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Does being an innovation company today mean you’re also a design company?

An expansive discussion occurred recently on the Xinova Slack board about the importance of Design (deliberately capitalized as the substantive) with regards to what Xinova does, who Xinova is, and why Xinova does what we do. With the ground-up rebuild of the Xinova platform, we thought you’d appreciate the back-n-forth. Enjoy.

In the future, I hope that *we* will be defining these roles, not based on weak terminology but on strong data and analysis; that shows that in fact maybe there is no such thing as a “Designer”, but it’s really a hybrid of Technologist-Creative-Problem Solver or Technologist-Analytic-Problem Definer or whatever. The problem IMO with innovation is that we are too used to using terms for roles when in fact the roles are far too fluid (and innovation itself is, also). As an experienced person, I know many people useful for innovation but the last thing I care about is their title or the topic of their educational degree .”

–Edward Jung, Founder and CEO

darrelrhea [3:34 PM] (Darrel Rhea is Managing Partner, Innovation Banking and Development) You probably have a sense that Design matters and relates to our innovation practices… Xinova needs to understand how Design complements Technology in the development and commercialization of new products and services.  Contemporary Design practices are a critical factor in successful innovation.  Over the last 40 years, design has gone from primarily focusing on aesthetics to a holistic integrative practice that is user-centered, focused on systems thinking, concerned with expressing corporate intent, and is emerging as a significant force in setting corporate strategy.  It is becoming common to see Chief Design Officers exert significant executive-level influence on innovation agendas at companies like Pepsi.  Design is competing successfully for a bigger share of the Innovation/Strategy/ R&D/Engineering budgets. This means it is an essential and growing part of our innovation ecosystem.

But can you quantify that contribution? Consider:

  • Ten years ago a group of senior level designers and I worked to quantify and make explicit the business value of Design in corporations. The Design Council in the UK had just done a rigorous study comparing the success of typical local companies with others that invested in deploying design practices.  The results were staggering. Shares in design-led businesses outperformed key stock market indices by over 200%. We wanted to test those results with large multinationals with a more international data set.
  • When I was Vice Chairman of the Design Management Institute, I had the privilege to work with an amazing team and have access to executives from hundreds of multinationals, and with their cooperation and financial support, we identified organizations with best practices in design and compared their financial results to their peers. We found that over a ten-year period, Design-led companies outperformed the S&P by over 228%!  There are plenty of other impressive statistics measuring Design’s contribution, and now many other studies that confirm it.

The big strategy consulting firms have jumped on the band wagon.

  • First, they realized that their client’s survival depends on not just optimization of the current businesses, it depends on innovation. They jumped on the innovation bandwagon.
  • And as a testament to the value of Design, they are buying up design agencies and trying to make Design central to their innovation practice. They have all drunk the Kool-Aid (but frankly are challenged to deliver given their quantitative/analytic cultures).

Now I see our DMI research being reiterated.

Why this matters to Xinova?

To be competitive in innovation, we need to demonstrate fluency in Design.  It is a critical part of innovation, especially as we extend our offer beyond technological solutions and claim to help our clients develop and commercialize products and services.  We need to build our network to include Designers.  Let me know if you have questions about design.

 

payne [4:13 PM] (Paul Payne is VP of Engineering) @darrelrhea I generally see people talk about “design” (like in that article) without defining it and suggesting it is a loosely connected set of practices centered on user satisfaction. I’ve always wondered how much of the discussion is just a matter of inventing new language for functions already historically embedded in Marketing, Product Development, R&D, Sales, Service, etc.? I see McKinsey suggests good “design companies”, essentially, are ones that raise user satisfaction to the same level of importance/focus across the org as revenue or costs. Is this the same approach that DMI took? I wonder how much of this is correlation vs. causation… in other words, perhaps companies that ask “what does the customer want” tend to do better over time than those that don’t… whether or not they have specifically run any particular “design program”.

I guess I’m always a bit confused at why it continues to be news to people that creating something valuable means it is valuable to someone. Perhaps I don’t understand what McKinsey and DMI are actually saying? In any case, I am entirely on-board with creating things that people actually find valuable…

Duncan [5:11 PM] (Duncan Mowatt is Senior Product Designer) I agree with Paul – There are a lot of consulting companies out there selling services that espouse design or design thinking services/workshops/whatever that make broad claims about how design will redefine your company. Design is trendy right now, and a lot of companies that are focusing on “design” really aren’t, at least not in the sense that they are willing to make actual meaningful changes to how they do business. But! They get to say that they’re focusing on design, which sounds good.

