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Design Thinking + IT Services = Innovation Excellence (White Paper)//Motiv Strategies

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"Design Thinking + IT-Mediated Services = Innovation Excellence" …

"Design Thinking + IT-Mediated Services = Innovation Excellence"

August 2009

White paper from Motiv Strategies CEO Jeneanne Rae and Director Carl Fudge.

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  • 1.                        Design Thinking + IT-Mediated Services =Innovation ExcellenceBy Jeneanne Rae Carl Fudge August 2009                                
  • 2.     Design  Thinking  +  IT  Mediated  Services  =  IT  Excellence  __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________Design Thinking + IT- million?” Both of these are described in Nelson’s (2007) paper, “IT Project Management: Infamous Failures, Classic Mistakes, and Best Practices.” OnMediated Services = the flipside, firms that get it right re-use developed IT platforms and associated data again and again toInnovation Excellence create new sources of value. They creatively adapt existing functionality to enable new products and services, as described in Kohli and Melville’s (2009)   writing on “Learning to Build an IT InnovationIT-mediated services are becoming increasingly Platform.” In the realm of IT at least, the rich dosignificant in the public and private sectors today. appear to be getting richer.While some examples of high profile successes exist,too many IT projects become high-cost resource Various explanations for the high rate of IT projectdrains that disappoint both the organizations that failure have been put forward. Technological issuesinvest in them and their targeted users. A major may be in play, such as difficulty choosing anreason for this is the frequent mismatch of appropriate software development methodology, aexpectations between developers and users. belief in technology “silver bullets,” or a managementDevelopers approach these projects as “IT team that is not effectively coordinating internal anddeployments,” focusing closely on technical outsourced developers. Other reasons include a lackspecifications but not fully taking into account the of complementary capabilities, scope creep,needs of real users, who expect a quality service to insufficient project sponsorship, over promising andbe delivered. The entire notion of creating a service under delivering, and poor interface design.for an end-user is often lost on development teams,resulting in the creation of user experiences that are Though these reasons do contribute to suboptimalunderwhelming and subsequently fail to capture the results, many IT project failures are ultimately rootedresults – financial or otherwise – that were projected. in a mismatch between what is demanded and what is supplied. The value proposition to users is that of aBecause of this mismatch of expectations and the service, such as an online benefits management toolopportunity to apply design thinking to bridge the gap, that provides a human resource service tothe practice of IT-mediated service development employees, while developers perceive that what is(services mediated by electronic technologies) is ripe being delivered is an IT project, a businessfor change. We propose a new, integrated automation system, a computer system upgrade, or aperspective rooted in design thinking called the “3-D new database. This difference in perception is amodel,” in which all decisions about the development significant hindrance to success and directly inhibitsof new IT-mediated services are grounded in the the user’s goal of a delightful and valuable solution,perspectives of real users. Not only will this approach such as Apple’s iTunes music delivery service.help organizations create new and delightfulexperiences that impact the bottom line, but it can While the technical features of an information systemalso enhance organizational culture by providing a are undoubtedly important, the overall experience offramework to achieve continuous improvement of the service is paramount. In the era of services,products and services. We describe this new happy users translate to the bottom line asapproach and illustrate its effectiveness in a specific organizations gain competitive advantage throughcase example: the Virginia Employment services that make them more “sticky” or allow themCommission’s unemployment insurance system. to reap cost savings through efficiency gains e.g., by replacing call centers with online, self-serviceWhy IT Projects Fail So Often software. The mismatch between a developmentIT projects do not have a strong success record approach focused on IT specifications and everoverall and according to the Standish Group (2006), increasing user demand for quality services leads to aonly 29% succeed, while 53% are challenged and model that is ripe for an overhaul. An empathic18% fail. The reality is that they are risky endeavors approach rooted in design thinking is a critical missingdue to the human and technological complexities link in the development of IT-mediated services,involved and the significant financial investment which we now describe.necessary. Failures lead to management frustrationand financial loss, notably shown by two examples: Integrating Design and Innovation Using the 3-Dthe FBI’s Trilogy project to upgrade its computer Frameworksystem, a $170 million “train wreck in slow motion,” The solution that we have developed comprises anand Nike’s inventory glitches after an ERP integrative process that blends design thinking withimplementation, about which CEO Phil Knight traditional innovation and IT system design activities.famously quipped “This is what I get for our $400 The resulting fusion provides a framework for   1
