HUMAN-CENTERED DESIGN MANAGEMENT FOR BETTER CUSTOMER EXPERIENCE

Moscow, ARENAS®lab

Human-Centered Design Management

By 2030, 75% of companies in the S&P 500 rating will cease to exist. Business is forced to change in order to maintain a competitive advantage. The main priorities of the organization are: fast-learning, flexibility, high-speed testing of market hypotheses, the ability to form mobile cross-disciplinary teams for testing and the implementation of new products and services. At the fore-front is the ability to create a stable and difficult-copied for competitors set of criteria and values ​​and a seamless user-experience.

DELIVERING COMPETITIVE ADVANTAGE THROUGH DESIGN

Design management plays a fundamental role in the success of many of the world’s leading companies. But how do those firms ensure that they are getting the best return on their investment in design? What is importance of design management? How can you make investment to your business by design and use it as a strategic tool to have long-time competitive advantages?

Here is top 10 most innovative companies, which using design as strategic tool (rated by Fast Company)

OUTLINE

  1. What characteristics of design management?
  2. How to define design management?
  3. Why design management is important?
  4. Who is design managers?
  5. What is differences between companies which use design and not?
  6. How do we practice design management with our clients?

CHARACTERISTICS OF DESIGN MANAGEMENT

Design management is today a relatively undeveloped field of research. It is characterized by a shift from the traditional hierarchical ‘Taylor management’ towards a flexible organization that encourages initiatives from individuals, risk taking and independence. Because of the lack of a general understanding of design management, it has not developed and grown to achieve a significant importance. The concept of design management facilitates increased value added for various of a organization’s stakeholders when efficiently utilized. For instance, design management strives to provide 15 Källström & Markovski Bachelor thesis ­ 2015 enhanced customer satisfaction and a closer cooperation between all functions that are engaged in the product development process. Furthermore, design management emphasises the significance of spreading a mindset and culture throughout an organization, in order to help the employees understand the potential benefits of a design focus. Design thinking sheds through an entire organization, from executive­ to production level, in order to completely leverage the benefits of design management.

To provide a short presentation of how the design management theory has developed, we will start with a presentation of the early ideas within design management, beginning the ‘rugby approach’. The rugby approach is a development of the traditional linear and notably isolated product development process, and focuses on the importance of collaboration between various organizational functions from the beginning of the product development process. For instance, the marketing function should provide input regarding customer needs, while the R&D is responsible for the creation of new and innovative products. Furthermore, the design function’s role is to aid the product development process with aspects regarding user­-orientation, such as user-­friendliness and appealing aesthetics. Lastly, the finance department should provide financial input to the product development process, but also revise the expenditures. By successfully implementing the rugby approach to the product development process, it is plausible that it will result in a reduced time to develop new products and facilitate more products brought to the market. Consequently, it can provide organizations with an organisational competitive advantage. The rugby approach is presented below:

The “rugby approach”

HOW TO DEFINE DESIGN MANAGEMENT

Before defining design management, it is of great importance to understand what design is.

“Design is only secondarily about pretty lumpy objects and primarily about the whole approach of doing business, serving customers and providing value.”

This quote emphasises the aspect of business within design, and by leveraging design management, organizations can take advantage of the benefits design can provide. Design management has a purpose, which is to make managers familiar with design and designers familiar with management, with the hope of integrating design into the corporate environment. Design management a perspective, not only to the product design, but also a change to organization behaviour and vision. On the other hand, design management is the implementation of design as a formal program of activity within a organization, by communicating the relevance of design to long­term organization goals and coordinating design resources at all levels of organization activity to achieve the objectives of the organization. ​

from. Design Management Directions, by Kapka Manasieva

Design management is defined and interpreted as a new perspective regarding how to better manage and integrate more organisational functions, with an emphasis on designers, in the product development process. When integrating more organizational functions early on in the product development process, especially designers, corporations avoid having to revise products later on in the process. This fosters efficiency, but also a better leverage of the entire organization. Furthermore, by providing the design function a larger influence in the product development process, designers can help a organization to differentiate and enhance customer satisfaction by developing and creating more appealing and user­-oriented products. These two factors increase the possibility of commercialising innovations, which has become increasingly important. Yet, it is significant to understand that the holistic integration does not always require all functions to be prevalent, but rather emphasises the importance of flexibility. To truly implement design management, the theory underlines the importance of creating an understanding within a whole organization, in order to incorporate design into the corporate culture. This is referred to as ‘design thinking’ within design management. Design management involves the integration of design thinking on all levels of the organization, to ensure that all employees work with a similar mindset, towards common goals and with a united perspective regarding the importance of design.

