4th International Scientific Conference A.L.I.C.E. 2016

Steinar Valade-Amland
CEO Three Point Zero, Copenhagen, Denmark

Abstract

The Unsustainability of Solving the Wrong Problems discusses the appropriateness of applied design thinking in the early phases of projects  aiming at developing new or improving existing products, services and systems – and the price of not doing so. In the public sector, due to its multi-layered decision ­‐ making environments, conflicting interests and compartmental structures – often combined with austerity – problems are rarely explored to its core. Hence, measures are often taken to relieve symptoms or addressing problems of more symbolic than real  significance, rather than addressing the core problem. In the private sector, the result is often the same, however more often due to lack of time and to processes favoring agile problem solving instead of actually solving the right problem. By applying design thinking and allowing for, actively encouraging and facilitating iterative, reflective processes – provided they are strategically anchored – succeeded by working with scenarios and narratives throughout the scoping, framing and re-­framing of the challenge at hand, the probability of identifying the most feasible problem(s) to solve increases. In particular in environments characterized by complexity and multiple stakeholders – provided these are engaged constructively and professionally – the available resources will be used to develop more  coherent, more sustainable and more resilient solutions.

Design thinking / complexity / multi-­‐stakeholder engagement strategies / risk management / resilience & robustness

Introduction

Over the last decade, design thinking and design methodologies have captured an increasing number of front pages of business magazines and newspapers, attracted the interest of large, multinational consultancy houses and become mandatory offerings of business schools throughout the world. Design has become a broadly acknowledged approach to developing user centered, market relevant and profitable products and services and as an appropriate means to foster innovation. The role of design as a means to inspire more sustainable products and services has also proven its relevance. However, the direct correlation between the use of design thinking and methodologies, and which ones are the most appropriate – in the very early phases, where needs and alternative approaches to their fulfillment are assessed – has only been superficially explored. This paper scratches the surface of the rationale behind the need for more structured research into this matter.

The first section of this paper discusses some of the preconditions that need to exist before applying design thinking and design methodologies makes sense, on how leadership is needed – in any organisation – to allow internal stakeholders and staff on all levels, clients, customers or citizens – and numerous other stakeholder to contribute to the process, as well as how time and space plays a vital role in facilitating reflection and collaborative processes.

The second section argues the role of design thinking and design methodology as a key approach to the early stages of the innovation process.

The third section takes its departure in the unsustainability of the excessive failure rates experienced in relation to new product development as well as in private and public services. Furthermore, it discusses how design thinking and design methodology can alleviate these problems.

The fourth section calls for research into the role of design thinking and design methodologies, and to document its effect in terms of reducing the environmental footprints of organizations by increasing their success rates from investments in the development of new products or services, thus benefiting from more coherent, more sustainable and more resilient solutions.

Preconditions for benefitting from design thinking and methodology

The emergence of Design Thinking

During the last decade, design thinking has gradually become as an almost transversal approach to strategic developments. As originally introduced in the book Design Thinking (ROWE, 1986), design thinking provides a systematic account of the process of designing in architecture and urban planning -­‐ whether it prescribes forms or simply provides procedures for solving problems. Thus, design thinking becomes a manifestation of an underlying structure of inquiry common to all designing. Two decades later, design thinking has taken on a quite different and much more opaque meaning, as promoted by numerous designers and “design thinkers”.

One of the most successful design service providers globally – IDEO – was among the first to elaborate design thinking into a coherent, methodological approach to problems solving.

The most significant shift in regarding design thinking over the aforementioned period is that design thinking now is no longer exclusive to designers and architects, but a way of thinking, which can benefit people and challenges across industries and sectors, provided a certain mind-­‐set is present, and the individual accept the premise of “thinking like a designer”. In a renowned article in Harvard Business Review (June 2008), IDEO’s Tim Brown systematically presents the premises of working with design thinking, listing them as empathy, integrative thinking, optimism, experimentalism and collaboration. From organizations, both in private and public sectors, which have adopted the idea of design thinking, some other and more fundamental preconditions have also proven their significance. The most determinative factor is – as it can promote as much as it can prohibit the five aforementioned premises – is that the idea and belief in design thinking is embraced at the organization’s C-­‐level management. Benefitting from design thinking, thus first and foremost is a question of leadership.

