Tim Brown, Executive Chair of IDEO, defined design thinking as “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.” Therefore, desirability, feasibility, and viability are balanced to solve critical problems.
While design thinking has historic roots that date back to the 1950s, 1960s, when design methods started to be applied to business, it gained momentum in the early 2000s when the consultancy firm IDEO popularized it further.
How design thinking grew in popularity starting in the 50s and 60s, and it gained momentum throughout the 2000s, according to Google Books Ngram.
Today Design thinking has become even more predominant and popular throughout the 2010s when thinkers like Tim Brown, Tom, and David Kelley from IDEO highlighted how design could be used as the primary force to balance out human needs with technological feasibility and viability.
The spike and explosive growth in interest in design thinking throughout the 2010s, when the founders of IDEO popularized the term.
What is design thinking?
As highlighted on IDEO by Tim Brown, Executive Chair of IDEO:
Design thinking 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.
Tim Brown, Executive Chair of IDEO
At the base of design thinking, there is creative confidence.
…creative confidence—the natural ability to come up with new ideas and the courage to try them out. We do this by giving them strategies to get past four fears that hold most of us back: fear of the messy unknown, fear of being judged, fear of the first step, and fear of losing control.
In an interview in 2012 on HBR about “The Four Fears Blocking You from Great Ideas,” Tom and David Kelley explained what prevented people from unlocking their creative power:
Fear of the messy unknown is meant to fear of getting out of the office to gather firsthand observations that require the ability to deal with the uncertain.
Fear of being judged.
Fear of the first step.
Fear of letting go is connected to the fear of losing control.
In his TED talk, How to build your creative confidence, David Kelley explained how to use a process that psychologist, Bandura called “guided mastery” that enabled people to get comfortable with the unknown or the featured step-by-step.
With confidence built up gradually and deliberately, a renewed self-reliance comes, that Bandura called “self-efficacy,” or “the sense that you can change the world and that you can attain what you set out to do.”
Integrative thinking: The foundation of design thinking
Roger Martin, the business school professor at the University of Toronto, calls integrative thinking. And that’s the ability to exploit opposing ideas and opposing constraints to create new solutions. In the case of design, that means balancing desirability, what humans need, with technical feasibility, and economic viability.
Tim Brown, in 2009 TED Talk
In short, according to Tim Brown, design thinking is born by balancing:
Desirability: do people want it?
Technical feasibility: can we actually build it?
Economic viability: is it sustainable? Should we do it?
The key ingredients of design thinking and its five stages
Design thinking moves around a few key ingredients such as problem-solving, human-centric (as Tim Brown, in 2009 TED Talk that means:
“It may integrate technology and economics, but it starts with what humans need, understanding culture and context before we even know where to start to have ideas“).
An effective design thinking process moves around five key stages:
Empathize: what do my users/customers need?
Define: what core problem do they have?
Ideate: craft and brainstorm creative ideas.
Prototype: craft a possible solution for each core problem.
Test: does the proposed solution fit and solve the problem?
Customer-centrism as North Star
Customer obsession goes beyond quantitative and qualitative data about customers, and it moves around customers’ feedback to gather valuable insights. Those insights start by the entrepreneur’s wandering process, driven by hunch, gut, intuition, curiosity, and a builder mindset. The product discovery moves around a building, reworking, experimenting, and iterating loop.
Disciplines like design thinking have become critical in these times, as they flipped the old business logic and moved the moats (competitive advantages) to the bottom of the company’s customers.
Business designers become the architects of business modeling
Business design enables organizations to deliberately craft a business model to prove sustainability in the marketplace by validating the building blocks of a businessmodel. The business designer can help an organization to build a viable business model by readily testing its riskiest assumptions against the marketplace.
In that respect, UX designers have become among the key people that helped companies build valuable products for customers.
And in that the business design is the evolution of this approach where the whole business is built by gathering as much customer feedback as possible, thus iterating it quickly to evolve it fast.
