Digital strategy for the algorithm economy IT Executive's Guide to Design Thinking Executive Summary From manufacturers to technology companies, today’s marketplace calls for every company to be a high-tech company. The evolution of e-commerce, mobile, cloud, and robots combined with rising wages and skilled labor scarcity has greatly contributed to technology becoming a prevalent part of the modern business model. As mobile device popularity increases, digital experiences are more important than ever for your customers. Design and user experience now play a much deeper role in the successful integration of technology into business. Your customers and users are expecting amazing experiences quickly and easily and you must understand both the functional and emotional needs of the user to give it to them. The proliferation of mobile devices and the need for presenting complex information on a small screen have accentuated the importance of design in every software application. Simply dumping what you have in your ERP systems and databases with lousy user experiences have ended up with apps that no one wants to use. New business models have been emerging solely based on design. On one hand, enterprise IT teams have numerous opportunities to improve business performance by taking advantage of the latest technologies. On the other hand, IT executives are struggling to justify the cost of IT investments. Good design has been a foreign concept so far. In our conversations with many IT executives, we’ve observed that IT teams are facing challenges in understanding the value of design, in laying out a business use case, and in knowing how to integrate design into their products and services. In this white paper, we help you understand the value of design thinking and offer ideas on how enterprise IT teams can leverage design thinking to spur innovation and give a competitive As Apple’s CEO Tim Cook said, “No one likes rotten milk. It has to be fresh.” You cannot wait years to deliver what your customers and users want. It is speed that gives a competitive edge. advantage to your organization. Design inspired by observing real people in their real lives is not new. Fashion designers have long relied on this method to offer what their Algarytm 2 customers really wanted. Now, it is the IT team’s turn to embrace design thinking in their products and services to offer compelling user experience and customer support. Poorly designed tools have resulted in lost business. When needs are not met by your company, customers will flock to your competitor. As Apple’s CEO Tim Cook said, “No one likes rotten milk. It has to be fresh.” You cannot wait years to deliver what your customers and users want. It is the speed that gives a competitive edge. Algarytm 3 1. What is Design Thinking? Design Thinking is about achieving a deeper understanding of your users, of the products and services, and uncovering valuable insights. Understanding your users’ and customers’ functional and emotional needs is an essential skill to thrive in the digital age. Before learning about what design thinking is, let us understand the complexities and challenges faced by businesses. Traditionally, enterprise software products are built from a business analyst perspective, engineering perspective, or enterprise software vendor perspective. In sum, in the world of ERP Software, the user experience part is ignored at the expense of functionality and features. As a result, multi-year, “Design thinking helps you seek a balance between intuition and analytics, between exploration and exploitation, between reliability and validity, and between art and science” – Roger Martin. multi-million dollar ERP projects have not lived up to expectations. Though these projects were “successful” in terms of features and functionality, they’re a big failure in terms of “user adoption” and achieving an overall return on investment (ROI). It is assumed that the user needs to be trained extensively and master the product. This assumption results in Algarytm 4 disconnected and disparate workflows and poor user experience. Users try to avoid the new software and find workarounds with manual steps leading to poor ROI on software investments. Design thinking is a paradigm shift in solving problems and innovating. Your customers are not just looking for a product or a service, but also expecting amazing experiences along with them. Using empathy to put users, customers, vendors, employees, and business partners at the center of problem-solving is the main foundation of design thinking. The design is more than making buttons pretty. It’s about helping users get things done in the most effortless way possible. Whether it is a software tool, a check-in process at a hotel, a landing page of a marketing campaign, or optimizing the sale process, design thinking enables you to transform your organization. Often times, design is not just about colors, look & feel. The design is not just limited to websites, products, or fashion. Design extends to how a customer experiences service or even how a government serves its citizens. For IT Teams, design is about achieving the full potential of software applications. “Design thinking helps you seek a balance between intuition and analytics, between exploration and exploitation, between reliability and validity, and between art and science” – Roger Martin. A New Kind of Leadership Design Thinking is being used to create strategic visions, new markets and new customers behavior Source: McKinsey Digital Labs Algarytm 5 2. How does design thinking work? Design Thinking is an iterative (non-linear), collaborative (cross functional) process and consists of five main phases: 1. Empathize 2. Define 3. Ideate 4. Prototype and 5. Test. Imagine the “ideal” Understand the problem space Scoping 360° Research Problem Definition Project Plan Synthesis Data Creating Choices Create the solution Ideation Insights Design Principles Making Choices Prototyping Ideas Concepts Creating Choices Validation Low-Fi / High-Fi Prototypes Implementation Blueprint Making Choices Source: Stanford D.School [7] Empathize: Empathy for the end user is at the heart of design thinking. In this phase, you observe user behavior and context, interact, and immerse yourself. The primary goal of empathy is to empower the designer to understand the people who you are designing the software for. In order to create awesome end-user experiences for your applications, you need to understand the experience of solving a business problem from a first-hand perspective. Whether it’s a sales representative engaging with a customer or an executive trying to run the business while on the go, directly Algarytm 6 observing the user has no substitute. By observing rather than “asking” or “telling,” you create a valuable opportunity to learn insights about the user’s emotional and contextual needs. You