outcomes, reduced the risk of costly failures, and increased portfolio profitability. Refined strategic prioritization enabled investments in solutions that were less likely to fail. Better design increased average product profits. IBM helped expand design thinking at the organization over three years to penetrate one quarter of the entire portfolio, enabling $18.6M in increased profits.

3. Cross-functional teams collaborated to share problems and find solutions, reducing costs by $9.2M in streamlined processes. 

Additionally, data from sixty survey respondents provided the following notable insights: 

  • Improved collaboration and business strategy drove increased customer experience and sales, streamlined processes, and reduced project labor.

  • 72% of IBM clients utilize design thinking in most or all teams

  • 52% of survey respondents associated IBM with design thinking

Likewise, the study details benefits hard-to-quantify, yet clearly visible, benefits:

  • Encouraged an empowered, engaged, and happy workforce.

  • Perfected internal processes for HR, sales, and beyond.

  • Enhanced KPIs such as UI, UX, CX, NPS, and brand energy.

And, finally, since management folks always appreciate a cost-benefit discussion, the interviewed organizations experienced the following risk- adjusted costs: 

  • Internal labor and IBM fees for projects totaled $6.8M, driven by distinct costs of $159K per minor project and $1.5M per major project.

  • Transformation costs reached $5M in IBM resources and internal labor.

  • Training incurred costs of $218K in IBM facilitation and internal labor.

  • Forrester’s interviews with four existing IBM clients, data from 60 survey respondents, and subsequent financial analysis found that a composite organization based on these interviewed organizations experienced benefits of $48,360,958 over three years versus costs of $12,045,247 by engaging with IBM’s Design Thinking practice, adding up to a net present value (NPV) of $36,315,711 and an ROI of 301%.

And, the of course, there is the Design Value Index (DVI), an investment tool that shows companies that integrate design thinking into corporate strategy can outpace industry peers by as much as 228%.

We’d like to hear from you!

What’s been your experience in getting management on board with Design Thinking? Are there steps or insights we didn’t mention hear that you think are important? Please let us know in the comments!

Selling Design Thinking to Management: What worked for us

Getting executives on board with design thinking can be an exercise in patience. 

Think of it as teaching a class. How would you explain to a classroom full of five year olds what design thinking is and how it can help them get more chocolate? More importantly, why this method over something else?

For starters, we like using this Venn Diagram to explain how Design Thinking fits into the larger picture of innovation in an organizations. It’s vital for management to see that you’re thinking bigger picture. 

As you narrow down to details, it’s helpful to break down the mystic barrier of Design Thinking into practical steps. There is no shortage of beautiful visuals out for you to use (here's an example). The process has its variations, but the general framework is fairly constant. 

That takes care of the what & how. 

The lynchpin is the why. Why do they need to pay attention to this method over their current mode of problem solving? In other words, what’s the benefit? 

Here are a few benefits of design thinking we've seen resonate: 

  • increase in revenue over time as products & services ideas are deeply rooted in customers’ actual (vs. speculative) needs

  • reduction in costs over time as validated product ideas are likelier to be more profitable

  • cross-functional ideation as a key component of the method brings about better ideas, eliminating homogenous group-think

  • application beyond R&D; any team can use this process to solve business (and even life) challenges and/or as team-building sessions.

  • Design Thinking improves organizational innovation outcomes by producing higher quality solutions

  • Design Thinking improves innovation outcomes by reducing the risk/visibility of failure

  • Design Thinking improves outcomes by improving the likelihood of implementation

  • Design Thinking impacts innovation outcomes by improving adaptability

  • Design Thinking impacts innovation outcomes by the creation of local capability sets

  • Design Thinking and co-creation isn’t a fad, but rather a new way for all problem solvers to put the user at the center of a problem to develop solutions from the outside in rather than the inside out.

We’ve also found it helpful to keep a regular schedule of updates flowing up the ladder for continuous buy-in. Updating executives on progress, letting them listen or view recorded user sessions is one of the most effective ways to get support. 

Selling Design Thinking to Management

“Design Thinking’ what? I can’t draw.” 

If you’ve ever tried explaining design thinking to executives, you’ve probably heard some version of this. 

Drawing abilities aside, in some ways “design thinking” is a misnomer. Although the method was born in the design world, it has long ago ceased to be the “designers” domain. And, while a lot of the tools embedded in the design thinking process come from the design world, the process itself is fundamentally a way to develop products and services in a customer-centric way. 

Yet, Here’s what usually happens today: an executive says, “wouldn’t be interesting if……?” His direct reports rummage through reams of data in expensive industry reports, or some such quantitative data source. They come back with a nice powerpoint presentation about why the idea will work (or not). Decisions get made.

Where’s the customer in all this? 

The outcome of applying design thinking has been proven through different case studies from various company sizes and industries such as Apple, Microsoft, IBM, IKEA, AirBnB, Starbucks, and others. Design thinking supplements existing quantitative methods with a qualitative approach of focused on identifying customer needs. Design thinking practitioners use data from customer conversations & observations to create validated products & services that fulfill today’s needs, anticipate future needs, and delight every day. 

No expensive industry reports required.