THE MERGERdesign + business

THE MERGERdesign + business

“To create anything , especially wealth, there are no better tools than those of design thinking .” Marty Neumeier, The Designful Company

“To create anything , especially wealth, there are no better tools than those of design thinking .” Marty Neumeier, The Designful Company

CONTENTS

part 1 Design thinking meets business

Forget everything you think you know about design

What is design thinking?

Design thinking tools

“Designful” companies reaping the benefits

Traditional business vs. design-minded business

part II Design in unlikely places

Design in unlikely places

Procter & Gamble case study introduction

Leadership

Business strategy

Company culture

Internal systems

Innovation

Conclusion

Bibliography

Colophon

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30-33

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“Companies that focus on design have a competitive edge .” Claudia Kotchka, Former VP of Innovation & Design Strategy at Procter & Gamble

part I Design thinking meets business

“Companies that focus on design have a competitive edge .” Claudia Kotchka, Former VP of Innovation & Design Strategy at Procter & Gamble

1

FORGET EVERYTHING YOU THINK YOU KNOW ABOUT DESIGN

Until recent years, companies have thought of design as a beauty parlor for identities and communications. However, leading companies like Apple, Procter & Gamble, and Samsung have demonstrated that infusing design at every level of an organization has the potential to increase the “bottom-line” more than any other business function. Design is rapidly moving from “posters and toasters” to include processes, systems, and organizations within a business. In today’s economy, successful businesses will be design-conscious businesses (Neumeier 2009).

Traditional business models were suitable for a long-gone market with a long-gone set of business problems. According to Marty Neumeier, “The complex business problems of today can’t be solved with the same thinking that created them. In an era of fast moving markets and leapfrogging innovations, we can no longer “decide” the way forward. Today we must “design” the way forward.” To prosper in this economy, businesses must deeply understand consumers, innovate continuously, and think abductively. So, I challenge you to forget everything you think you know about what design is, and consider it as a problem-solving process rather than an artifact. Design thinking is a powerful tool for businesses of all sizes. Small organizations and large corporations face many of the same business problems. By integrating design as a core business competence, a company unlocks its ability to simultaneously inspire innovation and increase efficiency. Design thinking is a tool for solving business problems, which defeats the toxic paradox in business today—an overreliance on analytical thinking that leaves you vulnerable in times of change and ill-prepared to capitalize on opportunities (Martin 2009).

To gain a competitive edge, think design. XMore than “posters & toasters”Design is rapidly moving from the artifact to include processes, systems, and organizations within a business.

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What does design thinking have to do with business?

DESIGN SOLVES PROBLEMS,AND BUSINESSES HAVE MANY PROBLEMS. Simple as that. Well, not quite that simple.

3

design methods & sensibilities

customer value & market opportunity

people’s needs

feasibility

WHAT IS DESIGN THINKING?

“Design thinking can be described as a discipline which uses designers’ sensibilities and methods to match people’s needs with what is technologically feasible and a viable business strategy can covert into customer value and market opportunity.”Tim Brown, Cofounder and CEO of IDEO

In other words, design thinking takes the problem-solving tools of designers and puts them in the hands of people who have never thought of themselves as designers so they can be applied to a vastly greater range of problems.

In the context of business, design thinking frees design activities from the product and allows them to be applied outside of the traditional realms of design and to different kinds of problems: innovation of services, consumer experiences, efficiency, strategy, and so on. (Brown 2009).

Design Thinking in the Context of Business

4

Model for Value CreationNeither analytical nor intuitive thinking alone is enough to foster long-term value for businesses. The balance of both is called design thinking. Mastering it provides long-term business advantage.

B A L A NCEdesign thinking

ANALYTICS INTUITION

Creative ThinkingCreative thinking transpires in the gap between vision and reality. The gap is filled with creative tension. It is the distance between “what is” and “what could be.” Traditional business is concerned with “what is” thinking. Nothing new can be gained this way.

Vision“what could be”

Reality“what is”

C R E A T I V E T E N S I O N

“Companies don’t fail because they choose the wrong course. They fail because they can’t imagine a better one.”Marty NeumeierThe Designful Company

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ANALYTICAL INTUITIVEABDUCTIVE

DESIGN THINKING TOOLS

“To create anything, especially wealth, there are no better tools than those of design thinking.”

