By Pietro Micheli
Although it is slowly lifting, the economic lockdown across much of the world is putting organisations under severe pressure.
While this downturn is creating lots of difficulties, business leaders have the opportunity to not just re-examine what they have done in the past, but challenge their assumptions about a number of key aspects including what the organisation does, what kind of customers it serves, and what kind of technology it uses.
The COVID-19 crisis is certainly having a deep impact, but changes brought by the fourth industrial revolution were already deeply affecting companies operating in industries as diverse as automotive, financial services, pharmaceutical and hospitality. The crisis has accelerated the need for established firms to re-invent themselves.
Indeed, you may be an established bank or car manufacturer, but maybe you can provide other services to people who are not your current customers. Also, can you work in more of an ecosystem rather than a supply chain? Can you collaborate with new organisations, such as start-ups or companies from outside your sector?
These are some of the questions that are part of the design thinking process — one way firms can go about re-imagining themselves. This is not a step-by-step linear process, but an iterative one, where the innovation is tested, feedback gained, refined and then tested again.
It may be that what is initially tested, such as a prototype, is not well received and then you have to go back to examining your assumptions, and finding out what new strengths your firm may have that can be exploited.
Essentially, it is a cycle of exploration and invention, with each part informing the other until an innovation takes hold. Though again, this cycle should continue if the company is to keep ahead of its competitors and stay truly innovative.
Exploration of assumptions
This is the starting point and it can be a painful process. Whether an external consultancy is brought in or not, a process co-ordinator needs to be identified and, particularly in the initial sessions, this person has to push the senior management team and keep asking why.
For example, if you work in wealth management, do your customers all have to be 60 year-old white men or can you open up to a younger, more diverse customer base? The exploration phase is tricky and executives and managers will shut down the conversation to move into action mode, but that is dangerous.
Senior managers need to examine all the assumptions and really drill down into what makes the company a good one, what is it really good at. In the end, it might not be the product or service, it could be an internal process or the marketing team. Therefore, can you develop your capabilities and direct your strength where it matters most?
The discussion might throw up biases that the company was unware of. When considering talent management, is a leader necessarily an extrovert, assertive and with typical ‘strong man’ attributes? Why can’t a leader be quiet, look for consensus and be supportive? What would these quieter leaders bring to the mix? What is the company missing out on by continually appointing ‘strong man’ stereotype leaders?
One way to trigger the type of challenging thinking needed is by asking ‘what if?’ What if we moved the whole business online? What if we targeted women instead of men? What if we collaborated with alternative suppliers? What if we started to operate in a different industry? These questions can drive a vision of a different future, of a different way of doing business.
Another method is to build an image of the world in five years; for example, when Coronavirus is behind us, what will the “new normal” look like? What trends can we see coming?
Imagine the dream scenario for this company, a positive picture. A good example is the car industry that is suffering so badly at the moment. Is building and selling cars really where future profits are? With the sharing economy growing and autonomous cars emerging will people even own cars in the next decade? They could become a commodity, a platform for IT software and the big profit margins will be selling the data services to car companies, so can we start creating that capability?
Once the exploration has been done and assumptions identified and unpicked, then the company’s executives can start to imagine a new business. This can be done through storyboarding, a step-by-step road to a positive future. Or the group can brainstorm what things will be needed in this new reality.
At this point senior managers need to look at their business less in the sense of what it makes or the service it is offering, but more about the problem it is trying to solve from a user point of view. You have to walk and think in your customer’s shoes and build a user-centred approach.
For example, with a company that design and build washing machines what is the problem it is trying to solve? Washing clothes as efficiently as possible. So, does the customer really need 23 different programme settings to achieve this? That is not being user-centred, that is more producer-centred; the R&D department has come up with these new programmes so we are going to put them on the washing machine whether the customer wants them or not.
But if you frame the problem you are trying to address tightly, put yourself in the shoes of the customer, then it is apparent that 23 programme settings is very confusing. They actually make the process longer as customers try to work out which one to use.
Companies renowned for good products have adopted a user-centred design. The road to success is not more stuff, it is how to make the life of people better and easier. The best products are intuitive, you don’t need instructions to understand them. And this is how companies should look at their future business, understand user needs, whether espoused or hidden. From there the company can work back through storyboarding as to how it solves problems for customers.
This is an iterative process where the idea is tried out as quickly as possible, then refined after feedback, tested again and so on. Companies often make the mistake of working laboriously on the new idea and making sure it is perfect before it is unleashed on customers.
People get very invested in those initial ideas and they don’t want to let it out of the building, because they don’t want to lose face. But that is the wrong approach. By getting a quick prototype in front of potential customers the company gets important feedback on its idea and can involve its customers in the process, making success a lot more likely.
A good example comes from Clydesdale and Yorkshire Bank (CYB). With less people using its branches, CYB found it had a lot of real estate that it could either sell off or re-purpose. After running several pilots it found the right services people wanted and created a new brand called ‘B’, opening three stores in London, Birmingham and Manchester.
It has been a huge success for them. It ran prototypes of the services without having to spend huge amounts on re-designing everything for these new services, and it avoided the ‘sunk cost fallacy’, where companies pursue a new product simply because they have spent so much money on it.
This is a cycle that companies need to start now as they are plunged into a recession, and keep working through. Only those firms that can innovate and quickly adapt to this new environment will be able to survive.
Micheli, P., Wilner, S. J. S., Bhatti, S. H., Mura, M. and Beverland, M. B. (2019) “ Doing design thinking : conceptual review, synthesis, and research agenda”, Journal of Product Innovation Management, 36, 2, 124–148.
Micheli, P., Perks, H. and Beverland, M. B. (2018) “ Elevating design in the organization”, Journal of Product Innovation Management, 35, 4, 629–651.
Follow Pietro Micheli on Twitter @PietroMicheli13.
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Originally published at https://www.wbs.ac.uk on May 15, 2020.