  • 3.     Design  Thinking  +  IT  Mediated  Services  =  IT  Excellence  __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________organizations to complement time-tested The Discovery phase continues with field research indevelopment strategies with design thinking and start the form of ethnography, latent needs finding,building an organizational culture of innovation as empathy for the end user and user journey mappingwell. The process involves three phases: Discovery, which is conducted by objective personnel trained inDevelopment, and Deployment (see Figure 1). We will design research methods. They function as explorers,illustrate the framework by describing a real client invested in discovering where informationproject that we worked on with the Virginia breakdowns occur and seeking to understand theEmployment Commission (VEC), to develop a new IT user’s context and state of mind. This informationmediated service for use in the public sector. often provides clues for potentially impactful innovation opportunities. To find these clues, an ethnographic model of the user’s experience is generated, noting pain points and emotional wants1. Discovery Phase and needs along the way. This process is referred toThe Discovery Phase is a combination of business as user journey mapping (see Figure 2), and is pivotaland design thinking and includes framing the problem in laying the groundwork for creating a customizedand researching user needs. It kicks off by stating all service innovation that will delight users andassumptions about the opportunity’s context, user, anticipate and counteract future informationand competitor to frame the research needed to prove breakdowns.or disprove the dominant logic of a sector or industry.Figure 1. The 3-D Model illustrates the main steps in IT-Mediated Service InnovationRather than using deductive logic (reasoning from a to an improved future and seeks to build ideas up,general theory to a specific instance) or inductive unlike critical thinking which breaks them down. Therelogic (reasoning from a specific instance to a general are no judgments in design thinking, a core value thatlaw or theory), design thinking uses “abductive” eliminates the fear of failure and encouragesreasoning, drawing on the logic of possibility and maximum input and participation. Also, the process isexploring alternative world states to reveal the intuitive rather than generative: in brainstorming, forpossibilities of what could be. Design thinking is linked   2
  • 4.     Design  Thinking  +  IT  Mediated  Services  =  IT  Excellence  __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________example, understanding patterns is almost always different alternatives while the big picture focus is themore useful than identifying the best ideas. overall customer experience.In addition to leaning heavily on design thinking As Consultants, we were engaged by the VEC whomethods, effective IT-mediated service innovation needed to create a Request for Proposal (RFP) forrequires the incorporation of traditional strategy and potential vendors of a complex service deliverymarketing analyses, too. A strategic lens ensures that system designed to automate activities such asthe work performed moves the organization towards administration of unemployment benefits. Theits most important goals, such as improving its user success of the service depended upon accuratelyexperience and driving loyalty. Marketing analysis is specifying the service needs in an RFP, which provedoften used as the starting point to seek deeper insight to be a difficult task for the VEC leadership.from certain types of customers, e.g., the mostprofitable, most diverse geographically or segments Aneesh Chopra, then Secretary of Technology for thethat are attached to certain channels. While this State of Virginia (and now serving as the Chiefanalysis is indeed necessary, it is not sufficient for Technology Officer of the White House Office ofeffective service innovation: demographic information Science and Technology), described the challenge asis no substitute for the contextual inquiry and one of “maintaining a balance between neutralityemotional needs gathering performed during towards competing vendors and successfully meetingethnography – the latter directly informs service the needs of the State to acquire a functional yetinnovation whereas the former provides boundary flexible system.” While a highly structured and explicitconditions. definition of requirements is common practice, this unfortunately also serves to restrict potentiallyOnce both design thinking and strategic analyses creative responses. For example, if the VEC were tohave been integrated, the next stage uses convergent specify what technology should be used to achievethinking to synthesize the initial findings and move certain functionality, this could inhibit a vendor whotowards the design of a new service concept in the may have a better, alternative way of solving theDevelopment stage. This culling reigns in the problem. Another difficulty with the traditionalpossibilities identified through design thinking and approach is that the user experience is opaque:identifies a clear starting point for service design. The “unfortunately, in most government services, its hardgoal of the initial discovery process is to articulate to describe the user’s experience,” said Chopra.what a better service would do and building manyFigure 2. A user journey map for an unemployed citizen seeking assistance from the VEC   3
