DISCUSSION 1 As we have learned from the readings, there is an in.docx

DISCUSSION 1: As we have learned from the readings, there is
an inverse relationship between bond prices and interest rates.
Given the current economic situation and the forecast of interest
rates, would you invest in bonds? Why or why not?
Be sure to rely on sources and cite your references in APA
format.
DISCUSSION 2: It can be said that the mortgage market was at
the center of the Credit Crisis of 2008. The emergence of
subprime loans and the demand for subprime loans caused the
creation of new financial products.
Describe how Mortgage-Backed Securities (MBS) were used
throughout the Credit Crisis and compare their use then to their
use today. For example, do you believe MBS’s are riskier than
people thought?
AT LEAST 200 WORDS EACH.
11/1/19, 12'45 PMThe Kind of Creative Thinking That Fueled
WeChatʼs Success
Page 1 of 12https://hbr.org/2019/10/the-kind-of-creative-
thinking-that-fueled-
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INNOVATION
The Kind of Creative Thinking That
Fueled WeChat’s Success
by Julian Birkinshaw, Dickie Liang-Hong Ke, and Enrique de
Diego

October 29, 2019
ALLEN ZHANG OF WECHAT (HBR STAFF/QILAI
SHEN/GETTY IMAGES)
https://hbr.org/topic/innovation
https://hbr.org/search?term=julian%20birkinshaw
https://hbr.org/search?term=dickie%20liang-hong%20ke
https://hbr.org/search?term=enrique%20de%20diego
WeChatʼs Success
Name=DM54255
WeChat, the messaging app, dominates daily life in China. With
more than a billion
daily active users, it is the default option for social networking
and chat. WeChat
users send more than 45 billion messages a day. It is the leader
in mobile
payments, with more than 800 million users of WeChat Pay.
And it provides
integrated services for upwardly-mobile Chinese users, by
offering taxi, restaurant,
movie-booking and retail apps all within its platform.

Many westerners are skeptical about successful Chinese
software companies like
WeChat: there is a perception that they have succeeded through
copycat strategies,
and have benefited from Facebook and Google being blocked
from operating in the
country. But WeChat didn’t get an easy ride: it had to fend off
dozens of domestic
competitors when it was launched, and it had to keep innovating
to stay ahead.
Many observers rate WeChat as offering a superior user
experience than its
western counterparts today, and its innovative features are now
being copied by
others.
We recently conducted an in-depth study of WeChat, through
exclusive interviews
with 15 executives, including founder Allen Zhang. What we’ve
found that is
WeChat isn’t just a Chinese success story – it offers insights to
innovators
everywhere.
Design thinking versus grand design

Our research suggests that WeChat’s success wasn’t achieved
through
technological superiority. It was built on the vision – or grand
design – of Allen
Zhang, a senior executive at Chinese tech company Tencent,
who saw an
https://www.zdnet.com/article/daily-active-user-of-messaging-
app-wechat-exceeds-1-billion/
https://www.zdnet.com/article/over-800-million-wechat-users-
sent-digital-monetary-gifts-during-lunar-new-year/
https://www.forbes.com/sites/rahilbhagat/2016/09/29/5-wechat-
features-that-whatsapp-should-really-use/#435384db7eea
WeChatʼs Success
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Name=DM54255
opportunity in 2010 to create an entirely new product for the
mobile era. He
personally led the entire development effort of WeChat, taking
responsibility for
the overall look and feel of the product, as well as overseeing
the coding teams.
The grand design logic is markedly different from the now-
standard design

thinking approach to innovation that was popularized by design
firm IDEO in the
1990s. Design thinking has been defined as a non-linear,
iterative process which
seeks to understand users, challenge assumptions, redefine
problems and create
innovative solutions to prototype and test. This user-centric
perspective has made
design thinking hugely popular, but some consultants and
academics have argued
that it is too structured, too prescriptive, and results in
incremental or conservative
outputs.
We argue that the grand design approach to innovation – where
a new product or
service emerges fully-formed in the mind’s eye of the innovator
before it is
developed and commercialized – can be more effective than
design thinking under
certain circumstances, most notably when a market is in its
early formative stage of
development. Think, for example, of Steve Jobs’ classic
inventions, such as the iPod

and the iPhone, Masaru Ibuka’s Sony Walkman, or Elon Musk’s
Hyperloop.
Our study of WeChat revealed four key components of the grand
design approach
to innovation that other innovators might consider when
developing ideas.
1. Creating a work of art, not a commercial product. Design
thinking seeks to
create practical, user-oriented solutions: it is about pulling
together what’s
desirable from a human point of view with what is
technologically feasible and
https://www.interaction-design.org/literature/topics/design-
thinking?page=2
https://www.fastcompany.com/90241727/design-thinking-is-the-
opposite-of-inclusive-design
https://hbr.org/2018/09/design-thinking-is-fundamentally-
conservative-and-preserves-the-status-quo
http://www.ideou.com/pages/design-thinking
WeChatʼs Success
Name=DM54255
economically viable. In contrast, the grand design starts with a

