DESIGN THINKING

DESIGN THINKING Essay ‘Design Management has traditionally used a Design Thinking approach to develop compelling products and services that resonate with customers, consistently producing financial rewards, and building brand loyalty. But beyond customer-centric empathy, beyond creative iteration [….], design thinking has more to offer the modern organization as a means to cultivate creativity and innovation in an organisation’ Design Management Institute, 2016. Please write a 1,500 word Essay that defines the Design Thinking approach to Design Management, scoping the topic by selecting a fashion case-study of your choice. The essay should demonstrate a minimum of 5 relevant academic sources from the field of design management. “Most people make the mistake of thinking design is what it looks like. People think it’s this veneer — that the designers are handed this box and told, ‘Make it look good!’ That’s not what we think design is. It’s not just what it looks like and feels like. Design is how it works.” — Steve Jobs “Design is the action of bringing something new and desired into existence—a proactive stance that resolves or dissolves problematic situations by design. It is a compound of routine, adaptive and design expertise brought to bear on complex dynamic situations.” —Harold Nelson, The Design Way We live in VUCA times i.e. volatility, uncertainty, complexity and ambiguity. The following explains VUCA: Businesses today are faced with four distinct challenges requiring four distinct responses. The above identifies how to approach VUCA. As you can see from the grid above, the vertical or Y-axis represents how well you can predict the outcome of your actions, or the certainty of the outcome. The horizontal or X- axis represents how much you know about the situation or situational awareness. As the world becomes more complex, old, traditional models of management are becoming outdated. Solutions to this complex world are to be found in a systems approach for it is holistic and views the world as dynamic, ever-changing not static; dynamic because of the interplay of many variables in the VUCA world. Stated differently, complexity has given rise to ‘wicked’ problems, which require a systems approach. According to Design Management Institute, “companies like Apple, Coca-Cola, IBM, Nike, Procter & Gamble and Whirlpool have outperformed the S&P 500 over the past 10 years by an extraordinary 219%, according to a 2014 assessment.” Why? Great design has the “wow” factor that compels people to buy these products. Success of these companies has led others to concentrate on design. What is design thinking? It is a new way of meeting customer expectations based on customer experience. Design Management Institute characterizes it as “Simply put, design management is the business side of design.” According to Tim Brown of IDEO, “Design thinking is a system that uses the designer's sensibility and methods to match people's needs with what is technologically feasible and what a viable business can convert into consumer value and market opportunity.” Tim Brown is a leading light in the field of design thinking. According to Tim Brown, businesses are under extreme pressure due to the pace of technological advancement. He believes companies can only survive through creativity. Creativity becomes all the more important because the march of technology continues at a dizzying pace. Creativity does not mean being a Picasso. It means applying the tools that would lead to the development of innovative products or processes. According to Jeanne Liedtka, an authority on design thinking, the principles of design thinking are empathy, invention and iteration. Put another way, she says, it starts with what is, moves to what if, then to what wows and finally what works. Linda Naiman, Founder, Creativity at Work, in her article, Design Thinking as a Strategy for Innovation, borrows from the UK Design Council to explain that design thinking involves the following steps: discover, define, develop and deliver. The goal is development of great design for “Great design has that “wow” factor that makes products more desirable and services more appealing to users.” How do organizations implement design thinking? The dysfunctional areas of the organization are identified & people integrated with core business processes, technology and systems so that collective efforts of people achieve organizational goals. They create a culture of learning. Learning requires empathy. You put yourself in the customer’s shoes to understand what the customer requires. Employees are encouraged to focus on the problem they are trying to solve, what is it that customers want or what is bothering them and to ask questions to see how their ideas will affect the profit potential. This is the ‘what is’ stage. Teams work to find solutions. It is not an individual effort. Multi-disciplinary teams are the key to design thinking; they look at issues from different angles. The teams have autonomy to operate. Management views are not imposed on them. The team develops a design thinking mindset. They collaborate, not compete. Their goal is to look for new possibilities. They look for trends. They consider how their ideas & actions will shape the future. This results in ideation. This is the ‘what if’ stage. A characteristic of design thinking companies is that failure is seen as learning and teams are encouraged to discuss their failures openly, what went wrong, why it went wrong and what lessons are learnt. The company culture does