Efficiency thinking is failing businesses and society. Incremental improvements in business processes have resulted in low-cost, widely available products and tremendous waste and social challenges. The future of value creation is designing for both the individual and society using design thinking. Design thinking creates value through aligning consumer desirability, technological feasibility, and business and economic viability to innovate. Moreover, the integrated value created through design thinking is proven to create a competitive advantage in highly challenging environments with abstract problems. To take advantage of design thinking, leadership must change their organization’s culture and adopt a new mindset toward failure. Failure by design is the secret to products and services customers use. The risks associated with design thinking are more valuable than incremental process improvements promised by efficiency thinking concepts.

Most leaders would agree that failure is not something that is typically celebrated within companies; however, the research consensus is fairly clear that innovation does not result from a moment of epiphany but rather interesting failure and hard work. This paradox of business failure by design and success is timely for leaders to consider. A survey of over 5000 CEOs conducted by PWC revealed that more than 60 percent of CEOs are expecting to launch new products or services to fuel their organization’s growth in the short term. Like a villain in every Disney princess movie, successful products and services need beginnings that include failures to have fairytale endings.

Failures create opportunities for organizations to innovate products and services that customers will use. However, failures are something organizations with a culture of efficiency thinking inherently work to avoid and for a good reason. Although failures can lead to innovation and organizational growth, the reality is that failure in the short term is often accompanied by negative consequences for the organization and employees involved alike.

Design Thinking Defined

In his book Change by Design, author and design thought leader Tim Brown describes design thinking as a human-centered approach to solving problems that integrate customer desirability with the feasibility given today’s technological capabilities and the organization’s economic and business viability.

Design thinking does not only solve for each of the three constraints of desirability, feasibility, and viability separately but brings them into balance. A design thinker seeks to answer the following questions: What does the customer desire and need? What functionality is possible now and in the near future? And what innovation contributes to a sustainable business model? Fundamental to design thinking are the concepts of divergent thinking, empathic observation, and fail fast prototyping.

When problem-solving, the goal is to expand the number of potential ideas before converging on one preferred or a few likely successful ideas. Divergent thinking is counterintuitive. Given the fast-paced digital reality of today’s marketplace, leaders constrained by time and a healthy fear of failure want to focus only on a few potential winners. The flaw is that by focusing on known winners, we limit innovation to small incremental improvements of what already exists. This results in little diversification and an increased potential threat of competition. Design thinking advises that constraints inspire innovation. When applying divergent thinking within a business the use of time-bound deadlines is helpful.

It is not good enough that product and service innovations meet the logical or stated needs of the customer. Still, they must also meet the customer or user’s emotional and often understated needs. Empathic observation is not something that can be outsourced or delegated to another person. Instead, leaders need to go and see for themselves. Compensatory behaviors are uses of products or services in ways other than intended. These behaviors are one way for leaders to understand customers’ unstated needs and desires. For example, when a customer props a product up against something already in the environment, so it doesn’t tip over, that can be a signal of a need not found in the product. However, the need observed may not be something a customer would reveal when asked to describe ideal product features.

A fail-fast prototyping approach is a crucial characteristic of design thinking. Failure is an important way to learn about an idea, and prototyping enables cost-effective observation of product and service ideas. The fear of failure is an ordinary workplace reality for entrepreneurial leaders. Fear of failing is proven to limit innovation. A mindset and organizational culture that is accepting of failure as a pathway to innovation is essential to design thinking. The most significant understanding comes when customers can actively engage with a product or service made possible by using prototypes. Examples of prototypes include enactments of services, and foam board objects, or scaled-down visual replicas of products.

Design Thinking vs. Lean Six Sigma

A broadly accepted efficiency thinking problem-solving methodology is lean six sigma. So, how is design thinking different from lean six sigma? There are fundamental differences and similarities (see Table 1). The purpose of lean six sigma is to incrementally improve process efficiency by eliminating waste and variability in the system that results in near-term improvements. Lean six sigma uses controls and process improvement methodology to limit variability and creativity. Design thinking utilizes a creative approach with the goal of radical change rather than incremental improvements. Both design thinking and lean six sigma are focused on the customer. Lean six sigma utilizes the voice of the customer and design thinking utilizes empathic observation. Both design thinking and lean six sigma are problem-solving approaches with the understanding that through testing, the best idea is identified to provide customer value.

Table 1: Comparison of Design Thinking and Lean Six Sigma

Attribute Design Thinking Lean Six Sigma
Approach Customer value through the integration of desirability, feasibility, and viability Customer value through improved process efficiency by eliminating waste and variability
Goal Radical change that balances the needs of society and individuals Incremental improvements
Customer Value Empathic Observation Voice of the Customer

The Good and The Bad Aspects of Design Thinking

An overused strength is a weakness. Taking an objective look at design thinking reveals both positive and negative aspects for organizations to consider before getting started. The good includes creating radical change, inclusive design, customer and societal value, and the reality that it’s a fast and cheap process. Examples are everywhere of products and services that miss the mark, such as Google’s failed social network Google+ and Amazon’s flawed Amazon Fire Phone. A walk through a mall parking lot reveals the vast similarity within the automotive industry and the potential for radical changes to create a competitive advantage rather than incremental improvements achieved with efficiency thinking.

