Digital Disruption: Why Design Thinking Helps

By Leaderonomics|30-11-2018 | 8 Min Read

 

Not long ago, before the advent of the Internet and its component technologies, the term ‘taxi’ would probably resonate with several attributes such as a car having a particular standard colour (blue/black/yellow/red), owned and run by licensed operators, and perceived as expensive compared to taking a bus in many parts of the world.

The Internet paved the way for the emergence of a new form of taxi service, a platform that empowers anyone with a decent car to become a taxi operator without the need to establish a dedicated company/operation to do so.

Today, in many parts of the world, companies such as Grab, Uber and Go-Jek have become household names, allowing millions of customers to avail taxi services with better value.

The value proposition of Airbnb (an online marketplace allowing individuals to lease or rent short-term accommodation) has revolutionised the hotel industry. In the financial service sector, digibank, a spin-off of DBS Bank Singapore, now allows customers to open a bank account in 90 seconds.

These examples have become a must in any discussion pertaining to disruptive technologies.

Digital disruption 

Digital disruption can be defined in many ways. Searchcio provides a useful definition: Digital disruption is the change that occurs when new digital technologies and business models affect the value proposition of existing goods and services.” This definition implies that digital disruption relates to three major points.

First, digital disruption has something to do with digital technologies that are driven by bits and bytes (binary digits that form the fulcrum of computational power), unlike their analogue predecessor.

A common example would be the smartphone, in which its ‘smartness’ is derived from its capability to perform numerous functions based on applications driven by binary digits. The digital applications embedded in smart devices such as televisions, phones and portable devices connect seamlessly to the Internet and allow users to communicate, transact, learn, work and be entertained.

Second, to become disruptive, digital technologies must be coupled with business models that offer specific or unique value propositions. The Global Centre of Digital Business Transformation (IMD, 2017) discussed three major value propositions brought about by digital disruptors, namely: cost value (free/ultra-low cost, buyer aggregation and price transparency), experience value (models that provide customer empowerment, customisation and automation), and platform value (creating an ecosystem, communities of interest and crowdsourcing).

Third, the value proposition changes the way in which an existing product or service is consumed or delivered to the customer. In this context, the word change is vital, that is, change is the value of product/service often used as a direct outcome or measure of digital disruption that can typically be measured on a scale.

To illustrate, using PowerPoint to present a lecture in a physical class or at a university is a form of digital technology, albeit not a disruptor. However, the possibility of offering college education, without the need to attend any class physically, would be considered a disruption.

Harvard Business School in 2015 stated that Design Thinking (DT) is a competency that managers and leaders must have. The processes within DT can assist organisations to better manage and address digital disruption.

Design Thinking 

The inherent ideas and ideals behind DT are not necessarily new. However, DT presents a systematic way of injecting creativity and innovative thinking in any company.

DT offers highly specific tools and techniques in a simplified manner. These tools are then used to derive the magical inspirational values of DT.

DT is defined as a user-centric collaborative approach in problem solving. The design school (dSchool) at Stanford University prescribed a five-step DT process. This five-step process and what each process means are summarised in Table 1:

DT Phase Brief explanation
Empathy The first step and arguably the most vital one in DT. Empathy focuses on having a deep understanding of customer pain points and emotional attachment to a given problem or challenge (called design challenge) in DT. Findings from the empathy feed naturally lead to the second step, namely, “define.”
Define Focuses on getting deep into the problem from the viewpoint of the customer. During this stage, design thinkers spend time coming up with specific perspectives and try to offer game-changing propositions to the problem based on insights or hunches.  
Ideate A stage where design thinkers try and generate as many ideas to address the problem defined. Ideate is akin to a brainstorming session where ideas are seamlessly generated.
Prototype Focuses on translating the idea(s) into tangible manifestations. A prototype is not confined to having a tangible product but also refers to simulations, mock-ups, or even campaigns depending on the challenge or issue that the organisation aims in addressing.
Test The final step stresses on the importance of pitching the idea to indemnified target groups; feedback is gathered by teams. The solution is then either launched or reworked accordingly until deemed fit for market launch.

