The Explainer: What Is Design Thinking?

Summary

Design thinking is a strategic approach that helps companies avoid common pitfalls in strategy-making by focusing on human behavior. It involves three stages: inventing a future by immersing in customer lives to form theories about their needs, testing these ideas through iterative prototyping and quick experiments, and finally, bringing the successful product to market by identifying necessary activities and resources. This method, popularized by David Kelley, Tim Brown, and Roger Martin, was exemplified by Procter & Gamble's turnaround of the Oil of Olay brand by targeting a previously ignored demographic and testing various product aspects.

Takeaways

• 📈 Companies often struggle with strategy due to relying on outdated data or making risky bets without evidence.
• 🔍 Design thinking offers a strategy-making process that focuses on human behavior to avoid common mistakes.
• 🌟 Pioneers like David M. Kelley, Tim Brown, and Roger Martin have popularized design thinking in business strategy.
• 🛠 The design thinking process has three main stages: inventing a future, testing ideas, and bringing the product/service to life.
• 🧐 Start by forming theories about customer needs through immersion in their lives rather than traditional market research.
• 📝 Test your theories with iterative prototyping and quick experiments to gather consumer feedback.
• ✂️ Adjust the product, pricing, or positioning based on the insights gathered from consumer responses.
• 🏢 In the final stage, identify the necessary activities, capabilities, and resources for production, distribution, and sales.
• 💡 Design thinking can unlock new markets and strategies by using imaginative, human-centered problem-solving.
• 💡 An example of successful design thinking is P&G's turnaround of the Oil of Olay brand by targeting a previously ignored demographic.

Q & A

What common mistakes do companies make when setting strategy?

Companies often make mistakes by either relying on backward-looking data that doesn't predict future customer needs or making risky bets based on instinct rather than evidence.

What is design thinking and how does it help in strategy-making?

Design thinking is a strategy-making process that avoids common mistakes by using tools from the design world and focusing on human behavior to create strategies.

Who are the key figures that popularized design thinking?

Design thinking was popularized by David M. Kelley and Tim Brown of IDEO, and Roger Martin of the Rotman School.

What are the three major stages of design thinking?

The three major stages of design thinking are: 1) Invent a future by forming theories about what customers might want, 2) Test your ideas through iterative prototyping and quick experiments, and 3) Bring the new product or service to life by identifying necessary activities, capabilities, and resources.

How does immersing oneself in customers' lives help in the strategy-making process?

Immersing in customers' lives helps by observing and asking questions about their behavior, which provides insights into their needs beyond what they might express in polls about specific products or services.

What is the purpose of iterative prototyping in the design thinking process?

Iterative prototyping allows for testing ideas with 'good enough' products or services, making adjustments based on consumer responses, and refining the product, pricing, or positioning.

How does design thinking help in identifying new markets?

Design thinking helps identify new markets by observing and understanding human behavior, leading to the discovery of unmet customer needs and opportunities for innovation.

Can you provide an example from the script of how design thinking was applied in a real business scenario?

Procter & Gamble used design thinking to turn around the skincare brand Oil of Olay. They observed shoppers, identified a market of women in their 30s and 40s that was being ignored, experimented with new formulations, tested prototypes and pricing, and launched new products that were well-received.

What was the industry's primary target audience for skincare products before P&G's intervention?

Before P&G's intervention, the skincare industry primarily targeted women over 50 who were worried about wrinkles, ignoring the needs of younger women in their 30s and 40s.

How did P&G adjust their strategy for Oil of Olay based on their design thinking process?

P&G adjusted their strategy by experimenting with new formulations that addressed multiple skincare goals, testing different prototypes, price points, and store displays to cater to a broader range of consumers.

What is the role of human-centered problem-solving in design thinking?

Human-centered problem-solving is central to design thinking as it focuses on understanding and addressing the needs, behaviors, and motivations of users, leading to more effective and innovative strategies.

Outlines

00:00

🔍 Design Thinking for Strategic Innovation

This paragraph introduces design thinking as a strategic approach to avoid common pitfalls in strategy-making. It contrasts the typical reliance on historical data or instinctual decisions with a more forward-looking and evidence-based method. The process involves three major stages: inventing a future by forming theories about customer needs through immersion in their lives, testing these ideas through iterative prototyping and quick experiments, and finally, bringing the successful product or service to market by identifying necessary activities, capabilities, and resources. The example of Procter & Gamble's turnaround of the Oil of Olay brand is used to illustrate how design thinking can lead to capturing new markets and developing innovative strategies.

Keywords

💡Strategy-making

Strategy-making refers to the process companies use to develop plans and decisions for future success. In the video, traditional strategy-making is criticized for either relying on outdated data or instinctual guesses. The video promotes design thinking as an improved approach that avoids these pitfalls by focusing on human behavior and experimentation.

💡Backward-looking data

Backward-looking data refers to information collected from past actions, trends, or customer preferences. While useful in some contexts, the video highlights its limitations in strategy-making, as it doesn't provide insights into what future customers might want. Companies relying on this data may miss emerging trends or unmet needs.

