Service design and Management, case study

1. Introduction
Increasing numbers of economics-related services, increasing problem
complexity, and growth in the field of information technology have all lead to
a need to change the frameworks around which production of innovation is
based. Service dominant logic (Vargo & Lusch, 2004) was proposed based
around the idea that service businesses will expand due to more economic
services being available. Innovation has shifted from individual products to
include service systems that provide value co-creation based around services
for customers and providers.
As problems continue to become more complex, it’s been noted that there is a
grey zone surrounding security and IoT technologies which cannot be
answered by science alone (Weinberg, 1972). In order to solve these problems,
it’s likely that a framework designed to create innovation is required that
includes customers and diverse stakeholders.
Information technology has now developed to become the basis for industry,
and the number of new businesses that base their services around connecting
different industries are rapidly increasing. These changes have an effect on
our daily lives, and are encouraginga transformation in how people think and
act, as well as encouraging changes in societal systems.
It is for this reason that comprehensive service system designs that include
customers, providers, and diverse stakeholders (Sawatani, 2016) are needed.
Design thinking (Sawatani, Kashino & Goto, 2016) is receiving attention as
way to overcome these issues due to its ability to understand problems from
a human-centric perspective. Likewise, service design (Sawatani, 2015), is
also receiving attention as a methodology for service system creation that is
adapted to design thinking. In this document we will examine the status of
leading companies which are already incorporating service design, and see
how this is leading to the creation of new value for them.

2. Overview of Service Design
Service Design
Service design can be defined simply as discovering the urgent needs of
customers (customer pain), and designing new service systems to act as
“painkillers” through encouraging change in businesses and organizations.
This is also beneficial for the companies, as offering these kinds of services
leads to increased profits for them. In other words, service design is absolutely
critical for both customers and businesses. Birgit Mager, President of the
Service Design Network (SDN), states that service design:
“Aims to ensure service interfaces are useful, usable, and desirable from the
client’s point of view and efficient and distinctive from the supplier’s point of
view.”
The Center for Services Leadership at Arizona State University, defines it as
follows:
“Service design is focused on bringing service strategy and innovative service
ideas to life by aligning various internal and external stakeholders around
the creation of holistic service experiences for customers, clients, employees,
business partners, and/or citizens.”
Service design is therefore “The process of creating service systems from a
human-centric perspective”. The introduction of design thinking is therefore
fundamental as a human-centric methodology. In other words, this means
that from the perspective of customers, providers, and other stakeholders
(hereinafter referred to in combination as “actors”), producing service systems
is an activity performed in order to receive value, as well as to ensure that
the service is actually accepted and offered.
Service systems are a system that show an exchange between actors.
Specifically, they are an integration of customer journey maps which view a
service from a customer perspective, and service blueprints, which are

3. performed from an employee perspective. Service systems include business
models which are actually ecosystems containing supply and logistics
partners etc. as well as other stakeholders.
In Japan there is perhaps not enough awareness of service design, and there
are still misunderstandings related to it.
Current misunderstanding seem to be centered around:
• Services are something that should be resolved on-site.
• Only paying attention to improving customer experience will lead to
negative effects on business
Services are not just an on-site initiative, instead they are an organization-
wide initiative designed to change the organization itself and offer an entirely
new system. An important aspect of this is that service design cannot just
stop at the customer-facing portions of the organization, it must be
incorporated as part of managerial strategies.
A variety of proposals for improvement that have been received from
customers are certain to be available in these customer-facing areas. There’s
also a lot that can be implemented on-site as part of improvement initiatives.
However, if a large change in direction is required, the managers and top
management - who know how they plan to change and transform the current
direction of their organization - must lead this change. Service design has the
potential to have large impact through changing the strategies and mission
of a business.
Survey Overview
The goals involved in introducing service design change the scope of
transformation for the business (transformations in ways of thinking and
behavior amongst employees and customers and in the business itself) and

4. the results that the business sees. We used the following questions to
interview leading businesses that are making use of service design:
• What kinds of design thinking and service design are you using in your
business? What was your purpose for introducing these concepts into your
business, and how far has the introduction progressed?
• What were the challenges involved in introducing these concepts? How did
you resolve them?
• As a result of introducing them, what has changed?
A number of common factors arose as a result of surveying these businesses
regarding their results. These were related to transformations of scope
related to the strategy and organizational structure of businesses, as well as
transformations related to behavior levels. The aims related to introducing
design thinking and service design were largely split between hoping to
encourage transformation at a company-wide level, or encouraging it purely
at a departmental level. The former can be seen as “offensive” strategies, and
the later can be seen as either “offensive” or defensive” strategies.
The next section will describe the representative organizational models seen.
SAP’s Innovation Center and GE Digital etc. created segregated
organizations for new projects. Others included cross-sectional structures for
each business division, or design organizations within business divisions.
Strategy/Organizational Level Transformations
● Top Commitments
The following is an overview of the status of design thinking and service
design initiatives being undertaken at the businesses we visited. Design
thinking and service design is being introduced into the organizational
structure of these leading businesses by top leadership. Projects themselves

