Why Design Thinking is the Future of Management

Why companies and leaders should reconsider their current philosophy of project management and why they cannot afford to ignore the value of Design Thinking for their organizations!

Design Thinking and Lean Startup are totally popular, although these practices exist already for years. Gartner IT research estimates that by 2021, more than 50% of established corporations will be leveraging lean startup techniques at their business level to increase the pace and success of business transformation. Industry leaders like IBM or Procter & Gamble have trained their whole organization with the disciplines of design thinking, to become more innovative and especially customer-centric.

There are clear indicators that a transformation of organizations and especially operations towards a more customer-centered approach is happening. Design Thinking and other human-centered methodologies like Lean Startup or Lean UX have become mature. In this article, I’m going to look at management practices and why we believe a new era has just started.

Digital disruption is present in every industry!

Technologies such as mobile devices, social networking, cognitive computing, and the Internet of Things are changing the way companies design, manufacture, and deliver almost every product and service. It also significantly increased the pace of change in business as a whole, requiring organizations to become agiler.

This, of course, has a disruptive impact on Product Development and Innovation as a whole. Traditional industries with dominated market position and business models (keeping prices artificially high) don’t work in a digital world, with shorter and more frequent product development cycles, global competition and the rise of freemium services.

Customers and users are now connected via social media, which allows updating people in seconds about their experience with products, services or companies. An increasing number of consumers depend on their purchasing decisions on reputation and reviews. Shitstorms can ruin brand reputation within a couple days, what marketing departments have built up over years.

Digitization forces organization to deal with completely new challenges and market preconditions. I know this isn’t highly advanced research, but I want to emphazise on the new requirements and settings for businesses and their organizations.

Why Digital Transformation should receive more consideration

Digital Transformation is one of those buzzwords, that you hear by almost every company, although every transformation is going to be different for organizations. 
You can define it, as the integration of digital technology into all areas of a business.

You can define digital transformation, as the integration of digital technology into all areas of a business.

It results in a:

  • fundamental change of how businesses are operating and how they deliver value to customers.
  • the cultural change that requires organizations to continually challenge the status quo, experiment often and get comfortable with failure.
  • change of organization and practices, going away from long-standing business processes that companies were built upon in favor of relatively new practices that are still being defined.

To handle this changes, many different management approaches have evolved, claiming to be the best and most efficient way. Companies have understood that linear methodologies like Waterfall, which follow a sequential and linear process of development, doesn’t work. The model originated in the manufacturing and construction industries, both highly structured environment where changes can be too expensive or sometimes impossible.

With the need of shorter product life cycles as well as higher flexibility during development, agile project management has become the standardized way of managing projects. Agile refers to a manifesto, which was published in February 2001 by 17 software developers, who have to discuss on lightweight development methods. It is based on an incremental, iterative approach, instead of an in-depth planning at the beginning of a project like waterfall. Changing requirements are expected over time and constant feedback from end users is encouraged. The goal of each iteration is to produce a working product.

While Agile was traditionally created for software development, it can also be used in many other projects and industries. Many practices in Agile, like stand-up meetings and visual management, are so common and can apply to any industry. It’s important to remember that Agile software development was born from the principles of Lean manufacturing and organizational learning.

There are subsets of Agile, like Scrum, which is one of the most popular process frameworks for implementing Agile. It follows a set of roles, responsibilities, and meetings that never change. But as agile, scrum also has its limitation on considering and integrating customer problems and needs.

Human-centered (Lean)Management

During my interviews with leading enterprises like SAP, BMW, Lufthansa and many others, to identify their philosophy of doing digital transformation. “Our tech teams are applying Agile, product teams are trying to integrate Lean and with the increasing need of customer- and user-centricity we want to combine everything with Design Thinking.”

But which one is the best?

While agile and scrum helped teams to gain flexibility, speed and the ability of continuous improvement, this generation of project or product management is limited in its capability of understanding and integrating the customer in team activities. Human-centered development approaches add the most crucial dimension to the success of any company activity — the customer!

Put the customer at the center of everything — focus on customer value if you’re struggling to get an alignment as a team. Ask yourself on a regular basis:

  • How do we know we’re shipping something users care about?
  • How do we find out?
  • How does that affect what we prioritize?

Why Design Thinking and Lean Startup have come to “be”

Design Thinking helps teams to emphasize on the customer problems and needs while Lean Startup helps with its build-measure-learn loop to identify the best-fit solution for the identified problems. Be aware that none of these methods are sufficient alone and only reveal their full potential in combination.

Successful companies nowadays neither stand out because of their most efficient production, nor their best engineers, sales managers, marketing commercials or whatever. It’s more their dedication to understanding the customer as well as their strong commitment to serving customer problems and needs.

Amazon is the best example of executing this practices in perfection, what helped them to achieve best-in-class customer satisfaction ratings and has enabled them also to dominate multiple markets (E-commerce, cloud web services, E-book reader). As more companies understand the real value of customer insights, the better they can target their business activities like product development, marketing or strategy in general.

Applying human-centered correctly helps companies not only to become more agile or flexible in their product development. It allows also to reduce waste in developing the wrong products as well as it helps to avoid investing money and resources into not required solutions. We believe human-centered has the opportunity to reveal the full potential of every organization and especially their employees. It helps them to alignment their teams towards customer value what will help to create successful products and services. This is why we believe no company can afford in future to disregard the relevance of customers and to avoid using human-centered methods in their organization.

Neither Design Thinking or Lean Startup nor agile or user experience (UX) are new for companies. To become successful in future, I believe it´s a matter of how well companies combine all of those practices. Efficiency will be measured in who well teams have a common understanding of their customers, as it allows them to target their work more precise towards the desired outcome. Designers teams can create better user concepts, development teams can prioritize better on features based on the customer value and manager will gain more confidence in taking the right.

What remains open is the question of how Design Thinking generates an interpretation of user needs that are so trivial and non-complex, that teams can build on this insight in further processing Agile mode. Is an interface between Design Thinking and Agile imaginable, which allows a simple planning and makes sequential processing possible?

There is good news — Pyoneer is going to building this interface!

Pyoneers is going to build an SaaS-Solution for innovators who want to deliver products that solve real problems. You can sign up at pyoneer.io to get insider first looks at the product and updates on our upcoming release.

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