Applying first principles thinking to design strategy!
First-principles thinking – sometimes called reasoning from first principles – is used to reverse-engineer complex problems and encourage creativity. It involves breaking down problems into basic elements and reassembling them from the ground up. Elon Musk is among the strongest proponents of this way of thinking.
As we saw, with first principles thinking, we can use a sort of blank slate approach to problem-solving, where rather than looking at the past or what has been done, we can look at the whole thing anew.
For that matter, root cause problem-solving methods, like 5 Whys, can help get to the root of the problem.
The 5 Whys method is an interrogative problem-solving technique that seeks to understand cause-and-effect relationships. At its core, the technique is used to identify the root cause of a problem by asking the question of why five times. This might unlock new ways to think about a problem and therefore devise a creative solution to solve it.
As once we get to the root of the problem, we can start from a blank slate to build something unique.
The first principles design thinking, therefore, involves solving design problems by breaking them down into fundamental truths.
Those fundamental truths will work as the basis to start building anew.
Despite the harmony between design thinking and first principles, it would be unwise to assume that the two are present in every organization.
In some design teams, the much less productive method of design by analogy is common.
As we saw above, an analogy can be very powerful in many contexts, especially when we take an idea that has been applied in a field and apply that in a – seemingly – unrelated field.
The advantage of using an analogy model to design thinking is the ability to build products that are many times better by simply transferring learning from one field to another.
Yet, for an exponential breakthrough, first principles thinking is more suited, as it completely changes the paradigm on top of which a whole industry has been built.
To avoid a scenario where the company ignores first principles and designs the feature anyway, designers need to identify the assumption and then break it down into fundamental truths with whatever research is necessary.
Then and only then can we move forward with developing the new feature.
What’s next? The rise of Business Engineering
I argue, that the next step to this evolution is that of the Business Engineer, usually intended as a person using technology to build technical processes within the organization.
However, in the FourWeekMBA view, the Business Engineer is a hybrid between an entrepreneur, a customer-centered business designer, and a business analyst, able to prevent false patterns, thus growing the business with a mixture of intuition, business acumen, testing, and experimentation.
That is the discipline that is part of the core FourWeekMBA curriculum.
The business engineer borrows the customer-centered approach from design thinking, yet it brings it to another level with customer obsession.
The business engineer borrows the business modeling discipline, yet she/emphasizes on quick experimentation, to remove any wrong assumption, as quickly and cheaply as possible.
And finally, from a combination of product, technology, distribution, business modeling, organizational design, and financial modeling, a third and final stage of scale is achieved!
Design thinking examples
In the final section, let’s take a look at four examples of design thinking in action.
GE Healthcare
GE Healthcare used design thinking to make their magnetic resonance imaging (MRI) machines more user-friendly for children.
The company observed that children reacted negatively to the long MRI procedure which took place in a cold, dark room with flickering fluorescent lights.
To improve the process, GE Healthcare observed the children in different environments, interviewed hospital staff, and spoke to relevant experts.
Extensive user research was performed with several pilot products launched, leading to the development of “Adventure Series” MRI machines for children.
One version of this series is the “Pirate Adventure”, which transforms the dark and uninviting MRI machine into a bright landscape filled with sandcastles, beaches, and the ocean.
The initiative increased patient satisfaction scores by 90% and also had the added benefit of improving the quality of the MRI scan itself.
Oral B
Oral B hired two engineers to upgrade its electric toothbrush range, with the company requesting that extra functions such as brush frequency tracking and music playing capability be added.
However, engineers Sam Hecht and Kim Colin found that teeth brushing was somewhat of a neurotic act for many people and that extra functionality could result in added stress and cause some to brush less frequently.
With that in mind, Hecht and Colin recommended more simple, less gimmicky features such as easier chargeability and a more convenient way to order replacement heads via smartphone technology.
Both these features were ultimately successful because Oral B focused on adding features that users wanted as opposed to what it wanted.