Leadership

Leadership takes on many forms and often leans up against a certain acquired portfolio of experiences and preferred models and tools, as well as prevailing “management trends”. Some of the more popular trends during the last decade or so – hence also competing for attention with design thinking – have been lean and agility, and more recently robustness and disruptiveness. The two first ones focus on efficiency and speed, while robustness focuses primarily on managing and reducing risks and disruptiveness focuses on breaking out of existing paradigms to create new business opportunities. Reverting to Tim Brown’s five premises; empathy, integrative thinking, optimism, experimentalism and collaboration, they all – except from optimism, which is essentially a perspective on life – have in common that they take time. Unless the sufficient time is granted, design thinking cannot happen – rendering it quite challenging to work with design thinking in an environment focusing on lean or agility – focusing on speed and efficiency. Design thinking and focusing on risk reduction and risk management, however, are not necessarily each other’s adversaries, provided the findings coming out of the research undertaken as part of the design process are fed into the risk assessments. The more diverse the stakeholder groups engaged – from clients and various user groups, through suppliers, distributors and others representing various links in the value chain to staff on all levels – and the more relevant the form of engagement and the tools provided, the lower the risk of failure will be.

Whether design thinking and disruptiveness are compatible or not, to some extent depends on which elements are adopted from the design methodology. In “Design-­‐driven Innovation” (VERGANTI, 2009), Roberto Verganti argues that core design methodological elements like multiple stakeholder engagement and user-­‐centered, co-­‐creative processes are only suitable for incremental developments, change and improvements, while disruptive innovation requires a process driven by visions and by creating new meanings. Design thinking, thus, is compatible with disruptiveness only to some extent.

However, an overwhelming part of the challenges faced by companies and organizations call for incremental change and continuous improvement rather than disruptiveness. Thus, design thinking and the adoption of design tools and methodologies are both valid and appropriate in most organizations, provided support and facilitation granted by their leadership.

Time

Time is a critical factor and scarce resource in many organizations, thus something to be managed meticulously. Applying design thinking takes time, and unless this fundamental prerequisite is present, the benefits from embarking on the design train will most probably be limited. There are good reasons for why a design process cannot be rushed; the engagement of multiple stakeholders, numerous iterations as the scope of the problem as well as the approach needed to mitigate it emerges, continuous prototyping and measures to validate whether they point towards the best possible outcome – all managed with the same care and scrutiny as any other project undertaken by the organization. As a matter of fact, companies that manage design effectively attain significantly better results from using design than those, which do not, as described in “Design Management Capability: Its mediating Role between Organizational Learning Capability and Innovation Performance in SMEs” (FERNÁNDEZ-­‐MESA et al., 2012) However, it needs to be managed based on the fundamental assumption that the iterative and cyclic nature of the design process does take time.

Another inherent element in the design process is reflection. Reflection is the processing of abstractions, based on previous experience, knowledge, values and aspirations. Systemic thinking requires the ability to abstract from and challenge the already existing imagery of the situation at hand. Abstractions require time and space to reflect, and just as important – an openness to add intuition and tacit knowledge – our own as well as others’ – to the formalised knowledge in which our professional identity often rests. Tacit knowledge is silent and unarticulated – thus, we need to give its articulation time for it to become coherent and valuable input to the process.