Marty Neumeier, The Designful Company

“Third-brain” ThinkingThis is a metaphor for holistic thinking. Third-brain thinkers develop the abil ity to zoom in and out on a problem, to see the “big picture” and the details (Neumeier 2009).

Abductive ReasoningThis is the logic of “what might be.” Abductive reasoning is the design thinker’s most crucial tool to the problem of business. New ideas come into being by “logical leaps of mind.” Design thinkers employ abductive thought, actively looking for new opportunities, questioning accepted explanations, and inferring possible new solutions (Martin 2009; Breen 2005).

ObservationDeep user-centered understanding is an essential tool. Design thinkers look for new insights; therefore they must be able to see things that others don’t. This requires careful watching and l istening (Neumeier 2009).

ExperiencesDesign thinkers consciously use accumulated personal experiences to create effective, consumer-centric solutions.

Design thinkers zoom in and out on a problemDesign thinkers develop their ability to zoom in and out on a problem, to see the “big picture” and the details.

P R O B L E M

The logic of“what might be” Abductive reasoning, or “the logic of what might be,” is a crucial tool to the problem of business. Abduction is forward-looking.

6

“Third-brain” thinking“Third-brain” thinking is where

the magic happens.

left-brain hemisphere

right-brain hemisphere

holistic thinking

7

It’s about matching necessity to utility, constraint to possibility, & need to demand.

Design is not just about creating elegant obstacles or beautifying the world.

Tim Brown, Cofounder and CEO of IDEO

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“DESIGNFUL” COMPANIES REAPING THE BENEFITS

Design-thinking organizations remain a minority and on the whole are relatively small companies. In fact, the larger the company, the less receptive it will be to design thinking.

Experts argue that an enterprise of any size can apply the methods of design to their own business problems. Companies that do so understand design as a core competence.

As you can see to the right, companies in a variety of industries are applying design thinking to their business. Southwest Airlines used design thinking to reimagine the entire flying experience. Through redesigning the whole system with direct flights, low prices, direct booking, and friendly staff, the startup airline managed to beat out long-time leaders American, Delta, United, Northwest, and Continental. These airlines were resting comfortably on the existing model. Today Southwest flies more passengers per year than any other American airline (Brown 2009; Martin 2009).

Reimagining the flying experienceAs a startup airline, Southwest was able to beat out well established competitors because it redesigned the entire flying service. Until 2009, it had reported 70 consecutive profitable quarters and more than 17 years of positive performance.

1 PROFITABLE QUARTER

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Traditional business

INDUCTIVE & DEDUCTIVEFocus on “what is”

DESIGN BLINDBusiness managers are deaf, dumb and blind when it comes to design

BEAUTY IS TACKED ONDesign = styling

FOCUS IS ON COSTSRisk-taking and innovation are mitigated as a result

DOMINANT MODE IS COMMAND & CONTROL

RISK-TAKING IS DISCOURAGED & PUNISHEDA “no can do” attitude

JOBS ARE ROLE ORIENTEDEmployees are assigned to a position

WORKERS ARE SILOEDCreates internal competition and debilitates communication

UNLOCK WEALTHThis model is no longer effective in an ever-changing market

ANALYZE, IMPLEMENTDiagnose problem, execute solution from standard box of options

Design-minded business

ABDUCTIVEFocus on “what could be”

DESIGN THINKERSBusiness managers and employees alike are design patrons

BEAUTY IS BUILT INDesign = core competence

FOCUS IS ON CUSTOMERSDesign places attention on human needs rather than costs

DOMINANT MODE IS VISION & CREATIVITY

RISK-TAKING IS PART OF INNOVATIONA “can do” attitude.

JOBS ARE PROJECT ORIENTEDEmployees are assigned to a project

WORKERS COLLABORATEA team-oriented environment, cross-disciplinary collaboration

CREATE WEALTHImagine new possibilities as a means of making money

ANALYZE, CREATE, IMPLEMENTDiagnose problem, create a new set of options, implement solution

TRADITIONAL BUSINESS VS. DESIGN-MINDED BUSINESSWhere does your company fall?