not penalize failure. It sees it as a learning process. Interaction with the customers and understanding of their requirements leads to ideation. The multi-disciplinary team works to develop ideas that are possible solutions. The pros and cons are discussed. Once the ideation stage has fully matured, the team works on selecting the idea that qualifies as ‘wow’. This is the what’s wow stage. The prototype helps in reducing market failure. Empathy need not bring out the true requirements of the customer. Even if it does, the team’s idea need not have translated it wholly into the product/process required. The idea should be translated into a prototype. If changes are required, they are incorporated and the prototype re-tested till it achieves customer acceptance. Prototyping is an insurance against failure in the market and loss of development costs. Feedback from customers is an important element of design thinking process. Design thinking is not limited to business alone. In their book, “Solving Problems with Design Thinking: Ten Stories of What Works”, Jeanne Liedtka et al state “we illustrate the value of design thinking approach in addressing organizational challenges as diverse as re-envisioning call centers, revitalizing a society’s neighborhoods and rethinking strategic planning”. ZARA CASE STUDY Zara belongs to the Spanish group, Inditex. Inditex owns Zara, Zara Home, Bershka, Massimo Dutti, Oysho, Stradivarius, Pull & Bear and Uterqüe. Zara accounts for 60% of the group’s sales. Set-up in 1975, Zara’s success is due to its basic philosophy of producing trendy and decently made but inexpensive products sold in beautiful, high-end-looking stores. While its competitors H&M and GAP are plodding along, Zara’s first quarter of 2016 sales were $15 billion. The success of Zara is dependent on its vertical integration of production, fast to market of new designs, brutally tight inventory control & turnover of new designs in a season. This strategy works because Zara listens to its customers, effects changes in designs at neck-break speed based on customers feedback and replenishes inventory every two weeks. This model of design thinking has worked very well for Zara. “Most innovative vision? We are always fascinated by this skill. It is one of the best business skills to have in our view. Does it mean you see everything? Certainly not. It does mean you have the ability to see what many cannot. And then act on these items. It is what made Zara an innovative fashion retailer in our mind.(digitalsparkmarketing.com) “The fashion director for luxury goods maker LVMH calls Zara “the most innovative and devastating retailer in the world.” Innovation stems from design thinking. Zara produces 6000 - 10,000 designs each year against 2000 - 3000 by H&M. The large number of designs makes it certain to hit right. It is able to put these designs in the stores within 15 days as against industry average of 6 – 9 months average. Agility and flexibility are the reasons for Zara becoming the largest retailer in the fashion industry. As new trends & designs hit the runway, Zara, operating on a fast fashion basis adapts these designs and puts them in the retail stores. Zara will put three or four dresses or shirts or jackets in the store. The store managers puts right questions to the customers who visit the stores and pass them to the designers who modify the designs as per the consumer experience. This feedback of the customers helps Zara to produce according to customer requirements. This in turn helps Zara to maintain low inventory. If demand increases or a new trend is observed, Zara can meet it in fifteen days. Unlike competition, Zara’s manufacturing plants are located around or near the headquarters. The suppliers are based in Spain, Morocco and Turkey and mostly are owned by Zara. It out-sources the simple items to China. This enables Zara to commit only 50%-60% of production as against 80% - 90% by competition. It replenishes inventory twelve times in a year as against 3 – 4 times by others. The inventory is sent to the stores by trucks over night. Zara pursues design thinking through an interaction of feedback received from stores and technology. It is able to produce to customer demand, turns over inventory fast – twelve times in a year and able to stock stores with fifteen days. No wonder Zara continues to thrive while competition plods at snails pace. (1497 words) ------------------------------------- References Solving Problems With Design Thinking by Jeanne Liedtka et all 4 Key Questions that Drive the Design Thinking Process (www.innovationmanagement.se/) Design Thinking as a Strategy for Innovation (www.creativityatwork.com) Systems Paradigm – Complexity Academy What Is Organizational Design – The Centre For Organizational Design (http://www.centerod.com/2012/02/what-is-organizational-design/) 6. How Zara Grew Into the World’s Largest Fashion Retailer (www.nytimes.com) Supply Chain Management of Zara (http://www.slideshare.net/chspravin/supply-chain-management-of-zara-28247084) The Success of Zara: Technology Makes It Possible (http://soft4inventory.com/blog/the-success-of-zara-technology-makes-it-possible/) What is it like to be a designer with Zara? (https://www.quora.com/What-is-it-like-to-be-a-designer-with-Zara) 10. While the rest of the industry struggles, this store has created the 'best business model in apparel’. (http://www.businessinsider.com/why-zara-is-crushing-the-retail-industry-2016-5) 11. What VUCA Really Means for You (https://hbr.org/2014/01/what-vuca-really-means-for-you)