Uber Eats is a three-sided marketplace connecting a driver, a restaurant owner and a customer with Uber Eats platform at the center. The three-sided marketplace moves around three players: Restaurants pay commission on the orders to Uber Eats; Customers pay the small delivery charges, and at times, cancellation fee; Drivers earn through making reliable deliveries on time.
Uber Eats has become the go-to food delivery app for many because the company has been able to empathize with customers and iterate quickly via design thinking.
The Uber Eats Walkabout Program is one such example, with designers visiting cities where the service is available and conducting extensive research on cuisine, infrastructure, transport, and food culture, among other characteristics.
One of the more common user pain points that Uber solved for its delivery drivers was the issue of finding a parking space in busy cities.
To make the delivery process more efficient, the Uber Eats driver app offers detailed, step-by-step directions from the restaurant to the customer.
Airbnb is a platform business model making money by charging guests a service fee between 5% and 15% of the reservation, while the commission from hosts is generally 3%. For instance, on a $100 booking per night set by a host, Airbnb might make as much as $15, split between host and guest fees.
In the early days of Airbnb, the founders realized that the listing photos hosts uploaded were not of sufficiently high quality to convert into bookings.
In response, they traveled to many locations themselves and used design thinking to imagine what a customer looked for when selecting short-term accommodation.
The first step was to invest in cameras that took high-quality photographs.
Other improvements included showing images of every room in the accommodation instead of a select few and the listing of special features such as a pool in the description.
It was also discovered that users wanted information on the surrounding neighborhood.
By placing itself in its users’ shoes, Airbnb was able to solve business problems and double its revenue weeks later.
In 2021, Airbnb generated enabled $46.9 Billion in Gross Booking Value, and it generated $6 Billion in service fee revenues. In 2021, there were $300.6 Million Nights and Experiences Booked, ad an average service fee of 12.78%, at an Average Value per Booking, $155.94.
IBM
For IBM, design thinking is a framework that serves to place “end-user needs at the center of the design process and enables teams to collaborate and work more efficiently“.
In essence, this means that for each IBM project, diverse teams assemble and maintain a razor-sharp focus on the benefits for the intended end user.
The company used design thinking to improve customer relations, bridge gaps between the product and design teams, and increase revenue and profits.
How was this achieved? Here are some of the initiatives IBM employed:
Product personas were created early in the discovery phase after teams met with real or intended users. This then afforded engineering teams more time to prepare for testing scenarios and reduced total development time.
Each meeting was framed in terms of addressing the real, human problem that was the reason for the project to start with. When teams were ultra-specific on what they needed to achieve, they required less time to design, develop, and test processes.
IBM also applied design thinking to future investments, using the framework to determine whether a project should be pursued or avoided based on its ROI.
Clarifying user needs early on also produced projects with fewer defects. As a result, teams were able to avoid costly and time-consuming reworks and repairs and increase project efficiency.
Bank of America
In 2004, Bank of America partnered with design consultancy IDEO to identify ways it could encourage more people to open a bank account.
In a campaign called “Keep The Change”, IDEO traveled across the country to observe how people related to money.
Representatives spoke to families and individuals about their banking and spending habits, and after a while, a few patterns started to emerge.
One such pattern was that mothers in a household tended to control the finances.
In the early 2000s, many would also round up the number in their checkbook to make addition simpler with the added benefit of creating a small buffer in spending.
Though the campaign did not explicitly set out to address financial insecurity, both the Bank of America and IDEO became aware of many consumers’ inability to save money.
If a consumer was more concerned about having their electricity turned off, they did not have the time, money, or energy to develop a savings plan.
Armed with this knowledge, IDEO proposed that purchases made with a debit card could be rounded up and the difference transferred automatically into a savings account.
What’s more, the Bank of America would match each amount that was added up to a certain threshold.
In addition to the obvious financial benefit of this design thinking initiative, the emotional benefit to consumers who found it difficult to save money is more meaningful and makes the Bank of America top of mind for others who want to take control of their finances.
