Change by Design Page 14

  Second, business thinking is integral to design thinking. A design solution can only benefit from the sophisticated analytical tools—discovery-driven planning, option and portfolio theory, prospect theory, customer lifetime value—that have evolved in the business sector. The unforgiving world of business can help design teams think responsibly about constraints, even as designers test those constraints as a project moves along. In prototyping an e-banking concept, for instance, an interaction designer might observe that the assumed source of revenue, advertising, would compromise the quality of the user experience. A business-oriented designer on the team might respond by evaluating alternatives to advertising, such as subscriptions or referral fees. This collaborative process allows everyone to assess the “viability” component of the innovation equation in creative ways, not merely as an after-the-fact market analysis.

  Alongside their ongoing project commitments, Diego and Ryan have applied their business expertise to thinking about how companies can manage their portfolios of design-based innovation. Based on their own case studies, they developed a tool they call the “Ways to Grow” matrix, which evaluates the innovation efforts within an organization. By mapping innovation efforts along a vertical axis representing existing to new offerings and a horizontal axis representing existing to new users, companies can get a good picture of the balance of their innovation efforts.

  Projects in the bottom-left quadrant—close to existing offerings and existing users—tend to be incremental in nature. They are important, and, indeed, the majority of a company’s effort is likely to be put into this type of innovation, which might include the extension of a successful brand or the next iteration of a current product. The aisles of any supermarket provide countless examples of incremental innovation: each of the dozens of flavors of toothpaste came from a process of incremental innovation and probably resulted in increased sales for the manufacturer. In the auto industry, where the costs of tooling can be astronomical, the vast majority of efforts are focused around incremental innovation—improvements to an existing model or the extension of an existing range. Auto manufacturers worldwide have suffered during the current recession, but those that have focused only on incremental innovation, namely Detroit’s “Big Three,” find themselves in the deepest trouble of all.

  In addition to incremental projects that secure a company’s base, it is vital to pursue evolutionary projects that stretch that base in new directions. This more venturesome goal can be reached either by extending existing offerings to solve the unmet needs of current customers or adapting them to meet the needs of new customers or markets. The Prius is an example of this type of evolutionary innovation. Through clever engineering and great design, Toyota captured the emerging demand for energy-efficient personal transportation while its American competitors were riding the existing wave of ever-larger SUVs. With fortuitous timing, the Prius offered customers significantly lower fuel consumption just as fuel prices in the United States leaped upward. The real innovation, however, was not just the hybrid electric motor but the large, colorful information display that gives drivers a minute-by-minute indication of fuel economy, constantly challenging them to improve the fuel efficiency of their driving. Toyota is positioned to weather the economic storm because it invested in evolutionary, not just incremental, innovation.

  Evolutionary innovation along the user axis might involve adapting an existing product so that it can be manufactured at a lower cost and thus marketed to a wider population. This is the concept underlying Tata Motors’ controversial microcar, the Nano. The Nano is neither a new nor an original automobile; European microcars have been available since the 1950s. But a vehicle like Mercedes’ $12,000 Smart car is still beyond the reach of much of the Indian market. Tata responded by engineering a car that has most of the features consumers expect but at a much lower cost. The Nano’s two-cylinder engine is more compact and lighter in weight than any previous engine and is therefore cheaper to manufacture. Its electronic engine management system allows it to get fifty-four miles per gallon and to produce lower emissions than the millions of two-wheeled vehicles now sputtering along India’s crowded roads. At a projected purchase price of just $2,000 the Nano is poised to reach a market previously inaccessible to car manufacturers.

  The most challenging type of innovation—and the riskiest—is that in which both the product and the users are new. A revolutionary innovation creates entirely new markets, but this happens only rarely. Sony achieved this feat with the Walkman, and Apple did so twenty years later with its brilliant successor, the iPod. In neither case was the core technology new, but both companies succeeded in creating a market for a different type of musical experience. The Segway Personal Transporter, by contrast, is an instructive failure. The self-described “serial inventor” Dean Kamen identified a need for a means of urban transport in situations where distances are too long for walking but not long enough to justify getting into our cars. Using sophisticated gyroscopic technology, he invented a clever two-wheeled vehicle that automatically balances itself as it whisks travelers along the sidewalks of their towns and neighborhoods.

  At first glance the Segway looks like a classic example of disruptive innovation. It provides a wholly new solution to a problem many people didn’t know they had. However, instead of the spectacular success predicted by Segway’s promoters, the results have been disappointing. At upward of $4,000 it would be easy to point to cost as the problem. I would point to the lack of a deep, human-centered analysis of how people might make the Segway part of their lives. It is enough to watch a brave early adopter dragging her Segway up the steps of her apartment building, to see a flock of tourists—already self-conscious—whizzing past the Eiffel Tower, or to hear how a postal worker cannot get enough life out of its lithium battery to complete his route to realize that invention is not the same as innovation. If a multidisciplinary design team had gone out into the field to understand the realities of urban life, conducted analogous observations, created scenarios and storyboards, brainstormed late into the night, built early prototypes of pipe cleaners and later ones using real users in real situations, and allowed its thinking to diverge before settling upon a single concept, we might all be cruising around town on our Segway Personal Transporters.

