Design Thinking: A Catalyst for Business Growth

Running a business is widely recognized as challenging, with the average startup lasting only about five years. While starting a business might seem straightforward, maintaining it proves to be the true test, a reality faced even by large multinational corporations.

Consider this: nearly 90% of the companies on the 1955 Fortune 500 list have either gone bankrupt, merged, been acquired, or dropped out of the rankings. However, the few companies that have retained their Fortune 500 status for the past 69 years showcase how design thinking and innovation are crucial for business growth.

This approach not only helps established companies but also propels new entrants to the Fortune 500, demonstrating that a design-centric strategy is key to sustained success and adaptability in a dynamic market.

As Alan George Lafley, former CEO of Procter & Gamble (P&G), aptly puts it: “Great design tilts the playing field. It creates breakthroughs that define markets, drive profits, and inspire culture.” This underscores the importance of embracing innovation and design thinking as essential elements for the growth and longevity of any business.

THE IMPACT OF DESIGN THINKING AND INNOVATION ON BUSINESSES

Design Thinking Leads to Superior Products and Services

Design thinking is a human-centred approach that allows businesses to gain valuable insights from real customer behaviours and identify problems at their root cause to develop effective solutions. While some may argue that the Research and Development (R&D) department fulfils that role, combining R&D with Design Thinking can further optimise product experience and customer satisfaction.

By using design thinking principles such as empathising with users, defining problems, ideating, prototyping, and testing, businesses can create solutions that truly resonate with customers, resulting in innovative products and services that stand out in the market.

Design thinking encourages companies to take a different perspective: to look at the context around their products and services and consider how they fit into the lives of their customers. This allows companies to speak to the heart of customers, addressing their hopes, needs, and challenges. As such, companies can design products and services that actually meet customers’ needs. By doing so, customer satisfaction and loyalty are enhanced, resulting in repeat purchases and increased revenue.

For instance, P&G’s in-depth research revealed that 80% of Indian consumers washed their clothes by hand, facing a choice between mild but ineffective detergents and strong but irritating ones. P&G developed Tide Naturals in response, providing effective cleaning without skin irritation and pricing it 30% lower than harsher alternatives. This strategic move significantly boosted Tide’s market share in India.

Fostering Innovation and Competitive Edge

Design thinking fosters innovation and helps maintain a competitive edge by encouraging out-of-the-box thinking and proactive problem-solving.

Netflix has consistently utilised design thinking to become a leader in its industry. Initially, Netflix’s main competitor, Blockbuster, required customers to visit physical stores to rent and return DVDs, causing significant inconvenience. Netflix revolutionised the movie rental industry by mailing DVDs directly to customers with a subscription model, removing this hassle.

Netflix’s true success lies in its continual innovation. As DVDs began to decline in popularity, Netflix introduced an on-demand streaming service, staying ahead of market trends and eliminating the wait time associated with DVD rentals. In 2011, Netflix further demonstrated its commitment to design thinking by addressing the demand for original, compelling content not available on traditional networks. By 2016, Netflix enhanced user experience by incorporating short trailers into its interface.

Each of these advancements was driven by customer insights and a robust design thinking strategy, showcasing how understanding and responding to customer needs can lead to sustained success.

Reducing Costs

Design thinking can also lead to significant cost savings. With deep customer insights, businesses are able to allocate resources more effectively, preventing any waste of time, money, labour, and materials on unsuccessful solutions. The design thinking process of prototyping, iteration, and validation allows businesses to identify problems early, streamline development, reduce risks, and ensure final products meet market demands.

For example, when Oral-B aimed to improve their electric toothbrush, their initial plan was to incorporate a variety of features such as tracking brushing frequency, monitoring gum health, and playing music. However, after conducting thorough user research and interviews, it revealed that providing such detailed data regarding their hygiene habits would only increase anxiety for the users. Consequently, the development team shifted their focus to making the toothbrush more convenient to charge and simplifying the process for ordering replacement heads. This strategy enhanced the user experience without adding unnecessary complexity.