There are also a ton of articles out there proclaiming that “Design Thinking is dead!“, and innovation is the new hotness.

Design Thinking is Dead. Long live innovation!

Design Thinking has for years been a regular feature at countless conferences. It has been referenced in even more articles and books. Corporate employees have gone through days and days of training in the discipline – everyone from R&D and IT to marketing and sales were converted. 

I guess I always read articles like this with a grain of salt. Humanizing what your company does and figuring out what and for whom you do what you do is always important. Design plays a major role in that, but this (like most articles from companies like McKinsey) feels a little too magic bullet-y (edited)

darrelrhea [5:25 PM] @payne Great questions!  First, Design is far more than a loosely connected set of practices centered on user satisfaction.  I won’t pontificate here on definitions (happy to elsewhere), but will address what a design-led company looks like.  I look for…

 

  • Corporate Commitment (Through word & deed, the company expresses its understanding of the strategic value of design — broad use, awards, innovation, etc.)
  • Scale of design operation (Design & design management widely practiced including corporate & key business units)
  • Penetration of Design practices (applying design to all of the operating functions and support services, and all phases of development from strategy all the way to service.)
  • Design Investment (The design operation is well resourced with professional staff, technology, & project funding)
  • Maturity of the Design organization (from ad hoc heroic efforts to standardized processes to optimized continuous improvements in process)
  • Clear Reporting Structure (Design’s presence is tangible & represented on corporate organization chart)
  • Experienced Executive Leadership: (Design function is run by an executive at the VP level +)
  • Clear metrics (exceeding customer satisfaction to deliver unexpected delight, or even deeply meaningful experiences)

How is Design different than the traditional practices of Marketing, Product Development, R&D, Sales, Service, etc.?  As a career professional in those domains working for many of the largest and best companies in the world, I can assure you that historically users/customers were an afterthought.  Consumer insight was sought out at the end of the development processes for validation, or surveyed to measure consumer satisfaction post-launch. Companies structures were optimized for profitability and control, they (and their entire supply chains) weren’t optimized for delivering a great consumer experience.  So while everyone would assure you that “the customer is king,” their approach was actually internally focused.  Design practices aren’t just a new set words for the same old thing, they bring a rigorous set of practices that impacts the entire field of innovation.  Yes, being human-centered is a part of it, but systems analysis and systems design are central, as well as being concerned with human values & ethics, and clarity of organizational intent.

darrelrhea [5:37 PM] @Duncan My point was that Design is so mainstream now that even the Big Players (quantitative, analytical, linear Big Players) are embracing it.   Warning: long rant to follow:

 

Design Thinking is a can a worms.  Design Thinking is promoting what I would describe as “creative liberation for repressed linear-thinking non-designers.”  Some of us have spent our careers championing human-centered prototype-driven iterative concept development in a collaborative environment.  Open-mindedness, questions vs answers, etc.  All good.  And for most people (non-designers), that is breakthrough stuff, and even transformative.  Never mind that it is entry-level design thinking.  The proponents of design thinking focus on selling tips, techniques, and tools (some of which I helped popularize) that are very useful.

What is lacking?  This approach by itself doesn’t really create innovation.  It might create some Innovative concepts, or it might produce some more open-minded people and have them more able to overcome their educational and experiential deficits and be productive in problem solving.  But it doesn’t produce what they claim.  It doesn’t (by itself) produce the change in the organizations that is required to go from “cool idea” to real value creation, one that is embraced, authorized, sponsored, integrated, and embedded into the systems of the organization.

Innovation is more than generating cool creative concepts.  It’s making change.  It’s bringing forth new realities.  It is creating solutions to problems that are embraced by the organization (or community) where the implementation needs to happen.  In doing innovation at scale — that is the real issue.  Innovation is almost always done in a social context, within an environment, within other systems that actively resist change.  So without contextual awareness and systems thinking, you get highly creative concepts that go nowhere.  It isn’t that this version of design thinking doesn’t solve problems, it just does it at a different level.  There are bigger issues that often need to be addressed.  Those bigger issues are usually more complex, more difficult to observe and understand.  They are historical, cultural, economic, political.  They are influenced by structural forces of change.  They are wicked.

And here is the problem: in their effort to bring creative problem solving to the masses and make it accessible, they espouse an anti-analytical style of thinking.

  • It’s a little thinking (through dialogue) with a lot of action/prototyping (which results in insights stimulated from the action)
  • ….versus deep contextual rigorous thinking (where we get bigger insights and the ability to reframe the problem space) and then focused, framed action/prototyping (with the appropriate design constraints pursued with more grounded confidence).