  • 5.     Design  Thinking  +  IT  Mediated  Services  =  IT  Excellence  __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________To gain more insight into the VEC user experience, reactions can be gauged. Storytelling, vignettes,field observations were conducted to capture insights cartoons, and amateur videos are shown to potentialfrom both staff and users regarding their current users in order to tap into their emotional response,interactions with the VEC system. The design thinking thus harnessing a unique quality of design thinking,approach yielded journey maps of user’s experiences, which is turning complex systems into forms that arenoting aspects such as how often users needed to visible, tangible and accessible to users. Wheninteract with the system (and for what reasons), and creating these visual representations, it is important towhat roadblocks they encountered. The mapping step involve end users and front line staff in thehelped identify when information breakdowns took conceptualization process whenever possible, andplace, such as when users were unable to understand keep the stimulus user-centered.what documentation was required to interact with thesystem, usability issues in managing system access Design thinking is critical during these initial iterationspasswords, and frustration over what users identified of a prototype and a couple of traditional mindsets willas “wasteful procedures.” need to be reversed in order for the process to be most effective. First of all, rather than evaluating aThe VEC now recognized that understanding user service by its technical performance, it should beneeds was key to developing first a successful RFP evaluated by the reaction it elicits from end users andand hopefully productivity reform, too. A key first step front line staff. Secondly, multiple prototypes shouldwas grouping users into four distinct scenarios or be generated and, while project managers may resist“archetypes,” based on their needs, an exercise which this out of concern that the process will be inefficient,had never been performed before. At this point, any incremental time investment is outweighed by thedevelopment of the RFP was significantly enriched fact that prototypes reduce uncertainty and risk.based on the methods of design thinking. According Through prototyping, designers can determineto Sam Lapica, Director of Technology at VEC, “We whether users actually want the service, whether thehad never created specific scenarios before - that was team can deliver it, and whether cost objectives cana new idea for us. It was more function specs, design be met before the initial pilot is launched. Ingoals, and aspirations. Once we identified the four prototyping, the goal is not perfection but rather tocustomer archetypes it became clear to us that we learn about the strengths and weaknesses of thewanted to challenge the vendors to respond to that.” concept and to identify new directions that further iterations might take.The value here rested in having additional criteria bywhich to evaluate vendor offerings, and assessing the With real user reactions in hand, the user experienceextent to which vendors’ proposals met the needs of can then be refined even further. This is also anall four user archetypes. Lapica notes that “this is a opportune point to study the business case and ITvery specialized area of software development and specifications of the service and to document thewe didn’t want to foreclose possibilities by being too feasibility, costs and projected efficiency gainsspecific in the RFP. We wanted the vendors to have associated with the service. It is important therefore tosome latitude.” Design thinking, in this case, was able deploy metrics and service standards to provideto accommodate both specificity and latitude by quantitative measures (i.e., time to completion,providing a wide range of archetypes to present percent completion, customer satisfaction) of thediverse user needs. According to Lapica, “The productivity enhancements driven by an improvedprocess built on what we had already started and customer experience. The best programs seek togave us a different perspective and the addition of the improve some important aspect of the business casescenarios was very creative.” such as productivity of the user or the system. And without specified targets, it is difficult to prove that the2. Development phase implementation of an ideal experience meets itsThe Development phase begins once a vision for a objectives. Once the concept and the business casebetter service is in place and initial prototypes can be have been developed, a period of iteration andconstructed. A key part of this is the ideation and refinement follows where, once again, it is importantvisualization process, where quick, visual to involve end users and front line staff wheneverrepresentations of services are depicted on paper so possible.that participants can easily understand them and their   4