 

Table 1: Stages of design thinking based on the work and experience of Stanford School

 

 

Why DT helps 

A 2014 study by the Design Management Institute shows that design-centric companies, such as Apple, Coca-Cola, P&G, and Nike, tend to outperform the S&P500 by more than 214 per cent.

The following points/themes (based on my own experience as a trainer and researcher in DT) are possible explanations regarding the relationship between DT and positive performance in an organisational context:

  • DT focuses on collaborative work—squashing the traditional silo mentality and mindset of working in departmentalised isolation. DT projects often provide a conducive field for the cross-fertilisation of ideas and solutions from various experts in a company. When executed well, DT can produce breakthrough ideas largely achieved by bringing in a group of diverse people in the organisation together, working in solving a DT challenge.
  • DT focuses on the customers it takes an ‘outside-in’ perspective of the company, placing customers at the core of every idea or solution generated. Although the notion of being customer-centric is not necessarily new, the DT process offers a novel way of examining customer centricity.
  • DT allows us to celebrate failure the prototyping and testing stages of DT are highly iterative, moving back and forth between both steps, where ideas are continuously refined based on feedback from the end-users/customers. Stated differently, DT could save companies a large amount of money by failing fast in-house rather than failing in the market after a mega launch.
  • DT stresses on the importance of listening with empathy at the core of every DT project, one outcome of successful DT projects is their ability to promote a culture that provides everyone a chance to express themselves freely. Thus, a culture of listening to one another better is generated (both with internal and external stakeholders).

Embarking on a DT Journey 

Prior to embarking on a DT journey, leaders should take the following pointers into consideration:

Why DT? 

The justification of embarking on a DT journey must be clear to the organisation. There are three possible reasons (based on my experience) that are often used by leaders when they sign-off on a DT project:

  • Sensitisation DT projects are used to create more awareness amongst employees on what DT is, what it can do, and the inherent processes in DT. Leaders often hope that post completing a DT programme or bootcamp, employees can use the ideas from DT to solve day-to-day work issues. In this context, the design challenges are often developed by a particular vendor and may not necessarily resonate with core issues faced by the organisation.
  • Specific challenge DT is used to address a specific problem faced by the organisation. Examples of projects that we have worked on include streamlining financial and procurement processes, introducing 21st century learning methods, business model of IOT projects, increasing customer base, etc. These challenges are often crafted on a joint basis between the DT vendor/trainers and the client organisation.  
  • Strategic DT used as basis to revamp the overall strategic outlook. This requires much more commitment from leaders and key stakeholders. In this regard, DT projects are often blended into an overall Digital Business Transformation initiative.

Selecting a Vendor 

There are many vendors or training providers that used the term DT, although they may not necessarily follow a prescribed methodology.

 Leaders in this regard should consider the particular methodology provided/suggested by all potential trainers making sure the methodology jives with the core objectives of using DT.

The Participants 

Participants selected for a DT bootcamp play a significant role in achieving any desired outcome of the intervention. We recommend that participants be made up of employees who are:

  • ready to learn new tools and have an open mind and heart for change,
  • willing to become DT ambassadors or champions, and
  • from a diverse background (often a blend between management, business, technology, and marketing groups).

Commitment to change 

Leaders should, as Stephen Covey says, “Begin with the end in mind.”

Successful DT projects are often coupled with leaders who visualise DT as a compass that guides the organisation towards the right direction, particularly in addressing any potential digital disruption.

Avoid thinking about DT as just any other training; rather use it as an opportunity to drive transformational change in the organisation—especially in dealing with digital disruption.

 

Dr. Murali Raman is the director of the Business School of Multimedia University. As a coach and trainer for over 15 years, he specialises in three broad areas: design thinking and digital economy, leadership development using directive communication based on coloured brain and emotional drivers, and soft skills development. Prof. Dr. Murali has published over 100 papers in international journals and conferences, including a book. He has also won numerous awards for academic leadership.

 

Prefer an e-mag reading experience? This article is also available in our 1st December, 2018 digital issue. Access our digital issues here.

 

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