They resist rigor as something that is about blind adherence to linear process models, rather than rigorous exploration and deep thinking that allows one to embrace the complexities of the problem space and make sense of them.

Without rigor, we cannot understand “the architecture of the problem.”  We cannot adequately frame or reframe the problem.  And that is where significant innovation comes from.  Rigorous sense-making.  Rigor is difficult to do, difficult to teach, it is largely individual and requires research activities. It doesn’t lend itself to a 2-4 day collaborative group process.  And this is where the popularized IDEO version of design thinking fails repeatedly.  It works great when the problem is all framed up and you need to generate solutions.  It is worthless in the face of wicked social/cultural/historical/economic/political problems.  (OK, not worthless, just ineffective.)

M [5:52 PM] (Mathew Holloway is VP of Products) A number of years ago I had a long set of conversations with two big players, one in consulting and one in design.  Both organizations wanted to be more like the other. They shared a number of clients in common and the business consultancy was frustrated because the design firm was out performing them in the Board Room–strategically, organizationally, with regards to execution, and in the products as well, etc.. The design firm was kicking their butts. But the design guys were also frustrated because their annual revenues capped out and they wanted to know how to scale their billings to match the consulting organization. It came down to how both organizations structured their teams. The consulting organization’s M.E.C.E. model meant they had thousands of billable hours and dozens of reports giving them massive revenues–but no real impact. The design organization’s Design Thinking approach resulted in cross-functional alignment, better insights, more tangible outcomes that were actionable, and education/enlightenment of their clients’ executive leadership resulting in the impact. The big consulting player bought some design firms and are now selling their analyst approach to design. The big design player is still doing their thing, opting for impact over revenue, but I think (and I could be wrong) they have started negotiating equity as part of their contracts.

M [6:29 PM] @darrelrhea “And here is the problem: in their effort to bring creative problem solving to the masses and make it accessible, they espouse an anti-analytical style of thinking.”  I think that’s painting with a very board brush… I don’t think this suffers any greater tendency for anti-analytical thinking than any other process that gets packaged up by one profession for consumption by another. Design Thinking–or User Centered Design, or ODI, or any creative problem solving can be equally rigorous to any other process–it depends on how it’s put into practice and how the people using it who bring innovations to the market are being held accountable by their organization.

darrelrhea [12:18 AM] @M  I’m a proponent of Design Thinking, but I’m highly critical of the superficial commercialized version that is offered up as a toolbox for downstream development. And that is what I was railing against here.  “Design by Post-it Notes, observe a customer or two and then just start prototyping and everything will become clear.” It’s this reduction and simplification of the practice for the masses that does tend to push the design-doing theme to the point of being anti-analytical.

M [1:04 AM] @darrelrhea we are agreed about all of that! (Especially since Design Thinking reemerged as a sales tool, rather than an actual process….) I am still curious about Paul’s question; how is “design” being defined?  I know you know this but given every product, every service, every policy, organization and contract are designed by someone, design is an over-used term. Do you have any idea how design is being defined by the top players? How did DMI define it?

darrelrhea [1:25 AM] @M “Design” is used to mean many different things today, from tactical and trivial, to strategic and deeply meaningful.  It has multiple meanings, and layers of meaning.  If you are confused, relax, you are like everyone else including the professionals and academics.  It might be a central phenomenon and a hero of our age, but few people can agree on what design is.  I won’t try to speak for others or DMI because they actually don’t have a singular definition.

What do I think Design is about?  Let’s start at a highest layer of meaning.

  • Design is about envisioning and bringing forth new futures. It is about producing change, and coordinating human actions to make a specific, desired, intentional change happen.
  • All of us have a stake in the future. Whether we are concerned with what actions we take to have our own next breakfast experience be to our liking — or concerned with what actions we collectively should take to ensure the planet is inhabitable for future generations, we care about the future.  And design offers us a rigorous discipline for conceiving, planning and making change.
  • Design is not the only discipline for making change, many others like engineering, scientific invention, or economic policy exist that can provide a framework and tools for pursuing change. But design is different than these other disciplines in some important ways.  The most important difference is that design is concerned with “goodness.”  It is not only concerned with change, but a desired, “good” change.  Every act of design is about making a change that serves an individual or collective purpose. A good design achieves our intent, and our intent is presumed to serve our sense of purpose.
  • Goodness is an assessment made by human beings. Therefore, Design is human-centric.  It is animated by human purpose. Design can only be framed and evaluated by its ability to serve, and to produce the “experience of value.”  Design is humanistic.