Promoting Team Collaboration

Design thinking, despite its name, is not limited to designers only. Anyone can be a design thinker. It promotes cross-disciplinary collaboration, breaking down silos to leverage diverse perspectives. It encourages stakeholders from various departments to engage collectively in solving complex problems and driving innovation.

A great example would be 3M, their innovation culture provides a diverse range of centres and forums designed to cultivate practical ideas, transforming them into opportunities with the necessary support and resources for success. Their scientists conduct fieldwork to observe customers and identify their challenges. Additionally, customers visit Innovation Centers specifically established for exploring possibilities, solving problems, and generating new product ideas. Scientists also exchange knowledge and build relationships at the Technical Council, which meets periodically to discuss technological project progress, and the Technical Forum, an internal professional society where 3M scientists present papers—both of which are key to 3M’s innovation efforts.

Notable innovations like the Post-It note originated from such collaborative work, exemplifying how design thinking fosters creativity and innovation. Arthur Fry, a 3M employee, who attended a Technical Council meeting where Spencer Silver discussed his attempt to create a super-strong adhesive for aerospace applications. Instead, Silver accidentally developed a weak adhesive, which he referred to as a “solution without a problem.” Fry, who sang in a church choir, faced the persistent issue of losing his bookmark in his hymnbook. He realised that Silver’s adhesive was perfect for bookmarks as it was reusable and left no residue. Fry secured funding to develop a product from Silver’s accidental discovery, leading to the creation of the Post-It note.

Design thinking is a powerful catalyst for business growth, transforming product development, innovation, and organisational dynamics. As some of Fortune 500 companies demonstrate that integrating design thinking into business strategies enhances customer satisfaction, increases revenue, and sustains a competitive edge. By prioritising empathy, creativity, and collaboration, businesses can exceed customer expectations, fostering loyalty and long-term success.

As Lafley, former chairperson of P&G, aptly states, “If we won with consumers, and consumers love our brands and product line, the financial results would come eventually.” As the business landscape continues to evolve, embracing Design Thinking will be essential for companies seeking to thrive in an increasingly complex and competitive environment.

References

Brown, Bruce, and Scott Anthony. 2011. “How P&G Tripled Its Innovation Success Rate.” Harvard Business Review. June 2011. https://hbr.org/2011/06/how-pg-tripled-its-innovation-success-rate.

Govindarajan, Vijay, and Srikanth Srinivas. 2013. “The Innovation Mindset in Action: 3M Corporation.” Harvard Business Review. August 6, 2013. https://hbr.org/2013/08/the-innovation-mindset-in-acti-3.

Han, Esther. 2022. “5 Examples of Design Thinking in Business.” Business Insights Blog. Harvard Business School. February 22, 2022. https://online.hbs.edu/blog/post/design-thinking-examples.

Hossein Ebrahimi. 2019. “1 a Design Thinking Approach to Putting the Customer First a G Lafley on Embracing Customer Empa.” YouTube. June 3, 2019. https://www.youtube.com/watch?v=5G-Ta2NczAA.

Northwestern University. 2010. “Cindy Tripp: How P&G Is Using Design Thinking as a Competitive Advantage.” YouTube Video. YouTube. https://www.youtube.com/watch?v=Co8BAz5LOOk.

Perry, Mark. 2021. “Only 52 US Companies Have Been on the Fortune 500 since 1955, Thanks to the ‘Creative Destruction’ That Fuels Economic Prosperity.” American Enterprise Institute – AEI. June 3, 2021. https://www.aei.org/carpe-diem/only-52-us-companies-have-been-on-the-fortune-500-since-1955-thanks-to-the-creative-destruction-that-fuels-economic-prosperity-2/.

R, Aswatha. 2023. “How Does Design Thinking Help in a Business?” APEX Global. August 3, 2023. https://www.apexgloballearning.com/blog/how-does-design-thinking-help-in-a-business/#F_Team_collaboration.JULY 4, 2024 IN ARTICLES, DESIGN LEADERSHIP, ENTREPRENEURSHIP