learn what they think and feel. By interacting with people, you can uncover insights that are hard to notice otherwise. Usually, people can’t express their needs eloquently and do not even realize that they have a need. These surprising insights will be the difference between a solution people would love to use and a solution to try and bypass at every opportunity they have. While observing and engaging with users, it is important to capture user ease of access to the solution and their experience. For example, a leading cleaning solutions provider, one of our prestigious clients, asks every project member to ride along with its service sales representatives for a full day of immersive experience. They observe, interact and take notes. This ride-along approach has helped everyone in the project team from designers, developers, and leadership understand the user’s context, behavior, and their needs. Define: The define phase helps you identify the actual business problem. In the world of IT, you define the app or the software tool that must be built in order to solve the business challenge discovered during the empathize sessions. An unfortunate result of confirmation bias is solving a wrong problem and providing a wrong solution. With design thinking, you can avoid this trap by synthesizing the findings from the empathy phase. Define phase is important because it helps you explicitly state the business challenge that you are trying to provide a software solution for. This phase enables you to come up with a concrete understanding based on the observations made during the empathize phase in order to come up with an actionable problem statement: your point of view (POV). In our experience of practicing design thinking, in this phase, IT teams either identify the modules in a software tool or role-based mobile apps that solve a particular business challenge. Also during this phase, you need to put together a strategy with a road map of solutions which could Algarytm 7 include mobile apps or tools to develop. As it is not practical to develop all the solutions right away, you can start with a solution that has the highest ROI or business need. Ideate: In the ideate phase, you need to produce as many ideas as possible to solve the business problem identified during the define phase. This phase is also the time to develop an architecture for the solutions. IT architecture could involve buy vs build decision, platform to build upon decision, and assessing the strengths and weaknesses of existing team. In this phase, ideas should be as wide and as radical as possible. Every idea is worthy to consider and it’s too early to dismiss any idea. We ideate to look beyond what is obvious. Sometimes, you could ask your users about ideas on how to solve problems. In Algarytm’s experience, this has proven to be a powerful method. During our design sessions, power users or hacker users (users who hack to get things done and do not wait for corporate IT to give them a solution) who find workaround apps and tools to solve their business problem are the best bet to gather ideas. Prototype: Prototyping is converting ideas and thoughts from an abstract form to a concrete form. For Enterprise IT, this could be a wireframe development using tools such as Axure, iRise and Justinmind. Prototyping allows you to test the ideas. One of the main goals of the prototype is to make it interactive, elicit feedback, and quickly adapt the feedback. For example, you could develop a prototype, simulate it to the end users and ask the users to use the prototype as though it was a real solution. Though the prototype would not look like a real solution with all the bells and whistles, “A picture is worth 1000 words. A Prototype is worth a thousand ideas”. it would still reflect the progress you made during the empathize, define and ideate phases. In this phase, you will learn how close the prototype is to the real solution. Is the user experience close to what users expect? Does the prototype have all the desired features and functionality? And, are all of the UI fields Algarytm 8 in right place? A major benefit of prototyping and taking feedback is to develop successful products with profound empathy for the users. Developing wireframes for apps using tools such as Justinmind takes just a few days and costs almost nothing. This way you can fail cheaply and quickly and deploy lean methodologies in your organization’s software development. Test: A “BRAIDED” DESIGN MODEL Design Strategy Technology Frame • Map business opportunity and strategy based on market and organizational factors. • “Trendscape”; identify user needs and define experience principles. • Identify technology developments; assess current technology enviroment. Cocreate •• Reframe problem statements based on customer feedback •• Define value proposition. •• Conduct workshops with customers and experts to cocreate optimal experience • Identify data and technology. • • • • Prototype Build rapid prototypes Iterate design as required with customer feedback Create technology-development (agile) plan Build business case Validate • Test usability •• Assess technology, process, and organizational needs for realization. • Validate with overall business strategy Govern •• Role model best-practice innovation process tied to business strategy ••• Build governance model for ongoing investment and evolution. Source: McKinsey Digital Labs. Testing is the phase where you test the proposed solutions, continue to “Prototype as if you know are right, but test as if you know you are wrong” – D.School Design Thinking Philosophy. gain feedback from users and refine the proposed solutions. Testing does not need to be the final phase. Design thinking is a non-linear methodology and you can go back to any relevant phase to refine the solution. Algarytm 9 3. How Businesses Benefit from Design Thinking Large companies such as Google and Apple have incorporated UX design as a centerpiece of their successes. Here’s why: The Institute of Electrical and Electronic Engineers (IEEE) released a report in 2005 titled “Why Software Fails.” The report notes that up to 15% of IT projects are abandoned and developers spend approximately 50% of their time on rework. It is common knowledge that the cost of fixing an error after a product is in the field is approximately 100 times the cost of fixing the same error(s) before the product is released. "Chief Information Officer" to "Chief Innovation Officer". From startups such as Airbnb to large organizations such as Pepsi and IBM, all are leveraging design thinking to understand what their customers truly care about, why they care, and how they want to experience a product or service. Business benefits are myriad from lowering risk in projects to rethinking corporate strategy. Design thinking bestows your organization to focus more on problem finding and less on problem- solving leading to a bounty of innovative ideas. Technology itself does not lead to the simple customer experience. 