Space

The book “Betterness: Economics for Humans” deal with the need for both time and space for reflection. “We seem to be clueless about making room for deep questioning and thinking: reflecting. Our doing/reflecting ratio is wildly out of whack. Most action items might just be distraction items — from the harder work of sowing and reaping breakthroughs that matter.” (HAQUE, 2011)

Suitable physical conditions for pursuing intellectual processing of the questions and situations we face on a daily basis is not something that should be left to the individual and his or her personal priorities. Just as the individual should not be expected to decide on how much and when to take time for reflection at work, as individuals can rarely decide for themselves to make it a natural, respected and recognised professional activity – physical space, which is appropriate to the structured activity of reflecting on, discussing and processing often complex information needs to be created. It has to be addressed – just like any other tool or appropriate ICT solution – as a structural and political element of the framework offered to teams and individuals. Hence, the responsibility of providing time, but also appropriate physical facilities for reflection rests with those, who are also responsible for corporate culture, strategic direction and for which goals to pursue.

There is no fixed formula for what a creative space looks like or what it contains, but in general, it needs to feel and look different from the offices or work spaces where other structured activities take place. There are numerous examples of very successful companies offering such spaces. Such dedicated areas are often characterized by an informal and laid-­‐ back ambience, different colors and materials, and different types of furniture than elsewhere in the work environment. However, certain elements of functionality also need to be present, such as surfaces suitable to illustrate and make notes as the process proceeds.

The design process

Design used as a structured methodology to develop new or improve existing solutions requires the choice of a process and methodology, which is easily understood by all parties involved in the process. A visual representation of the process will be a great help to that extent. An extensive number of design processes exist, and there is no scientific evidence to claim that one or some are better than the rest. However, to capture the gist of design thinking, the process needs to contain at least four or five phases, accommodating research and empathizing, ideation, prototyping and development. The choice of process is not crucial as such, but what constitutes a process based on design thinking – as opposed to many other processes known from engineering and other technical sciences – is the relatively heavy front-­‐end. Comparing development processes labeled as design processes to other development processes, the most conspicuous difference is the number of phases or activities undertaken before the problem is actually solved. Some design processes allow for up to four phases focusing on understanding, scoping and framing the challenge, while development processes known from engineering and other technical domains often dedicate one phase at the outset – often labeled “requirements” or “planning”. This difference is not merely technical and semantic. It reflects the fundamental difference between processes based on design thinking and processes deriving from engineering traditions. These differences are supported by research into what design teams actually undertake of actions during a design project (STEMPFLE -­‐ BAKE-­‐SCHAUBE, 2002) and similar research into what electronic engineers actually undertake of actions during a development process (McNEILL et al., 1998). The nonlinear design process is based on simultaneously following a forward (breaking down) and backward (validating) reasoning strategy, also indicating that the process itself both entails and builds upon a learning progression during the design thinking process. (GOLDSCHMIDT -­‐ WEIL, 1998). As such, the design process – to the extent that it reflects design thinking – is an analytical process containing elements of inherent research.

Processes inspired by design thinking and design as a methodology are currently applied to challenges and problem-­‐solving across industries and sectors – ranging from new product development (NDP) via business modelling to public services and policy making, as portrayed in “Solving Problems with Design Thinking: Ten Stories of What Works” (LIEDTKA et al., 2013). The arguments often heard from organisations and leaders adopting design thinking also often revolve around the advantages experienced in the early phases of the process; better understanding of the current situation, more in-­‐depth analysis of possible scenarios and related consequences and better opportunity to explore alternatives – measured both by functionality and attractiveness. The analysis was visualised in “Designing for Growth: A Design Thinking Tool Kit for Managers” (LIEDTKA -­‐ OGILVIE, 2011) – taking its departure in the four questions; What is?, What if? What wows?, What works?

Regardless of which design methodology or working process, one chooses to apply to the challenge at hand, the above representation of design thinking is crucial to its success; asking as many – and to the extent possible – the right questions. By allocating the necessary resources to, and by facilitating the process of reflection and exploration throughout the process, the outcome of the process will be more targeted, better analyzed, more attractive and more appropriate to solve the problem or meet the demands to which the solution is a response.