Reasoning

Design

Process

Strategy

Work environment

A N A L Y Z EA N A L Y Z E

Value creation

I M P L E M E N TI M P L E M E N T C R E A T E

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designdrives

innovationpowers

brandbuilds

loyaltysustains

profits

If you want long-term profits, start with design.

“Design thinking is valuable not just to creative industries—it is most powerful when applied to multi-faceted problems .” Tim Brown, Cofounder and CEO of IDEO

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“Design thinking is valuable not just to creative industries—it is most powerful when applied to multi-faceted problems .” Tim Brown, Cofounder and CEO of IDEO

part II Design in unl ikely places

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RAPIDLY GROWING BUSINESSES

DESIGN IN UNLIKELY PLACES

Where can you apply design thinking to gain the greatest advantage for your company? You can certainly use it in the traditional areas of products and communications, and you absolutely should. However, higher up the ladder, design can be applied to consumer experiences such as help lines, customer service, online interaction, live events, shopping environments, and wayfinding systems. Design thinking can be aimed at operational processes, new ways to streamline innovation, optimize supply chains, and help employees and partners work together more effectively. When applied to reporting structures, collaboration models, and physical work environments, design thinking can lead to unmatchable competitive advantage. Design thinking frees design activities from the product and allows it to be applied outside the traditional realms of design to different kinds of problems (Brown 2009).

Design Council research found that design can directly and significantly improve sales, profits, turnover, and growth. Using and valuing design brings bottom line benefits, and those who understand and act on this insight have a competitive edge over the rest. For example, rapidly growing businesses are nearly six times as likely as static ones to see design as integral. Furthermore, businesses that add value through design see a greater impact on business performance than the rest (Design Council 2007).

How important is design to business?Almost half of the UK’s rapidly growing businesses see design as crucial to business success. A rapidly growing business is almost 3x more likely to value design as a crucial business ingredient than other businesses.

ALL BUSINESSES

46%

7%

Design of the brand vs. design of the businessThe traditional areas of design, which I refer to here as the design of the brand, bring great return on investment. However, the sweet spot, which is largely untapped, is in the design of the business itself.

DESIGN OF THE BRAND

DESIGN OF THE BUSINESS

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S H O R T -T E R M L O N G-T E R MVALUE

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Design Council 2007

TO SOME EXTENT

TO A GREAT EXTENT

Extent of contribution of design to business performance over the past 12 monthsDesign can have a positive effect on all business performance indicators, from turnover and profit to market share and competitiveness.

INCREASED MARKET SHARE

INCREASED TURNOVER

DEVELOPMENT OF NEW MARKETS

INCREASED PROFIT

46%

44%

6%

42%

7%

7%

42%

6%

COMPETITIVENESS

NEW PRODUCTS/SERVICES

INCREASED EMPLOYMENT

38%

37%

26%

7%

9%

3%

“The greatest payout of design thinking is in the design of the business itself— the design of the strategies and business models for enterprise success.”

Thomas Lockwood, President of Design Management Institute

15Design Council 2007

50/50P&G transformed into a design-friendly organization that balances traditional businesses’ analytical tendencies with designerly intuition.

D E S I G N T H I N K I N G

ANALYTICAL INTUITIVE

Design hero Former P&G CEO, A.G. Lafley, employed design initiatives which helped to recover the company from its downward trend.

CASE STUDY PROCTER & GAMBLE

Procter & Gamble (P&G), the world’s largest consumer packaged-goods company, was not always the design leader it is today. In spring 2000, the 165-year-old company was in a crisis. Quarterly profits were declining and already low stock fell by 30% in a single day. Revenue growth at the $40 billion company had slowed to a measly 3% a year, profit had stagnated, and 7 of 10 of P&G’s biggest billion-dollar brands were losing market share. The decline was picking up speed by June 2000. P&G’s shares stalled around $60 and analysts were losing faith in long-term growth for the veteran company. For the first time in the company’s history, directors fired the chairman and CEO.