WHY DESIGN MANAGEMENT IS IMPORTANT?

Companies will see a growing importance of implementing design management to their organizations. First, design management is a powerful source for stimulating innovation in the organization and by using it, corporations can build a sustainable competitive advantage. Second, we suggest that the customers are changing and demanding more of product designs, as a result of the increasing amount of competing products on the market. The latter fact that is importance of design thinking’s, to understand customers and thereby create better products. What Powell and Brown have in common is that they emphasise the importance of using design management in a more loose organizational context that fosters innovation and ‘outside the box thinking’, to create a long lasting competitive advantage. Design management can facilitate customization of products, increased the speed to market, foster product differentiation and improve internal performance, as a way of generating a competitive edge. Regarding product customization, design can help companies to both better understand customers needs by leveraging user­-oriented designers and, as a result, produce more appealing products. Moreover, by focusing on design, it is also possible to extend products life cycles. As for example, the option to design product foundations that further can integrate improvements in the future can extend product life cycles. This kind of opportunity can be of huge relevance in the modern society and business world of today where products life cycles constantly diminish and, thereby, force companies to constantly develop and commercialize new innovations in a even shorter time period. Furthermore, by leveraging design management early on in the product development process, the time it takes for the product to go from ideation to the market can be reduced. Further, by focusing on design helps corporations to differentiate, both by providing product specific differentiation and assisting in the strengthening of the corporation’s image. Consequently, it is possible to develop an own customer segment by the development of differentiated products, a segment that can be difficult for a corporation’s competitors to reach. When utilising design management internally in a corporation, it can result in an improved working environment and, therefore, motivate employees to work harder, effectively creating a working environment that stimulates innovation and stronger results. To summarise the importance of design management with a quote, professor Burder stresses that “design decisions are becoming increasingly important for market acceptance” . In addition, the complete aspect of design as the only process where technological, stylistic and ergonomical specifications can be transformed into viable products. Consequently, design should have a large influence on all business activities, in order to make it possible for corporations to stand out of their competition.

WHO IS DESIGN MANAGERS?

Design management is the business side of design. DM encompasses the ongoing processes, business decisions, and strategies that enable innovation and create effectively-designed products, services, communications, environments, and brands that enhance our quality of life, provide organizational success and high-level design culture.

illustration from book “Uncovering Design Management” by Kallstrom & Markovski

Design management focuses on:
design 
brands 
products 
production 
distribution
environments
technology
design skills
teams
culture
leadership
learning & development
marketing
implementation
sales 
delivery 
service
integrative thinking
facilitation
system thinking
cultural relevance
socially responsibility
provide team success

DM provides:
1. The End-to-end Vision Statement a concise description of the goals of the project or business which help the team stay focused on what is important from the organization point of view. Design management a perspective, not only to the product design, but also a change to corporate behaviour and vision.
2. Organization Design Strategy as a program of activity within a corporation, by communicating the relevance of design to long­term organization goals and coordinating design resources at all levels of organization activity to achieve the objectives of the organization and high level of culture.
3. Projects Portfolio Management assesses current project portfolio management processes and, in collaboration with organization management and teams, identifies the appropriate level of DM discipline for your organization. Applying our best-in-class Project Portfolio Management Maturity Model to determine organisation current PPM capability and identify process gaps between your organization’s current state and desired future state. We provide the roadmap for improvements and work with you to develop the implementation plan or creating and prioretising gypothesis and testing it. DM Solutions provides you with guidance and implementation support to quickly deploy the portfolio management improvement recommendations. Activities typically include:

  • Establishment or refinement of portfolio governance policies
  • Alignment of portfolio decisions to strategic business goals
  • Portfolio and program prioritization and selection facilitation
  • Portfolio Review Board session facilitation
  • Portfolio and project communication management
  • Optimized resource planning including “what if” scenarios
  • Portfolio performance management
  • DM software tools selection and process implementation
  • DM workshops, training, and mentoring for executives, management, and staff
  • DM adoption and change management
Product Development Roadmap

2. The Product Roadmaps is an initial visual timelines of major product features to be delivered and is normally created by the Product Owner; one of the Scrum roles which will be explained later.
3. Gather User Requirements, and turn them into deliverable features — these are called stories. Stories are normally written by the Product Owner and the requirements that make up these stories come from the customer. 
4. All these stories make up the Product Backlog. In Scrum, we do not wait until the Product Backlog is 100% prepared with all the details to start the Sprints; we can Product Backlog creation and maintenance

Design Sprint Planning

Design management dealt with two main issues:
How to develop corporate systems of planning aims 
How to solve problems of methodological information processing

Consultancy:
Managing the product development process, including market research, product concepts, projects, communications, and market launch phases positioning of products and companies. Managing products, services, environments, brand, communication and community, to stay relevant, grow and provide sustainaibility. Сreate internal design capabilities, hiring professionals and teams from the market, for the most profitable and effective implementation of the design strategy.

