Design Thinking and Leading Change in Business

- So, there's more and more talk these days about designers leading change in business. And Pepsi is a perfect example, so in 2012 the CEO created a chief of design position to lead innovation in their company from a design perspective. So, what would be your advice to designers who are looking to get a seat at the table, who do not have one in a company? - There's a story I tell that is completely fictional, it's never happened, but it always happens. I mean, it sort of underlying a lot of conversations. When you get into that room, and all the C-suite or senior managers are there, imagine a conversation about moving forward with a product decision or a service unit, The CEO turns to the designer and says, "Well you think we should do this one instead of that one, why? That's the moment of truth, right? How are you going to describe why you think that's going to be more successful for the company to choose rather than an alternative. Designers, for the most part, aren't really prepared for that converstaion. Especially in school, we do a lot of things still in traditional design education where we tell people, "The work speaks for itself," right? And we don't require them to be articulate, or to be good writers, or to present well necessarily. So, what's left for a designer to talk about often is where their inspiration came from: what they saw in competitors, what their favorite preferences are around design elements, et cetera. And it's interesting, but it's not usually very convincing. Now, the CEO turns to the VP of Marketing and says, "Well, you think we should do this one instead of this one." Why? And the VP of Marketing says something like, "Well we polled "customers and 63% more people want that one than this one." If you're the CEO, how are you, like, which one are you going to choose? Of course you're going to choose the 63% more people want this one that one, because it just sounds more valid, right? That may still be the wrong decision, in fact it probably is the wrong decision, because market research is, it's just crap. 95% of it is worse than wasteful, because it's often leading companies and decision makers down the wrong decision path. But given the choice between this sort of accurate, confident, rationalization for choice, and this kind of wishy-washy, ambiguous, well, "I kind of felt like it was this," what are you going to do? Designers need to figure out how to have a better conversation about their design decisions. We did it, we chose this form and these materials, and this type face, we chose these things because customers reacted to them in these ways. We have an underlying theme here around accomplishment and security and beauty, and those things are supported by this, this and this. And that fits strategically in our company, because our company's themes are accomplishment, beauty, and community, right? That becomes a confident conversation that a CEO won't feel stupid about if they overruled the VP of Marketing and choose this one. It may even be what they're reacting to themselves, but can't articulate, and here's the articulation of it that inspires them, that's aspirational, that makes them feel like, "Yeah, this is the right decision," but they're now given a discussion around it that's focused on value, and it's focused on validation. - And it sounds to me like what you're saying is that designer's actually giving things that feel tangible. - Absolutely, and they will never be completely tangible, you will never win this over numbers, right? But, you're right, you can give a tangibility to these often ambiguous, esoteric, ethereal decisions, but they're often the same things that people are already feeling. People in the room may already be in love with this because it's more beautiful, or it's more something, right? But they don't know how to have that conversation, they don't have that vocabulary. You have to give them the vocabulary for that yourself. - Would it be fair to say that using phrases like, I feel and I think are killers? - I don't think that they're killers, I'm a big believer in I-statements, because you speak for yourself. In that situation, they're not as strong as we talked to customers, they feel, they reacted, they chose. Essentially, that's what the marketing person is saying anyway, right? But then, melding both those sides, the assured, tangible, quantitative with the ethereal, aspirational, qualitative, that's a more powerful discussion that gets people excited. The other thing is that we have to turn, we have to change a lot of the vocabulary. One of the big vocabulary words the designers need to change is the word value. Because in traditional business value pretty much just means money. Sometimes we can talk about functional value, performance value, this works bad, this is worth more because it does more. There's three other kinds of value, that's the quant value, then there's the qual value, and we all know this value exists because we all feel it, we react to it, but we don't know how to talk about it. And that's emotional value, identity value, and meaning value. The qualitative value is almost always worth way more than the quantitative value. And most business people know that it's sort of out there. When you learn accounting, you learn two terms: book value, what the company's worth, close the company today, sell off all the assets, which, you know, might be a factory, desks, chairs, whatever, that's the book value of the company. It's what the accounting system and income statements, and balance sheets say you're worth. Then there's something called good will. And any time a company gets sold, gets acquired, or goes public, there's this immediate, often surprisingly huge number of sum of money that gets literally shoved into the balance sheet under good will, meaning, we don't know where it came from, people just like us, I guess, and we don't know where to put it because it doesn't fit the balance sheet anywhere, but we have all this extra money, we got to do something with it. We shove it into this cell in the spreadsheet. I'm sure when lynda.com got bought, there was the book value, and there was a bunch of good will. When Instagram was purchased by Facebook, the book value the day before the company was sold, $86 million, that's what the books said that the company was worth. How much money did they get? Well it was 1.1 billion. So over on this column, the qualitative value $1.01 billion versus 86. If you could have a conversation with a business person that expands the definition of value, and show them that all the value, especially if they're an entrepreneur, all the value they know, that they've seen happen in other companies, that they want to make happen and grow, all that's on this side, but all your tools for creating and managing come from value, traditionally are only doing this side. This is what designers can help build. Now you've had, now you've changed the conversation of value, and you've made a big place for design to happen. They may not be convinced the first time, but now you've at least opened the door that your tools help you with the 86 million, they're not doing very good on the 1.01 billion, that's where I come in as a designer, I can help you do this. And then you actually have to help them do that, right, like you have to be good at that. - Design thinking is a huge topic these days, and depending on who you talk to there are different steps to that process and different variations on when those things happen. What is the version that you guys teach in your program? - So you're right designer thinking has been, in fact, the kind of, it's the beachhead that's led