Why your business needs a design strategist

Over the years, most business leaders used analytical and logical approaches that guaranteed steady algorithmic process to profitability, this method still work but mostly led to status quo and redundancy in creativity and innovation. The fear of some of these business leaders has been, “investing money into ‘untested process’ that is not feasible or logical.” Hence, there have been proven competitive advantage for companies that adopt design thinking in their business model; Design Management Institute, 2015 assessment reveals that design-led companies have outperformed the S&P 500 over the past 10years by an extraordinary 211%. McKinsey’s Design Index 2018 research found that shareholders return and revenue growth differences between the fourth, third, and second quartile MDI scorers were marginal. The market disproportionately rewarded top quartile companies whose design performance truly stood out from the competition. In 2019, Invision surveyed thousands of companies to explore the relationship between design practices and business performance, found that companies with high design maturity see cost savings, revenue gains, brand and market position improvements as a result of their design efforts. They further uncovered that the practices of these enterprises offers a blueprint for business leaders to ensure their design dollars are invested for maximum returns.

Designers couple talent and creativity with sound understanding of business structures, processes, goals, and alliances. They draw upon all of that background knowledge to convert technology and market knowledge into emotionally compelling products and experiences that profit both consumers and businesses. “For business leaders pursuing an innovation-driven business model, strategic designers are essential partners.” (Hartmut Esslinger, founder of frog design).

 

Here is the case of Procter & Gamble (P&G); the world’s largest consumer packaged goods company, spent most of the 1990’s in a restructuring mode. It actively acquired new businesses, diligently pursued cost-cutting measures and reorganized its business around products rather than geography. It bought and sold businesses, closed plants, and shuttled executives to new positions in the company. By January 1999, it had a new CEO in place and was ready for the challenges of the new century. Or so it seemed. (The Design of Procter & Gamble; The Design of Business, Roger Martins).

Instead by spring 2000, P&G was facing perhaps the greatest crisis in its 165-year history. CEO Durk Jager had spent several months embroiled in a complex but ill-fated potential merger with drug companies Warner-Lambert and American Home Products (now Wyeth). A friendly takeover offer for Gillete was quickly rebuffed. In March, with its core business in decline and acquisitions slowing down, P&G was forced to warn investors that it would suffer its first quarterly profit decline in eight years. In response, the stock, which had already fallen from a cyclical peak of $116 in January to $86, fell by 30 percent, to less than $60 a share, in a single day. Revenue growth at the $40 billion company had slowed to a measly 3 percent to a 4 percent a year, profit had stagnated, and seven of ten of P&G’s biggest billion dollar brands were losing market share.

Here comes the new CEO A.G. Lafley, who had recently returned from a successful assignment running the Asia-pacific business to head both the North American region and the global beauty business. Although he was a rookie CEO, Lafley was prepared to take bold action to pull P&G out of its downward spiral. Design thinking, he believed, offered a way out of the trade-off between innovation and efficiency. He committed to turning P&G into a design organization, beginning with his senior leadership team. In 2001, only a year into his tenure, he appointed ‘Claudia Kotchka’ as the corporation’s first ever Vice President for ‘Design Strategy and Innovation’. Her mandate was to build P&G’s design capability and act as the corporation’s champion of design thinking.

Lafley wanted Kotchka for the balance she struck between business and design. As he explained to her, “In order to do this, I need someone who can speak both languages — the language of design and the language of business.” Embedding design into a company as big as P&G, and one with such a strong and defend culture, was a massive challenge. “A.G. had always been a believer in design,” Kotchka Said “but the company. I would say, had not.” (The Design of Procter & Gamble; The Design of Business, Roger Martins).

Lots of problems are hard: differential calculus, for instance, or determining the optimal production schedule for a new manufacturing plant or assigning a realistic value to stock options. Hard problems are complex and take many steps from beginning to end, making it difficult to see your way clear to the solution from the outset. Hard problems face us at every turn, but fortunately business schools specialize in giving us the analytical tools that allow us to tackle and solve these problems. So hard problems aren’t the problem, the real challenge that faces the CEO and the Young Manager alike is that not all problems are hard problems. In fact, many of them belong to an entirely different category: Wicked Problems.

Wicked Problems aren’t merely harder or more complex than hard problems. They don’t just involve mere factors or stakeholders. They don’t just take us longer to solve. Analytical thinking alone, no matter how skillfully applied, isn’t going to generate an answer to a wicked problem. Instead, dealing with wicked problems demands that attention be paid to understanding the nature of the problem itself. Problem understanding is central; the solution, secondary. It’s no wonder that so many designers have come to embrace the notion that their role is to work with wicked problems. (Wicked Problems by Jennifer Riel).

Within three years of Lafley’s appointment as CEO, P&G did not only create successful products by adopting design process but was transformed from a mature company with slowing growth, eroding profits, and moribund brands into a genuine growth company, with profit growth of 15 percent per year. Thirteen of its top fifteen brands had increased their market share. Within six years, revenues were $70 billion and growing at a consistent 10 percent clip. P&G’s roster of billion-dollar brands expanded to twenty from ten, and several other brands were flirting with that benchmark. R&D spending fell from 4.8 percent of sales to 3.6 percent, yet the success rate of its new-product initiatives had quintupled to 65 percent. Profit had doubled and was growing at 15 percent annually.

I believe businesses that adopt design thinking are more creative and they consistently design great products and services which guarantee their revenue growth and shareholders return over their industry counterparts.

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