Designs on transformation

Sunday, January 17, 2016
© 2015 Marc Sniukas — Sketch developed while working on The Art of Opportunity in Brussels

Organizations that seek transformation and innovation go beyond top-down, analytical methods, and incorporate the lessons of design thinking, humanistic management and systems theory. Here are seven principles that can dramatically improve how your organization develops products, services, and processes.

The accelerated pace of change has caused extraordinary economic, cultural, and competitive pressures. From robotics to nanotechnology to renewable energy, hyper-competition is now the standard. Comprehending the rate of change and applying the rules of the game have become so challenging, only the most adaptive and adept organizations will survive. Fixed, top-down planning will not ensure the successful execution of strategic initiatives. Adaptation and evolution are required.

Business Design Thinking draws upon the lessons of design, humanistic management, and systems theory, integrating complexity into a coherent, even elegant experience. These organic, flexible, and inclusive methods can not only transform a business but also help an organization catapult to greater levels of success.

Organizations applying Business Design Thinking require new ways of working where all employees are engaged in an integrated, designed, and well-coordinated environment. This requires cultivating a performance strategy, maintaining a healthy work environment, and using innovative methods of execution.

Below are seven principles of business design thinking that can benefit the modern enterprise. By instituting these varied principles, businesses can transform nearly anything: concepts, brands, categories, markets, technologies, materials, logistics systems, experiences — even industries.

1. Engaged employees

A positive culture of engaged employees is at the heart of healthy organizations. In a 2013 Booz & Company global study, 86% of C-level executives and 84% of all managers and employees said workplace culture is key to their organization’s success. Six in ten saw culture as a more important ingredient than either strategy or operating models.

We also know that cultural health drives financial success. According to the 2013 Gallup Report, “State of the American Workplace,” 70% of employees are not engaged or are actively disengaged. Gallup estimates that this costs the U.S. $450-$550 billion each year in lost productivity! The study further found that organizations with an average of 9.3 engaged employees for every actively disengaged employee experienced 147% higher earnings per share versus their competition.

Companies that have engaged employees tend to have a humanistic management style and are steadfastly purpose-based. The purpose is a universally shareable, legitimacy-inducing goal, providing stakeholders with a reason for wanting the company to succeed. Their purpose provides the platform needed for the employee to make decisions for the organization‘s benefit. In turn, the company can count on motivated employees, loyal customers, trusting business partners, and a high degree of goodwill from other stakeholders.

2. Visual thinking

Today’s world is exploding with too much information that is literally at our fingertips. It’s simply overwhelming. Cognitive science has shown we simply can’t recall everything we see and hear. That is why employing visual thinking is so valuable.

Why do people remember what they see so much more readily than what they hear? One recent article on the subject describes the evidently limitless capacity of long-term memory to store concepts and then points to studies that seem to indicate “pictures have a direct route to long-term memory, each image storing its own information as a coherent ‘chunk’ or concept.

Dave Gray, the founder of XPLANE, describes visual thinking as, “a way to organize your thoughts and improve your ability to think and communicate. It’s a great way to convey complex or potentially confusing information. It’s also about using tools — like pen and paper, index cards, and software tools — to externalize your internal thinking processes, making them more clear, explicit, and actionable.”

The psychologist Jerome Bruner of New York University described a study by Paul Martin Lester that shows that people only remember 10% of what they hear and 20% of what they read, but about 80 percent of what they see and do. Training materials used by the federal government cite studies indicating that the retention of information three days after a meeting or other event is six times greater when information is presented by visual and oral means than when the information is presented by the spoken word alone. The same materials also cite studies by educational researchers suggesting that 83% of human learning occurs visually.

Researchers at the Wharton School of Business compared visual presentations and purely verbal presentations and found that presenters using visual language were considered more persuasive by their audiences, 67% of whom felt that presenters who combined visual and verbal components were more persuasive.

3. Human-centered design

Human-centered design is a repeatable creative approach to problem solving and innovation. It begins with the people you’re designing for and ends with solutions that are devised to meet their needs, wants, and limitations. When applying human-centered design, you build empathy with the folks you’re designing for; producing tons of ideas, constructing a plethora of prototypes, exploring and getting feedback from the people you’re designing for, and ultimately launching your inventive solution. While described differently by various practitioners, there are three phases to human-centered design.

1) Discover/Inspiration — In this phase, you learn directly from the people you’re designing for as you immerse yourself in their lives and come to deeply understand their needs. You work to ask the right questions and must, “get out from behind the desk.”

2) Ideation/Design — Make sense of your phase 1 learning by identifying your opportunities. Ideate like crazy on alternative and then create some form of a prototype of the concept, product or offering to get feedback

3) Build/Implement — Launch your solution to the company and/or your market. You can be confident your solution will succeed because you’ve designed, iterated, tested incrementally with the very people you’re looking to serve.

Essential activities to employ are making user feedback routine and applying a team-based approach to gain a diversity of thought and ensure all perspectives are represented throughout the process.

4. Iterative evolution: Prototype, test, reflect and iterate

As Peter Drucker said, “Follow effective action with quiet reflection. From the quiet reflection will come even more effective action.” He may not have intended it, but Drucker was representing the value of the principle of the iterative evolution. Think cyclical, not linear. It is all around us really — the seasons of the year, Darwin’s theory of evolution. Life presents “experiments” in variation; then through repeated cycles (iterative) and in smaller portions at a time (incremental), we “reflect” and then take advantage of what was learned from prior development. Through reflective learning at each iteration, we design and add modifications and/or new functions.