The unsustainability of solving the wrong problem

Across sectors, new products and services are developed, problems are solved and change processes are undertaken all the time. However, new products have a failure rate of 25 percent to 45 percent (COOPER, 1987) and for every seven new product ideas, about four enter development, one and a half are launched, and only one succeeds (BOOZ ALLEN HAMILTON, 1982). Despite the fact that these findings are somewhat aged, and taking into account that other sources often cite significantly higher failure rates – as high as 80 percent in the personal care industry (DILLON, Harvard Business Review, April 2011), both private and public organizations struggle with the same challenge, and with the recurring challenge of how to understand what current and future customers and users want and how they will respond to a new product.

According to an article in New York Times from April this year, during the period 2010-­‐15, approximately 225.000 new packed consumer products were launched in the US, while the comparable number for the period 1980-­‐1985 was 35.000 – an increase of more than 600%. One gathers that after one year, half of them remained in the market, while only 10 percent remained after two years. One cannot claim that all the remaining 90 percent – equaling more than 200.000 products – were wasted, but I would argue that a substantial part of the products launched failed to succeed as a result of poor research into the needs and aspirations of the marketplace; of addressing non-­‐existing demands – of solving the wrong problem. Hence, any cost-­‐benefit or value analysis would reveal that investments must have been made with little or negative ROI, while the human resources could have been used more wisely and resources spent in terms of materials and energy consumption could in many cases have been saved.

Adding to the physical products developed and launched comes all the products, which never got to the point of market introduction, but where substantial amounts of unnecessary resources were allocated to the development process itself, the costs of and resources wasted on service innovation and improvements leading nowhere in the public and private sectors alike, as well as failed projects focusing on business model innovation, new processes and organizational change. Not all of these resources could have been saved, as innovation implies failure and dead-­‐ends. However, despite the fact that “Companies that make poor choices with respect to their NPD portfolio run the risk of losing their competitive advantage.” (KAVADIAS-­‐CHAO, 2008), a substantial portion of all failed projects was allowed to continue for too long, entailing unnecessary costs, human as well as natural resources – disregarding a phenomenal amount of research conducted into NPD in particular, numerous available models and an increasing focus on risk management in development projects.

While mathematical models can help foresee and alleviate certain contingencies, applying design as a methodology from the very early phases of a development process and throughout to delivery and deployment is another approach to reducing project risks and dealing with uncertainties as they occur (VALADE-­‐AMLAND, 2014).

Sustainability issues in New Product Development

Decisions during the NPD process have impact on 80-­‐90% of a product’s life cycle sustainability performance. (MAY et al., 2011). However, while there is an abundance of literature revolving around how sustainability measures are built into new products in the development phase, often taking its departure in Life Cycle Assessments, very little literature exists, which links the success and failure rates of new products with issues related to waste of resources and sustainability. ”Notwithstanding the logic behind integrating sustainability in the early stages of an innovation process, in practice it is flawed. Front-­‐end innovation is a hot research topic, but there is still little research done on its relationship to design for sustainability.” (DEWULF, 2013). In her paper, “Sustainable Product Innovation: The Importance of the Front-­‐End Stage in the Innovation Process”, she refers to some of the few scholars, who have explored the correlation between the earliest phases of a development project, often referred to as Front End or Fuzzy Front end (HERSTATT -­‐ VERWORN, 2001).

One definition of Front End is “the process in which an organization formulates a product concept and decides whether or not to invest resources in that concept.” (MOENAERT et al., 1995), while (KHURANA -­‐ ROSENTHAL, 1998) argues that FE begins when an opportunity is first considered worthy of further ideation, exploration and assessment and ends when a firm decides to invest in the idea, commits significant resources to its development, and launch the project. At least as far as deciding to invest in the idea and committing resources to its development, this resonates with most other authors on the subject.