  • 6.     Design  Thinking  +  IT  Mediated  Services  =  IT  Excellence  __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Figure 3: Design thinking methods used in the Development phase including ideating (left); visualization (center) and concept development (right)At this point, the focus shifts from quantity to quality 3. Deployment phaseconcerns. Contrary to traditional approaches which The strength of the final prototype and its businesslay out specifications for IT functionality early on in a case determine whether and how big of an investmentproject, design thinking methods involve crafting the organization should make in the potential service.informed technical requirements later in the process, Just as it would with a physical product such as aonce a clear vision for key requirements can be medical device or laptop computer, the designarticulated. thinking process ends with a final specification for what should be built. In the product developmentAt the VEC, Sam Lapica described the visualization world, it is well known that organizations are far morephase as “exercises with the project team to arrive at efficient at producing a product efficiently if both thea unified vision for the project,” as these exercises developer and the users agree that the final prototypewere used to develop a service prototype for use in represents cost, margin, and timing expectations. Thisthe RFP. Part of the difficulty in developing the RFP is not necessarily common practice in the IT world,lay in the complexity of the service, which was where projects are often funded lavishly before theintended to satisfy a variety of user needs e.g., final outcome is known and are not necessarilybusiness owners researching incentives for opening a subject to user scrutiny during development.new branch in Virginia or individuals navigating thestate’s unemployment registration procedures. The In fact, many of the disasters mentioned at theservices in question were entirely intangible, requiring beginning of this article occurred because there wasconceptual rather than physical prototypes. Using a no final prototype or business case prior to theprototype allowed the Vendors to gain a much clearer beginning of the implementation phase of the work.and more granular understanding of user needs. This area holds one of the strongest opportunities for IT-mediated service design to learn from productDuring the VEC project, the iteration and refinement development processes. The techniques now used inprocess culminated in a two-day workshop involving product development in most industries includeconsultants, the technology team at the VEC, and parallel development, rapid prototyping, and mostsenior VEC leaders. Consultants presented the user recently, co-creation with users. Finally, incorporatingprofile archetypes and guided discussion of their an element of storytelling helps sell the concept tofindings to determine whether user needs could leadership. All of these methods should be used in IT-realistically be met through the system. This process mediated service innovation to reduce the risk ofshifted the focus of the RFP process from identifying failure.desired information technology specifications, toexploring how they would address the problems of a A common practice for many would-be innovatorswide range of users. According to Lapica: “It became faced with developing IT-mediated services has beenpossible to identify not just information technology to go straight from concept generation to a pilotbarriers, but business process and policy restraints phase. Often these efforts require significantthat were obstructing the process.” Chopra stated that investment and have been known to fail because theythe workshop was, “The most impactful moment. We do not meet user needs or their service expectations.listened to the customer experiences and allowed This is most likely due to several reasons, includingVEC leadership to listen to the outcomes and see if inadequate understanding of the problem to bethey found them realistic or unrealistic. This changed solved, a solution fraught with shortcomings, a systemthe nature of the discussion away from ‘what IT that is too costly, or all of the above. The protocolsrequirements do we want from the IT vendor?’ to ‘how outlined during the development phase, especiallywill we address the needs of user A, B, and C?’” prototyping and iteration, help the development team   5
  • 7.     Design  Thinking  +  IT  Mediated  Services  =  IT  Excellence  __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________get the technical specifications into the success zone There may also be an unexpected indirect benefit ofbecause of their heavy user focus. Because services deploying the process we describe: a subtle shift inneed to be experienced in order for judgments of culture of the organization applying the designquality to be made, there is no better way to mitigate thinking process to IT-mediated service innovation isthe risk of possible failure than to deploy prototypes. It very likely, too. At the VEC, Chopra believes thatis therefore in the best interest of any organization to design thinking indirectly shifted the overall approachbuild in the requisite protocols for continuous to business improvement. In discussing hisimprovement upon launch whether the IT-mediated perspective on business improvement strategiesservice is internal or external to the provider. using previous approaches, he indicates that: “I would have emphasized Six Sigma, lean, or some other performance improvement process that is a well-Conclusion known manufacturing strategy used for processNo one argues that IT projects have a very high improvement. Now I would say design thinking is farfailure rate. The question is why, and what can be better suited for a services environment. We hopedone about it? We submit that there are two main design thinking might be the platform on which welearning points for organizations as they seek to build a culture of continuous performancedevelop IT-mediated services that delight users and improvement throughout our organization.”customers. First, IT projects should be reframed as As organizations grapple with the twin challenges ofIT-mediated services so that the user experience is ever-demanding users and