3.1 Simplification In an ever growing complex technology landscape, simplicity is the need of the hour. Clunky UI, complex instructions and too many clicks are no longer tolerated by users. Great design reduces the friction between the user and the application. The user interface becomes simple and beautiful. By discovering people’s unmet needs through rapid prototypes, you can offer solutions that are designed by end users. Straightforward and aesthetically pleasing products are compelling to use and more relevant in the mobile first world. Simple solutions are easy to use and get the work done. For example, a well-designed marketing landing page from your company could be the differentiating factor between your firm and the competition. However, in Algarytm’s experience, we’ve found that some Algarytm 10 enterprise software developers do not even know who the end user is. 3.2 Acute problem identification The design thinking approach to problem-solving does not jump right into the solution. It mandates you to determine whether the problem itself exists to start with and whether it is the right problem to solve. An in-depth understanding of the problem itself enables you to prioritize the challenges of the business. Frequent complaints we hear from our customers are that there are way too many priorities, and software projects have no clear idea on the ROI. In order to avoid this, embrace design thinking. The design thinking process does not assume the problem as given. Instead, you are asking intelligent questions of the user and ensuring that the correct problems are being addressed with a clear focus. 3.3 Foster innovation What we are traditionally been good at Desirability People Feasibility Technology Innovation Opportunity Viability Business One of the biggest benefits of design thinking is fostering an innovation culture in your organization. At the intersection of people’s needs, technological feasibility, and business viability, design thinking empowers you to create innovation opportunities. In order to innovate, it is necessary to learn what your people’s needs are. You can then satisfy their needs in Source: Design Thinking public domain the most innovative way by generating as many ideas as possible. Algarytm 11 Innovation does not happen in isolation. It is universally known fact that innovation needs different ideas from different areas of an organization. When cross-disciplinary teams collaborate to solve a problem, they tackle the problem from different perspectives leading to an innovative solution. This not only results in an accumulation of ideas but also sends an important signal that you are creating an open culture where everyone could share their ideas without the fear of criticism. Simple and usable tools and applications improve your customers and users experience in engaging with your organization. Whether it is retrieving information for one of your products, placing an order, or requesting support, true understanding of your customers and users enables you to win hearts and wallets. 3.4 Higher Profits & Shareholder Value Design oriented products and services not only create the amazing experiences that customers expect, but they also generate higher profits. A $10.000 investment in our design index of diverse design-centric companies would have yielded returns 228% higher than the same investment in the S&P over the same amount of time. $45K DMI DESIGN CENTRIC INDEX $40K $39.922,89 DESIGN CONSCIOUS COMPANIES APPLE COCA COLA FORD HERMAN MILLER IBM INTUIT NEWELL RUBBERMAID NIKE PROCTER & GAMBLE STARBUCKS STARWOOD STEELCASE TARGET WALT DISNEY WHIRLPOOL D.INDEX $35K $30K 228% $25K $20K S&P INDEX $15K $10K JUN ‘13 DEC ’13 JUN ‘12 DEC ’12 JUN ‘11 JUN ‘10 DEC ’10 JUN ‘09 DEC ’09 JUN ‘08 DEC ’08 JUN ‘07 DEC ’07 JUN ‘06 DEC ’06 JUN ‘05 DEC ’05 JUN ‘04 DEC ’04 JUN ‘03 DEC ’03 DEC ’11 $17.522,15 $5K Source: Design Management Institute Algarytm 12 The companies comprising our design index outperformed the S&P over a 10-year period encompassing a bull market (October 9, 2002 October 8, 2007), a bear market (October 9, 2007 - March 5, 2009), and the current period (March 5, 2009 present). DESIGN INDEX COMPARED TO S&P INDEX FULL PERIOD BULL MARKET (10/09/02 10/08/07) BEAR MARKET (10/09/07 03/05/09) CURRENT PERIOD (03/05/09 PRESENT) Design-Centric index ABSOLUTE PERFORMANCE DESIGN-CENTRIC INDEX PERFORMANCE RELATIVE TO S&P Source: Design Management Institute +299% +112% -28% +222% +75% +67% -37% +99% +224% +45% +9% +123% S&P index Design Management Institute, in its study on design thinking, discovered that design oriented firms such as Apple, Starbucks, Steelcase, and Walt Disney outperformed S&P index by 224% over a 10-year period from 2002. "In 2005, the UK’s Design Council discovered that every £1 spent on design led to more than £20 in increased revenue, £4 increased profit and £5 in increased exports. An even earlier study, by Julie Hertenstein and Marjorie Platt, examined 51 firms in four industries, using 12 different measures of financial performance across five years, and concluded that firms rated as having good design were stronger on virtually all measures." - HBR. 3.5 Command Brand Loyalty Design oriented companies with a true understanding of their customers preferences, tastes, hobbies, and culture are commanding a strong customer loyalty. It is a well-known fact that emphasis on design was a significant factor in Apple’s success. Needless to say, Apple's products are of high quality, simple to use and elegant. Apple did not just provide a product or a service. It created superb experiences for its customers. By Algarytm 13 creating amazing experiences, Apple has created a cult-like fan following for its design-oriented products. Strong customer loyalty fetches a premium for the products or services, which results in improved financial performance. Whether it's the company's customer-facing commerce web-site or a customer support mobile app, Enterprise IT teams have a great opportunity to improve the design of these products and turn customers and users into loyal fans. 3.6 Streamline business processes Even though frameworks such as Six Sigma could streamline operations and business processes, by combining technology solutions and insights learned from users, IT teams could take the efficiency of operations to next level. Streamlining a business process plays a critical role in creating amazing digital experiences. With insights and feedback learned from users during design thinking sessions, you have an opportunity to eliminate manual steps and automate possible steps. One of Algarytm’s clients, a wholesale distributor, transformed its reverse logistics business process by embracing design thinking. The distributor discovered that returns are important to its