design into business and led business people, especially in tech open their eyes to design. And the first thing you have to discuss about design thinking is that design thinking is different than the craft of design. Being a good design thinker, which anyone could be good at, does not make you a designer. And designers have feared from, you know, the first moments of design, other people telling them how to do their job, because everyone has a preference, right? So the stereotypic story of the CEO who's wife's next door neighbor's dog walker's friend likes purple, can you do it in purple, right? Which just grates designers. Those are decisions about the craft of design, which is a craft that you learn: graphic design, fashion design, industrial design, interaction design. But design thinking, even though it's used in those crafts, inseparable, because it's a process for essentially taming ambiguity. One of my faculty is Lisa Salmon, who's a fantastic author has a fantastic book out. She's now starting to talk about renaming the MBA a Masters in Business Ambiguity, because design thinking is one of those tools that leads you through the desert or the fog when things are ambiguous, and allow you to get somewhere. And it's nearly magic for people who have trouble with ambiguity or come from a traditional business background. When I taught at Haas, which is the business school at Berkeley, for a couple years, Sarah Beckman there, who's been teaching design thinking in business school for 25, 26 years, longer than anyone, I learned a great deal from her about really how distinct these modes of thought are, and how do you help people who aren't designers, who aren't comfortable with ambiguity, learn to become more comfortable. To me there's about four elements of design thinking that differentiate it from quantitative reasoning, scientific method, integrative thinking, other forms of approaching challenges. The first is design research, which is qualitative engagement with the market with customers, with constituents, if it's not business, for instance. And understanding them on a level of emotions and values and meaning and not just what they're willing to pay for what their budget is, and what features they need. That leads you to what is essentially the most important part of design thinking which is reframing. And I saw this over and over when I taught at Haas, where students would come in from the business school, and they already knew the answer, they knew what they were going to create, and they just wanted to get to it. And then we had them do these sort of four weeks, five weeks, six weeks of talking to customers, and doing this weird stuff. And they didn't appreciate it, and in fact many people rebelled against it, because it just didn't make sense, it didn't fit the kind of background and tools that they used normally. But, there comes that moment when you listen to your customer feedback and you integrate it, and you try to make sense of it, and come up with insights, and realize ohhh, they don't even want what we were going to make. That's not going to work. But we did find this thing over here that they can't get enough of. And you know what? It's a better opportunity than what we thought was an opportunity. We need to shift gears. And then people talk about the pivot, right? That's when the pivot comes from, it reframes the problem. We're not at this company, we're going to be at that company. Well that reframing, that pivot, requires some pretty flexible thinking. The people who are dogmatic and often quantitative are trying to optimize, are trying to be efficient with their time, they're fighting needing to do that, so this is the most disorienting part of the problem, and we would get to the end of class, the end of the semester, and talk with the students and every single semester there was a handful of students who said, "You know what, six, seven weeks in, "I knew this was going to be a failure in this class. "But it was too late to pick up another class, "so I couldn't drop it and pick up something else, "because I wouldn't have enough credits to graduate, "so I just gave up. "I figured I'd put all my, "I was going to get a terrible grade in this class, "I'm going to make up for it, "I'm going to put my time in the other class, "so I just gave up fighting it. "And that's when it started working." So when they were able to let go of the rigid structure that they required, and just sort of let it wash over them, they got to someplace that was way better. They would always say, "We ended up with something "way more interesting which was a better opportunity "than anything we had imagined coming into the class." And that's the process of design thinking, but it requires that reframing, because you never really know what people need and react to. The next pieces are prototyping, which isn't so unusual, although, still, you can run into people, who, if you're negotiating a contract, might say something like, "Well, I'm not going to pay "for prototypes, I'm only going to pay for the stuff "we're actually going to use." You're laughing because you've seen this, right? So prototyping and integration is still sometimes contentious, but, especially in the tech world and the physical goods people get, why that's important. Design thinking is a way of moving through those processes and melding them with the other kind of quant processes that is driving business's business model and driving the financial model and setting up your operations, et cetera. But it's a very different animal, and so, how the two connect is really critical, because you can have a lot of naysayers along the way. And I think that cultural difference is the biggest set of skills that designers need to learn. Other people think differently, they literally see something that I don't see. Sometimes that's good, sometimes that's bad, and I need to help them through this process, because it's really disorienting to them. Those collaborative, communication, personal skills end up probably being the most important skills, and they're the most important classes that we teach. Not that anyone ever would come to our program to learn those classes, because they want to learn design thinking, or sustainability, or finance, or whatever. But it turns out that those are the most important classes. - So you said, as a designer you go out and you'll interview people and sometimes they'll see things that are different from you, and sometimes that's good and sometimes that's bad, is what could be bad? - What could be bad about seeing other things? I don't think that there's necessarily, I should rephrase that, that maybe it's not bad, what's bad is if you can't integrate the two. So, I remember Sarah grabbed a bunch of whiteboard markers and threw them on a table in front of the whole class, and said, "You, what do you see?" And someone said, "Well, I see six whiteboard markers." "You, what do you see?" "I see three red ones "and a black one, and two blue ones." "You, what do you see?" Everyone was describing something different. And she said, "Nobody mentioned the three "that fell off the table." And everyone went, "Oh yeah, three fell off the table." Right? There are more things to see than just what you get. And the more we see, the more different perspectives we get on the problem, the more informed we are, and that's the qualitative, again, right? I guess what's really bad is if you don't have a lot of different perspectives, or if you're shutting down perspectives. So, I guess what I meant by sometimes it's bad is sometimes people see things and they're so confident about what they see as being the most important thing that they discount everything else.