5. are being implemented by creating positions for executive officers in charge
of design, and by specialists that include designers.
● Management Systems
When examining SAP we find that one of the fundamentals of their hiring
process is diversity (in Japan, 2/3 of new employees are women, with more
than 1/2 of new employees being overseas hires), and that one of their
evaluation indices is the number of “tries” (in terms of new projects) that have
been made. Evaluation is made based around what has been learned from
failures. IBM has implemented a number of evaluation indices that differ
from those for more typical projects when it comes to design thinking. These
include Quick Wins etc. where joint development is performed with diverse
stakeholders while using design thinking.
Behavioral Level Transformations
● Discovery of issues through evaluation of usage
after a technology has been developed
・Resolutions
It’s important to fully understand customers and empathize with their needs,
but this doesn’t mean just doing what they ask. Even from the customer’s
perspective, it may be possible to revolutionize a situation through coming up
with innovative new solutions, which may be discovered by pursuing a more
traditional solution to an issue. Both customers and businesses aim to solve
problems and create value through innovation that is created by searching
for issues from both a higher and broader perspective, and combining
technologies.

6. Business Structure after Introducing Service
Design
Finally we will explore the structure of these businesses after they
implemented service design. The leading businesses that we visited began by
first detecting issues from the perspective of “What issues are arising?”,
before making use of external resources and settling on processes of problem
resolution based around open innovation.
Survey Details: Sap
SAP LABS, LLC
A rare example of a German business
that succeeded in Silicon Valley
SAP was first established in Germany in 1972. The founders included David
Kelley from IDEO, as well as the founder of d.school Hasso Plattner. Both
were dropouts from IBM. IBM’s products and services were centered around
middleware, with a strategy that was based around being an “arms dealer”
for other businesses. This meant the pair’s focus on the application layer was
straying out of IBM’s territory. If they pressed forward, they risked becoming
a competitor to businesses that were developing applications based on IBM’s
platforms, leading to a destruction of the ecosystem.
After being ordered to stop work on the project they were developing, they
decided to quit IBM to start their own business. The company they founded,
ERP (Enterprise Resource Planning), succeeded as a business. They have
80,000 employees worldwide, with 20,000 based in America, and a further
4,000 based in Silicon Valley.
The culture of the company was extremely strict, leading to it being referred
to as a dinosaur, but visitors couldn’t help but notice how unique it was
amongst the other companies in Silicon Valley. Most companies in Silicon
Valley(such as Apple and Google) are American. The only exception being the

7. Japanese company Hitachi. SAP was the largest foreign company in this
unique territory, and interestingly Japan and Germany have many similar
points. Both countries are limited by their labor forces and access to sources
of energy, and both see engineering from the perspective of artisans/meisters.
The fact that this sober and strict German company could succeed within
Silicon Valley lead to it becoming a benchmark for Japanese businesses.
Although many Japanese companies have visited Google and Apple, none
have been able to imitate them. SAP is therefore an interesting benchmark
in terms of it being a completely different perspective on succeeding in this
unique area.
SAP Labs, LLC’s journey
SAP first arrived in Silicon Valley 22 years ago. At first the company’s
German president attempted to do things in a German-manner, which ended
in failure. The company first became aware of design thinking 12 years ago,
leading to it completely revising its management strategies and product
portfolio. In 2010 90% of its revenue came from ERP. By comparison, in 2015
60% of the company’s overall revenue had changed to come from New SAP
(new projects including mobile, cloud, and HANA - a big data analysis
platform). It seems that the company had overcome the sickness that most
large companies find themselves facing related to not being able to transform
themselves and having an innovation dilemma. The key to overcoming this
sickness was design thinking.
Overcoming “Big Company Sickness”
From 2000 onwards, Plattner began to feel a sense of impending danger
caused by the sudden arrival of the digital economy. While on a plane trip, he
read an article in a business newspaper written by IDEO’s David Kelley on
design thinking, and came to the realization that it was the solution for their