customers and they expect a smooth and streamlined process when they change their mind about purchases. Example: A leading global mining company’s customer support process was inefficient. Mineworkers call the call center, the call center contacts the engineers and the engineers go to the mining site and fix the issues. This whole process was taking longer than a day and mines were losing $1M to $2M worth of productivity while critical machinery was down. By developing a technology solution that automatically routes the calls from mine workers to engineers, lead time to respond and fix customer issues were cut down to a few hours. With project management methodologies such as Agile, IT teams have contributed tremendously to the business transformation. Introducing design thinking and spreading it to other business functional areas should follow the same approach. Algarytm 14 3.7 End to End Integration: Hardware/Software/Service integration Customer experience involves hardware, software and service. Approaching a problem from people’s needs rather than a solution will help you offer a holistic solution that meets their complete needs. Alternatively, a solution can be offered from just one perspective that is truly not integrated. An incomplete solution that does not integrate the entire workflow of the end user will result in a solution that meets the needs of the user in isolated parts and leave them to complete the workflow on their own. This is risky because some users are tech savvy and some not. When you focus on experience, you will consider software, hardware and service and ensure all parts are working together cohesively. 3.8 Gain competitive advantage The design of business The Knowledge Funnel • Mystery It starts with a question, intuition, curiosity • Heuristic Open-ended rule of thumb, incomplete but helpful for organizing data • Algorithm Full description of the observation, predictive and rational Source: Roger Martin’s, “The Design of Business”. Algarytm 15 According to Roger Martin of the Rotman School of Management at the University of Toronto, businesses have to reconcile the two prevailing modes of thought: Analytical Thinking and Intuitive Thinking. In his view, design thinking is a discipline that balances analytical mastery and intuitive originality. Design thinking is the form of thought that enables fast movement along the knowledge funnel as shown above. Firms that master design thinking gain an endless competitive advantage as they move quickly from exploration to exploitation. In the first stage of the funnel above, you explore a mystery. This could take any form: CFO brainstorming on how to realize a positive return on IT investments, an IT manager struggling to improve user adoption of the enterprise applications, or a Marketing executive wondering how the firm’s e-commerce website could reduce abandoned shopping carts. The next stage is heuristics. A heuristic is a rule of thumb that helps narrow the possibilities and reduce the mystery down to a manageable size. In this phase, you identify patterns. For example, you could understand why shoppers are abandoning the shopping carts after they add products to it. In this phase, you learn about the customer’s buying journey and his or her persona. Developing an algorithm or a fixed formula is the next step in the funnel. This fixed formula or an algorithm could be a mobile app to improve customer experience to the challenge of abandoned shopping carts. When a firm focuses purely on exploiting its original innovation, it is not ready to respond when disrupters arise to potentially introduce new innovative solutions. Either it is too late or the culture of innovation is simply too hard to nurture. On the other hand, when firms focus solely on innovation, they do not reap the financial benefits of the innovation. This is because the firm does not know how to translate the innovation into profits. Both exploration and exploitation can generate tremendous value but are harder to pursue at the same time. “At the heart of design thinking is abductive logic, which sits squarely between the past data-driven world of analytical thinking and the knowing-without-reasoning world of intuitive thinking.” Roger Martin says the answer is design thinking. As he adds, design thinking is a third form of thinking that combines intuitive thinking and analytical thinking. In his book, Roger Martin says, “At the heart of design thinking is abductive logic, which sits squarely between the past Algarytm 16 data-driven world of analytical thinking and the knowing-without-reasoning world of intuitive thinking.” Design thinking powers the directed movement of a business through the knowledge funnel from mystery to heuristic to algorithm and then through utilization of the resulting efficiencies to tackle the next mystery and the next and the next. 3.9 Reduce costs “According to several reports, 50% of developers’ time is spent on correcting defects and bugs”. 3.9.1 Product development costs In Design Thinking, users of a product or a service are involved from the beginning. When a prototype is quickly iterated multiple times and feedback is gathered from all stakeholders, you are not leaving any chance for miscommunication. Business requirements need to be changed during development. Product Managers, Business sponsors, end users, and Developers have to be on the same page. This results in high-quality products achieved at a lower cost. Otherwise, if you gather feedback long after development and testing are done, costs will be significantly higher than when you need to change after the product or service is in the hands of the user. 3.9.2 Reduce risk Many IT projects do not deliver the ROI as expected. They either fail because they are late or because they do not meet the end user expectations. With design thinking, you develop a prototype that is very close to the actual product and test it with users. A well-defined project meets the deadlines and you can deliver the project on time and on budget. End user personas, wireframes, and quick iteration of prototypes eliminate confusion and complexity. Algarytm 17 3.9.3 Smoother change management transition For any product or service, adoption is the Holy Grail. After a project is developed, change management is one of most significant undertakings for IT organizations. Effective change management is essential to transition the stakeholders to new processes and tools. Yet, change is profoundly hard. Large and transformative projects are very slow to gain traction because new tools are harder to use, and no amount of training is sufficient to bring people up to speed. With simple to use products or services that are designed as per the functional and emotional needs of end users, you could smoothly manage the changes. When the customer or user is involved from the beginning, he/she shapes the problem definition, the design, and the destiny. Furthermore, with design thinking elements such as “day in the life of a user,” storyboards, and personas, users will be eagerly ready for a change. 