Edward [2:28 PM](Edward Jung is Founder and CEO) This is management consulting. They need to simplify things (e.g. into a four box “matrix” or a tagline like “Design Thinking”) that is both sufficiently general to let customers fit themselves into their narrative and sufficiently specific to make it sound serious. So let’s not overanalyze the latest consulting trend — it’s not made to survive that.

On the other hand, the point is one of thing things I call a “pendulum point” (see, I was a consultant once, too!) And that most organizations start to unbalance themselves and swing around like a pendulum, following metrics of apparent success but with inertia (slow to adopt, slow to change). This is just one of those: it’s obvious you should design with customers in mind and obvious that you shouldn’t listen to customers too literally and use both your imagination and analysis to figure out what to do. But sometimes those obvious things get swamped by 100 other things you have to consider when running a business.

Anyhow, to go back to what I *think* was Darrel’s original point, we have Design talent in the network and should organize them with other talents like technology, analysis and finance; not to say that those talents are all distinct but that in different situations we will find customers feeling that they are lacking in one or several of them, and we should be able to “fill in the gap.”

In the future, I hope that *we* will be defining these roles, not based on weak terminology but on strong data and analysis; that shows that in fact maybe there is no such thing as a “Designer”, but it’s really a hybrid of Technologist-Creative-ProblemSolver or Technologist-Analytic-ProblemDefiner or whatever. The problem IMO with innovation is that we are too used to using terms for roles when in fact the roles are far too fluid (and innovation itself is, also). As an experienced person, I know many people useful for innovation but the last thing I care about is their title or the topic of their educational degree.

darrelrhea [3:11 PM] Yes Edward:

 

1) We need design talent in all of its many flavors within our network, along with engineering, etc. to help us move toward the profitable commercialization activities where large value is generated.

2) We need to be just fluent enough in Design to be relevant to and transact with Designers who are getting a bigger piece of the innovation pie within organizations.

3) We need to be aware that a growing portion of the business world is starting to frame innovation in terms of Design (due to the increasing financial successes of design investments and the media narratives around this). It isn’t close to eclipsing Technology, but it is a shift.  Long term, we need to accommodate that shift as market-centric innovation is perceived as more of a direct competitor to us.

4) We can do this by positioning what Xinova does as the cutting edge of design, we are designing new ventures, new business models, disrupting (and therefore designing) new industries (things that 99.9% “designers” can’t really do).  Yes, we do problem solving and technical invention faster better and cheaper, but we also (aspire to) create new businesses that change the world.

darrelrhea [3:35 PM] Seth found this, it is hilarious.  How to look innovative.

A Guide To Corporate Innovation: 19 Strategies To Drive Innovation Now – CB Insights Research

After the success of Corporate Innovation Theater, we wanted to issue a more comprehensive guide to corporate innovation. Something actionable and easy to digest. Given the importance of innovation to drive the longevity, growth, and competitiveness of large corporations, here …

payne [4:56 PM] FWIW (not much), I have a working hypothesis that adding magnets to any existing solution is sufficient to make it innovative. 😜

 

Edward [5:26 PM] When we brought in the Atlas Informatics/Ivy Softworks folks part of the vision was to get the technology and design leads there to help engage the network and stimulate services offerings. I had used the example of how several customers were interested in using… (xxx) as a service to help them with digitalization problems (at that time mostly not paying attention to the integrated design aspects). In fact, the Ivy Softworks original model was an “Innovation Studio” that would contribute a diversity of internal talents toward problems whose solution teams could be spun out. So, having internal fluency is important and building our internal vocabulary for it is a good idea, to Darrel’s point.

Meanwhile, I feel that although Design language is important, eventually our way of networking Markets (Demand in our vocabulary) will be even more powerful. The connection of our four pillars (Talent, Capital, Technology and Demand) will require a lot of “impedance matching” which is where eventually (IMO) the Designers and fluency will fit in. So we will have to be the “universal adapters”. I like this concept. Good discussion.

brad [8:52 PM] (Brad is Global Head of Network Platform) Universal Adapter is the right approach – we can’t be locked on triz, design thinking, six sigma, or any other process, but we need to be able to speak that language if that’s what our partner is comfortable with.

And, we need to have design as a capability within the network.  Both employees (we have!), the near network, and the long tail.  Reasonably we can fulfill the near network side, but we’re only just getting into the long tail side of expanding the network skillsets.

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