8. problems. After arriving, he phoned David, and proposed building a design
thinking school which was established as “d.school” (part of Stanford
University) in 2004.
When starting SAP, Plattner had experienced working on-site with customers,
gaining an understanding of their activities and processes before turning
them into products. For that reason, when he read David Kelley’s article he
realized that in order to overcome this impending danger, it was important to
return the business to its original starting point of working closely together
with customers. The tool required to accelerate the permeation of this process
throughout the company was design thinking.
In 2005 he hired 35 design thinking experts for the company’s strategy
planning division in Germany, and began devising a strategy. Next, he
introduced this strategy into research and development, with work beginning
on the hana project from 2007.
hana is now the basis for the company’s new projects, but has its roots in a
hackathon held with students in Silicon Valley. Plattner held the hackathon
as part of one of his classes, with the event itself based around the theme of
“Thinking about businesses that destroy ERP”. His students suggested that
what customers wanted was “A platform that allowed for real-time decisions
to be made based upon data”. The project was mainly worked on by Korean
students, leading to its name being hana (Korean for “one”). Plattner then
went on to make a proposal regarding the project at a strategy meeting.
The 7 to 8 years since its introduction lead to a number of success stories
within the businesses it was used in, with it being eventually rolled out to
other divisions in 2012. The department most resistant to its introduction
was sales, which tended to think about business from a short-term
perspective. Within this department a number of individuals appeared who
found that they enjoyed design thinking after undergoing training and
hearing about success stories related to the project. This was how SAP
managed to integrate design thinking into its company culture.

9. Factors for Success: 3 Perspectives
People・Place・Process
■ People
People involves making use of diversity within an organization. The key to
this is the way in which people of different ages, genders, cultures, countries,
and roles can come together to co-create something. As a company that had
its origins in Germany, most of the personnel working at SAP, along with the
companies that it worked with, were European.
SAP began to shift towards open innovation, rather than working alone. In
Silicon Valley, for instance, it established d.school and increased its
connections with universities. It worked with bluebottle to create a
collaboration base called hanahaus (one house) close to Stanford University,
thereby accelerating its opportunities related to coming into contact with
diversity.
Diversity also became a fundamental aspect of its hiring policies. Its hiring
process in Japan is based around a day-long sales boot camp, which involves
making a group based proposal based around a business case. As a result of
this, 2/3 of its new hires in Japan are women, and more than half are
foreigners. Ensuring design thinking permeates throughout its diverse
employees and customers leads to the creation of a shared language and
framework. This, along with co-creation with its customers, leads to better
results, along with the creation of a positive feedback loop. These design
thinking training tools have been made available to the public as “SAP
Scenes”.

10. ■ Place
SAP had to first leave its castle hometown to create new methods and a new
company culture. In 1972, SAP created its first base of operations in Walldorf,
Germany. This was followed by another base of operations in Palo Alto,
created in 1993 to further develop its IT market and acquire more personnel.
At present it has 4000 personnel in Silicon Valley. The scale of its employees
is within the top ten in the area (with Google at 1st place). Its highest ranking
employee at Palo Alto is its CDO (Chief Design Officer) Sam Yen. Its new
projects are created here, which are then rolled out to other locales.
An efficient way to develop these new projects is to separate location,
personnel, and evaluation. One of the evaluation indices for SAP’s new project
developments is the number of attempts that have been made. A great deal
can be learned from failures, which is why this is incorporated into
evaluations.
In Silicon Valley getting used to failure, and failing often, is seen as necessary
in order to succeed. Related to this, Google and Amazon are said to be the two
companies with the most failures on Earth.
There are 2 varieties of failure:
1. Attempting something and making a mistake.
2. Not attempting something and missing an opportunity.
In Silicon Valley the latter is considered to be a mistake. The former is not.
However, Japanese businesses tend to do the reverse of this. Urging
employees to make the kinds of mistakes in 1. is important, as is using these
mistakes in evaluations.
■ Process
Gaining an understanding of the background behind the concepts of design
thinking and the processes behind its introduction allows for it to be used as

11. a shared language and framework. However, it takes time for it to permeate
amongst regular employees and specialists until it becomes a usable concept.
A 100 question employee survey is currently being held twice a year at SAP,
with 30 to 40 of these questions checking how design thinking is being
incorporated into the work employees are performing.
To put it simply, design thinking is a framework for creating innovation.
Europe has always been multicultural, and is therefore good at creating
frameworks. By comparison, Japan tends to place importance over tacit
knowledge as opposed to explicit knowledge. Saying to employees that “we
need innovation” or “we need to making changes” while not providing
methods to achieve this, is rather unfair.
From Problem Resolution to Problem Discovery
The value of design thinking is not simply in its ability to solve customers’
problems, it’s in its ability to discover customers’ most essential problems, and
solve them. SAP’s methods for performing problem discovery and setting with
its customers is one of the foundations of design thinking.
For example, consider the problem of a supermarket that is missing items
from its shelves. This is a missed opportunity, and originally proposals would
have been made regarding inventory management and supply chains.
However, approaching the problem from a design thinking perspective
encourages working with the supermarket to discover who its customers
really are.
For example, this may lead to discoveries where customers are no longer
treated as a category such as “women in their 30s”, but instead as individuals
such as “37 year old Ms. XX, who has a 2 year old child and an infant, and
who has to ride her bike to the supermarket in the rain.” Actually
investigating what kind of people their customers are, and realizing that they
may not want to come to the supermarket in the rain, leads to the realization