concept, a vision in
the mind’s eye of the creator, and it holds onto that concept for
as long as possible.
Here is how Allen Zhang described WeChat to us:
Before perceiving WeChat as a commercial product, I’d rather
picture it first
as an impressive work of art. When I started designing user
interactions for
Foxmail, I complicated everything. It felt wrong because it no
longer looked
neat. For WeChat, I now see the necessity of subtraction –
making things
simpler –and focusing on the product’s aesthetic quality.
As one example, the feature bar at the bottom of the WeChat
screen is four icons:
Chat, Contacts, Discover, Me. Over the years many people
suggested adding to this
list, like many other apps, to support users’ behavior. Zhang
said no: “I told the
team to establish a rule that WeChat shall always have a four-
icon bar, and never
add anything to it.” Another example is the almost complete
absence of

advertising. Unlike Facebook or LinkedIn, WeChat users see a
maximum of two
ads per day through the Moments feature.
There is of course a tension between artistic ideals and
commercial realities.
Comparing WeChat with Facebook, the New York Times says
Mark Zuckerberg
wants Facebook to emulate WeChat by reducing the number of
ads, but he hasn’t
done so, presumably for fear of reducing Facebook’s
profitability. Allen Zhang, in
contrast, faces requests to increase the amount of advertising on
WeChat because
its owner, Tencent, is a publicly-traded company and faces
pressure to increase its
http://www.ideou.com/pages/design-thinking
https://www.campaignlive.co.uk/article/tencent-advertising-
revenue-soars-44/1579898
https://www.nytimes.com/2019/03/07/technology/facebook-
zuckerberg-wechat.html
WeChatʼs Success

Name=DM54255
profitability. Zhang has held his ground up to now, arguing that
continued growth
is more important than current profitability. As the HR head for
WeChat told us,
this decision “is a testament to Allen’s ideology sinking into the
heart of the team.”
2. Responding selectively to users. At the heart of design
thinking is the notion
of empathy – the ability to see the world through other people’s
eyes, to see what
they see, and experience things as they do.
While the grand design approach to innovation doesn’t deny the
importance of
empathy, it takes a selective approach to how much user views
should be heeded,
because if one does everything they ask, the result is increased
complexity and a
loss of coherence.
How does WeChat address the needs of its users? Allen Zhang
explained to us that
he asks developers to put themselves in the shoes of their least
sophisticated users

– people who might be technologically illiterate, or trying
WeChat for the first
time. From his early days in the company, he pushed his team to
develop this
‘dumb user’ perspective through what he called the 10/100/1000
principle:
product managers were expected to do ten end-user interviews,
read 100 user
blogs, and collect feedback from 1,000 user experiences every
month.
While these insights are important, specific user requests are
sometimes
deliberately ignored. For example, unlike most social apps in
the west, WeChat
does not have a “read” notification to tell the sender their
message has been
opened. Many people requested that function, but Zhang said
no. Harvey Zhou,
one of the founding team members of WeChat, explained the
logic to us: “Allen
thinks social interaction should not be forced: if you send me a
message, I may not
https://www.interaction-design.org/literature/article/design-
thinking-getting-started-with-
empathy.%20%20Note%20also%20D%20School%205-

step%20model%20starts%20with%20empathy
WeChatʼs Success
Name=DM54255
want to respond immediately, and if I know you have received a
notification, that
pressures me to respond. We are determined not to add this, to
respect the
individual and to preserve their independence.”
In a similar way to Steve Jobs, Allen Zhang has also shown an
uncanny knack for
understanding what users want or need even without them being
able to articulate
their view. For example, two key features that have helped
secure WeChat’s
dominant position in off-line payments are Mini Programs and
QR code scanners.
While they are ubiquitous today, WeChat had to be proactive in
getting users to try
them out initially.

How does one know which user requests to listen to and which
to ignore? There
are no easy answers, but two rules of thumb are helpful: think
about coherence (is
it consistent with the existing design?) and simplicity (can I
still do the basics well
if I add this feature?).
3. Managing the process through top-down stewardship.
Another key feature
of design thinking is its emphasis on collaboration – the notion
that good ideas
emerge through a social process where people build on each
other’s suggestions.
There is no room for big egos in design thinking.
The grand design approach, in contrast, gives less freedom to
the collective and
puts more faith in the views of a small number of people
(sometimes just one) at
the top. It operates through top-down stewardship. It is
paternalistic in style: we
want you to share your ideas, but we won’t act on many of
them, because we know
best.