A significant benefit of design thinking is solving problems in ways that benefit the individual and society as a whole. As evidenced by global ecological crises such as the Great Pacific Garbage Patch, which is twice the size of Texas located in the Pacific Ocean, we need a change. Unfortunately, a deluge of low-cost, widely available products made possible by efficiency thinking has contributed to a western culture of commercialism and waste. A change is needed in how businesses view design now more than ever.

Although offset by the positive aspects, a critical evaluation of design thinking reveals a few associated negative characteristics, such as the requirement for intensive end-user involvement and the lack of focus on incremental improvement. Every organization is challenged to keep up with the fast-paced digital marketplace advances. Design thinking prototyping and testing with end-users takes time and money to execute. Not every challenge presents an open-ended challenge or the luxury of the opportunity to engage customers. Also, a business-focused only on radical change misses the relatively quick process improvements opportunities and is too disruptive to running the day-to-day business.

When and When Not to Use Design Thinking

You may be wondering under what circumstances should design thinking be used and when should it be ignored? Design thinking is not always the best approach to problem-solving. Design thinking is best for very complex challenges that are human-centered within supportive organizational cultures. It is not a good fit for run the business types of problems or efficiency thinking cultures.

Design thinking works well for problems beyond analytical and logical solutions. Those that are present intuitive and emotional aspects difficult to define and the types of issues that are likely to reveal more problems during the problem-solving process. Challenges like profitable and sustainable growth, or socioeconomic such as making education and clean water globally available are examples of when to use design thinking.

Design thinking is not best for cultures that are efficiency thinking driven. In these organizations, design thinking can fail due to a lack of support. In an efficiency-driven culture, the appreciation for structure and milestones can become frustrated by an iterative creative design thinking approach. Efficiency thinking cultures value incremental changes and stability and likely will not be accepting of or willing to advance radical ideas that consider both the individual and societal value.

Design Thinking Thought Leaders

A comprehensive literature review of design thinking published in the Creativity and Innovation Management Journal found that more than 80 percent of the professional and scholarly content originates from after the year 2000. So, who are the contemporary “heroes” of the design thinking movement?

Richard Buchanan, professor of design and innovation at the Weatherhead School of Management, focused on the challenges of solving open-ended and abstract problems that extended into personal and social life. Richard is accredited with integrating highly specialized fields of knowledge from the sciences into a holistic design thinking problem-solving approach.

Roger Martin is an author and former Dean and Institute Director of the Martin Prosperity Institute at the Rotman School of Management in Canada at the University of Toronto. His newest book is When More Is Not Better: Overcoming Americas Obsession with Economic Efficiency. Roger’s is recognized for his contributions to advancing design thinking within the field of business.

Tim Brown is the Executive Chair at IDEO, one of the top innovative companies globally, and author of Change by Design. IDEO contributed to designing the first manufacturable mouse for Apple and the early laptop computer. Tim is definitely on the shortlist for his contributions to human-centered design and contributing to popularizing the design thinking movement.

Design Thinking User Stories

There are many different examples of business and social organizations where design thinking has made a significant difference. The following four user stories demonstrate the broad applicability and success of design thinking within various real-world situations.

Commodity suppliers have limited ability to add product features and often face extreme competition on price. Researchers from the University of Applied Sciences Upper Austria studied Redgas, an Australian supplier of heating fuel. They found that changing the company culture from efficiency thinking to design thinking produced a competitive advantage through improved customer service.

A fundamental principle of design thinking is that constraints inspire innovation. Aravind is an excellent example of this principle in action. The socioeconomic realities in Tamil Nadu, India, historically had limited access to quality medical treatment only for the wealthy minority before the formation of Aravind. According to Tim Brown, Aravind utilized empathy, experimentation, prototyping, and the minimal technology necessary to create inner ocular lenses. As a result, these lenses not only met the medical standards in Tamil Nadu, India but were economically affordable for the poorest citizens needing cataract surgeries.

Creativity is a central aspect of entrepreneurial opportunities and is generally absent from entrepreneurial didactic frameworks in business schools. Researchers Nielsen and Stovang from the University of Southern Denmark in Kolding Denmark found that design thinking enhances entrepreneurial education by inspiring students to create rather than learn about specific curriculum content areas. A common complaint of business schools is that entrepreneurship is less about reciting a textbook answer and more about making bold choices. Making students active designers of knowledge teaches them to identify new opportunities through divergent thinking and prototyping skills.

Products and services need to meet both the stated and emotional needs of customers. In 2015 American Express worked with IDEO to identify a new service that contributed almost $4 billion in lending to the bottom line. Through empathetic listening, researchers determined that millennials wanted both flexibility and transparency when they made significant purchases. Building on this emotional desire, American Express overhauled its processes to create a way for users to easily split these purchases into equal monthly payments with a fixed fee and free of interest.

Designing a Better World

Design thinking can shape and improve the way we live. A quick glance at news headlines points to a need for radical change in the world. Asking the right question is an essential attribute of design thinking. At the leading design thinking organization IDEO, they begin every challenge with the question, how might we? Applying this question to the big challenges facing our world requires us all to consider how we might make the world a better place?

As globalization advances and our world becomes increasingly complex, adopting and applying a design thinking mindset instead of efficiency thinking expands individual and societal value possibilities dramatically. Implementing design thinking will require leaders and organizations to change what they say is important, what they take for granted, and how they respond to challenges in times of crisis. Organizations will need to embrace new strategies, structures, people, processes, and rewards. It will require engaging customers in design and business leaders working more like designers across all functional areas. As industry competition increases and revenues decline, design thinking organizations and leaders will secure a competitive advantage.