12. that what the supermarket needs is not inventory management, but instead
it needs a delivery service. This means work needs to be done to “set problems”
before considering what countermeasures are required.
https://youtu.be/NsdG48dpmxA
Project Approach
Designers are Leaders
Projects in design thinking are implemented by teams consisting of designers,
industry business managers, and the engineers who will actually design them.
These individuals understand both their company’s core technologies and
their customers. The leader of these projects is the designer.
This leads to the birth of innovation through completely new service systems,
which creates results for the business itself. In other words design thinking
is a framework for creating innovationas team. Making use of this framework
makes it possible for small, medium, and large businesses to create
innovation, and is receiving increased attention from many companies.
Survey Details: GE Digital
GE Digital
(Design Center)
Overview of Predix
4 years ago, GE developed a fundamental platform designed to allow for the
introduction of IIoT (Industrial Internet of Things) technologies. It was first
designed for internal use, and after trials was used within the company for 2
and a half years while improvements were made. After this process was
completed, it began to be offered for external use under the name of Predix.
All of the company’s departments were given the mission of introducing

13. Predix to industries throughout the world, with an initial focus on dedicated
cargo companies and 8 different airlines including China Eastern Airlines.
GE visited these companies to confirm their needs, and created software and
applications based on their customer portfolio. For example, they created a
mobile app for China Eastern Airlines pilots, and collected data from
airplanes for other companies. When developing Predix, GE developed
connections with other companies such as Pivotal, which they now own 16%
of. Their overall direction is to aim to incorporate technologies from a variety
of different companies, not just produce everything internally.
Overviewand Details Regarding the Establishment
of GE Design Center
The design center was created on the first floor of the company’s building as
a place to gauge customer needs and was a response to the requirement to
base interaction with customers around design thinking when working with
them. Customers come to the building, and are introduced to the process of
design thinking in order of start to finish. They are also able to experience
ways of thinking related to design thinking. The building currently houses
1,300 employees, and is the headquarters of most of the projects based around
Predix. Deta scientists, designers, researchers, product managers etc. are all
basing their work around the Predix framework. The building also employs
60 designers, of whom 10 are working in the airline division.
GE Design Center’s Facilities.
■ Work Bench
The Design Center’s work bench offers programs aimed at high schoolers
related to STEM (science, technology, engineering, and mathematics). For
example, students are invited to come and use the tools at Work Bench,

14. female students are invited to attend coding lectures, and multi-week classes
are held during the summer vacation to offer an introduction to the processes
involved in software development. Work Bench offers the opportunity to
experience development based around design thinking. The Work Bench
offers 3D board development tools through a vending machine, as well as
other related tools.
■ 270 Degree Projection Space
Immersive Room
The projection space offers a 270 degree image, and allows for the playback
of 360 degree photos and videos taken at other locations. For example, if 360
degree photos and videos are taken at railway company’s facilities, this
information can be shared and experienced at the Design Center. Cockpits
can also be recreated, allowing for discussions based around actually feeling
what it’s like to be in the cockpit itself. It also allows for visualization during
brainstorming sessions by being able to place information regarding the
brainstorming process on the walls.
Project Approaches at the Design Center
Examining the approach taken to projects from GE’s side, using its airline
projects as an example, reveals that its teams are made up of 4 core members.
・Project managers
・User experience manager
(Design and research)
・Data scientist
・Solution architect

15. The project manager manages the overall project. The managers in charge of
design and research are responsible for facilitating the overall project and
gaining an understanding of the issues involved, as well as defining who the
project’s actual users are.
The data scientist considers what sources of data can be used, and how they
can be used intelligently (Predix has a data platform function that allows it
to make use of a variety of data sources).
The solution architect is in charge of considering how the Predix-based
solution will be developed and released. As a machine expert, the solution
architect also considers whether data will come from finance related sources
or from engines, along with methods for connecting this to Predix. There are
also situations where GE performs the software development.
Work related to the final design decision is performed as a partnership with
the customers, but daily considerations relating to why the solution is being
created are made, along with improvements, with the overall goal being to
polish the project to ensure customer satisfaction.
Individual actions are not finalized simply through a one-time process of
being given a problem and delivering an answer. Focus is placed on the
importance of continuous improvements based around the customer’s needs.
Projects are typically 3 to 6 months in length, depending on their scale. A
typical project continues for around 6 months. The process starts by
considering what needs to be made, and ends with the project being released.
There are currently 60 designers working in the Design Center, with 10
working directly on airline projects. In most cases a designer is purely
responsible for duties in their own department, but there is also a system in
place where designers work as internal consultants and take on work from a
variety of other departments. There are also situations where work is