Additional Case Studies
Netflix:
Design Thinking Approach: Netflix uses design thinking to enhance its user experience and content recommendations.
User-Centered Design: Netflix collects vast amounts of user data to understand viewing habits and preferences. It uses this data to personalize content recommendations for each user.
Content Creation: Netflix also applies design thinking principles to content creation, analyzing viewer feedback to develop original series and movies tailored to audience interests.
SpaceX:
Design Thinking Approach: SpaceX applies design thinking to revolutionize space exploration and travel.
Iterative Design: SpaceX uses iterative design processes to develop and test its rocket prototypes, making improvements based on feedback and data.
User Feedback: The company values input from astronauts and engineers to refine spacecraft design, safety features, and usability.
Goal-Oriented: SpaceX’s design thinking approach is goal-oriented, with a focus on reducing the cost of space travel, enabling interplanetary exploration, and making space accessible to humans.
Procter & Gamble (P&G):
Design Thinking Approach: P&G employs design thinking to innovate its consumer products.
Empathy with Consumers: P&G conducts in-depth research to understand consumer needs and preferences. This empathy drives product development.
Cross-Functional Collaboration: P&G encourages cross-functional collaboration among designers, engineers, and marketers to create products that resonate with consumers.
User-Centric Innovation: Products like the Swiffer and Tide Pods were born from P&G’s design thinking approach, meeting consumers’ demands for convenience and efficiency.
Warby Parker:
Design Thinking Approach: Warby Parker disrupts the eyewear industry with a design thinking approach.
Customer Feedback: Warby Parker involves customers in the design process, collecting feedback on styles and preferences.
Direct-to-Consumer Model: By selling directly to consumers online, Warby Parker bypasses traditional retail markup, offering stylish and affordable eyewear.
Try-Before-You-Buy: The company offers a try-before-you-buy program, allowing customers to test frames at home before making a purchase.
NASA:
Design Thinking Approach: NASA applies design thinking to space exploration and technology development.
Human-Centered Spacecraft: NASA designs spacecraft with human factors in mind, considering astronauts’ comfort, safety, and performance.
Prototyping and Testing: The agency builds prototypes and conducts extensive testing to refine spacecraft design and ensure reliability.
Mars Exploration: Design thinking plays a crucial role in NASA’s mission to explore Mars, with a focus on human habitation, life support, and resource utilization.
IDEO.org:
Design Thinking Approach: IDEO.org is a nonprofit organization dedicated to using design thinking to tackle social and humanitarian challenges.
Human-Centered Solutions: IDEO.org collaborates with communities, NGOs, and governments to create human-centered solutions for issues like clean water access, healthcare, and education.
Empathy and Prototyping: The organization emphasizes empathy for end-users and rapid prototyping to test and iterate solutions.
Impactful Innovations: IDEO.org’s design thinking approach has led to innovations like water purification systems, healthcare delivery models, and educational tools for underserved populations.
Ford Smart Mobility:
Design Thinking Approach: Ford Smart Mobility employs design thinking to address urban mobility challenges.
User Research: The company conducts user research to understand urban commuters’ pain points and preferences.
Mobility Services: Ford offers mobility services like bike-sharing and ride-sharing, driven by insights from design thinking.
Collaboration: Ford collaborates with cities and partners to develop sustainable and convenient mobility solutions.
Airbus:
Design Thinking Approach: Airbus applies design thinking to aircraft design, passenger experience, and aviation solutions.
Passenger-Centric Design: Airbus designs aircraft interiors with a focus on passenger comfort, space efficiency, and amenities.
Eco-Friendly Innovation: Design thinking drives Airbus’ efforts to create more fuel-efficient and eco-friendly aircraft, reducing emissions.
Safety and User Experience: Safety and user experience are paramount in Airbus’ aircraft design, influenced by feedback from airlines and passengers.