3.10 Amazing customer experiences Accenture’s 2013 Global Consumer Pulse Survey showed that 51% of U.S. consumers switched service providers in the past year due to poor customer service, up 5% since 2012. Amazing customer experience is one of the key differences between new generation companies such as Google, Amazon, Starbucks and Nike, and old guard. In the digital age, how a product or a service helps user achieve a desired result is more important than a pointed solution that is superior is one aspect but overall experience is inferior. Design thinking helps you approach a business challenge holistically. For example, e-retailers such as Amazon are not only known for their order fulfillment and delivery but also known for their easier and integrated reverse logistics. Designers could create amazing customer experiences by bringing together interdisciplinary teams such as sales, marketing, customer support, IT and user experience. An end to end workflow involves all these departments and could result in a complete experience for the user. Algarytm 18 3.11 Build high quality software and eliminate technical debt “Sufficient amount of messy code may bring whole engineering department to a stand-still”, Sven Johann & Eberhard Wolff, INFOQ. In our decade long careers, we have observed that it is very rare that a development team has a deep understanding of the user’s true needs. Many times, we developers do not know who the users are. Concepts such as storyboards and personas are foreign, especially in ERP projects that follow waterfall methodology. In this process, development teams accumulate huge amounts of technical debt that cripples them later during maintenance and scaling of the apps. The design thinking process enables you to have a deep understanding of the user by leveraging storyboards, personas and wireframes. When you rapidly iterate the wireframes with the users, you are taking your understanding to a next “Sufficient amount of messy code may bring whole engineering department to a stand-still”, Sven Johann & Eberhard Wolff, INFOQ level. Algarytm 19 4. Case Studies Airbnb- From near collapse to conquering the market From a near collapse to conquering the market, Airbnb attributes its market dominance to user-centred design. The accommodation sharing start-up is now valued at $20 Billion. But, in 2009, this start-up was about to go bust at $200 revenue per week with the founding team maxing out their credit cards. This start-up did not see any light at the end of the tunnel. As the Airbnb team was trying to figure out what went wrong, they discovered that all of the photos for their listings were low quality and unattractive. There was a similar pattern across all rental property postings. Potential renters were not booking the properties because they were not sure what they are paying for from the poor quality photos. “Going out to meet customers in the real world is almost always the best way to wrangle their problems and come up with clever solutions” – Joe Gebbia of Airbnb in an interview with FirstRound. To fix the problem, Airbnb decided to spend time with customers posting the rental properties. They replaced the amateur photos with high-quality photos and a week later results were in. Just by improving the pictures quality revenues doubled to $400 per week. The Airbnb team declares this was a turning point for their fledgling start-up. Hyatt Hotels - Transforming the Guest experience Hyatt Hotels Corporation is an American hotel operator with 627 hotels worldwide and around $4B annual revenue. When Hyatt decided to stand out in the crowded luxury hospitality industry, it realized it could achieve this goal only by creating amazing experiences for its guests. As a first step, Hyatt determined it needs to be more approachable to guests and not hide behind the desks. Algarytm 20 In an interview with Computer World, John Prusnick, Director of IT Innovation and Strategy, explained how Hyatt Hotels outlined design thinking that was embraced by the whole company to achieve its goals. When they were pondering over how the guest experience could be transformed, they set up eight lab hotels around the world. At Chicago’s O’hare Hyatt hotel, they equipped hotel agents with iPads to finish the check-in and check-out process. This has improved the processes but was not as transformational as Hyatt expected. Guests were congregating at the front desk and queuing up to check-in. During the design thinking process, Hyatt figured out that guests were actually waiting at the airport to catch a shuttle bus. So, Hyatt moved its agents from the hotel to the airport’s shuttle bus lines and processed the check-ins there. At first, customers thought this was unbelievable and wondered whether they were some sort of VIPs. Guests were amazed and thrilled that they were given the hotel keys right at the airport and could just walk in straight to their rooms, upon hotel arrival. To transform the guest experience further, Hyatt taught all its staff, from CEO to cleaners, the process of empathizing with guests by learning how to better communicate with them and what motivates them to fully understand their expectations and complaints. Through design thinking, they were able to come up with a ‘more approachable, less hiding’ approach of interaction between guests and hotel staff. In doing so, they’ve succeeded in keeping the ‘hospitality’ aspect alive in the hospitality industry, which has given them a step up on the competition. VMware/Citrix - Innovating through Virtualisation In an interview with McKinsey, Catherine Courage says she championed user-centric design not just for the company’s customers but also for its internal employees. As a VP of customer experience at Citrix systems, she says they are in the 5th year of spreading design thinking to its products, and internal business functions such as IT, sales and marketing. According to Courage, “Design thinking is about constant innovation, Algarytm 21 simplicity and delighting users. It is about the absolute focus on the end user”. We were not surprised when she echoed our views on traditional product development: Usually, product organizations start with a problem and, based on intuition about what the customers want, they race towards a solution. One of the goals for Citrix was to ensure they were creating delightful experience across all customer and end user touch points from the use of their website to trying products, to using the products, and all the way to customer support and contract renewal. “For design thinking to succeed, it needs to be part of all company processes. Employees across the organization must consider how they can contribute to the customer