There are a number of benefits of applying cycles of evolution.

  • Gathering initial requirements and plans is faster; you can quickly create premises and assumptions to meet a user’s needs, then develop a prototype to test and gather feedback to quickly gather the key value to the target user.
  • Long term planning time is reduced and your effort is focused on discovering and addressing the “job to be done” for your user.
  • Each period of reflection in your iterative cycle lets you reassess the key value to be gained by your user, determine what changes matter, and which ones don’t pay-off in ROI in delivering value to the user.
  • Rapid iterative cycles allow you to react to market or environmental changes. Longer and more resource heavy methods move more slowly and are less nimble.

All these factors have been shown to reduce time and costs for innovation and transformation efforts.

5. Cross-functional, team-based approach

Nearly every business problem today is mired in complexity. Multiple organizational functions are affected and should be involved with finding solutions for these challenges which Lisa Kay Solomon calls, “adaptive challenges.” As described in Solomon’s bestselling book, Moments of Impact, adaptive challenges, “are messy, open-ended, and ill-defined. In many cases, it’s hard to say what the right question is — let alone the answer.” She states, “It’s nearly impossible for any one senior executive — or small leadership team — to solve adaptive challenges alone.”

To address complex issues, form a team, and design strategic conversations. While any individual can ideate and create new things, leveraging diverse thoughts and gaining input from different perspectives can generate growth and sustain a company’s competitive advantage now and in the future.

According to a recent study by Deloitte, cultivating “diversity of thought” can boost innovation and creative problem-solving. Why? People bring different cultures, backgrounds, and personalities to the table — and those differences inform how they think. Some people are analytical, while others thrive in creative zones. Some are detailed planners, and others love impulsiveness. Mingling up the types of thinkers in addressing problems and sparking solutions can kindle creativity, insight, and improve efficiency. Varying the types of thinkers in a company guards against “groupthink,” a common issue in groups where they focus first and foremost on group conformity, often at the expense of making good decisions.

6. Collaboration

Collaboration is the fuel of any business, whether it is between employees, partners, or customers. It is a driving force for continued efficiency among everyday tasks and a necessity for improving the outcomes of many business activities. Nearly 80% of the senior executives surveyed in a 2005 study said that effective coordination across product, functional, and geographic lines was crucial for growth.

Collaboration helps spur original thinking, with connections happening across locations and departments that couldn’t have previously occurred. By nature, collaboration brings different voices, teams, specialties, and opinions together to co-create and solve an existing problem or develop something completely new. The collaborative tools of today bring major value to innovative thinkers by echoing their goals, thoughts, notes, discussions, documents, and brainstorming sessions to an entire company.

The objective of collaboration is improved performance, however, that is measured. Most organizations hope collaboration will reduce costs, increase revenue, build company capability, and create new opportunities. Collaboration is capable of delivering all of these, although there are hazards that should be avoided. Perhaps the most common snag is trying to over-formalize collaborative environments that are essentially informal.

According to researcher Martin Butler, “knowledge workers do not derive benefits from collaboration systems that are top-heavy with process. Sometimes the costs of setting up formal environments for knowledge workers can be greater than the benefits that are derived. Attempting to make people ‘share on-demand’ is not a very good idea.”

Perhaps the most significant factor affecting the success of collaborative activities is company culture. As we discussed earlier, a culture of engaged employees can have profound effects on a company’s results. However, a company with competitive, political corporate environments is not likely to benefit from collaboration initiatives. People will generally be unwilling to share, participate, and collaborate, and any attempt to force sharing by imposing artificial rewards based on a measure will just result in the manipulation of the system. This is the main reason that collaborative knowledge sharing is so difficult to implement. Changing your company culture to support engagement and collaboration is no small undertaking, and may not be possible. In such a case, it is best to seek out areas where collaboration has few political implications.

7. Organic Systems Thinking

Management systems and processes tend to be linear and built-in vertical silos of function. They assume that similar inputs will result in similar outputs. In many situations, this holds true. However, this old industrial-era perspective is more like viewing a mechanical system and tends to see people as objects and pays less attention to the human factor. As soon as people become involved, the system becomes complex and adaptive. It is dynamic; an event with similar “inputs” will yield wildly divergent outputs.

Today’s organization can be viewed as a living organism. To evolve, it must operate as a complex, dynamic, growing system that can learn and adapt over time. Like organisms, organic systems organizations are “open” and vulnerable to the environments in which they operate. Much like living things they thrive in an environment that supports their biological needs or adapt to those environments in order to survive, an organization must operate in an environment which is conducive to its needs or must adapt to their environment to ensure its survival as well.

Relationships between the system constituents rather than the constituents themselves are critical to Organic Systems Thinking. To achieve your desired transformation result, think about connected linking and the extent and strength of those connections. These interrelationships contain performance factors you can control and some that you can’t. Simply put, you are part of the system. You may not be the center of the universe, but understand how different actions can influence, impact, and amplify outcomes.

By applying the principles of Business Design Thinking, you can transform your organization to be an adaptive, responsive, innovative company that can thrive in this tough, ever-changing world we live in.

Parker Lee is president of Compass52 and has been actively designing organizations for better performance and empowering change since the 1970s. Previously, he was president and executive vice president of business development at XPLANE, which, under his leadership, enjoyed significant annual growth while delivering innovative design thinking engagements for clients globally.

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Parker Lee

Parker Lee is the managing partner of Territory, a design consultancy, who has developed and led teams in transformation, design thinking, and business development for decades. Co-author of The Art of Opportunity, he has created and facilitated dozens of design and visual thinking engagements.

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