WeChatʼs Success
Name=DM54255
As Allen Zhang told us: “We encourage people who present
their own way of
thinking – I encourage them to speak out.” But at the same time,
it is clear that he
makes all the key decisions himself. As his colleagues
explained, they submit new
features to him for approval, and he decides on the icon, the
nickname, and other
key aspects of the user experience. Developers are keenly aware
that the biggest
challenge is how to ‘get past Allen’, and that many seemingly
good features are
vetoed by him.
WeChat executives explain this process in a couple of ways.
First, Zhang is striving
for a meritocracy, where the best thinking, in his view, wins
out. Second, WeChat

has benefitted enormously from having a singular, coherent
identity, and this in
turn is made possible when there is a single architect with
decision-making
authority. When a product feature is vetoed by Zhang, it isn’t
because it’s a bad
idea in its own right; it is because that feature doesn’t fit with
his vision for
WeChat.
Of course, this top-down approach brings challenges – its
harder for new leaders
to rise up through the ranks, and it risks stifling fresh thinking.
The leader has to
work hard to explain why specific ideas are being rejected and
to reassure them
that their input is still important. And as we discuss below, the
leader has to know
when to shift to a more inclusive model.
4. Leading with conviction. The style of leadership required for
design thinking
and grand design also differs. Design thinking favors a coaching
style of leadership,
hand-holding when necessary but drawing back when a team
hits its stride. The

grand design logic, in contrast, puts leaders on a pedestal – they
embody the
https://hbr.org/2019/03/the-right-way-to-lead-design-thinking
WeChatʼs Success
Name=DM54255
design they are pursuing, and they project a strong emotional
conviction about
why it is right. This leadership may be charismatic and larger-
than-life, or more
softly spoken and introverted.
Allen Zhang’s conviction is manifested in a number of ways. He
obsesses over the
details. As he explained to us, “I am the only senior executive I
know of, inside and
outside our company, who sits in meetings with front line
product manager to go
through each and every detail.” He is also a perfectionist. “I
don’t allow a single
flaw in the product” he explained to us. “I set aside the way a

company normally
does things… otherwise our product cannot be guaranteed to be
the best”.
Of course, leaders who adopt design thinking aren’t lacking in
conviction – but
their conviction is to a process, a way of working, rather than to
any particular
design.
When should you use the grand design approach?
WeChat illustrates the potential value of the grand design
approach to innovation.
But it’s clear that grand designs can be risky, because they go
beyond the proven
needs and wants of users. One well-known cautionary tale is
Dean Kamen’s
Segway – a brilliant vision of the future of personal
transportation that never really
got off the ground. Kamen thought he would sell half a million
units a year, but
actual sales were only 300,000 in total over the first six years.
So when is a grand design appropriate? In simple terms, this
approach to
innovation is more likely to be successful when user needs are
fluid and malleable.

Allen Zhang’s grand design for WeChat succeeded because he
was able to shape the
emerging marketspace.
https://www.wired.com/2015/01/well-didnt-work-segway-
technological-marvel-bad-doesnt-make-sense/
WeChatʼs Success
Name=DM54255
WeChat was created at the specific point in time, 2009-2010,
when social
networking on smartphones was taking off, thanks to the rollout
of 4G
technology. In both North America and China, there was a
scramble to colonize
this new marketspace, with many competitors offering different
visions for how
users might take advantage of real-time browsing and photo and
video sharing.
Harvey Zhou described how WeChat’s approach to innovation
in this period

differed from before:
When we did QQ Mail, everyone was a user, we experienced it
through our
perspective, and if something wasn’t good enough we just
changed it. Every
developer could be part of an optimization process. But when
we are trying to
create something radical, a bottom-up process would tear it
apart. Users need
to be given an extremely clear concept with precise information
– and that
needs a single architect.
Of course, as the smartphone user experience becomes more
established and
predictable, the need for a grand design recedes, and the value
of the traditional
design thinking approach becomes greater. WeChat’s leaders
are starting to
recognize this. Allen Zhang told us that for several of the more
incremental
features being developed today, such as Top Stories
(personalized article
recommendations), he is giving teams full authority to make
their own design

choices.
Finding the right approach to innovation
WeChatʼs Success
Name=DM54255
What should innovators take away from WeChat’s experience?
First, you need to
understand the key principles underlying your chosen approach
for innovation and
product development. Design thinking is now so well
established that many people
don’t question whether it is the right methodology. But it
builds on a number of
underlying assumptions – for example, empathy with user needs
and collaborative
development – that aren’t right for all circumstances. By laying
out the alternative
set of assumptions underlying a grand design logic, you can
engage in a more

critical and constructive discussion about why you are using
your chosen model.
Second, you should be thoughtful about the specific
circumstances in which you
are operating, and choose your innovation approach on that
basis. Design thinking
works well in established and mature markets where user needs
are properly
understood and innovation tends to be incremental, whereas the
grand design
approach has greater scope to succeed under conditions of high
uncertainty, and
where user needs are unknown and potentially malleable.
Innovation is the lifeblood of any successful company, but many
companies get it
wrong – by falling into the trap of me-too incrementalism, or by
betting on risky
new offerings that miss the mark. A clear understanding of the
conditions in which
you are operating will help you make better choices about the
approach to
innovation that you use.

WeChatʼs Success
Name=DM54255
Julian Birkinshaw is Deputy Dean and Professor of Strategy and
Entrepreneurship at the London Business School. His most
recent book is
Fast/Forward: Make Your Company Fit for the Future.
Dickie Liang-Hong Ke is a Technology Entrepreneur and Sloan
Fellow at London Business School
Enrique de Diego is a Visiting Professor at Universidad de
Navarra.
Related Topics: Product Development | Leadership
This article is about INNOVATION
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Abdulakeem Sanusi 3 days ago
Perfectly written
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