The value of design thinking for businesses

?Dr Ekaterina KhramkovaLumiknows

Russia

WHY

Business people in corporations and SME struggle with the notions of

‘design thinking’ & ‘design research’. Here are 8 ‘business’ figures to explain

the value of DT & DR.

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Lumiknows, Ekaterina Khramkova 2

?What are all these ‘design thinking’ / ‘design research’

about?

The value of design thinking & design research for organizations


All together, it’s about developing new products with higher:

1. success rate & 2. speed-to-market.


Design thinking is a processDesign research is a tooling


1. ABOUT SUCCESS



REVENUE


POSITIVE. FIGURE №1

New products bring in higher sales, increased customer loyalty, and ultimately higher profits

Launching new products & services is the N1 driver of revenue growth.Deloitte Research

Almost half of total revenue comes from new products.Aberdeen Group


REVENUE


Oracle

Half of the revenue for Best-in-Class companies comes from new products, a clear gap between their peers.

New products bring in higher sales, increased customer loyalty, and ultimately higher profits



FAILURES


NEGATIVE. FIGURE №2

New Product Development is a highly complicated process

Every year brings 30,000 of new products. About 90% of them fail despite thorough and expensive market research. Harvard Business Review


FAILURES




The main reason behind new products failure: 24% Inadequate market analysis (i.e. analysis of customer needs); 16% Product problems of defects; 14% Lack of effective marketing effort; 10% Higher costs than anticipated; 9% Competitive strength and reaction; 8% Poor timing of introduction; 6% Technical or production problems; 13% All other causes.Robert Cooper, Winning At New Products


FAILURES




Management will increasingly have to be based on the assumption that neither technology nor end use is a foundation for management policy. They are limitations. The foundations have to be customer values. Peter Drucker, Management Challenges for the 21st Century


FAILURES




All too frequently, marketers' focus on the customer causes them to target phantom needs. Clayton M. Christensen et al


?Is there any technique to identify real

needs for NPD?



REAL NEEDS



Marketing research techniques:Customer needs

Design research techniques:People needs

Number of people 100 10Number of things 1 100

Design in Technology program, University of Cambridge, Judge Institute of Management

Design research tools used in design thinking is an effective approach to identify new product ideas


IDEAS-TO-MARKET



Why so many ideas?? Because of a dropout rate…

D. L. Babcock, Managing Engineering Technology

60ideas

1 successf

ul product


?Why to use such sophisticated tools to generate new product ideas?

There is business analytics…



DATA VS. KNOWLEDGE



Machines cannot generate new product hypotheses

Despite an abundance of data, most companies do a poor job of predicting the behavior of their customers. Even companies that take the greatest trouble over their predictions are correct only 55% - a result that hardly justifies the costs of having a CRM system in the first place.Harvard Business Review


2. ABOUT SPEED



SPEED-TO-MARKET



While both cost and quality come in high, launching products before competitors has always been a top focus for manufacturers.

Every year for the past five years, Time has been the number one pressure identified by companies surveyed… Products that are released on-time result in 72% higher profit margins.Aberdeen Group


ALL TOO LATE…



In today’s fast moving environment, when the product reaches the market, it may find it already dramatically changed

If it takes you 9 months to develop and launch a new product and then another 9 months before it begins delivering significant revenue, your development cycle time is 9 months but your time-to-revenue is 18 months.Industryweek.com


?How can design thinking help to

speed up the NPD process?



PROTOTYPING



Design thinking is about creating prototypes of new product ideas asap.

In our practice, when companies are used to spending up to 1 year to produce a well elaborated product which may be already obsolete by the time of launch, we spend about 1 month to create rough prototypes refined due to several iterations based on customer feedback.Lumiknows


PROTOTYPING



Design thinking is about creating prototypes of new product ideas asap.

We had this idea of ‘adaptive script’, but it was all at the level of thinking. We had been asking our divisions for about 3 months if that was possible to implement. But everybody kept silence… And here, suddenly, we have realized it and within a very short time! …And I like the definition of ‘prototype’ as a ‘visualization of business requirements’.Department of customer experience modernization, Sberbank. Design thinking project executed by Lumiknows, 2015

Lumiknows, Ekaterina Khramkova 22The value of design thinking & design research for organizations

REVENUE FAILURES

REAL NEEDS IDEAS-TO-MARKET

SPEED-TO-MARKET DATA VS KNOWLEDGE

PROTOTYPING ALL TOO LATE…

Why design thinking & design research:

value for business


Contacts

Ekaterina [email protected]

Lumiknows, Moscow, Russiahttp://www.lumiknows.com

Lumiknows is a Russia based product design & innovation consultancy.


mailto:[email protected]

http://www.lumiknows.com/

?Dr Ekaterina KhramkovaLumiknows

Russia

WHY

THANK YOU!

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