16. outsourced. Responsibility for the coding stage of projects is given to
employees with a background in UX visual design, UX research design, and
design.
Facility Design
When a business implements a project that makes use of Predix, they spend
one day in the Design Center. They are provided with an understanding of
GE Digital and Predix, and are given the day’s agenda. GE explains the
schedule for the day and its vision, along with its strategies, and explains how
it will move forward with the project in order to solve the problems the
customer is facing. Once the introduction is complete, the customer moves to
the workshop area. The workshop is a space within the GE Design Center
that is used to move forward with the project. It includes a moving project
space, as well as a dedicated space for discussions.
The moving project space is called a “machine” and features 8 modular rooms.
All rooms feature a touch screen, and all furniture such as chairs and tables
are movable. The spaces can be customized according to the number of people
present, making them ideal for a variety of situations.
The discussion spaces are called “bays”. These spaces are used to hold group-
based discussions. Each bay features its own projector and moving
whiteboard, with each fitted out with all required equipment. These facilities
have their own facility managers, and are used almost weekly. GE receives a
usage fee for the use of these spaces, and offers facilitators along with food.
All rooms feature computers with dual displays, and allow software to be
opened from touchscreens. They feature cameras on both sides, with one
being a video conferencing camera, and one facing the whiteboard to record
whatever is written there. There’s also a space for meals, and these are
provided while teams work on the project or hold discussions. The exterior of
these spaces is designed to be primarily functional as opposed to futuristic.

17. They are designed to block out noise, and iPads built into each of the spaces
control the interior lighting, TVs, and other devices. Other necessary items
are also included in each room.
Business divisions also have similar Design Centers in Shanghai, Texas,
Paris, and Singapore. However, the moving-style rooms that can be changed
as required are only available at the headquarters. The Dubai center features
a round-shaped room with a futuristic large screen TV, creating an almost
Star Trek-style futuristic feel.
Challenges Related to Project Implementation
and Solutions
Connections between Projects and Products
Responsibility for factory design is given to GE’s Factory Division. Most
projects given to GE Digital have a relatively high degree of freedom, but
projects related to airports have more limitations. This is because there are
few examples of cases where service design can be used when collaborating
with airline companies.
Originally, business analysts were responsible for managing the projects,
with those in charge of education transferring to GE Digital to move the
project forward, but the necessity of product managers has now become
evident. In response to this, a variety of layers that straddled over multiple
occupations, such as a project manager layer and programming management,
were put into place. This created a structure that allowed for the appropriate
links to be made between projects and GE’s products.
Budget Acquisition
Budget acquisition has always been a challenge. In particular, when GE
Digital was first working purely internally, it was extremely difficult for it to

18. acquire a budget from within the company when planning something. At
present GE Digital has its own funding, which solves this problem.
Building Relationships with Stakeholders
Using airport projects as an example, there were cases where design thinking
could not penetrate the airport itself due to the variety of stakeholders
involved. This is because not all airports are the same, and because the
various stakeholders all have their own respective functions. This means that
they are separated, and there was no single point of contact to cover all of
them. When dealing with this kind of situation, it’s extremely important that
an individual exists at the managerial level who is willing to sponsor the
project. If there’s a problem or there are issues surrounding the budget, being
able to consult with a top-level individual such as this is important for
problem resolution.
Forming an Organizational Culture
Within GE
GE was originally a manufacturer of electronic appliances, and thus had a
culture based around hardware design. This has gradually changed to become
a culture of creating solutions based around user experiences. All divisions
have a shared language that involves actually going to a location to perform
research and deepen understanding. Divisions also understand the
importance of developing solutions, and understanding the individual
problems of customers and users.
There is a movement within GE to spread this shared language throughout
its entire organization. For example, if the GE Minds and Machines IIoT
technologies conference was going to be held in the next week, a place would
be created to provide training aimed purely at software engineers. Plans

19. would involve providing software engineers from around the world an overall
explanation of Predix and examples of how to use it.
Ensuring that its organizational culture has a solid foothold means that the
the Design Workout (training/practice) method, which has been in use for
many years, is used. In the past, these software engineers would be invited
into a training room and a PowerPoint presentation would be used to provide
the training. More recently, these training sessions would incorporate Design
Workout, which incorporates genres based around design thinking and
activities such as drawing experience maps.
Because there are occasionally customers who have never performed Design
Workout, the project is moved forward by first explaining how Design
Workout is used. This method is especially effective when a problem needs to
be fully understood to move a project forward.
Challenges Related to Service Design
Service design is seen to be important, but it can’t always be introduced
effectively. For instance if we were system designers, we would think in ways
that are based around systems. Taking the example of a factory that produces
items like batteries and engines, we would primarily think about optimizing
the factory’s overall systems through smart movements. This would be
performed by marking employee movements, collecting the data, and
analyzing it. We would think about things from a user perspective as much
as possible, but for a variety of reasons it would be difficult to consider
everything from the perspective of service design. In particular, there are
regulations relating to relationships between areas of operation and the
airline industry, and there are also regulations relating to the materials used
in cockpit design, so it is difficult to perform user-centric design based around
the concepts of service design.

