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Two key ingredients for success in digital age: Design thinking and rapid innovation

Dan Glessner Vice President, Digital
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November 10, 2016 - 

Bob Dylan, 2016 Nobel Literature prize winner: “He not busy being born is busy dying."

The largest public companies by market capitalization have changed significantly over the past 15 years—as digital technology has played an increasingly larger role within our work and personal lives. Looking like a technology “who's who" roster, the five most valuable companies today are Apple, Google, Microsoft, Amazon, and Facebook. More broadly, fully one-half of all U.S. S&P Index companies have changed since 1999. With apologies to Bob Dylan… those companies not digitizing are busy dying.

In today's digital age, companies must change from their traditional legacy orientation—embodied by 12-18 month development projects and 2-3 year strategic planning cycles—to develop new core competencies related to speed, agility, and rapid innovation. Two foundational capabilities are needed to enable these new core competencies: design thinking and rapid innovation.

A new study from Harvard Business Review Analytic Services in association with the Genpact Research Institute found that the biggest obstacle to accelerating the pace and impact of digital transformation is the inability to experiment quickly (cited by 48% of respondents). Design thinking and rapid innovation create a culture of experimentation, continual reinvention, and enable even the largest organizations to innovate like start-ups

Design thinking to drive outside-in perspective and learning

Although Design Thinking has had various names and incarnations for a few decades, it is still not commonly practiced within most companies. Since much has been written on design thinking, this post focuses on the key attributes used to develop the outside-in orientation. Understanding the customer journey—and the key actors along it—is the starting point. Working to deeply understand the customer persona(s) and their emotional needs is paramount. Creating an optimal customer experience is the ultimate goal, but in order to do so, the team needs to “fall in love" with the problem and gain strong empathy with the customer (as opposed to an engineer's natural inclination to quickly move toward the stage of hypothesizing potential solutions).

The team should also be exposed to inspiration from interesting solutions in tangential market spaces and novel start-up solutions and alternative business models. Immersion in outside ideas enables improved out-of-the-box thinking during the ideation and solution development phases.

Experimentation is at the very core of design thinking. Ideas for potential solutions should focus on meeting the functional and emotional needs of customer personas and be tested directly with customers, instead of being endlessly debated internally. Compared to more traditional focus groups, which have the problem of being biased by individuals with strong points of view, and/or market research projects, which last months, direct responses from 5-6 customers are more valuable. Test, observe, learn, improve—and then repeat. This outside-in learning is empowering to those who experience it and practice it regularly.

Rapid innovation enables high-velocity engineering and “wow" experiences

Rapid innovation is a new competence which goes hand-in-hand with design thinking. Progressing from ideation to paper prototypes, to digital mock-ups, to working front-end prototypes over the course of only one week is both an exhausting and exhilarating experience. High velocity engineering, which leverages overseas development teams, enables rapid progress in an around-the-clock manner. This sprint enables the development of a “wow" experience for customers—whether internal or external—in a matter of only days.

Companies able to create these “wow" customer experiences will thrive in today's digital age. This competence is a critical skill which digital leaders have mastered… and is a “must have" for all others. It is a far cry from the traditional development cycles of 12 to 18 months or longer; rapid innovation can enable radically shortened time-to-market and improved customer experiences. In addition, courage is needed for companies to know when to kill unsuccessful projects, and rapid innovation enables these important decisions to be made faster.

The team which executes rapid innovation sprints will act like a start-up operating with greater purpose, speed, and agility. Leaders who foster this ability in their companies will bring to life a new innovation methodology which emphasizes an outside-in, agile, fast, and customer-obsessed culture. Rapid innovation through high-velocity engineering sprints is a key ingredient for becoming a market leader in the digital age… and staying there.

Leadership to sustain new innovation culture

Design thinking and rapid innovation empower organizations to think and act differently, but this cultural change must be sustained by effective leadership. Much more important than achieving any single “wow" customer experience is the ability to sustain this new innovative methodology. Best practices here include following change management principles to identify key constituents to become champions, practice continuous and broad communications, promote early wins, and promote the new behavior which must be modeled within the broader company.

Technology will continue to play a larger role within a company's value chain—as all companies increasingly become technology companies. The resulting industry disruption will cause continued changes in the company composition of various indices. The best way to make it onto a leaders listing is to invest in developing design thinking and rapid innovation core competencies. This investment will foster your company's ability to continually re-invent itself and thrive in the digital age.

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