experience.” Catherine Courage Citrix applied design thinking principles to its product development teams. Next, they realized design thinking and empathy for users is applicable to every aspect of the business. They’ve scaled these principles across the company and have currently trained over half of its 9,800 employees in a customer/user-centric way of problem-solving. Mint's Story: Money make sense made simple Mint would not have been launched had it not embraced design thinking. Mint is an online personal financial management portal that helps its users track their bank accounts, credit cards, investments and loans. Mint connects to over 16,000 financial institutions across US and Canada and has over 17 million customers using its service. During its lifetime, Mint has won numerous awards for its innovation and design. In 2009, the company was acquired by Intuit. Similar to Airbnb, Mint also faced an existential crisis in the beginning. But, Mint’s travails were far more insurmountable. Unlike Airbnb, Mint was asking for people’s personal bank accounts, usernames, and passwords. This kind of financial aggregation service from Mint was unprecedented. Naturally, people were reluctant to give away their financial account information for an unknown start-up. For this same reason, many Venture Capitalists in Silicon Valley had originally passed on the idea. To overcome this challenge, Mint’s primary objective was to establish Algarytm 22 credibility with users through trustworthy visuals, copy writing, and making people feel comfortable through the whole signup process. Building trust was the name of the game. Some of the principles Mint institutionalized were simplicity and responsiveness. While the flat design was trendy at that time, Mint used 3D designs to put special focus on important content and to reduce the number of erroneous clicks on its app. Furthermore, Mint’s designers went on to spend countless hours to create the emotional experience for the user. These tasks included airbrushing design elements and choosing the right color scheme to make everything precisely right for the user. To make sure skeptical customers feel comfortable to provide their bank information, Mint designers used iconography related to login buttons that demonstrated a strong sense of security. Mint’s design job was not done yet. People could log in to Mint website to give it a shot. But, the process of adding all the bank accounts at that time was laborious and manual. It was clunky and confusing. This was a big hurdle for the team. So, in a typical silicon valley fashion, the company designed a way for all accounts to be synced in real-time and made the whole process effortless by leveraging technology. This was a transformational design decision and Mint prevailed. IBM's Blue Mix Development IBM’s revenue was down 14% year over year and it was the 14th consequent quarter of losses for this 100-year-old technology behemoth. In its long history, IBM has faced many hardships, but every time, Big Blue has successfully rebounded. IBM’s main sustenance is still the traditional software products such as WebSphere as well as hardware and consulting services, which generate about 60% of the company’s revenue. However, this business model is vulnerable to competitors such as Amazon in the areas of SAAS, cloud and digital platforms. While IBM was transitioning from old economies to the new digital economy, the challenges it faced were significant. However, this time Algarytm 23 design thinking was implemented, which helped them to expedite the transition. IBM’s CEO, Virginia Rometty, said in an interview with New York Times that people always ask, “is there a silver bullet?” She went on to say, “The silver you might say is speed, this idea of speed.” Ms. Rometty is pulling other levers to accelerate the pace of change at IBM, but she asserts, “Design thinking is at the center.” IBM has used design thinking to spur innovation and has bet the ranch by investing in training almost all of its employees on how to shed old ways of product development and to embark on the new way of user-centric thinking. IBM has hired more than 1,000 professional designers and much of its leadership is going through user-centric and customer centric thinking training. Historically, for IBM “design” meant creating eye-catching products, but the definition has broadened now. It means looking at problems through the lens of users by showing empathy for them, researching the customer needs with real people, and building rapid prototypes. IBM’s executives were the first to get trained on design thinking and, per The New York Times, the company has trained over 8000 employees so far. As one example, IBM worked with GameStop, the world’s largest video game retailer, to build a cloud-based customer service app for their customers. The results were stunning. GameStop has now re-invented the retail experience in their industry with cutting-edge technologies that allow users to purchase and download games online with a first-class user experience. The project was delivered in a few months and GameStop believes IBM has exceeded their expectations. One of the biggest successes for IBM’s design thinking journey is its cloud application platform Bluemix, a PaaS which allows to DevOps to build, run, deploy and manage applications on the cloud. This platform went from an idea to several thousand developers in a year, which is something that usually takes several years. IBM attributes this success to design thinking. IBM made developers part of the entire journey of product development. They built rapid prototypes, tested with users, and refined the platform. IBM now has a long list of success stories and happy Bluemix customer testimonials. Algarytm 24 Disasters: Avon CRM implementation Avon, the beauty company has taken a $125 million loss when it implemented an ERP system for its salespeople who sell beauty products door-to-door. The predominant reason the project was failed because the software was too difficult for the salespeople to use. It was so frustrating that salespeople would rather quit than use the software. Although the software worked as designed from a functionality perspective, it lacked the ‘usability’ quotient and became totally disruptive to salespeople’s daily routines. Avon lost mobs of their sales representatives and the project was a complete disaster. While it is easy to blame the ERP software, the blame should actually go to the people who designed the project for ignoring users and therefore not truly understanding their daily routines and needs. The sorry tale of Avon illustrates the importance of design. If you make your users jump through hoops with cumbersome software tools, it drains their energy and motivation. This leads to complete loss of productivity and loss of people, too! Algarytm 25 5. How to get started with Design Thinking? To