20. It’s impossible to tell if there are service design solutions for each industry,
without first attempting to make them. The closest concept to service design
is incubators, which involve 4 people. For example, performing tracking of
airline maintenance, providing airline services, and examining all systems
such as customer baggage handling and security services in order to optimize
them. However it’s impossible to complete all of these in one go, so they all
need to be examined separately. Baggage handling and refueling work would
need to be looked at individually, with optimizations created for all of the
work involved. This would need to be done from the perspective of a team, or
from that of designers and engineers, or from that of customers.
Data Collection and Analyses
Using Streetlights and Interior Lighting
A smart city project, implemented through a business division known as
“Current”, used streetlights as a part of their analysis solution. The
streetlights have sensors and cameras attached to them, allowing for the data
acquired from these to be analyzed. For example, San Diego parking installed
these streetlights in their car parking areas, making it possible to analyze
noise levels, traffic levels, detect nearby gunshots, and track
temperatures/rain etc. An iPad app can be used to monitor the current
situation at these car parking areas. Photos can be taken frame-by-frame
using our video monitoring technology. This allows for continuous photos to
be taken of traffic levels, or the brake drums on trains, which are then
automatically examined and analyzed, without any human involvement. The
sensors also allow for the detection of gunshots, as well as how loud they were
in decibels. Along with San Diego, one other city has also begun introducing
these streetlights.
An interior lighting project is also being implemented in Tokyu Hands, a
Japanese department store. These stores have sensors installed into their
interior lighting, which allows for customers who want to buy items such as
cookies or biscuits to be detected, and then be guided to the shelves they’re

21. located on. At the moment this project is mainly based around detection, and
is expected to expand to include different forms of interior and exterior
lighting, and allow for apps to be used to track a variety of sensors.
Predix’s Challenges and Future
Predix has only just been developed, and so it is unclear as to what kinds of
results it will achieve. We’re still considering the ways in which we can use it,
and this is a process proceeding through trial and error. From the perspective
of airline projects, we’re still examining and considering a variety of work
processes, and coming up with optimization strategies for pilots, maintenance,
and for maintaining engines and returning them to planes. There have been
success stories in fields such as oil and gas, and smart cities. These are being
used as examples to explain the use of Predix as a general purpose platform.
GE has a variety of applications for Predix, but these can’t be said to be
perfect. However, we’ve made airplane engines for many years, and are
performing daily monitoring to gain a fuller understanding of them. This is
the kind of experience we bring with us, to help put our customers’ minds at
ease.
Survey Details: IBM
IBM (Almaden Research Center)
IBM’s Design Thinking Principle: Loop
It’s important to understand the essence of design, when designing something.
When designing something, focus needs to be placed on its human users. For
that reason we need to be able to empathize with these users. In order to solve
whatever problem we’re faced with and achieve the hoped for result,
initiatives that are both fast and scalable are essential. For that reason, a

22. shared framework was created that would be understandable by people from
around the world.
The main principle of this framework is called “loop” and it contains 3 main
elements. The first element is a focus on user results, the second is forming
teams that have their own discretionary power, and the third is ensuring an
ongoing process of evolution. This means going to where users are, observing
them, and attempting to understand them. A constant focus on customers is
directly connected to results. This needs to be reflected on by the team, with
specific ideas formed from abstract ideas.
Methods for this can involve the use of post-it notes, paper prototypes,
storyboards, or mapping. However, these are only tools, and what is really
important is our own thoughts. Who are our users, what are their needs? Who
are they, and what have they learned so far? What is it that they actually
want to do, and what are their next plans? How can these stories be delivered?
These are the things we consider when we design something. This is what
“loop” is.
The Key to Adapting Design Thinking to Business
When designing something as part of a business, work needs to be performed
with a variety of teams and in a variety of environments. For this reason there
are a variety of loop methods. These include methods that work across teams,
methods for individual teams, and methods that use agile approaches. An
experimental approach is required to confirm which method is best for a
situation.
When design thinking was adapted for IBM, 3 keys to success were discovered.
These keys were seen to be the most important techniques for adapting design
thinking to a large-scale complex business such as IBM. The 3 keys include
“hills”, “playback”, and “sponsor users”.

23. Hills are a method of design intent for working out what kind of value will be
offered to users. This allows for products to be created across teams, with the
whole team understanding the intent of its designers. Playback is a milestone
designed to be confirmed with stakeholders as well as with the team. Sponsor
users involves finding people who may actually become users of the products,
and having them support the team. These keys are incorporated into
traditional design thinking.
It’s not easy to find sponsor users. When starting the project, a variety of
users are interviewed. Their behavior patterns then need to be understood.
The design research divisions include staff from fields such as sociology,
anthropology, and other areas, with a variety of experiences related to design
thinking located in one place.
Design Thinking and Agile Development
IBM has combined design thinking and agile development. Design thinking
is an excellent method for discovering and resolving problems, but isn’t a
quick way to commercialize something.
Design thinking is used alongside an agile sprint, reviews are performed, and
confirmation is performed while displaying the prototype. Agile is combined
in the design thinking process as a way to complete the project. This also
makes tracking easier. It also makes the state of development easier to share
with the client and allows for it to be shared with the stakeholders.
PowerPoint or other presentation methods can be used to display the
prototype version, as well as to make suggestions regarding what kind of
changes will be made in that week or the following week.