HOW DESIGN VALUE INCREASED?

We still meet many companies that do not see the link between design and good business. We felt compelled to write up our thoughts and highlight 5 strongest arguments for how design can spur business growth.

Last year management consulting giant McKinsey & Company acquired Lunar, a top design firm in San Fransisco known for its work with clients such as Apple, HP and Coca-Cola. This is just one of the many examples illustrating how the business world is not only finding design an indispensable element to create success, but also one that is worthy of paying big bucks for.

They are of course not doing it on a whim. Studies show that they are definitely on the right track. Microsoft funded DMI (Design Management Institute) to create a ‘Design Value Index’ studying the performance of selected US publicly held design-led companies. The results are astonishing: from 2004–2014, the design-led companies outperformed the overall S&P 500 Index by a whopping 219%!

It is therefore clear that companies that recognize design as a strategic asset (rather then just its aesthetic value) perform much better than companies that do not.

Both UK and Sweden follow the same trend as in the US survey. The Design Index studies conducted by the Design Council of UK tracked 61 design-led household brands and found that they outperformed FTSE 100 by over 200% in a 10-year period. Companies who have significant success usually have an appointed design director who is able to see and account for the business value of a design process, or have maintain long term working relationships with their designers. It is sometimes difficult to quantify design’s short-term impact on a business, and companies that lack the vision may find their hands tied when it comes to justifying their investment in design. Yet it is design that decides how to best position the product or service in a way that effectively addresses the target audience’s desires and needs, allowing the business to be strongly poised in the market and successfully grow.

The reach of design extends not just to US conglomerates, but also to startups. Young entrepreneurs now start their own microbrands using crowdfunding platforms such as Kickstarter and Indiegogo, and design is vital to their success from the moment of inception. It is imperative for startup companies to incorporate design in their business strategy development, the earlier the better. In devising their strategies, bear in mind a design thinking attitude: how to engage our customers and enhance our competitiveness through design? Design should be the core of your business strategy, culture and day-to-day operations.

So what does this mean for China? Doing business in US and EU is of course different from doing business in China. The culture is different, the market is different. China is people-oriented; building relationships and trust is the impetus of building a successful business. Advertisements of products and services are inevitably endorsed by famous celebrities or public figures; design is important, but so is a trusted spokesperson. All is fine and dandy until most resources are being funneled into celebrity endorsement and trust is earned at the expense of product design and customer satisfaction.

It was rumoured that artist Ke Zhendong’s drug scandal caused companies he served as spokesperson for up to a billion RMB direct and indirect commercial loss. A celebrity’s personal life choices may severely jeopardize brand image and products endorsed by him.

Thankfully, Chinese new generation seem to be basing their purchase on other values, especially those living in the coastal areas. They are rapidly upping their demands on products and services and are more than willing to pay premiums for quality.

To meet this requirement, a company quickly need to learn how to incorporate a design process that enables the company to design products that customer actually care about. It starts with recognizing human intuition and feeding the ability to provide products and services that are based not on what you can produce with current manufacturing setup, but rather on a defined customer need. Incorporate three principles in your existing operations, products and services: inspiration, ideation and implementation.

Human-oriented design process

What is differences between companies which use design and not?

Are you using design to make your products and services more beautiful? Are you using it to create better customer experiences? Are you using it to formulate your organizational strategy? Are you using it to strengthen or create a culture of innovation and entrepreneurship?

Design is now used in many ways across the business world, and we think the Danish Design Ladder is the best way to understand how businesses are using design and where there is potential to use it in different ways.

Because Design is truly permeating the business the world (with dedicated HBR issues and feature length documentaries) we think it’s necessary to explain the different stages. In the hope that people start to adopt and use Design in different ways.

Leaders around the world are adopting and using design in powerful new ways.

So how mature is your organization when it comes to Design? The Danish Design Ladder talks about four stages of design use. We’ve added another two stages of use. The six stages below talk about the different ways leaders are using Design in Business.