understand your customers, employees and vendors better, Corporate IT must incorporate analytics into applications and measure them. Valuable insights into users functional and emotional needs can be realized through the analysis of demographics, usage patterns, app downloads and other data. Based on our experience of working with small to large companies, we suggest you need to take a ‘crawl, walk and run’ approach to getting started with your software application design. Also, it is important to note that you don’t need to re-design all the applications that are currently running. Establish a Design Center of Excellence: If you have researched enough about design thinking and are convinced that design could add value to your digital portfolio, you could start with setting up a design center of excellence that is led by an experienced designer. Your design center leader needs to have a tremendous amount of experience in designing business processes and digital solutions. Three required components for implementing a successful and sustainable design CoE (Centre of Excellence) are a solid foundation of Technology, People, and Process. When considering hiring a professional designer, you want to find a team with much experience in software apps design as well as having expertise in business processes. Algarytm 26 Partner with Design Firms: Reputable design firms work with organizations from all around the world and, therefore, are exposed to a variety of different business challenges. This kind of design expertise helps you hit the ground running on day one. The frameworks and tools carried by an experienced design firm add tremendous value. For complex and high-stakes business challenges, design firms are indispensable. Some of the downsides of working with pure design firms for software projects, however, are that they are not familiar with systems such as ERP, and they do not have a deep understanding of business processes such as inventory management and logistics. It’s better to partner with consulting firms that provide comprehensive services which include strategy, technology, user experience and design thinking. Active Feedback Loop: Needless to say, that customer is always right. The ultimate goal of UX designer is to provide simple solutions that customers love to use. Contacting all customers through workshops is impossible. Nowadays, app stores, social media, and forums open very effective channels to connect with your customers. Creating an active feedback loop with your customers, employees and vendors is a non-risky approach to design thinkings way of discovering customer insights. In this approach, you do not need to invest much and most of the firms already have tools to gather feedback. You can leverage existing channels such as app stores, portals, and websites to learn more about what experiences your constituents care about and what problems they are facing. A few suggestions: • Monitor app stores for customer reviews. • Create dedicated websites where customers can submit ideas, discuss features, and engage with customer support. • Reward those helping you find bugs and submitting great ideas. • For internal apps, monitor portals such as Microsoft SharePoint and ask your internal users to review the tools. Algarytm 27 • Connect with your customers by actively seeking feedback from them through reviews, feedback on your web site, forums, and personal visits. Measure User Experience: Incorporate user experience analytics into all the apps. You can use 3rd “Build. Measure. Learn. You can’t learn if you can’t measure.” party platforms such as Flurry or custom frameworks to measure success criteria such as user adoption, demographics, and performance. With UX analytics, you have all the necessary information at your disposal to prove the ROI: geographic locations, the frequency of the app usage, what features are getting the most and least clicks, where do users get stuck, and are they going through the process as expected? User experience analytics enable you to understand what applications are successful, what is the user adoption, and where features and functionality are working. Another major benefit of having sophisticated UX analytics is to empower IT Support teams to fix production issues easily and quickly as they arise. Work closely with Marketing & Sales: Marketing and sales people are the front line of people who closely interact with your customers. In these day-to-day actions, they begin to deeply understand the important details such as what target market your organization serves, the customer’s buying journey, and the intimate dynamics between customer and organization. Embrace Agile Project Management Methodology: Agile Project Management is an iterative process that focuses on customer value first, team interaction over tasks, and adapting to current business reality rather than following a prescriptive plan. Discover the problem, evolve quickly, and adapt are key principles of this ideology. Outputs such as prototypes and story maps help to move quickly towards a solution with this methodology. It is an universal truth that technology is becoming ever more complex, Algarytm 28 and companies do not know how they get disrupted, or from where they gain new competition. Rapid testing of new ideas is critical for maintaining a competitive edge. “One of the things that design thinking enables you is to do is fail quickly and fast, and not to be fearful of it. The more experimentation you can do the better” -Melody Dunn, IBM Design Studio Algarytm 29 6. How to measure Design Thinking ROI “In the modern world of business, it is useless to be a creative original thinker unless you can also sell what you create. Management cannot be expected to recognize a good idea unless it is presented to them by a good salesman”, - David M Ogilvy. Is your CFO asking you why you are spending so much money on designing the software? If you can’t quantify the benefits and measure the ROI, it is challenging to get a budget allocated to design and innovate. One day, we all have to be accountable to the budgets we spend and show a solid ROI. Measuring how design thinking impacts your organization is vital to getting continued support. Although it is challenging to measure a creative effort right after the implementation, there are several direct and indirect ways that helps us understand whether design thinking will yield any positive results. Anything that is not tied to the bottom line is doomed. New ideas: One low hanging fruit in measuring design thinking efforts is the number of new ideas generated. While not every idea is useful and ready for implementation, if your firm is attracting several different creative ideas to solve a business problem, the sheer number of ideas alone are a testament to the flourishing creativity in your organization. Customer support costs: A clunky and confusing software