A.G. Lafley became the CEO and committed himself to the challenge of pulling P&G out of its downward spiral. Design thinking, he believed, offered a way out of the trade-off between innovation and efficiency. Over the course of the next 6 years, he managed to transform a suffering large traditional enterprise into a design-friendly, long-term growth organization that balances analytical and abductive thinking.

P&G is significantly more innovative and efficient than a decade ago. Within 3 years of Lafley’s design initiatives, profit growth doubled, growing 15% per year, and 13 of 15 brands had increased market share. Within 6 years, revenues were $70 billion and growing at a 10% rate. P&G’s roster of billion-dollar brands expanded from 10 to 20. Market value doubled to nearly $200 billion in 3 years making P&G 1 of 10 most valuable companies in the world, ahead of Johnson & Johnson (Martin 2009).

If that’s not reason to consider the power of design thinking, I don’t know what is.

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P&G transformed Within 3 years of Lafley’s design integration initiatives, P&G was transformed from a company with slowing growth, eroding profits, and stagnating brands into a genuine growth company.

B I L L I O N D O L L A R B R A N D S

P R O F I T S

M A R K E T V A L U E ( I N B I L L I O N S )

Pre-design integration Post-design integration

B R A N D L O S I N G M A R K E T S H A R E

B R A N D G A I N I N G M A R K E T S H A R E

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100

150

200

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15%EACH YEAR

RAPIDDECLINE

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leadership

“Without committed leadership, no business can realize the structural, process, and cultural adjustments needed to become a design thinking organization.”Roger Martin, Dean at the Rotman School of Management at University of Toronto

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Business leaders & design patronsThese leaders progress their organizations forward by giving design a voice at the top of the chain where key decisions are made. This doesn’t mean you have to be a designer. Guggenheim didn’t have to be an artist to be a patron of the arts. Mike LazaridisFounder of Research in Motion

Guy LalibertéFounder of Cirque de Soleil

Bob UlrichFormer CEO of Target

Steve JobsCo-founder & former CEO of Apple, Inc.

James HackettPresident & CEO of Steelcase

YOU DON’T HAVE TO BE A DESIGNER TO BE A PATRON OF DESIGN

At the top of the company ladder, design thinking can be applied to the leadership that activates the organization. In the words of Roger Martin, “Without committed leadership, no business can realize the structural, process, and cultural adjustments needed to become a design-thinking organization. Business leaders must learn to think of themselves as the balancing force—the promoter of both exploitation and exploration, of both administration and invention.” (Martin 2009)

Moving design “upstream”Businesses are integrating design closer to the executive suites where strategic decisions are made.

3 steps taken by design alert businessesAccording to research conducted by the Design Council, design alert businesses tend to do the following:

Have designers at managerial and executive levels

Employ external design consultants

Provide design training for their employees

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19Design Council 2007

P&G CASE STUDY:LEADERSHIP

A.G. Lafley was determined to turn P&G into a design organization, beginning with his senior leadership team.

In 2001, he appointed Claudia Kotchka as the corporation’s first-ever VP for design strategy and innovation. Her decree was to build P&G’s design capability from within and act as the champion of design thinking. A.G. Lafley also increased the number of design managers company wide by 500%.

Lafley modeled design thinking in his own behavior, doing in-depth at-home visits with consumers wherever he traveled. He even chatted through a translator with rural Chinese women washing clothes in a river. After all, they use detergent too (Martin 2009).

P&G’s Champion of Design Thinking Lafley appointed Claudia Kotchka as P&G’s first VP of Design Strategy and Innovation.

Integrating design thinking starting with leadershipLafley increased the number of design managers by 500%.

# O

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P O S T - D E S I G NI N I T I A T I V E S

P R E - D E S I G N I N I T I A T I V E S

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DESIGNFUL LEADERSHIP FOR SMALL BUSINESSES

Give design a voiceInnovation flourishes best when design has a voice where key decisions are made. Either represent design yourself or invite an internal designer to the meeting.

Model design thinking in your own behaviorWhat if you are not a business owner? What if your boss knows nothing about design thinking? You are far from powerless. This does not impede your efforts to sharpen your own design-thinking capability.

