Design thinking, Ideo and disruptive business model innovation
November 25th, 2009 by Patrick StählerTo be honest, I get a bit bored about the mantra that design thinking will solve the problems of large corporation. Well, when I go through the case studies at Ideo I am extremely impressed by their client list but not about the output. I have seen several design thinking sessions and I am not impressed at all with the output. The results are very often: More-of-the-Same but with fancier design.
Wer hat es erfunden? Novo Nordisk insulin pen
Where is the invention from design thinking that changed the industry? Where is the iTunes or the Kindle of Ideo? The problem with design thinking starts very early in the process with the problem definition phase. And that is where large corporations fail. They define the scope too narrow and than you get nice new things that sustain your current business but not new business models that rock your industry and yourself.
Ideo is a very good (self-) marketing & design firm but not an industry rocking firm. Large firms just love Ideo because Ideo just offers such a well designed process to solve the big problem of “being not innovative”. You hire Ideo for comforting yourself for not using your own common sense and your own customer insights. You just outsource your understanding of the customer to Ideo.
And how innovative are Ideo’s ideas?
Let’s take the example of the insulin pen Ideo describes on its homepage as a case. They did the work for Lilly in 1997. Well, that is not really outstanding since the Danish firm Novo Nordisk introduced the pen in 1985. So Lilly was just catching up to this formerly unimportant drug firm from Denmark that solved 12 years earlier the problem that Ideo solved for Lilly. Novo Nordisk was a business innovator. Lilly is not.
Another show case of Ideo is the modular shopping cart they did in project for the TV channel ABC. Instead of having one big bulky shopping cart they came up with a modular cart that is better suited for today’s shopping habits. Definitely, the new shopping cart is nice but definitely not industry changing. Industry changing were such firms as Walmart or discounters like Aldi. They changed the retailing industry forever. For fashion retailers examples are Zara or H&M who saw that fashion is as much logistics as it is about fashion.
Adapt the Definition phase of design thinking
We have to watch out that design thinking will not become the next management fad like scientific management. I propose we go back to what God gave us, our common sense or in German “gesunder Menschenverstand” and that we use more our curiosity why the things are the way they are. The business model canvas will help us to understand the business we are in.
The business model canvas by Patrick Stähler
What is great about design thinking that is all about imagination of the unknown. But to really challenge the hidden assumption of any business more time should be devoted to the definition phase and to the unlearning phase. Only, when you challenge the hidden dominant logic of an industry you can rock the industry. If you do so, the design thinking process can be valuable to your company.
Unhiding the hidden dominant logic by looking at the jobs you do for your customers
So the best way to start is to unbundle your current value proposition. Ask questions like which job do you solve for your customers. And quite often, to your surprise, you solve very different jobs for different customers with the same product. And with dissecting the value proposition into job-to-be-done very interesting new problems emerge on which you can apply the design thinking approach.
I have done this several times already in customer projects and it works well. I used this job based unbundling on newspapers in my recent post on “Who says paper is dead?“.
I am interested in your experience with design thinking and business model innovations. Love to hear from you.
November 26th, 2009 at 9:32 am
I think the problem of businesses approach towards disruptive design or innovation is that any appearing phenomena is talked to death and showed in various case studies etc. There is no just-do-it-mentality in this area. It’s what I know as the the Nato-principle (No Action Talking Only). I studied Mechanical Engineering and from this point of view some of the argumentation feels kind of ridiculous. Rapid Prototyping, Virtual Product Development or Digital Mock Up Technology – all are applied in Bachelor courses at universities and also R&C Departments are often fooling around with this stuff. Being creative and changing the world from scratch is not the right approach in my opinion.
November 26th, 2009 at 3:28 pm
100% correct Patrick, especially the insight as to why large corporations jump on the IDEO bandwagon. New products alone do little to change a company’s dynamic as they are often easily copied and quickly commoditized. You need an innovative business model to compete as one of one. Too few companies are willing to take the risk and do the hard work of business model change. Leaders do not realize that keeping with the same business model and only doing incremental improvements is a far greater risk. My recent blog post provides tool helpful when using the business model canvas.
