Design Thinking, the widely celebrated innovation model built on observation and prototyping, seems overdue to be assessed with the same scrutiny and iterative spirit it asks us to aim at everything else.
It’s time now to say, “Ok, we’ve used Design Thinking and prototyped this thing… what have we learned about creating new products, new services and new businesses? What’s working in our innovation and what’s not? What should the next model do that this one can’t?”
The increasingly evident answer is that Design Thinking is 100% effective at solving 50% of what it takes to create big innovation outcomes that deliver increase in revenues and profits.
Design Thinking is relatively new as an ink magnet, an academic pursuit, and a business paradigm, but its principles have, in various guises, been around for ages.
Tackling innovation challenges by applying lateral thinking in an intuitively-led problem-solving process of observation, interrogation, creation, and iteration has a pedigree stretching back from de Bono to da Vinci. There are two aspects of Design Thinking that must be addressed for those working on the front lines of transformational innovation — the bigger, harder plays that create and grow new markets and businesses. The first is just semantic. The power of empathetic creativity in innovation is immense and to attach it to that subset of creativity we call design is akin to saying life is synonymous with breathing. Design is to creatively-fueled innovation as breathing is to life — powerful and fundamental, but part of a bigger whole.
The meatier issue that is the impetus and focus of this article is that Design Thinking is overdue to have its own tenets pointed in upon itself. By now, it’s been sufficiently road-tested for us to interrogate it with the same rigor it asks us to aim at everything else. It’s been prototyped. What have we learned? And in those lessons, is there a path to a more powerful model?
The answer is yes.
Let’s kickstart the prototype appraisal with a simple provocation: If, on its way to work tomorrow, Design Thinking tragically stepped in front of a bus, what would be its legacy?
“Design Thinking taught forward looking businesses the value of bringing creative inventiveness (aka, abductive thinking) to the center of modern innovation practice.”
Or maybe, “Design Thinking taught modern institutions that human life should be the primary springboard of 21st century innovation.”
Any combination of the above would be a great tribute. There’s just one problem. The big companies eagerly embracing Design Thinking are not doing so out of mere curiosity, trendiness, or a footloose desire to unlace their wing tips. They’re grabbing at it because transformational innovation has simultaneously become more important to long-term growth and more difficult to pull off.
In the end, what these companies crave is not a way to make innovation more creative for creativity’s sake, more humanistic for humanity’s sake, or simply to elevate the quality of the products moving through the pipeline. What they’re after is a way to make innovation a more powerful, impactful, and reliable growth engine. Simply put, they need innovation to work better.
Design Thinking, as applied to the creation of business-building transformational innovation, is undeniably a giant leap forward from the linear models that preceded it. But in the realm of business tools, being better-than-what-came-before has a short shelf life as a measure of success. Just ask your Palm Pilot.
The reality is that across sectors and companies, the innovation imperative is going up, but hit rates and ROI are going sideways or down. It’s time to shift the conversation around Design Thinking from the rear view mirror to the road ahead — from better-than-the-old-way, to what growth-minded businesses need moving forward in a competitive environment that grows more intense by the day.
As the first well-structured model for injecting empathetic, humanistic creativity into innovation, is Design Thinking the end game? Or is it like the first mobile phone? Paving the way, then giving way to the smartphone that built on what was right, but was far more useful and valuable.
The things that limit Design Thinking’s impact are not the innovation process, the zeitgeist, or the academic world, but more critically for businesses are its tangible outputs, hit rate, and returns to the shareholders bankrolling its use.
Following Design Thinking’s own playbook, let’s say that this prototyping exercise, conducted across a broad array of companies and industries over a number of years, is doing no more and no less than what every other prototype is supposed to do. It’s showing us the gaps between what the model in hand does and what a subsequent model should do to better serve the needs of the marketplace.
The gap lies not with what Design Thinking is or does, but with what it’s missing.
Design Thinking has gone to market as an incomplete answer to what companies need to successfully monetize high-impact transformational innovations in the climate they now face. In the past two decades, the business world has become far more complex. The low-hanging fruit has already been plucked. Markets are saturated. Competition is global, local and nimble. The half-life of competitive advantage continues to shrink. Resources are tighter. Big bets need bigger justification.
When the consumer solution is the only big issue on the table, Design Thinking can deliver in spades. But those cases are increasingly rare. Innovation has become, in nearly every case, a two-problem game: in addition to the consumer challenge, the increasingly complex needs of the business need equal attention in the form of disruptive growth strategies, new business models, and new ways to profitably redeploy existing commercial assets. The big issues that Design Thinking weren’t designed to address — like where to play, how to win, how to create new competitive advantage, and how to make money — are increasingly fundamental to the innovation process and dictate what makes it into the pipeline and the P&L.
Most CEOs will tell you that in today’s climate, exciting a consumer with a new possibility is far easier than getting a company to do things it doesn’t know how to do or have the asset base to deliver against. Design Thinking, as with any other one-sided model, comes with a built-in structural bias toward delivering ideas that would be great for consumers, but may never reach them because they haven’t considered commercial viability. They end up dying on the vine because to the business, they are commercially unattractive, strategically peripheral, naïve of capital requirements, or operationally impossible to commercialize.