Individual level design thinkingDevelop the tools that facilitate design thinking: third-brain thinking, abductive thought, and iterative prototyping. Develop the capacity for observation. Design thinkers are “first-class noticers.” Transform your insights into feasible business contributions.

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businessstrategy

“Strategy is a design exercise.”Herman Miller, Co-founder of Herman Miller

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DESIGN IS A STRATEGY

Design is an investment in innovative thinking, positioning, branding, and communication that creates value for businesses in terms of competitive advantage, customer loyalty, and market share. Thomas Lockwood argues that, “No other business discipline or function has greater potential to affect the ‘triple bottom line’ than design.” The application of design thinking not only improves strategic options, but helps business leaders visualize bold moves and mitigate risk (Lockwood 2010).

Companies who integrate design as a core business strategy think of it as a means of making money. Design as a strategy puts an organization one step ahead of competitors because it continuously looks to the future and creates opportunities (Breen 2005).

Is design important to competitiveness?Nearly half of all businesses (46%) think design has become more important over the past decade in helping them to compete. The majority (84%) of rapidly growing businesses agree (Design Council 2007).

ALL BUSINESSES

84%yes

RAPIDLY GROWING BUSINESSES

Impact of added value on business performanceIf a business adds value to make what it offers more attractive to customers, it’s likely to out-perform businesses which depend entirely on their core product or service. Prospects are best of all if added value is combined with the use of design or design is seen as integral to the business.

ONLY CORE PRODUCT OR SERVICE

ADDED VALUE WITHOUT DESIGN

ADDED VALUE THROUGH DESIGN

VALU

ING

DES

IGN

BUSINESS GROWTH

Positive relationship between valuing design and a growing businessResearch shows a positive correlation between growing businesses and valuing design. Businesses that place less importance on design tend to grow only moderately, stay the same size, or shrink.

b u s i n e s s p e r f or m

an

ce

46%yes

23Design Council 2007

Design Council 2007

Align business strategy and design strategyP&G was able to integrate their design and business strategies to allow design thinking to infiltrate the company as a go-to problem-solving method.

P&G CASE STUDY:BUSINESS STRATEGY

Lafley elevated innovation and design to the level of core company strategies. It was made clear in all sectors of the organization that design was thinking was a viable problem-solving method.

In order to elevate design thinking in the corporate hierarchy of values, Lafley made solving wicked business problems by means of design a highly valued, intriguing assignment. For example, the employees who rescued the baby-care business, which had been declining for nearly ten consecutive years, were rewarded as well as those running bigger departments (Martin 2009).

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DESIGNFUL STRATEGY FOR SMALL BUSINESSES

Think of design as a business strategyRegard design as a means of creating wealth. Integrating design as a core business strategy provides competitive edge.

Deeply understand your customersThe consumer is boss! In order to best serve them, businesses must observe patrons in their environment to identify unarticulated needs and motivations.

Encourage logical leaps of mindThinking creatively doesn’t mean you have to make risky choices. Design thinking calls for prototypes and iterations to mitigate risk.

Empower creativityMake the most of the creativity of employees and partners. Great ideas come from everywhere. Creativity is the #1 engine of economic growth.

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company culture

“Businesses need to be designers, think like designers,feel like designers, work like designers.”Roger Martin, Dean at the Rotman School of Management at University of Toronto

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GREAT IDEAS COME FROM EVERYWHERE

By tearing down the organizational walls and reconnecting various department silos, a company pools its human resources. This creates opportunities for cross-fertilization and collaboration. Building design into company culture also creates a balance of proof-based analytical thinking and forward looking intuitive thinking, two vital ingredients for competitiveness (Martin 2009).

There is an issue of respect that plagues internal design departments. As soon as a designer is hired, the assumed worth of his or her talents disintegrates. Soon, the new hires are besieged with low-level chores and shut out of high-level conversations. This segregated culture is counter-productive and squanders the potential for creative input (Neumeier 2009).

According to Roger Martin, traditional organizations must reinvent themselves to perform more like design shops. In this model there are fewer permanent projects. Rather, work flows from project to project, and employees organize around each unique project, as in a design shop. Accenture is an efficient, project-based company that is careful to not allow projects to become enduring (2009).