From the states–Happy Thanksgiving, one of my favorite holidays.
December 7th, 2009 at 10:32 pm
Sorry for the late reply to your comments.
@Thomas
You say that being creative and changing the world from scratch is not the right approach. What do you think is the right approach? And which approach do you think is appropriate for whom since I believe that we have to distinguish between start-ups and established companies?
@kay
Kay, I second your comment that product innovation is not enough and therefore the business design process that focuses mainly on product innovation will not solve the growth imperative of large corporations. I think there is a second reason why business design promises too much.
The problem is in the first phase of the design thinking process, the definition phase of the problem. Here, the problem that the design thinking process is supposed to solve is defined too narrowly. And you can have the best process the output is still mediocre if you have asked the wrong question. You get a great answer for the wrong question.
And third, there is the belief that with a structured process you will succeed. The interesting thing is that most outstanding ideas evolve over time and usually not in the context of a structure brainstorming session or process. But of course, it sells much easier to managers if you say that even creativity can be actively managed. That’s what managers love and therefore they buy into the business design story.
I love the saying: A fool with a tool is still a fool. And design thinking is just a tool.
December 21st, 2009 at 3:29 pm
Hi Patrick, thx for the response.
First I have to say that Design Thinking is not my primary focus and maybe I’ve not read enough about it. But from my engineering background this is kind of old wine in new skins. Hence I think it’s kind of ridiculous to claim that “Design Thinking will lead to disruptive changes” from skratch. I’m not saying that it’s not the right approach. Design Thinking appropriates and combines some well known techniques wich can help in an innovation process, but the technique for itself is not enough to innovate. In my opinion real innovations derive from specific need of a problems to be solved and not because someone uses a new buzzword or its corresponding visualization techniques.
December 28th, 2009 at 9:52 am
I totally agree with design thinking not leading to disruptive innovation.
I’m a bit irritated by your business model framework: why include leadership style etc? I don’t think it makes sense to try to put everything into a business model.
December 28th, 2009 at 1:11 pm
@Marc
I use the extended business model framework only for large, established corporations that are looking for business innovations. The culture/value part is included to show them where they will have difficulties to execute the new model. The fact is that even when have designed the best new business model they can not execute it due to their existing culture. And that is the reason why I include the culture/value aspect in the business model for traditional corporations.
For entrepreneurs I use just the three parts value proposition, value architecture and revenue model.
January 10th, 2010 at 10:59 pm
I think there is still value in leaving the value/leadership section in – even for startup companies.
Even startups need to think about what kind of culture they want, who is representative of the culture they want and what values will continue to prevail as the company gets bigger. If entrepreneurs aren’t thinking about the people side of the business early, they may lose the magic that got them started.
January 11th, 2010 at 10:50 am
@Christopher
Thanks for your comment. As you wrote culture can be a differentiation factor also for start-ups. Think about Zappos that was acquired by Amazon exactly for their customer service culture. Check my post on culture and business models at http://blog.business-model-innovation.com/2009/10/culture-and-the-business-model-we-are-humans/
January 26th, 2010 at 7:37 pm
It looks like the “design thinking” community might not have the best/newest/most efficient/you name it tool to encourage successful innovation, but they are doing are great job in lobbying… have a look at
http://ec.europa.eu/enterprise/newsroom/cf/itemlongdetail.cfm?item_id=3054
and
http://ec.europa.eu/enterprise/newsroom/cf/document.cfm?action=display&doc_id=2784&userservice_id=1&request.id=0
January 27th, 2010 at 10:10 am
@Georg You are right. They are excellent in marketing and getting sponsoring from Government and Universities. The links you posted show exactly why I am skeptical. The more Governments think this is the next big thing the more likely it is a fad. Governments are very good at spotting trendy stuff without long-term economic impact. And another good indicator is when large corporation jump on the bandwagon. The large incumbents want to be innovative by using new techniques but they don’t understand that they will not find disruptive innovation this way since their resource allocation process (who gets which resources like management attention, money, etc. and who gets promoted) totally contradicts disruptive innovations. Disruptive innovation will come from outsiders not from the incumbents. And design thinking will not help!
