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The value of design thinking for businesses

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Business people in corporations and SME struggle with the notions of ‘design thinking’ & ‘design research’. Here are 8 ‘business’ figures to explain the value of Design Thinking & Design Research for organizations.

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The value of design thinking for businesses

  1. 1. Dr Ekaterina Khramkova Lumiknows Russia WHY Business people in corporations and SME struggle with the notions of ‘design thinking’ & ‘design research’. Here are 8 ‘business’ figures to explain the value of DT & DR. THINKING DESIGN Version 1.0 & DESIGN RESEARCH
  2. 2. What are all these ‘design thinking’ / ‘design research’ about? The value of design thinking & design research for organizations Lumiknows, Ekaterina Khramkova 2
  3. 3. All together, it’s about developing new products with higher: 1. success rate & 2. speed-to-market. The value of design thinking & design research for organizations Lumiknows, Ekaterina Khramkova 3 Design thinking is a process Design research is a tooling
  4. 4. 1. ABOUT SUCCESS The value of design thinking & design research for organizations Lumiknows, Ekaterina Khramkova 4
  5. 5. REVENUE The value of design thinking & design research for organizations Lumiknows, Ekaterina Khramkova 5 POSITIVE. FIGURE №1 New products bring in higher sales, increased customer loyalty, and ultimately higher profits  Launching new products & services is the N1 driver of revenue growth. Deloitte Research Almost half of total revenue comes from new products. Aberdeen Group
  6. 6. REVENUE The value of design thinking & design research for organizations Lumiknows, Ekaterina Khramkova 6 Oracle Half of the revenue for Best-in-Class companies comes from new products, a clear gap between their peers. New products bring in higher sales, increased customer loyalty, and ultimately higher profits  POSITIVE. FIGURE №1
  7. 7. FAILURES The value of design thinking & design research for organizations Lumiknows, Ekaterina Khramkova 7 NEGATIVE. FIGURE №2 New Product Development is a highly complicated process  Every year brings 30,000 of new products. About 90% of them fail despite thorough and expensive market research. Harvard Business Review
  8. 8. FAILURES The value of design thinking & design research for organizations Lumiknows, Ekaterina Khramkova 8 NEGATIVE. FIGURE №2 New Product Development is a highly complicated process  The main reason behind new products failure: 24% Inadequate market analysis (i.e. analysis of customer needs); 16% Product problems of defects; 14% Lack of effective marketing effort; 10% Higher costs than anticipated; 9% Competitive strength and reaction; 8% Poor timing of introduction; 6% Technical or production problems; 13% All other causes. Robert Cooper, Winning At New Products
  9. 9. FAILURES The value of design thinking & design research for organizations Lumiknows, Ekaterina Khramkova 9 NEGATIVE. FIGURE №2 New Product Development is a highly complicated process  Management will increasingly have to be based on the assumption that neither technology nor end use is a foundation for management policy. They are limitations. The foundations have to be customer values. Peter Drucker, Management Challenges for the 21st Century
  10. 10. FAILURES The value of design thinking & design research for organizations Lumiknows, Ekaterina Khramkova 10 NEGATIVE. FIGURE №2 New Product Development is a highly complicated process  All too frequently, marketers' focus on the customer causes them to target phantom needs. Clayton M. Christensen et al
  11. 11. Is there any technique to identify real needs for NPD? The value of design thinking & design research for organizations Lumiknows, Ekaterina Khramkova 11
  12. 12. REAL NEEDS The value of design thinking & design research for organizations Lumiknows, Ekaterina Khramkova 12 POSITIVE. FIGURE №3 Marketing research techniques: Customer needs Design research techniques: People needs Number of people 100 10 Number of things 1 100 Design in Technology program, University of Cambridge, Judge Institute of Management Design research tools used in design thinking is an effective approach to identify new product ideas 
  13. 13. IDEAS-TO-MARKET The value of design thinking & design research for organizations Lumiknows, Ekaterina Khramkova 13 NEGATIVE. FIGURE №4 Why so many ideas?? Because of a dropout rate…  D. L. Babcock, Managing Engineering Technology 60 ideas 1 successful product
  14. 14. Why to use such sophisticated tools to generate new product ideas? There is business analytics… The value of design thinking & design research for organizations Lumiknows, Ekaterina Khramkova 14
  15. 15. DATA VS. KNOWLEDGE The value of design thinking & design research for organizations Lumiknows, Ekaterina Khramkova 15 NEGATIVE. FIGURE №5 Machines cannot generate new product hypotheses  Despite an abundance of data, most companies do a poor job of predicting the behavior of their customers. Even companies that take the greatest trouble over their predictions are correct only 55% - a result that hardly justifies the costs of having a CRM system in the first place. Harvard Business Review
  16. 16. 2. ABOUT SPEED The value of design thinking & design research for organizations Lumiknows, Ekaterina Khramkova 16
  17. 17. SPEED-TO-MARKET The value of design thinking & design research for organizations Lumiknows, Ekaterina Khramkova 17 POSITIVE. FIGURE №6 While both cost and quality come in high, launching products before competitors has always been a top focus for manufacturers.  Every year for the past five years, Time has been the number one pressure identified by companies surveyed… Products that are released on-time result in 72% higher profit margins. Aberdeen Group
  18. 18. ALL TOO LATE… The value of design thinking & design research for organizations Lumiknows, Ekaterina Khramkova 18 NEGATIVE. FIGURE №7 In today’s fast moving environment, when the product reaches the market, it may find it already dramatically changed  If it takes you 9 months to develop and launch a new product and then another 9 months before it begins delivering significant revenue, your development cycle time is 9 months but your time-to-revenue is 18 months. Industryweek.com
  19. 19. How can design thinking help to speed up the NPD process? The value of design thinking & design research for organizations Lumiknows, Ekaterina Khramkova 19
  20. 20. PROTOTYPING The value of design thinking & design research for organizations Lumiknows, Ekaterina Khramkova 20 POSITIVE. FIGURE №8 Design thinking is about creating prototypes of new product ideas asap.  In our practice, when companies are used to spending up to 1 year to produce a well elaborated product which may be already obsolete by the time of launch, we spend about 1 month to create rough prototypes refined due to several iterations based on customer feedback. Lumiknows
  21. 21. PROTOTYPING The value of design thinking & design research for organizations Lumiknows, Ekaterina Khramkova 21 POSITIVE. FIGURE №8 Design thinking is about creating prototypes of new product ideas asap.  We had this idea of ‘adaptive script’, but it was all at the level of thinking. We had been asking our divisions for about 3 months if that was possible to implement. But everybody kept silence… And here, suddenly, we have realized it and within a very short time! …And I like the definition of ‘prototype’ as a ‘visualization of business requirements’. Department of customer experience modernization, Sberbank. Design thinking project executed by Lumiknows, 2015
  22. 22. The value of design thinking & design research for organizations Lumiknows, Ekaterina Khramkova 22   REVENUE FAILURES REAL NEEDS IDEAS-TO-MARKET SPEED-TO-MARKET DATA VS KNOWLEDGE PROTOTYPING ALL TOO LATE… Why design thinking & design research: value for business
  23. 23. Contacts Ekaterina Khramkova e.khramkova@lumiknows.com Lumiknows, Moscow, Russia http://www.lumiknows.com Lumiknows is a Russia based product design & innovation consultancy. The value of design thinking & design research for organizations Lumiknows, Ekaterina Khramkova 23
  24. 24. Dr Ekaterina Khramkova Lumiknows Russia WHY THANK YOU! THINKING DESIGN Version 1.0 & DESIGN RESEARCH

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