Stages of design culture development in organizations

Stage One: Nothing
You use Design for nothing. You don’t have any formal design roles in your organisation, and you don’t use design agencies. Not fun.
Example: A steel mill with high demand for their product where any design work (or other work) is seen as superfluous.

Stage Two: Aesthetics
You use Design for aesthetics, styling, or ‘form-giving’. Whether through your products and services or the physical touch-points that your customers interact with.

You employ designers or outsource aesthetic design work to agencies. Design makes things more beautiful. Fun.

Example: A shoe company that uses design to make their shoes look more appealing to customers.

Stage Three: Process
This is where you’re using Design to inform your processes to create products and services, you’re also likely to have adopted Design Thinking and you hold co-design sessions or workshops to inform how you actually get things done, your processes.

You employ designers to do things other than styling or aesthetics. They are integral to getting your products and services out to customers through incredible experiences.

Your people perform customer research, ethnography, prototype, and come up with creative ways to solve customer needs.

Example: A device manufacturer using design to make their products easier to use (also includes aesthetics).

Stage Four: Strategy
You use Design to inform and create your organisation’s strategy. Here’s a quote directly from the Danish Design Ladder website…

“The designer works with the company’s owners/management to rethink the business concept completely or in part. Here, the key focus is on the design process in relation to the company’s business visions and its desired business areas and future role in the value chain.”

Your organisation has designers as founders, or board members, or in the c-suite. Positions of authority where they (Design) can influence investment choices.

Example: A financial services organisation shifting investment to a service that solves a deep customer need that was identified through customer research.

We love mentioning the Danish Design Ladder to clients and consultants alike, it helps people frame how they use design, and think about the potential value they can gain by moving up to higher levels. We’ve been using design across all levels for a while now, and we’re starting to push into other areas, so we extended the ladder by two stages…

Stage Five: Systemic Change
You’re using design to help solve complex social issues, massive industry problems, or to streamline complex ecosystems. You’re using Design to drive systemic change across numerous organisations or businesses.

Government organisations are starting to do this to formulate policy within their own local or regional ecosystems. They bring disparate groups together and Design solutions that best fit that particular ecosystem. They’re able to drive systemic change through the collaboration with those groups.

Example: A local council using design to bring together groups from around the community to solve a complex social issue.

Stage Six: Culture
This is what we see as the pinnacle of using Design in Business. You use Design to build and harness great culture. You’re shifting the mindsets of people within your organisation to align to the design mindset, people are starting to innovate, act like entrepreneurs, embrace ambiguity, listen to the voice of the customer, and lead through design.

Example: Any organisation that actively hires designers (or people with a design disposition/background) into roles in the hope of inspiring, challenging, catalysing, and developing their incumbent workforce.

How do you interpret design in your own mind? Do you see it as adding aesthetic value, or do you see it as being able to create healthy and creative cultures? Think about how you might move your business or team up the ladder, adopting design in new ways and gaining greater value as you move upwards.

HOW DO WE PRACTICE DESIGN MANAGEMENT WITH OUR CLIENTS?

We working closely with different types of clients: individual entrepreneurs, startups, product teams, SMB, enterprise organizations and agencies. Each type of business has some unique challenges at current stage of development.
Deep experience of working with different types of businesses and industries helped us form thinking and mindsets to detect most important points of effort. In the very fast changing environment the main priorities of the team are: fast-learning, flexibility, high-speed testing of market hypotheses, the ability to form mobile cross-disciplinary teams for testing and the implementation of new products and services.

Starting from collaboration with client we hold a series of workshop to understand clients needs, desires and business strategy. Then we develop end-to-end vision of our partnership and desirable outcomes of our activities.

Focusing on better outcomes for business and organization we redefine clients objectives to find proper points of effort.

Using theory of constraints of systems we define features scope that most useful and fast delivering with considering organization current resources.
We provide series of workshops to help client and project team switch to agile paradigm of thinking to work on project with best performance and mindfulness.

Also we help client transform business vision to integrated strategies. We create brand, customer service, products, marketing, community agile strategies to provide better customer satisfaction, business results and drive employees involvement by “learning + development” programs and agile workflow. We also help to access team capacity and develop working standart for sustainability and continues team improvement.

We use full scope of our expertise to produce better business results at all stages of organization development from sketch to scale. Soon we prepare full-scale case with detailed view of our work with jeweller manufactory company.

Human-centered design management at ARENAS®lab

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