How Design Thinking drives Strategy.

If you have been hanging out with Entrepreneurs or Innovation officers, chances are you might have heard the term Design Thinking. Over the years, Design Thinking has become one of the buzzwords in the business circle and for good reasons. So what really is Design Thinking?

Before we get to that, let’s establish that Design Thinking is not Design. Design relates to the look of the product/service. It includes elements such as Logo, Packaging, Graphics, etc. Whereas, Design Thinking is a broader, all-encompassing term. Think of it as redesigning a Pig rather than applying lipstick to it. You’re looking at the problem in a fundamentally different way rather applying a quick fix to it. More specifically, Design thinking is a methodology to reimagine and redesign products and services to create unique customer experiences. According to Ideo, Design thinking utilizes elements from the designer’s toolkit like empathy and experimentation to arrive at innovative solutions. By using design thinking, you make decisions based on what future customers really want instead of relying only on historical data or making risky bets based on instinct instead of evidence (“Design Thinking” 2018).

The Design Thinking process could essentially be broken down into 5 distinct phases.

1. Empathize — In this phase, you conduct interviews to identify the needs that are unmet by the current selection of products/services or the infrastructure/platform. Essentially you rely on the natural interaction of the customer with a product/service to observe the consumer behavior.
2. Define — In this phase, based on the interviews and surveys conducted, you begin to define the problem. It is of vital importance to clearly define the problem statement. Doing so will help narrow the range of potential solutions or approach you may adopt to solve the stated problem.
3. Ideate — In this phase, you brainstorm a variety of ideas that could offer solutions to the business problem. Ensure that you have a multi-disciplinary approach to develop a multitude of ideas. A holistic view helps to consider factors, which if not taken into account, might otherwise lead to a single dimensional view of potential outcomes.
4. Prototype — Prototyping is one of the key elements of Design Thinking approach. Rapid prototyping and storyboarding are rather unconventional methods that help you see what a product or service offering might look like. The idea is to quickly run the iterations to recognize the approach that work and that do not.
5. Test — In this phase, you go back to the customer with a newly developed product or service and gauge the difference in their experience between the old and new offering. Usually, focus groups and a lot of different statistical techniques such as A/B testing are conducted to compare different versions. You repeat the process if you do not find a noticeable change in the customer satisfaction levels.

Now, you might ask how is the process of Design Thinking different from a traditional Innovation process. Innovation process has 4 stages-Ideate, Define, Design and Develop. Each stage has to be in perfect synchronization to develop a successful idea. Whereas, Design Thinking has a modular approach. You can mix and match various stages to develop your ideal approach. Design leads to Innovation; Innovation demands Design. They co-exist.

Design Thinking has led to a whole new breed of products, services, ecosystems and experiences. One of the early adopters of this idea had been Steve Jobs. He firmly believed that Design should guide the Engineering and not the other way round. Think about it. Before we had beautiful iMacs, there were large, bulky, poorly designed Microsoft PCs. Steve Jobs later became famous for his idea that a Computer should be as beautiful on the inside as it is on the outside. In one line, he captured the essence of Design Thinking. He looked at iMacs not as machines running softwares but as devices the evoked imagination and creativity. That’s how he fundamentally redesigned the role of a computer. The slew of products that followed based on this ideology has served the company well. Steve Jobs created an ecosystem of connected devices that not only capitalized the emerging technologies such as Cloud Computing but also provided end-to-end solutions for all the customers’ needs. This led to network effects and extreme brand loyalty to the extent that Apple became one of the most valued companies on the planet.

Given that Design Thinking is a dynamic and multi-disciplinary approach, it can be applied to any industry and any job function. Over the years, Design Thinking has given birth to a new job designation such as Chief Design Officer and its variants. Another company that has reaped the benefits of adopting Design Thinking approach is Pepsi. Mauro Porcini, Chief Design Officer at PepsiCo, mentions that the company is not competing just with other soft drink companies. The company is essentially competing with anything that captures the fleeting attention span of people in this day and age where the information is constantly bombarded. It could be Beyonce’s new single, a jingle on the radio, the announcement of a new game on Youtube. The dynamics of the competition have changed and it compels organizations to reinvent every 2–3 years to stay relevant. That’s exactly what Pepsi has done by adopting Design Thinking.

Few years back, Pepsi introduced Spire-a touchscreen soda fountain that does more than just dispense a variety of flavors. Rather than just adding more buttons and flavors to its analog dispensers, Pepsi digitized it to create an interactive experience. The machine will remember your previous selections and suggest you new flavors. It will play the Pepsi jingle to increase the recall value and show beautiful shots of the drink to show the infusion of flavors while dispensing. It creates an engaging experience out of merely pushing a button.

Design Thinking has also served Pepsi well in Asian markets such as Japan and India. In India, Pepsi enjoys a strong competitive position in soft drinks market despite having fewer brands than Coca Cola. Pepsi, on various occasions, has utilized rapid prototyping to test a new concept. For example, Pepsi introduced Pepsi Blue during 2003 Cricket World Cup to capitalize on the blue color uniform of the Indian Cricket team. Due to novelty factor and advertising targeted to Indian youth, the product was successful. Pepsi Blue was an experimental concept but it didn’t fly since kids were beginning to gulp down Blue Kerosene mistaking it for Pepsi Blue. But therein lies the advantage of rapid prototyping. It allows you to quickly gauge the interest of the product/service and if it doesn’t work, you can pull it from the markets. This way, even if you fail, you fail small. In Japan, Pepsi introduces a new flavor every 2–3 months. Did you know, they launched a Cucumber flavored Pepsi in Japan?

Few months back, I had the opportunity to visit Japan. I enquired with local businesses concerning the proliferation of such wide range of flavors across the selection of food and beverages. They shared that in Japan, the competition is very high when it comes to consumer brands and the product cycles are short. To remain competitive, businesses sought to diversify local offerings. Traditionally, Japan offered a lot of rice based items such as Salmon Rice and Salted Rice Balls. Few local companies took popular local items and applied their flavors to other food and drinks. This strategy worked wonders and a lot of local, speciality flavors began to develop. International companies such as Coca Cola, Pepsi and Kit-Kat took note of it and followed suit. Japanese people take a lot of pride in their food and culture. Thus, if a food item or drink reflects such pride, then it’s likely to be successful.

Kit-Kat is another good example of this phenomenon. In Japan, Kit-Kat has launched flavors such as Sushi, Seaweed, Puff Rice, Green Tea and Watermelon. Ki-Kat now launches 20 new flavors every year and replaces flavors on shelves every two months. This is a prime example of Rapid prototyping. For Coca-Cola, the advantage comes from the deep penetration of vending machines in Japan. Japan has a vending machine for every 23rd person — highest per capita in the world. These vending machines allow Coca-Cola to quickly test the feasibility of a flavor. If it works, they continue with it, if not then they pull the flavor from the market. This also allows them to selectively target consumers and provide higher variety of flavors. In addition to that, since Baseball is the most popular sport in Japan, it allows food and drink companies to launch limited edition of flavors. Overall, such wide proliferation of flavors allow international companies to compete with local brands and provide a competitive advantage in production and distribution.

As the technologies continue to evolve, customers’ preferences will evolve as well. To stay relevant and competitive, not only corporate giants but startups too need to evolve to deliver experiences that redefine consumption and leave lasting impressions. Easier said than done, adopting Design Thinking approach can take years and could make the transition difficult if the innovation process at the organization doesn’t have similar elements to Design Thinking.

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