  The “Ways to Grow” matrix is a tool of design thinking that companies can use to manage their innovation portfolios and remain competitive in a constantly changing world. Although the imagination may be drawn to the once-in-a-lifetime smash hits, these are few and far between. And though it may be tempting to focus on incremental projects in which business forecasts are easy to make, this shortsighted approach leaves companies vulnerable to the unforeseeable events of the type that Nassim Nicholas Taleb dubbed the “Black Swan.” Game-changing events may occur at any moment and will upend the most cautious business plan. Integrated digital music dethroned Sony. The whole of the conventional music-publishing industry was ill prepared for the disruptive impact of the Internet. The hushed auction chambers of Christie’s and Sotheby’s were no match for the raucous clamor of eBay. While there is no greater clarity than 20/20 hindsight, the financial meltdown of 2008 demonstrated that no company is “too big to fail” and even the most robust organizations would do well to write themselves an insurance policy. The next Black Swan could come from the labs of Genentech, the towers of Wall Street, or the caves of Tora Bora. A company’s best defense is to diversify its portfolio by investing across all four quadrants of the innovation matrix.

  transforming organizations

  Here, then, are the paired challenges facing most companies today: how to incorporate designers’ creative problem-solving skills into their larger strategic initiatives and how to engage a far greater percentage of their workforce in design thinking itself. Designers have learned that it is possible to add doctors and nurses to their project teams, not to mention supermarket clerks, warehouse workers, office staff, professional athletes, marketing executives, HR managers, truck driver
s, and union representatives. It is no less realistic to ask junior marketing executives and senior research scientists from the same organization to join forces and think beyond their respective disciplines. Some of the boldest initiatives in today’s business landscape come from companies that are using design thinking to increase their innovation efforts and drive their growth.

  When I speak to CEOs, the question they most often ask is “How can I make my company more innovative?” They recognize that in today’s fluid business environment innovation is key to their competitiveness, but they are equally aware of the difficulties in focusing their organizations around this goal. Jim Hackett, the CEO of Steelcase, is one of a small number of enlightened business leaders who understand that a steady flow of innovative products rests upon an underlying culture of innovation. While he is excited by the challenge of designing new products, he is even more excited by the challenge of designing the organization itself.

  Like many innovators, Hackett paid a price for coming to this question years before the business press turned “innovation” into a new kind of religion. There were no road maps to help him achieve his goals and few metrics to help gauge his success. Over time, however, through the hard work of his leadership team and his own willingness to experiment, Steelcase came to look like a different company from the one that offered the world its first fireproof wastebasket back in 1914. Whereas once technology and manufacturing capability drove most of its new-product development, the innovation process at Steelcase now begins with a focus on the needs of users and customers. Steelcase works outward from the perspective of human-centered design thinking.

  One unit within the company, Workplace Futures, operates as a sort of internal think tank to explore areas ranging from higher education to information technology. Workplace Futures includes anthropologists, industrial designers, and business strategists who conduct observations in the field to gain insights into the problems of Steelcase’s actual and potential clients. They develop scenarios to help them anticipate the future needs of university researchers, IT workers, or hotel managers; build prototypes to help them visualize solutions; and create compelling stories describing potential opportunities. Sales teams are then in a position to collaborate with customers to solve problems instead of simply trying to sell them the latest range of products.

  Workplace Futures has identified health care as a particularly significant opportunity, and on the basis of its forecasts Steelcase has launched a fast-growing business called Nurture that specializes in health care environments. Nurture’s teams have worked on projects that range from outfitting the brand-new, state-of-the-art Metro Health Hospital in Wyoming, Michigan, to prototyping a single room in the Sidney Hillman Health Center in New York City, a nonprofit facility oriented toward the medically underserved and housed in a nineteenth-century building in the East Village. The design brief of the past might have called for “comfortable seating in the waiting room” or “storage unit for patient property.” The brief of the design thinkers at Nurture, by contrast, is more likely to ask, “How might we create zones of privacy in public areas?” or “How might we accommodate the different spatial requirements of patients, visitors, and medical staff in a hospital recovery room?”