Value of employing designersBusinesses that employ a designer are even more likely to perform well when it comes to adding value to their core product or service.

Design built inEmbedding design into the very culture of the organization promotes innovation from all corners of the company.

DEVELOPED NEW PRODUCT OR SERVICE IN THE LAST 3 YEARS

BUSINESSES THAT EMPLOY A DESIGNER

BUSINESSES THAT DO NOT EMPLOY A DESIGNER

69%

47%

DESIGN

enhances

COMPANY CULTURE

fuels

INNOVATION

increases

EARNINGS GROWTH

27Design Council 2007

P&G CASE STUDY:COMPANY CULTURE

Designers on business teamsClaudia Kotchka, VP of Design Strategy and Innovation at P&G, built a design function within the organization, assigning designers to business teams. She felt it was essential to have designers working with the core business teams rather than segregated in a disparate staff function. Her goal for design was “to really embed it in the culture, not just have a new design function. I needed designers in the business units, sitting in the business units every single day, in order to make that happen.”

Kotchka said that this decision was one of her most strategic choices: “They’re definitely part of the business team, and that was our goal. We wanted a seat at the table. We wanted design to be sitting on the leadership team, wherever decisions get made, and have a voice. And we wanted the business units to really understand design, participate in design, and not see it as a black box.”

Project-to-project workflowLafley altered P&G’s internal norm of permanent tasks that become monotonous into a design shop norm of time bound project-based work. Employees would move on to a fresh new project after completing the current one.

The Clay Street ProjectThe Clay Street Project is a loft for business teams to get away from the daily grind and think like designers. Teams of ten employees are taken away from their day-to-day jobs for 3 months to use design thinking to solve business problems in their own departments. Teams that create strong ideas on these design thinking excursions are encouraged to realize them back at the office (Martin 2009).

P&G’s Clay Street ProjectThe Clay Street Project is a loft for business teams to get away from the daily grind and think like designers.

P R O J E C T P R O J E C T P R O J E C T …

P E R M A N E N T P R O J E C T

Design shop workflowAt P&G the workflow is that of a design shop: project by project, rather than permanent, on-going tasks.

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DESIGNFUL COMPANY CULTURE FOR SMALL BUSINESSES

R-E-S-P-E-C-TReimagine your company’s internal design function as an independent design studio, not glorified secretaries.

Function like a design shop Tear down the walls, so to speak. Work together, work iteratively, and focus on human needs.

Collaborate cross-departmentallyEncourage representations from each department to meet regularly to explore opportunities for cross-fertilization and collaboration.

Project-to-project workflow Working on a project by project basis is more efficient. Not to mention it keeps employees fresh and energized.

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“Design thinking can be aimed at operational processes, new ways to streamline innovation, optimize supply chains, and to help employees & partners work together more effectively. ”Marty Neumeier, The Designful Company

internalsystems30

REIMAGINING INEFFICIENT BUSINESS PROCESSES

Design thinking can be utilized to improve efficiency of internal systems and operational processes in a business of any size.

By examining the working processes in a business, a design thinker might be able to identify areas where money is being lost due to an inefficient or ineffective system. By thinking abductively, the process can be reimagined and redesigned to improve its value.

Design thinking can be applied to any type of business process, anywhere from supply chains to internal communications to work flow (Lockwood 2010). Increase efficiency to

lower pricesIn order to offer competitive prices on everyday national-brand products like Pepsi and Tide, Target redesigned its infrastructure and back-end processes to be more efficient.

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P&G CASE STUDY:INTERNAL SYSTEMS

The redesign of inefficient and ineffective internal systems played a major role in turning around falling numbers at Procter & Gamble. By 2000, only 15% of R&D projects were meeting their internal targets. P&G was not earning the returns on innovation spending needed to maintain a winning value equation. A.G. Lafley realized they were not playing to their strength, which was honing and refining existing discoveries, also known as “N+1 innovation.”

