There is growing evidence that businesses that are design-led out perform those who only use design in activities such as marketing and product development. A growing number of more traditional businesses are adopting design-thinking and other problem solving techniques across all organisational activities.
The outcome is an increase in positive employee engagement, innovation, and delivery of useful and responsive products and services to customers.
The Design Business Council provides evidence of the measurement and success of design-led businesses outperforming others.
Developed by the Design Management Institute
- tracked 16 publicly traded ‘design-centric’ stocks
- six selection criteria
- stock prices captured June 30 / Dec 31.
- modelling was based on a weighted average market capitalisation of individual stocks
- stocks were indexed
- performance compared to the S&P 500
- tracked over 10-year period.
The 2015 index showed that for the third year in a row the performance was in excess of 200% over the S&P.
The UK Design Council developed a Design Index
- measured relationship between the effective use of design and share price performance.
- used publicly listed companies performing well indesign awards
- tracked share prices between December 1993 and December 2004
- design awards with robust criteria chosen as an external indicator of the way a company uses and values design.
Share prices of design-aware companies outperformed the FTSE 100 and FTSE All Share indices by more than 200%.
In addition to the challenges faced by traditional businesses, purpose-driven organisations are also tasked with tackling the most complex social and environmental issues that exist in our society. We believe this is even more of a reason for these purpose-led organisations to embrace design.
What is Design?
It’s important to define what we mean by design. Design can be used as an adjective, ‘that is a well-designed building’; or as a noun, ‘I like that design’. When we speak of design, it is as a verb: to design. Using design as a process and way of thinking allows us to approach complex and challenging problems. Design-thinking as defined by Tim Brown, CEO of Ideo is:
“A human-centered approach to innovation that draws from the designer’s toolkit to integrate the needs of people, the possibilities of technology, and the requirements for business success.”
Rather than being tied to any particular definition, we believe this type of thinking involves:
- Actively taking the time to understand the problem you are trying to solve, before rushing to a solution.
- Clearly define the challenge and desired outcome.
- Question the way things have been done in the past.
- Understand the people who are involved with and affected by the problem you are solving.
- Test all assumptions before deciding they are ‘fact.’
- Explore many ideas & options
- Test ideas and validate
- Set the course and implement
- Learn by doing & measure
An example of this approach to uncovering and defining problems can be found here. This shows what this process looks like and the positive effects it has on an organisation.
What Role Should People Play?
Alongside adopting a design-thinking mindset, we believe it’s important to understand the role of people in the process. Human-centered design (HCD) is a framework that develops solutions to problems by involving the human perspective in all steps of the problem-solving process. It’s important to not only consider the role of those creating new ways to solve organisational problems, but to involve the people these problems affect.
The type of activities can include individual face-to-face interviews, group interviews, observational research, co-creation workshops and feedback throughout the process. The desired outcome are solutions that meet real customer needs.
Where Can Design-thinking be Applied?
We believe design-thinking can be applied across all organisational activities to improve processes, remove roadblocks, overcome challenges and find better ways to deliver real value to people. This is innovation – delivering significant positive change. It’s an outcome, not a product or idea.
Michael Porter, American academic from Harvard University, categorises these processes and activities, as shown below:
Primary activities are:
- Inbound Logistics – involve relationships with suppliers and include all the activities required to receive, store, and organise inputs.
- Operations – are all the activities required to transform inputs into outputs (products and services).
- Outbound Logistics – include all the activities required to collect, store, and distribute the output.
- Marketing and Sales – activities inform buyers about products and services, induce buyers to purchase them, and facilitate their purchase.
- Service – includes all the activities required to keep the product or service working effectively for the buyer after it is sold and delivered.
Secondary activities are:
- Infrastructure – ties various parts of the organisation together, it consists of functions or departments such as accounting, legal, finance, planning, public affairs, government relations, quality assurance and general management.
- Research & Development – activities that are undertaken to assess and understand current and future challenges and development of new products or services.
- Human Resource management – consists of all activities involved in recruiting, hiring, training, developing, compensating and (if necessary) dismissing or laying off personnel.
- Technological Development – relates to the equipment, hardware, software, procedures and technical knowledge required in the organisation’s transformation of inputs into outputs.
- Procurement – is the acquisition of inputs, or resources, for the firm.
Design thinking can be used in Human Resources. As this Deloitte article outlines:
“Design thinking takes aim at the heart of unnecessary workplace complexity by putting the employee experience first—helping to improve productivity by designing solutions that are at once compelling, enjoyable, and simple.”
IBM explains how they use design thinking in creating better ways for different departments and activities to work together, delivering a better experience to customers.
It often involves a mindset, approach and the utilisation of designers were appropriate (research, service design, employee experience design, user-experience and organisational design to name a few.)
Porter’s Value Chain is most relevant for larger businesses that are creating products & services for large scale distribution. However all organisations, including not-for-profits, NGOs and social enterprises undertake many of these activities in the implementation of their purpose and mission.
Does Design-thinking Fix Everything?
Ok, we probably need to say more!
Adopting a design-thinking mindset does not replace an effective business strategy. It’s not a choice between using design-thinking or agile or lean management or other problem solving approaches. It’s not a regimented step-by-step template that is simply rolled out across an organisation.
It requires leadership and commitment to trying new ways to achieve your organisations objectives. Design-thinking provides opportunities to engage teams and your ‘audience’ in solving problems together that positively impacts the outcome, meeting real human needs.
The Main Point
Design-thinking is a mindset for exploring complex problems or finding opportunities. Using intuitive and abductive reasoning, it explores and questions what is, and then imagines what could be with innovative and inventive future solutions. It focuses on human needs and experience.
Companies that are actively employing this mindset are outperforming others. Purpose-led organisations have the added complexity of running a business, and delivering socially impactful outcomes. Becoming design-led is an important investment into developing better ways to deliver these impactful outcomes.
We would love to hear your thoughts at firstname.lastname@example.org
By Rusty Benson | Co-founder & Research Lead
Original image by Ulrich Wechselberger
At Raine & Makin we work with organisations to understand their challenges and turn them into opportunities. We focus on defining the problem, before rushing to the solution. If you have a problem that is stopping you from achieving your organisation mission, get in touch to discuss how we can work together to solve it.