ever-increasing resourcefront and center in all aspects of design and scarcity, new approaches will be required. Simplyexecution. Second, service innovation methods based applying new technologies to new problems using theon design thinking methods should be applied. As same methods is a prescription for mediocrity andemphasized by Tim Brown, CEO of IDEO, in his 2008 preservation of the status quo. We urge organizationsHBR article, design thinking is a “discipline that uses to consider design thinking as an innovative newthe designer’s sensibility and methods to match approach to designing compelling IT-mediatedpeople’s needs with what is technologically feasible services.and what a viable business strategy can convert intocustomer value and market opportunity.”In the VEC engagement and others with which wehave been involved, we observed that there are bothdirect and indirect benefits of using a design thinkingapproach to IT-mediated service innovation. Theprimary direct benefit is a better service design interms of effectiveness, usability, and efficiency. Thekey to achieving better service design is elevating theuser needs so they become central to all aspects ofthe process. At the VEC, the project started off as anexercise in IT specification setting, but after goingthrough the design thinking process, it became moreimportant to examine the IT barriers, process barriers,and policy barriers that are obstructing the process. Inthe words of Chopra, “What we’ve learned throughthis process is a far clearer path from IT investment tocitizen improvement. In the past, IT investments werelargely back office and internal in their focus, citizenbenefit often indirect and secondary.”   6
  • 8.     Design  Thinking  +  IT  Mediated  Services  =  IT  Excellence  __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________     Top  Tips  from  the  Authors  for  Building  Innovative  IT  Services     1. Hold   on   to   the   notion   of   creating   a   service   for   an   end   user   rather   than   a   new   systems   deployment.   Forgetting  this  often  results  in  user  experiences  that  are  underwhelming  and  fail  to  capture  results.   2. Ground   all   development   decisions   in   the   perspectives   of   real   users,   by   gaining   their   insights   and   letting   them  co-­‐create  the  new  service.   3. Try   to   match   user   and   developer   expectations   and   remember   that   the   value   proposition   to   users   is   that   of   a  service  and  not  a  set  of  technical  specifications.   4. Market  analysis  is  necessary,  but  not  sufficient  for  innovation:  demographic  information  is  no  substitute  for   the  contextual  inquiry  and  emotional  needs  gathering  performed  during  ethnography.   5. Ensure   there   is   a   final   business   case   and   prototype   in   place   before   implementing   the   new   IT-­‐mediated   service.  This  practice  reduces  uncertainty  and  therefore,  risk.        Bibliography    Brown,  T.  Design  Thinking.  Harvard  Business  Review  (2008).  Hartmann,  D.  Interview:  Jim  Johnson  of  the  Standish  Group.  InfoQueue,  2006.  Kohli,  R.,  and  Melville,  N.  Learning  to  Build  an  IT  Innovation  Platform.  Communications  of  the  ACM,  52,  8  (2009),   122-­‐126.    Nelson,  R.R.  IT  Project  Management:  Infamous  Failures,  Classic  Mistakes,  and  Best  Practices.  MIS  Quarterly   Executive,  6,  2  (2007),  67-­‐78.    Further  Reading    “IT’s  Star  Turn”  by  Jeneanne  Rae  in  BusinessWeek  online  http://www.businessweek.com/innovate/content/jul2007/id20070718_340679.htm  “Seizing  the  White  Space:  Innovative  Service  Concepts  in  the  United  States.”  Prepared  by  Peer  Insight  for  Tekes,  the  Finnish  Funding  Agency  for  Tehnology  and  Innovation    http://www.peerinsight.com/docs/tekesreport.pdf       7
  • 9.     Design  Thinking  +  IT  Mediated  Services  =  IT  Excellence  __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________  Author  Biographies    Jeneanne RaeJeneanne is a nationally recognized thought leader on innovation management and design strategy. Rae was hailedas one of Business Weeks "Magnificent Seven Gurus of Innovation" in its cover story on the creative corporation.After receiving an MBA from Harvard Business School, Jeneanne has now spent twenty years mastering the art andscience of innovation, including spending seven years on the senior management team of IDEO. A columnist forBusiness Week online, Jeneanne writes on cutting-edge innovation topics. As an adjunct professor for nine years,she taught new product development and service development at Georgetown Universitys McDonough School ofBusiness and currently teaches executive education through various top ranked programs. Jeneanne can becontacted at: jrae@motivstrategies.com; 703-778-1051.Carl FudgeCarl is an Innovation Program Leader with Motiv, focused on design capability building and service innovationprojects within leading international corporations. With a background in organizational change, Carl is a firm thoughtleader on subjects including organizational design, leadership and talent management. He holds a Masters degreefrom Columbia University in Organizational Psychology and a B.S. in Psychology from University College London.Prior to joining Motiv he was a Management Consultant with McKinsey & Co., in Houston, TX. While at McKinsey heworked on topics such as growth strategy, operational efficiency and performance management in the beverage,foodservice, media and energy industries. Carl can be contacted at: cfudge@motivstrategies.com; 703-778-5543.         8