  By shifting its focus from furniture products to the entire health care environment, Nurture represents a case study of design thinking at work. The new approach often begins with an intensive workshop called a “Deep Dive” (lighter versions are dubbed “Skinny Dips”) in which product designers, interior designers, and architects team up with physicians, nurses, and patients to explore a problem, prototype possible solutions, and evaluate results. These hands-on research initiatives are typically designed to understand an issue from an industry-wide perspective, but Nurture also works on behalf of specific clients. For example, it conducted field observations on cancer care environments nationwide for the Cancer and Hematology Centers of Western Michigan and worked with the Centers’ architects to build and equip a functional prototype. Before Emory University Hospital in Atlanta built a new neurological intensive care unit, it turned to Nurture for help in identifying potential design problems. The team ran simulation exercises in a mock-up of the proposed facility and also held a design charrette with the hospital’s architects and clinicians, and members of patients’ families to gain a better understanding of ways to include family space in the rooms of ICU patients.

  Nurture’s product offerings consist of reception desks, seating for waiting areas, lighting solutions for clinical laboratories, storage facilities for nurses’ stations, and the like. Where it differs from the traditional design-based approach, however, is in understanding itself to be closer to the health care industry than to the contract furniture industry. Nurture begins with the premise that the physical environment contributes to the healing process as much as do prescription medicines, surgical instruments, and a skilled nursing staff. This research-based and data-driven approach has led to product innovations including enclaves in waiting rooms that allow for conversation but protect privacy through seating and modular architectural panels; nurses’ stations that improve sight lines, help to manage workflows, and accommodate impromptu meetings; and patient rooms that optimize storage space, have zone lighting that meets the various needs of medical staff, visitors, and patients; and ergonomic solutions that meet the needs of radiologists and anticipate the ever-changing research methodologies of laboratory researchers.

  Indeed, research scientists are not the only ones whose work is fact-based and data-driven. Together with the Mayo Clinic, Nurture has designed experiments to test its insights into clinical environments. It designed and ran a randomized controlled study to compare the effects of two different examination room designs on patient-physician interactions and—like any scrupulous research team—published the results regardless of the outcome. People who practice design thinking rely heavily upon imagination, insight, and inspiration, but at Nurture they are equally committed to the rigors of scientific procedure.

  Driven by this new orientation, Steelcase designers are actively thinking not just about well-designed objects but about the workplace of the future and how to equip it. It is a sign of the times that Steelcase, whose name betrays its origins in gray metal filing cabinets, was one of the first in its industry to promote digital technology as a means of storing, retrieving, and especially sharing information. Indeed, one of the first insights to emerge from Hackett’s embrace of design thinking was that many of Steelcase’s client companies are themselves shifting from individual knowledge work to team-based collaboration. This trend led to important changes in the way Steelcase might support this broad structural transformation through physical space and furniture systems, but that proved to be just the beginning.

  In 2000, as if to mark the coming of the digital millennium, Steelcase introduced its first fully Web-enabled product. RoomWizard, a small networked display, is designed to be mounted outside conference rooms to show who has reserved them and for how long. Operated by a simple touch screen interface or over the customer’s intranet, RoomWizard allows me to reserve a meeting room in our offices in Munich or Shanghai from my laptop in Palo Alto and allows facilities managers to plan future space requirements in the most efficient way possible. Something is clearly afoot when an office furniture company begins selling networked information appliances, but facilities are supposed to facilitate, and that is what RoomWizard does. Jim Hackett continues to sell chairs, desks, and even fireproof wastebaskets, but mostly he is trying to sell solutions that will enhance the efficiency and the experience of today’s workplace.

  give them the net

  Back in the 1980s, IDEO did lots of work with Acer, the Taiwanese computer giant. At the end of one particularly well-received project, Professor David Liang, who had been helping us navigate the considerable cultural distance between our team and our client’s team, offered the provocative counsel “They liked the fish. Next time give them the net.” The deliverable, in ot
her words, was great, but Liang saw the opportunity to share with Acer the process that had created it. Hastily we assembled a team of instructors from our design community, packed up a load of Sharpies and Post-it notes, and headed off to Taipei, where we conducted the first of what would become a major program of innovation workshops. We called it “IDEO U.”

  Whereas companies as far flung as McDonald’s and Motorola conduct internal “universities” to train their own employees, we turned outward and set out to train companies in our methods of human-centered, design-based innovation: user observations, brainstorming, prototyping, storytelling, and scenario building. Over time, however, and after countless workshops conducted throughout the world, we learned that planting a cell of design-trained, innovation-minded conspirators inside a large organization is not the most effective way to proceed. Innovation needs to be coded into the DNA of a company if it is to have large-scale, long-term impact.

  As the concept evolved, we began to run more structured workshops focused around the specific objectives of companies including Nestlé, P&G, and Kraft Foods. Still, in the absence of broader organizational changes the impact of a stand-alone workshop will be limited. All the innovation workshops in the world would not have transformed P&G if A. G. Lafley had not designated a chief innovation officer, increased the number of design managers by more than 500 percent, built the P&G Innovation Gym, created a new approach to partnering with the outside world (“Connect and Develop”), and elevated innovation and design to core strategies of the company.