💡Risky bets

Risky bets are decisions or strategies based on instinct rather than evidence. The video criticizes companies that gamble on gut feelings without proper research or testing. This contrasts with design thinking, which emphasizes testing and experimentation to mitigate risks.

💡Design thinking

Design thinking is a human-centered approach to problem-solving and strategy-making, popularized by David M. Kelley, Tim Brown, and Roger Martin. It focuses on understanding customer behavior and needs, prototyping solutions, and iteratively testing them. The video presents it as a method that helps avoid common strategy-making mistakes.

💡Human behavior

Human behavior refers to the actions, preferences, and motivations of people. In the context of design thinking, understanding human behavior is crucial to creating products or services that meet real customer needs. Instead of relying on traditional market research, design thinking involves observing and questioning how customers act in real life.

💡Prototyping

Prototyping is the process of creating an early version or model of a product or service to test its feasibility. In the video, companies are encouraged to use prototypes to gather feedback and refine their offerings before a full launch. This helps reduce the risk of failure by learning from real consumer interactions.

💡Iterative experiments

Iterative experiments are tests conducted in small cycles where products or strategies are refined after each trial based on feedback. The video emphasizes the importance of conducting quick experiments to adjust pricing, product features, or positioning, allowing companies to optimize their strategies in real-time.

💡Capabilities and resources

Capabilities and resources refer to the skills, assets, and tools a company needs to successfully launch and scale a product or service. After identifying a winning product through design thinking, the video advises companies to ensure they have the necessary infrastructure to produce, distribute, and sell it efficiently.

💡Observing shoppers

Observing shoppers involves watching and analyzing consumer behavior in real-world environments, as demonstrated in the Procter & Gamble example. By understanding how customers interact with products in different retail settings, companies can identify unmet needs and opportunities, such as P&G discovering a market for younger women in skincare.

💡Human-centered problem solving

Human-centered problem solving is an approach that places the needs, desires, and behaviors of people at the core of the problem-solving process. In the video, design thinking uses this approach to unlock new markets and create customer-focused strategies, ensuring that solutions resonate with real user experiences.

Highlights

Companies often stumble when setting strategy due to reliance on backward-looking data or risky instinct-based bets.

Design thinking is introduced as a strategy-making process that focuses on human behavior to avoid common mistakes.

Design thinking was popularized by David M. Kelley, Tim Brown of IDEO, and Roger Martin of the Rotman School.

The process consists of three major stages: inventing a future, testing ideas, and bringing the product or service to life.

Inventing a future involves forming theories about customer needs by immersing in their lives rather than polling about specific products.

Observing and asking questions about customer behavior is key to understanding their needs.

Testing ideas is done through iterative prototyping with 'good enough' products or services and conducting quick experiments.

Adjustments to the product, pricing, or positioning are made based on consumer responses during testing.

Bringing the new product or service to life involves identifying necessary activities, capabilities, and resources for production and distribution.

Procter & Gamble's turnaround of the Oil of Olay brand is cited as an example of successful design thinking application.

P&G observed shoppers in different retail channels to understand the market and customer needs better.

The skincare industry was primarily targeting an older demographic, neglecting the needs of younger consumers.

P&G identified a significant market opportunity by focusing on the needs of consumers in their 30s and 40s.

The company experimented with new formulations to address multiple skincare goals.

Different prototypes, price points, and store displays were tested to gauge consumer response.

P&G launched a series of premium, widely distributed products that appealed to a broad consumer base.

Design thinking's human-centered problem-solving approach can unlock new markets and strategies.

Transcripts

When companies set strategy, they often stumble.

Either they collect a lot of backward-looking data,

which doesn't tell them what future customers really want.

Or they make risky bets based on instinct instead of evidence.

Design thinking is a strategy-making process

that avoids these mistakes by applying tools

from the world of design and shifting

the focus to human behavior.

Popularized by David M. Kelley and Tim Brown of IDEO

and Roger Martin of the Rotman School,

design thinking has three major stages.

First, invent a future.

Form a few theories about what customers

might want, but don't have by immersing yourself

in their lives.

Instead of polling them about specific products or services,

observe and ask questions about their behavior.

Next, test your ideas out.

Use iterative prototyping with good enough products

or services, and conduct a few quick experiments

to see how consumers respond.

Adjust the product, the pricing, or the positioning accordingly.

Finally, bring the new product or service to life.

When you've got a winner, identify the activities,

capabilities, and resources your company will

need to actually produce, distribute, and sell it.

For example, when senior managers at Procter & Gamble

wanted to turn around the skin care brand Oil of Olay,

they began by observing shoppers in both mass retail channels

and high-end department stores.

They realized that their industry

had been primarily targeting women over 50 who

were worried about wrinkles, while pretty much ignoring

those in their 30s and 40s who were concerned

about other issues.

This was a huge market to be captured.

So P&G experimented with new formulations that

would tackle multiple skin care goals then

tested different prototypes, price points,

and store displays.

Finally, the company launched a series of new premium,

yet broadly distributed products that

were well-received by a wide range of consumers.

By using imaginative, human-centered problem solving,

, design thinking can help you unlock new markets and identify

new strategies.

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