Is Design Thinking Included as Part of Your Core Business Strategy?

While many businesses claim to be customer centric, most seem to exist only to defeat competitors, not to delight customers. Design thinking adds customers to the equation and flips the formula.

Believe it or not, business strategy in the Western world is a relatively new idea, only having emerged as a discipline in the 1960s. For centuries before that, businesses ran on a more military model that focused on only two players — you and your enemy — and only one goal — defeating the enemy.

Some businesses survived for centuries on this model. The Japanese construction company Kongo Gumi, for example, had 500-year strategic plans that drove its business for more than 1,400 years. Unfortunately, by 2006 the company’s adherence to the binary military strategy had taken its toll. The Kongo Gumi name only exists today as a subsidiary of its owner.

But even when modern business strategy did finally arrive, demigods like Peter Drucker kept the same warfare approach. Drucker’s innovation on the old theme was to add “You can’t improve what you don’t measure” as a method of improving performance to out do the competition. Numbers became the new weapons and spreadsheets the new battlegrounds. Our left brains took over, and we found comfort in the idea that if we focused on the numbers, we would know where to apply our resources to outsmart our enemy.

However, that approach, like the military strategy before it, failed to incorporate a third, still more important player: the customer.

Including the customer complicates things, because it forces us to rethink most of the management philosophies borne of binary military strategies. It also forces us to push beyond the comfortable left-brain thinking and explore the creative side. But in reality, today’s customers are besieged with choices, and their expectations are rapidly expanding. Companies who adapt to this reality will succeed, while those who ignore it will fail. That’s why we can say that if you take care of the customer, beating the competition will take care of itself.

Nevertheless, the old-school approach to business strategy still permeates the business world, including the world of product and process design. The solution: design thinking.

What is Design Thinking?

Design thinking is a system that focuses on how humans interact with their environments to reshape products or processes. It requires using empathy to observe how people interact with products or processes, and then to apply that unique perspective to make iterative changes to reach the desired response. Design thinking’s mix of quantitative and qualitative data serves as a check-and-balance system to ensure that changes will be successful. Think of it as the relationship between form and function.

In other words, design thinking allows us to see how a customer actually engages with a product or service, instead of what we think is happening. In every industry, we can find examples where design thinking allowed a newcomer to leapfrog past their competition – think Netflix, Airbnb, UberEats and Amazon.

This isn’t entirely new, of course, and many companies have used this approach. For example, while companies like Blackberry and Nokia were locked in combat, Apple focused on the third player — their customer. They realized that how humans emotionally experience a product affects buying and brand loyalty more than statistical feature comparisons. Did you toss out the box your last Apple (or any) product came in right away? If not, that’s a good indicator the manufacturer reached you on an emotional level. They made the box an extension of the product. This is the root of design thinking, and it isn’t limited to consumer goods.

Humans are funny. We’d like to think we’re logical, but we make 80 to 95 percent of our decisions based on emotions. Design thinking helps us understand how people interact with us or our products so we can make that emotional connection.

Double Major in Business and Psychology

Design thinking can sometimes push us outside of our comfort zone. It requires us to see things in a different way, and this new lens creates new options and decisions that lead to new pathways. We can choose to follow the comfortable path like Nokia, or we can explore new ideas. To illustrate, let’s talk about sunk costs.

Sunk costs are investments you’ve already made, but that shouldn’t affect current decisions. The problem is that we often continue to invest in familiar areas, even if they aren’t productive. Back to that pesky human thing, again. It’s natural to want to extract as much value from the pain or expense we’ve invested in, even if it negatively influences us in the future.

This is often why a “fast follower” or startup can be more nimble – they aren’t hung up on trying to extract value from previous investments. We often think our secret sauce is our investment in things like our internal processes, but clinging to those processes can lead to a sunk-cost fallacy. So we continue to invest in what we know (our internal processes), but we miss the opportunity to invest in what we should know more about – our customer (and their experience).

Design thinking allows us to examine our customers’ journey and overlay it with our internal experience, our processes and our technologies to understand the entire perspective. When we can see through the customer’s lens, it helps us see gaps, friction or missed opportunities in their journey. Design thinking starts by pushing us outside of our comfort zone, but it ends with creating more confidence in future investments.

Connecting with the Customer Through Design Thinking

Experience design experts live by design thinking. They ensure the solutions you create go beyond well-engineered to become an experience that generates brand advocacy. Instead of engineers building a product that marketing has to convince us we need, design thinking flips the formula 180 degrees. They start by designing a solution that people connect with emotionally, rather than just checking all the boxes functionally. Remember how Nokia provided us with a limited structure of how to search text, but Google came along and decided just to make the search function work better? That’s designing for the need instead of engineering around the limitations.

In the elevated playing field of business, functional requirements are merely table stakes. Design thinking is what separates the leaders from the followers. If you are not incorporating design thinking into your core business strategy, your competitor probably is.