tool causes headaches for customers and results in low return on your IT investments. For example, a customer trying to place an order may get stuck and call the call center for help. If your goal was complete self-service, these additional customer support costs eat into your margins and could be completely avoided, not to mention the less than favorable user experience for your customer, which can result in reduced future revenues. We suggest you measure how Algarytm 30 many customer support calls you receive because of the hard to use software tools. One useful measure would be to compare the customer support costs before design thinking concepts were applied and costs after products were built using design thinking. Application Maintenance Costs: One of the major benefits of design thinking is the number of reduced bugs and change requests. When your systems are designed using a 360-degree perspective, chances for temporary stop-gap fixes are low. By addressing all possible requirements and usability issues, the chances of developers coding a fool-proof solution is high. As a result, a well-designed system reduces the maintenance costs of production. Employee engagement: It is an IT development team’s dream come true when all the users love to use the applications and improve productivity. In fact, higher user adoption is one of the major benefits of embodying design thinking into your software applications. By measuring user adoption, you get an idea of design thinking impact. Things to consider: How many users use the application? How many times did they use a solution that was developed using design thinking vs alternative solutions? Is the design thinking enabled solution their first choice? Sales: If you are offering an e-commerce solution to your customers, vendors, or dealers, measuring the increased or decreased volume of sales orders coming from the eCommerce site before and after the design is a good measure to understand the ROI. If you are in the B2C market, you could measure a number of clicks such as the time it takes to complete a workflow like as a sales order creation or returning an item. Telling your CFO that “sales has increased by 10% after the latest design” is more powerful than saying“users love the e-commerce tool”. Algarytm 31 Risk: Many enterprises leverage waterfall project management methodology and, more often than not, business requirements change long before the end user uses the product. In the design thinking way of defining system requirements, chances are high that we capture emotional and business needs. As we have learned in the business benefits section above, design thinking reduces a project’s risk significantly and ensures the success of large business transformation projects. By measuring how many times requirements get changed, you can get an understanding of the +ve (positive/negative) outcome of design thinking. OCM: Measuring and quantifying change management efforts is hard and tricky. Still, you can compare the amount of change effort it took with an old tool or application versus with a new tool for which design thinking was applied. A tool that is well designed would take significantly less change effort, saves money, and increases adoption. Conclusion Software needs design thinking. In this digital age, many people think that software can create miracles. But, the reality is that the magic only happens when the right relevance and usability are factored into the programming. Asking the right questions and solving the right problems is at the core of design thinking and at the core of the effective software. When design thinking is part of the discovery process as well as the development process, user-experience is elevated as well as functionality. These all translate into competitive advantages and increased revenue. Algarytm 32 About Algarytm Algarytm is an award winning mobile solutions provider trusted by companies like ABB, Medtronic, Tennant Co, Kraft (Mondelez), Hallmark, and Hunter Douglas, with simple yet transformational solutions that people love to use. By combining ORACLE ERP software and mobile solutions with over 100+ mobile app project implementation experience, Algarytm helps organizations redefine and reinvent business processes across the wholesale, retail, manufacturing, finance, transportation and logistics industries. Focusing on enterprise mobility with a heavy emphasis on design thinking, performance, and security, Algarytm’s complete suite of 100+ mobile solutions help customers lead the algorithm economy. Algarytm is a proud partner of Capriza, Microsoft/Xamarin, Airwatch, Ionic, GOOD, Oracle, and SAP. Testimonials/Case Studies Are you ready to put design thinking to work in your business to create more delightful user experiences, solve problems, increase ROI, and up your digital game? email us at sales@algarytm.com so that we can share some ideas on how these strategies can be implemented into your business model to help you gain competitive advantage. "The information provided within this eBook is for general informational purposes only. While we try to keep the information up-to-date and correct, there are no representations or warranties, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the information, products, services, or related graphics contained in this eBook for any purpose. Any use of this information is at your own risk." Visit us: www.algarytm.com Algarytm 33 About the Author Raj Peddisetty is a Digital Transformation advisor at Algarytm. Raj is a seasoned practitioner of Design Thinking, User Experience in Mobile, e-commerce, Cloud and Marketing automation. Raj brings 11 years of experience in SAP, Oracle for industries ranging from Wholesale, Retail to Manufacturing and Healthcare. Raj has worked as a consultant, architect, developer for system integrators such as IBM, Accenture, Capgemini, SAP, CSC. Raj has helped global business transformation projects for Fortune 500 clients such as Wyeth Pharmaceuticals, The Dow Chemical Company, Colgate Palmolive, National Gypsum, Medtronic, The Patterson Companies, Harland Clarke. Raj has an MBA from the University of Chicago Booth School of Business and is certified in Design Thinking by IDEO. References: •https://www.youtube.com/watch?v=zmmXZyge3SU •http://firstround.com/review/How-design-thinking-transformed-Airbnb-from-failing-startu p-to-billion-dollar-business/ •http://firstround.com/review/Head-Designer-of-Mint-on-Why-Great-Design-isnt-about-Ma king-Things-Pretty/ •http://www.nytimes.com/2015/11/15/business/ibms-design-centered-strategy-to-set-freethe-squares.html?emc=edit_tu_20151116&nl=bits&nlid=65983784&ref=img&_r=0 •http://www.computerworld.com/article/2486278/it-management/how-to-balance-mainte nance-and-it-innovation.html •http://andrewchen.co/product-design-debt-versus-technical-debt/ •http://creativecommons.org/licenses/by-nc-sa/3.0/ Algarytm 34