Google:
Design Thinking Approach: Google uses design thinking to enhance its products and user interfaces.
User-Centered Design: Google prioritizes user feedback and usability testing to refine its search engine, applications, and hardware.
Innovation Labs: Google’s innovation labs employ design thinking principles to develop new technologies and experiences, such as Google Glass and self-driving cars.
Accessibility: Google’s design thinking approach extends to accessibility features, ensuring inclusivity for users with disabilities.
Key Highlights
Origin and Growth of Design Thinking:
Design thinking has its roots in the 1950s and 1960s when design methods were applied to business.
It gained momentum in the early 2000s, popularized further by IDEO, a consultancy firm.
Thinkers like Tim Brown, Tom, and David Kelley from IDEO highlighted design’s potential for balancing human needs, technological feasibility, and business viability.
Definition of Design Thinking:
Design thinking is a human-centered approach to innovation.
It integrates people’s needs, technological possibilities, and business requirements.
Creative confidence, the ability to generate and try new ideas, is at the core of design thinking.
Integrative Thinking:
Design thinking involves integrative thinking, which exploits opposing ideas and constraints to create new solutions.
It balances desirability (what humans need), technical feasibility, and economic viability.
Five Key Stages of Design Thinking:
Empathize: Understand users’ needs.
Define: Identify the core problem.
Ideate: Brainstorm creative ideas.
Prototype: Create possible solutions.
Test: Validate solutions against the problem.
Customer-Centric Approach:
Design thinking prioritizes understanding customers’ needs and feedback.
It involves continuous iteration and experimentation to build valuable products.
First Principles Thinking and Root Cause Analysis:
First principles thinking breaks down complex problems into fundamental truths.
Root cause analysis, like the “5 Whys,” helps uncover the underlying causes of problems.
Role of Business Engineers:
The evolution of design thinking leads to the role of a “Business Engineer.”
A Business Engineer combines entrepreneurship, customer-centered design, and businessanalysis.
They iterate quickly, experiment, and ensure scalability in business models.
Examples of Design Thinking in Action:
GE Healthcare improved MRI machines for children.
Oral B focused on user-friendly toothbrush features.
Uber Eats enhanced the driver experience through research and improvements.
Airbnb improved listing quality based on user needs.
IBM applied user-centered design to product development.
Bank of America’s “Keep The Change” campaign promoted financial saving.
Impact of Design Thinking:
Design thinking improves products, services, and user experiences.
It fosters innovation, revenue growth, and customer satisfaction.
It addresses real-world problems and balances human, technological, and business aspects.
GE Healthcare: Child-Friendly MRI Machines
GE Healthcare used design thinking to improve the experience of children undergoing MRI scans.
They observed that children found the procedure intimidating and uncomfortable.
GE Healthcare redesigned MRI machines with child-friendly themes, such as “Adventure Series” machines that transform the machine environment into a more welcoming and engaging space.
The initiative increased patient satisfaction and improved scan quality.
Oral B: User-Centered Toothbrush Features
Oral B initially wanted to add extra functions to their electric toothbrushes.
Designers Sam Hecht and Kim Colin found that adding more features could cause added stress for users.
They recommended simpler features such as easier chargeability and convenient replacement head ordering, focusing on what users wanted rather than what the company wanted.
Uber Eats: Improved Delivery Driver Experience
Uber Eats used design thinking to enhance the delivery driver experience.
The Walkabout Program involved extensive research on food culture, infrastructure, and delivery challenges.
Addressing issues like finding parking spaces in busy cities, the driver app now offers step-by-step directions from restaurant to customer.
This improved efficiency and overall customer experience.
Airbnb: Enhancing Listing Quality
Airbnb used design thinking to improve the quality of listing photos.
The founders realized that low-quality photos impacted conversion rates.
They invested in better cameras and improved listing descriptions, including images of every room and surrounding neighborhood information.
This user-centric approach led to higher user satisfaction and doubled revenue.