To improve innovation efficiency, Lafley created Connect+Develop, which is a program for P&G to connect with outside innovators and develop their creations as only P&G could. The goal was to source half of product innovation from outside the company. By playing to their strength, P&G doubled the volume of discoveries. Among the successes from Connect+Develop are the Crest SpinBrush, Mr. Clean Magic Eraser, and Tide to Go stain remover.

Lafley also redesigned the strategy review process at P&G. Traditionally, each department leader made a presentation with a single solution for the next year with all of the analytical proof needed to get the CEO’s approval. This process squandered the possibility of “logical leaps of mind.” The new design for the strategy review was for a conversation and discussion, not a presentation. This encouraged employees to become comfortable with tossing around new ideas. The new system proved to be good for business because department heads began making bigger bets with senior management (Martin 2009).

Efficiency pays off:R&D spending vs. success rateAfter the system redesign, R&D spending was reduced from 4.8% of sales to 3.6%, yet the success rate of its new-product initiatives had quintupled to 65%.

S U C C E S S R A T E %O F N E W P R O D U C T I N I T I A T I V E S

R & D S P E N D I N G % O F S A L E S

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DESIGNFUL SYSTEMS FOR SMALL BUSINESSES

Reimagine inefficient systemsThrough examining internal processes and systems, small businesses can identify where money is being lost and redesign the system to be more effective.

Play to your strengthsLike P&G, every company has its strengths and weaknesses. Taking full advantage of strong points and outsourcing experts when necessary is good practice.

Consider design in every facet of your organizationThe tools of design thinking can be applied to any problem.

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innovation

“Innovation must be the central driving force for any business that wants to grow and succeed in both short and long terms. ”A.G. Lafley, Former CEO of Procter & Gamble

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DESIGN DRIVES INNOVATION, INNOVATION DRIVES BUSINESS GROWTH

When most people think of innovation, they think product design, right? Well, it’s not just about products. Don’t forget about the innovation of services, customer experiences, and business processes. Businesses of every size must innovate continuously in these areas to keep up with the competition and maintain market share. A.G. Lafley states in The Game-Changer, “We live in a time when the rate of change is such that today’s unique product or service becomes tomorrow’s commodity.” New innovative designs keep consumers coming back for more. Business innovation is a result of design thinking (Lafley 2008).

Many companies have applied design thinking to the system of innovation with great success. Whirlpool, Royal Dutch Shell, and W.L. Gore have implemented an innovation system known as

“The 10% Solution.” Employees are encouraged to put forth 10 percent of their time, or 1 day every 2 weeks, to the development of new ideas. Whirlpool expects this program to add more than $500 million a year to the top line.

Google takes innovation one step further. Employees dedicate 20% of their time or 1 day a week to the development of new ideas.

Google has also implemented an idea management system known as the Concept Collection Box. It allows employees to email innovative ideas for products, processes, and even businesses to a company wide suggestion box. Once ideas are collected, employees can then make comments on them and rate their chances for success. This type of open brainstorm is an inexpensive tool that any company can use to build a culture of innovation (Neumeier 2009).

The “10% Solution”Whirlpool, Royal Dutch Shell, and W.L. gore have implemented an innovation system wherein employees dedicate 10% of their time to the development of new ideas. At Google, employees dedicate 20% of their time to innovation.

The “Concept Collection Box”At Google, employees email innovative ideas for products, processes, and even businesses to a company wide brainstorm box. Once ideas are collected, employees then make comments on them and rate their chances for success.

TIME REQUIRED ON DEVELOPMENT OF NEW IDEAS

10%

WHIRLPOOL

20%

GOOGLE

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P&G CASE STUDY:INNOVATION

When Lafley was hired as CEO he studied the competition reports and could plainly see that P&G was being robbed of its market share by private-label brands. In order to win back eroding loyalty of shoppers, Lafley knew P&G had to become more innovative. The problem with this was that traditional business thinking said that a company could have innovation or it could have efficiency, but not both. However, Lafley believed design thinking offered a way to be both innovative and efficient.

Space to innovateAt P&G, design drives the innovation process. The company has created innovation centers all over the world—in Kobe, China, Geneva, Singapore, and Cincinnati—that are designed to represent realistic home and shopping environments.