24. Ways to Effectively Use Design thinking
■ Set a specific period of time
When using design thinking, a specific period of time should be set in which
creative thinking is performed. For example, a 2-hour period in which ideas
are written on post-it notes, and a whiteboard is used for brainstorming
during a session in which all members are involved. Each team then holds a
discussion, and finally presents their ideas in a uniform manner. This process
reveals thinking patterns and ideas.
■ Use Design Thinking as a Shared Language
As in “When should we do a playback?” design thinking lingo should be used
in discussions. This lingo has already become a shared language within the
company to the point that it is easier to use than typical language used at
IBM. Using a shared language ensures that everyone has an understanding
of design thinking. Agile design thinking is now being used in divisions other
than the research divisions, making it easier for everyone to understand.
There are also projects where IBM’s design thinking is taught to other
companies.
■ Understanding the Essentials
No matter how much opinions differ, always aim to return to the essentials
to rethink things. Teams can consist of many members, or just a few. Teams
must empathize with users, but they need to empathize with one another as
well. The “essence” of something is like the North Star - it never shifts. Teams
need to consider this in an ongoing manner.

25. ■ Ensure a Whole-System Perspective
Ontario College of Art and Design’s Peter H. Jones explains the concept of
there being 4 different domains. The first is products that have not been made
and don’t yet have a form, this is the domain of graphic designers and
communication designers. The second is products and user experience design
services. The third is closed systems within organizations and businesses,
and the fourth is complex open systems.
These respective domains are also related to other domains. There are
researchers in charge of research areas related to specific industries and
fields of businesses. There are also situations when only one domain is
focused on. However, domains are only one part of an already complex system.
It’s important to focus not just on one, but to look at the overall picture. It’s
also necessary to reconsider what you’re focusing on while understanding
that these domains are one part of a complex system. This allows for you to
gain an understanding of its relationship with the bigger picture.
Survey Details: Instacart
Instacart
A Fresh Food Delivery Service
Used by More Than 10% of America
Instacart is a website and app based service that allows users to purchase
food items from their favorite stores by having staff go there to purchase it
for them. The staff can communicate with customers if an item they requested
isn’t available. Time is calculated in 1 hour blocks, and the service also allows
for delivery to workplaces.
The service began in 2014 when 3 individuals took photos of all the items
available in a supermarket and posted them on a website. As requests for
orders came in, they began to offer a purchasing and delivery service, which

26. led to more orders. Many retailers disliked the service when it started.
Eventually some of these retailers began to partner with the service.
The service currently offers food items from the 3 largest grocery stores in
America (Target, Publix, and H-E-B), as well as more than 100 smaller
retailers throughout America. There are users in 25 cities throughout
America, with 15 million households, or approximately 12% of the population,
using the service. The service has been operating for almost 4 years, but has
almost doubled in size in the past 1.5 years. It’s currently aiming to offer its
service throughout America in the near future.
When customers place an order, 10,000 shoppers from throughout America go
to the store to pick up the requested items. Instacart began the service as a
way to resolve a problem its customers were facing. One of their company
values is “Soul for the customer”
Company Values
Making proper use of time and using different methods of thinking allows for
bigger achievements through teamwork and collaboration. It may be quicker
to do something alone, but achieving something big requires more than one
person. I believe it’s important for people to do things in their own way and
take responsibility for this. One of the company’s values is “Soul for the
customer”, which is a method of problem resolution for customers. We offer a
variety of services, but these are all for our customers. The services we
provide all require persona.
Instacart’s Partners Retailers, Makers
An important aspect of Instacart’s business is its partnerships with retailers.
The company doesn’t have any inventory of its own, instead it uses retailers’
inventory. Benefits for retailers include being able to expand their sales

27. channels through online sales. Instacart offers product and pricing
information from a large number of retailers. These include product lists and
inventory information. All necessary data is offered as data.
This all means that users do not need to spend time going to different stores,
instead they can make all their purchases in one location. Instacart’s website
displays retailers in a side-by-side manner, allowing customers to buy items
from their favorite stores. If the store is one they make a lot of purchases from,
they already know the price of items they commonly buy. Instacart receives
cooperation from the retailer to offer these items for the same price.
The company also has other valuable partners in the form of P&G, Coca Cola,
General Mills, and other product makers. By offering an online platform
Instacart also helps product makers to promote their items. Customers are
also able to buy the items that they’re used to. Depending on the situation,
it’s also possible for these brands to offer items for special prices.
Some retailers now offer dedicated registers for Instacart. This is in response
to the large amounts being ordered through Instacart. The strategy ensures
this can be dealt with efficiently. This strategy requires that retailers trust
Instacart, and is a sign of the close partnership that the company is building
up with many of them. Another benefit of partnering with retailers is the
creation of dedicated areas where items being purchased are collected and
bagged, ready for delivery. Some stores also offer refrigerators and freezers
for purchased items. This means that items can be stored in these areas if
there’s a gap between the purchase and delivery times.
Instacart’s sales lead to revenue for retailers. In order to have their CPG
products displayed in a more preferential manner, companies can also pay a
premium price.
Flow from Order to Delivery