Thus, an acknowledgement exists, that the decisions made during the early phases of a development project not only determines the nature of the development and the various factors influencing on its sustainability, but also the unsustainability of embarking upon a development project. “Successful sustainable design requires both strategic (front-­‐end) and operational (new product development) activities”, (ÖHLUND, RITZIN, 2004). By applying design thinking and design methodologies, the Front End will be given significantly more attention than in many other development processes, such as a traditional Stage Gate process, introduced by Robert Cooper in 1996 – thus also allocating more time to understanding the current situation, market needs and the extent, to which the problem identified is the right problem, or whether it might possibly be part of a more complex configuration of interrelated problems, a symptom or a misconception.

The role of design in relation to sustainability

Design as a methodology is a significant factor in regards to safeguarding that sustainability issues are duly considered throughout the development process. However, its role in the very early phases is unique, as it inherently responds to the call for constant balance between the three factors reflected in the triple bottom line; social responsibility, financial feasibility and the well-­‐being of the natural environment; between “people, profit and planet”, as stated by the Brundtland commission already in 1987. “Design is all about attractiveness, sensuality, aesthetics and functionality, about real people and real problems, about individuals and their encounters with systems, about encouraging responsible behaviour and choices, about challenging our prejudice, about fellowship and ownership, commonality of reference and cultural diversity, about expressing identities -­‐ for the individual, for groups of individuals, for corporate entities and for societies at large; design is all about ”people, profit and planet” (DANISH DESIGNERS -­‐ The Role of Design in the 21st Century -­‐ A Vision for the Future of Danish Design, 2010)

By applying the principles of design thinking and by engaging multiple stakeholders in the process already from the fuzziest front-­‐end and throughout to where many other development processes start; “requirements” and “planning”, which both assumes the development of a product, service or operation as given, organizations subscribe to the idea that even though one might have identified a problem and possibly also have an idea about its mitigation, neither are necessarily worth pursuing. Thus, design thinking can contribute to significant reduction in waste of resources otherwise allocated to solving the wrong problem. Taking the triple bottom line into consideration, in most cases, this will have implications of economic and environmental, as well as social significance:

• Profit / economic significance: Reducing the costs of product and services development and improvement, business model innovation and organizational change, thus leaving organizations more profitable and resilient.
• Planet / environmental: Reducing resources going into back-­‐end development, launch and marketing, as well as production and distribution of goods, which proves to fail in the marketplace.
• People / social: Improving relevance and meaningfulness of a reduced number of products and services, thus also facilitating the right choice for the user (IYENGAR -­‐ LEPPER, 2000) and (SCHWARTZ, 2004)

Need for research intro the role of design as a means to reduce failure rates

The advantageous role of design with regard to growth and business revenue, brand value and market penetration, customer loyalty and profitability has been systematically researched over the last decade in particular. For every one pound invested in design, businesses can expect over 20 pounds in increased revenue, over four pounds increase in operating profit and over five pounds in increased exports. (DESIGN COUNCIL, 2012) These findings may include some of the financial gains from reducing the number of failed product or service development projects. However, there is a need for more targeted research into the savings – not only financially, but also in terms of human capital and energy consumption, related to the development of new products and services that the application of design can contribute to. The role of design as a measure to reduce the footprint of new products and services launched has been well documented, while the unsustainability of – and the role of design to avoid – solving the wrong problem is obvious, however yet not addressed scientifically. One can only hope that such research will soon be undertaken to support the already existing portfolio of scientifically supported arguments to apply design thinking and design methodology from the very inception of new developments, be it of product or services, in the private or public sector.