March 11th, 2010 at 12:53 pm
Dear Patrick Stähler,
thanks for pointing me to your interesting post.
I agree with your view that challenging the hidden dominant industry logic is the most promising approach to address radical innovation. As a consequence, a new value proposition is mostly linked to a change in the business model and the value network of the innovator. Design thinking may unleash its potential in this process in order to redefine assumptions.
This concurs quite well with thoughts from Roberto Verganti on “Design-Driven Innovation”: http://www.designdriveninnovation.com/
I’m currently reading the book with great interest as it’s reshaping my understanding of innovation.
He also emphasizes that the IDEO approach usually leads to incremental innovation as basic underlying assumptions don’t become challenged.
Overall, I think, design thinking is for sure no magic tool to inherently solve every business problem. However, it can serve as a valuable approach for successfully addressing incremental improvements and more radical innovation – both types need to be balanced in a portfolio.
Moreover, the human-centered principles make design thinking an interesting tool for a broad scope of application. I personally embrace the concept as it may help to shift from a technology-dominant to a more customer-centered view – at the end of the day innovation starts and ends with people and how they value the offer.
Looking forward to keeping in touch.
Regards from the eastern part of CH
Ralph-Christian Ohr
March 11th, 2010 at 6:26 pm
@Ralph As you have said in the end: innovation starts and ends with people. And this is the reason why I use also values and culture as a defining component of a business model. Particularly, in large corporations the existing culture is a barrier to innovate. See http://blog.business-model-innovation.com/2009/10/culture-and-the-business-model-we-are-humans/
March 19th, 2010 at 2:37 pm
Patrick, you have triggered a very spirited discussion – congrats!
Part of what makes design thinking so appealing is its immediacy. We can marvel at its art museum beauty – and that is one form of utility. We can benefit from its functionality. And when it uniquely defines an original brand, it can build loyalty.
Business model innovation, however, is redesign of behavior AND customer experience AND potentially product and service. So it goes far deeper – and often requires tough decisions about what to abandon as well as what to create. Culture change is a huge part of this. Stated (or asked) positively, given the change we need to create, what kind of leadership do we need? Do we have the people who can exhibit the kinds of behaviors we need to be successful? If we ignore the people side of it, we end up with a great business model, unimplemented, like so many other great ideas.
Rather than a jihad about which is better, in my mind the question is, what is the best either can offer? When do we use either of them? How can they create new forms of value when they work together?
If we get TOO stuck on method, then we become overly control-driven, which is the antithesis of innovation.
Every company has a portfolio of new offerings, some incrementally better, some revolutionary. Both business model innovation and design thinking will have a place in the portfolio.
March 22nd, 2010 at 5:58 pm
@Greg Thanks for your comments. In general I like tools like Design thinking, 5 forces but I am skeptical about how we use them. Even so useful tools like double-entry bookkeeping has be been abused by managers. Instead of using the “true and fair” principle managers and their accomplices like auditors or investment banks created special purpose vehicles with the sole purpose that the assets and liabilities will not show up in the books.
So ever tool is only as good as the people that use them. The best way to sum it up: A fool with a tool is still a fool.
March 29th, 2010 at 1:49 pm
Good discussion around design thinking, and very much in agreement that it starts too far down the innovation process to come up with anything more than service/ product innovation, and even therein, incremental. Where I have found design massively useful is in the NATO world – where if you can rapidly sketch out an idea to bring it to life people respond much more emotionally than they would to concepts/ powerpoints. It is then a great tool for moving from a complex challenge to something people can get their arms around. It is interesting how well the industry, and particularly IDEO have self promoted themselves, certainly something disruptive there!
June 8th, 2010 at 5:01 pm
Hey, I just forwarded this to some friends, loving it!
August 12th, 2010 at 11:24 am
[...] ideas cannot be found. This is the same criticism I have already raised in the case of “Design Thinking”. If you ask the wrong questions, you get irrelevant [...]