As design researcher Dr. Sam Ladner put it, “there is no shortage of creative solutions to unmet needs, only a shortage of profitable ways to provide them.”
The next leap is obvious. We need a model that solves both sides of the two-problem game.
The two-sided coin
As obvious as it sounds, the lines between the idea, product, and business are blurred in innovation practice with surprising frequency, leading to big consequences for shareholders bankrolling a given initiative. Each has a pivotal role in transformational innovation, but none is sufficient on its own. Design Thinking solves for the product, but the approach does not ensure that the ideas are born from a strategic understanding of both the business and the consumer.
A great idea paves the way for a two-sided solution by defining a strategically attractive gap in a market and a market in the gap. A great business requires, among other things, intelligent use of assets, sustainable competitive advantage, and a path to long-term growth.
A great product experience — Design Thinking’s sweet spot — is highly valuable when it embodies a big strategic idea and works within a profitable business system. But, when it fails to consider the idea and business, falls into the realm of merely interesting.
Deconstructing some well known hits and misses helps illustrate the distinction and sets up a framework for the shift to a two-problem model.
Great products need great businesses
Let’s start with a classic example that nailed parts of the two-sided problem that too often get the most attention — the idea and the product — but missed wildly on the third.
Great idea, great product, bad business.
LeapFrog was great idea and product. Turning electronic games into an educational tool (or education into games) represented a big win for parents who could get their kids to willingly do something educational, and for kids whose parents were suddenly handing them electronic games. No begging required. Its products were well accepted. The problem was that it went to market via the toy business, which carries famously tight margins that eventually got the best of LeapFrog. Its market cap is now less than 2% of its peak.
What this example highlights is that solving for a consumer need is critical but not sufficient to the creation of a commercially successful piece of transformational innovation. What also becomes clear is that treating the human product experience as the thing that matters above all else is akin to building a one-legged stool, raising the odds of falling over.
Now to what happens when you nail all three in equal measure.
Great idea, great product, great business.
The idea was brilliant. Transforming water from a pure, ancient thing to a modern carrier of nutrients and flavor turned the water world on its head while giving consumers a new lifestyle tool. Brought to life through an iconic bottle that tells its own story, delicious liquids in vivid colors that break through the clutter at retail, and a premium price point, the business sold for over $4 billion to Coca-Cola, and is purpose-built to innovate on a dime to address emerging need states and tastes in the years ahead.
A better way forward
What the business world needs is a model that obsesses over winning the two-problem game, serving the needs of both the consumer and the company by nailing a great idea that opens a new strategic market space, a great product offering, and a great business.
To unlock the full power of creativity in igniting successful innovation outcomes, human-centered creativity has to become a supporting part of a bigger, more complete, and more strategically astute whole.
Let’s call this bigger thing Money + Magic, an approach that leverages all that’s powerful and right about Design Thinking’s core strengths, but builds in the missing link that separates the merely clever from the successful, lucrative, and strategically valuable.
Money + Magic is about pairing up human-centric creativity with its catalytic complementary opposite capability — the commercial acumen needed to dissect the strategic, operational, and financial needs of a business.
Money + Magic
Rather than start with a one-problem orientation — focused solely on finding a human problem to be solved with a new product experience — Money + Magic works from beginning-to-end with the assumption that there are two discrete sets of problems to be interrogated, defined and solved concurrently — the needs of the consumer and those of the business.
Money + Magic says that success lies not in first solving for consumers and then hoping the commercial, financial, and strategic value will eventually get figured out, but in consciously pursuing new intersections between consumer needs and business needs, and only advancing ideas where that sightline to intersection is evident.
Money + Magic makes the questions of where to play, how to win, and how to build and leverage competitive advantage integral to the innovation process, bringing as much interrogation and lateral perspective to the needs of the business as to the things that touch the consumer’s life.
The nature of the consumer insights uncovered is quite familiar to Design Thinking practitioners. The commercial analogs are not. Those commercial insights may come from spotting a costly and underutilized piece of infrastructure, an underdeveloped consumer segment that represents a long-term business risk, a portfolio gap in a high-growth adjacency, an emerging technology with no defined value to consumers’ lives, or a situation where a higher margin technology platform is stuck in a niche part of the business rather than its core.
The consumer insights are doorways to relevance and value in the marketplace. The commercial insights are doorways to strategic, financial, and operational wins for the company. Simply put, Money + Magic marries the “wow” with the “how.”
Money + Magic says that if an idea can’t actually reach consumers, improve their lives, and create commercial value, it’s not a great idea.
Does this impede creativity? Quite the opposite. Creativity loves an intriguing problem to solve, a compelling array of stimuli, an ability to bounce around among different perspectives, and the adrenaline rush of making new connections.
Money + Magic not only proves the needs of the business can be solved in parallel, but that they should — with no compromise to the inventiveness of the idea, ultimately leading to greater impact on a consumer’s life.