Consumer-centric At Procter & Gamble the customer is boss. Innovations are driven by human needs, not costs. Part of design thinking for innovation is developing a deep understanding of consumers. Previous to Lafley’s design integration efforts, P&G was not focusing on customers and Lafley believes this is why they were losing market share in core categories like disposable diapers and toothpaste. Now, P&G spends time with consumers to learn from them what they really want. P&G employees observe consumers in stores, their homes, and in consumer-testing centers.

Innovating from all sources Great ideas can come from anywhere. Thinking like a designer, Lafley opened up the company to get all employees involved in innovation. Lafley encourages the upward flow of ideas at P&G—the more ideas, the more innovations (Martin 2009).

The “Innovation Gym”P&G built spaces dedicated to design thinking all over the world to facilitate development of innovative products, processes, services, and strategies.

upward f low of ideas

Bottom-up modelP&G values new ideas from all sectors of the company.

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DESIGNFUL INNOVATION FOR SMALL BUSINESSES

Think innovative services, customer experiences, and business processes Businesses of every size must innovate continuously in these areas to keep up with the competition and maintain market share.

Spend time on the development of new ideasTry the “10% solution” or a “concept collection box.” These are cheap, easy ways to innovate continuously.

Genius teamsCollaborate to innovate. To crack any problem, create a team of 5 to 20 members and brainstorm solutions to the problem. Innovation is a numbers game. Winners are the companies that can increase the total number of viable options.

Bottom-up modelThe upward flow of ideas empowers employees and harnesses new ideas from every corner of the company.

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CONCLUSION

Traditionally, the definition of design has lived in the constraints of a noun: products, communications, identities, etc. All of these are valuable, even imperative investments for businesses. However, the sweet spot is design as a verb. Exploiting design as a problem-solving process brings long-term value for businesses.

Investing in effective design is more important than ever in this economy. Businesses cannot afford to blend in. Furthermore, those businesses that understand how to integrate design at all levels of their company will gain a competitive advantage. According to Marty Neumeier in his book The Designful Company he states, “You can’t gain a competitive advantage from carrying on with business as usual. You have to design new solutions to problems that other companies are unprepared to tackle...Off-the-rack solutions are insufficient in an age of perpetual change.”

Several successful businesses have discovered the key to prosperity in the 21st century—the design of the business itself (Martin 2009). The tools of design thinking are too powerful to be exploited in creative industries alone (Neumeier 2009). Design can be applied to any problem and businesses of any size and industry can benefit from design thinking. Integrating design as a central business proficiency increases the triple-bottom line, as this case study of P&G shows. By implementing the methods used by design-conscious corporations like Procter & Gamble, Target, and Samsung, mom-and-pop businesses can integrate design into their own culture to create effective, human-centered solutions to everyday business problems.

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BIBLIOGRAPHY

www.AIGA.org

Breen, Bill. “The Business of Design.” Fast Company: Where ideas and people meet.

Brown, Tim, and Barry Kātz. Change by Design: How Design Thinking Transforms Organizations and Inspires Innovation. [New York]: Harper Business, 2009. Print.

Lafley, A. G., and Ram Charan. The Game-changer: How You Can Drive Revenue and Profit Growth with Innovation. New York: Crown Business, 2008. Print.

Lockwood, Thomas. Design Thinking: Integrating Innovation, Customer Experience and Brand Value. New York, NY: Allworth, 2010. Print.

Martin, Roger L. The Design of Business: Why Design Thinking Is the next Competitive Advantage. Boston, MA: Harvard Business, 2009. Print.

Neumeier, Marty. The Designful Company: How to Build a Culture of Nonstop Innovation : A Whiteboard Overview. Berkeley, CA: New Riders, 2009. Print.

“The Value of Design Factfinder Report.” Design Council. 2007.

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COLOPHON

This book was handmade by Haley Hodgen for her BFA graphic design thesis at Indiana University in the Spring of 2012. It was inkjet printed on Mohawk Superfine Soft White Smooth 80# cover and drum leaf bound.

This is edition of .

Special thanks to Julia Rickles for her photography featured throughout this book.

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