IBM: User-Centered Product Development
IBM used design thinking to place end-user needs at the core of their projects.
Product personas were created to align engineering teams with user needs.
Specific problem-solving meetings helped teams focus on project objectives, reducing development time.
This approach led to improved efficiency, fewer defects, and increased revenue.
Bank of America: Keep The Change Campaign
Bank of America collaborated with IDEO to encourage more people to open bank accounts.
The campaign addressed consumers’ difficulty in saving money.
IDEO proposed rounding up debit card purchases and transferring the difference into a savings account.
Bank of America matched contributions up to a threshold.
The initiative helped millions save over $2 billion and improved financial confidence.
A Blockchain Business Model according to the FourWeekMBA framework is made of four main components: Value Model (Core Philosophy, Core Values and Value Propositions for the key stakeholders), Blockchain Model (Protocol Rules, Network Shape and Applications Layer/Ecosystem), Distribution Model (the key channels amplifying the protocol and its communities), and the Economic Model (the dynamics/incentives through which protocol players make money). Those elements coming together can serve as the basis to build and analyze a solid Blockchain Business Model.
In an asymmetric businessmodel, the organization doesn’t monetize the user directly, but it leverages the data users provide coupled with technology, thus have a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data, combined with its algorithms sold to advertisers for visibility.
In a business world driven by technology and digitalization, competition is much more fluid, as innovation becomes a bottom-up approach that can come from anywhere. Thus, making it much harder to define the boundaries of existing markets. Therefore, a proper business competition analysis looks at customer, technology, distribution, and financial model overlaps. While at the same time looking at future potential intersections among industries that in the short-term seem unrelated.
Technological modeling is a discipline to provide the basis for companies to sustain innovation, thus developing incremental products. While also looking at breakthrough innovative products that can pave the way for long-term success. In a sort of Barbell Strategy, technological modeling suggests having a two-sided approach, on the one hand, to keep sustaining continuous innovation as a core part of the business model. On the other hand, it places bets on future developments that have the potential to break through and take a leap forward.
A transitional business model is used by companies to enter a market (usually a niche) to gain initial traction and prove the idea is sound. The transitional business model helps the company secure the needed capital while having a reality check. It helps shape the long-term vision and a scalable business model.
The minimum viable audience (MVA) represents the smallest possible audience that can sustain your business as you get it started from a microniche (the smallest subset of a market). The main aspect of the MVA is to zoom into existing markets to find those people which needs are unmet by existing players.
Business scaling is the process of transformation of a business as the product is validated by wider and wider market segments. Business scaling is about creating traction for a product that fits a small market segment. As the product is validated it becomes critical to build a viable business model. And as the product is offered at wider and wider market segments, it’s important to align product, business model, and organizational design, to enable wider and wider scale.
The market expansion consists in providing a product or service to a broader portion of an existing market or perhaps expanding that market. Or yet, market expansions can be about creating a whole new market. At each step, as a result, a company scales together with the market covered.
In the FourWeekMBA growth matrix, you can apply growth for existing customers by tackling the same problems (gain mode). Or by tackling existing problems, for new customers (expand mode). Or by tackling new problems for existing customers (extend mode). Or perhaps by tackling whole new problems for new customers (reinvent mode).
In the FourWeekMBA Revenue Streams Matrix, revenue streams are classified according to the kind of interactions the business has with its key customers. The first dimension is the “Frequency” of interaction with the key customer. As the second dimension, there is the “Ownership” of the interaction with the key customer.
Revenue model patterns are a way for companies to monetize their business models. A revenue model pattern is a crucial building block of a business model because it informs how the company will generate short-term financial resources to invest back into the business. Thus, the way a company makes money will also influence its overall business model.
A pricing strategy or model helps companies find the pricing formula in fit with their business models. Thus aligning the customer needs with the product type while trying to enable profitability for the company. A good pricing strategy aligns the customer with the company’s long term financial sustainability to build a solid business model.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
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