References

BOOZ ALLEN HAMILTON, 1982: New Product Development for the 1980s, Booz, Allen and Hamilton Inc, New York

BROWN, T.(2008): Design Thinking, Harvard Business Review (June 2008)

COOPER, R.G.; KLEINSCHMIDT, E.J.; (1987): New products: What separates winners from losers, Journal of Product Innovation Management 4, 169-­‐184 (September 1987)

DANISH DESIGNERS (2010): The Role of Design in the 21st Century -­‐ A Vision for the Future of Danish Design, Manifesto

DEWULF, K.(2013): Sustainable Product Innovation: The Importance of the Front-­‐ End Stage in the Innovation Process, In: Advances in Industrial Design Engineering, INTECH, Croatia

DESIGN COUNCIL (2012): Design delivers for business -­‐ A summary of evidence from the Design Council’s Design Leadership Programme, Design Council, London

DILLON, K.; (2011): I Think of My Failures as a Gift, Harvard Business Review, April 2011 FERNÁNDEZ-­‐MESA, A.; ALEGRE-­‐VIDAL, J.; CHIVA-­‐GÓMEZ, R; GUITTÉREZ-­‐GRACIA, A.: Design Management

Capability: Its mediating Role between OLC and Innovation Performance in SMEs. In “DRUID Academy 2012”, University of Cambridge, 19-­‐21 January 2012

GOLDSCHMIDT, G; WEIL, M (1998): Contents and Structure in Design Reasoning, Design Issues 14, 85–100

HAQUE, O.(2011): Betterness: Economics for Humans, HBR Press, Boston

HERSTADT, C; VERWORN, B. (1999): Approaches to the “Fuzzy Front End” of Innovation, Working paper no. 2 IYENGAR, S.; LEPPER, M. (2000): When Choice is Demotivating: Can one Desire too Much of a Good

Thing?, Journal of Personality and Social Psychology, Vol. 79, No. 6, 200, 995-­‐1006 KAVADIS, S.; CHAO, R.O. (2008) Resource allocation and new product development portfolio management, In: Handbook of New Product Development Management, Routledge, Oxford KHURANA, A,; ROSENTHAL, S.R. (1998) Towards Holistic “Front Ends” In New Product Development, In:

The Journal of Product Innovation Management, Volume 15, Issue 1,, January 1998, Pages 57–74 LIEDTKA, J.; KING, A.; BENNETT, K.(2013): Solving Problems with Design Thinking: Ten Stories of What Works, Columbia Business School Publishing, New York

LIEDTKA, J.; OGILVIE, T.(2011): Designing for Growth: A Design Thinking Tool Kit for Managers, Columbia Business School Publishing, New York

MAY, G.; TAISCH, M.; KERGA, E.(2011): Solving Assessment of Sustainable Practices in New Product Development, In: Advances in Production Management Systems. Value Networks: Innovation, Technologies, and Management, IFIP WG 5.7 International Conference, APMS 2011, Stavanger, Norway, September 26-­‐28, 2011 – pp. 437-­‐447

MCNEILL, T.; GERO, J.; WARREN, J.; Understanding conceptual electronic design using protocol analysis, Research in Engineering Design, 1998, Volume 10, Number 3, Page 129

MOENAERT, R.K.; DE MEYER, A.; SOUDER, W.E.; DESCHOOLMEESTER, D.(1995): R&D/Marketing,

communications during the fuzzy front-­‐end. In: Transactions on Engineering Management, 42 (3) (1995), pp. 243–258, IEEE, New York

ROWE, P.(1986): Design Thinking, MIT Press, Boston

SCHWARTZ, B. (2004): The Paradox of Choice – Why More is Less, Harper Perennial, Glasgow STEMPFLE, J.; BADKE-­‐SCHAUB, P.; Thinking in design teams – an analysis of team communication, Design Studies 23 (2002) 473–496

VALADE-­‐AMLAND, S.(2015); INNOLITERACY – fra design thinking til håndgribelig forandring (from Design Thinking to Tangible Change), DJØF Publishing, Copenhagen

VERGANTI, R.(2009): Design-­‐driven Innovation, Harvard Business Press, Boston

ÖLUNDH, G.; RITZÉN, S. (2004): Making an ecodesign choice in project portfolio management. In: Proceedings from “The 2004 IEEE EMS International Engineering Management Conference”, 18-­‐21 October 2004, Singapore.