28. Customers make an order online or through the mobile app, which are
collated by Instacart. The company checks the content of the orders, and
automatically distributes them depending on the location of currently
working shoppers, along with order statuses. The orders are then sent to
dedicated Instacart shopper apps. Drivers pick up the bags of shopping, using
their own vehicles to deliver them to customers.
Drivers use the same app as shoppers to see where they need to deliver the
purchases. They then deliver the orders to customers. There are also
situations where multiple orders are delivered at once. In order for drivers to
more efficiently deliver orders, their delivery routes are decided for them,
with instructions as to what order they should make their deliveries in.
As well as delivery charges, the company also gains profit through its service
fees (an optional payment). Separate from this customers can optionally
provide shoppers and drivers with tips, which become direct income for these
workers.
After receiving their deliveries, customers can also place feedback. They can
record their level of satisfaction on the website or on the app using a star-
based system. If they are so dissatisfied that they don’t award the service any
stars, they are given the option to call customer support. This feedback is
provided to the development team, who constantly work to improve their
products.
Instacart’s Clever Advantages
~ Specifying Times in 1 Hour Blocks
One of the advantages of Instacart’s system is having its delivery times be
specified in 1 hour blocks. Other companies only allow delivery times to be
specified in 3 hour blocks, which increases requirements related to
redeliveries if customers happen to not be at home.

29. In addition, if an ordered item isn’t available shoppers are able to offer a
similar item to customers, who can give their permission for that item to be
purchased instead. The app makes processes like this automatic. There’s no
need for shoppers to actually speak to customers on the phone.
Partnerships with Retailers are a Factor for
Success
Many retailers understand that customers want an online delivery service,
but can’t or won’t invest in offering one. Offering this through the Instacart
service allows retailers and customers to be matched.
Services that treat on-demand as a market, such as Uber, are becoming
increasingly common. Consumers are getting used to placing orders online
and having them delivered, but placing orders for food items online was an
undeveloped field amongst America’s retailers.
Organizational Structure
Customer Research and Supply and Demand
Prediction that Supports Customer Preferences
■ Designers
There are 12 designers in the Instacart team, and there are also product
designers and brand marketing designers. Product designers research the
packaging of consumables and perform customer research. Collected data is
analyzed and used to judge whether an initiative has gone well or not,
allowing for design related to interaction with customers. At the same time
designers communicate closely with development staff. This process is
directly connected with the development of the product.
The brand marketing designer uses POP-style marketing reminiscent of a
store interior. When the company expands into a new area, it places adverts

30. throughout the city, as well as on buses etc. It also uses social media such as
Facebook in its marketing efforts.
■Shoppers and Drivers Acquired through a
Prediction System.
Instacart’s prediction system incorporates a variety of variables such as
weather and days when special events are occurring. The more experience
that Instacart builds up, the more accurate its predictions are becoming. But
this doesn’t mean that its predictions are always correct. As demand
increases there’s not always enough supply. Instacart has improved this
balance by slightly increasing its hourly wages.
Instacart’s KPIs
Examining Instacart from a macro perspective, the company’s overall KPI is
how many deliveries it can make. A KPI for designers is how much they
increase awareness of Instacart’s brand. They use a variety of digital
marketing to increase their engagement with general consumers. Their rate
of success at being able to draw these consumers back to their site is also a
KPI for the company. The KPIs for product designers are receiving orders
from new customers, and increases in order numbers. The KPI for shoppers
is how many cases they can deal with in an hour.
Plans to Expand to 50 Cities!
Instacart has learned a great deal from the progress it has made so far. The
company has discovered differences between cities such as San Francisco and
New York when expanding its business. By making use of the wisdom it has
gained so far, it has improved its ability to expand to new cities. Instacart has
also improved its service regarding the products it deals with. For example,

31. customers can now specify ripeness levels/other details for items such as
apples, as opposed to simply treating all apples as one product. It’s not easy
to pay attention to individual details like this, but it is something the
company is striving to achieve.
It decides on the areas it wants to expand into by performing surveys on
markets and the residents living in them. Anyone can sign up for Instacart,
so some users have even signed up in locations where the service is not
available. Areas with large numbers of these signups also increase the
likelihood of the service being launched there. Many of the retailers that it
has created partnerships with already have locations nationwide, so it also
decides where to expand to through consulting with them.
The demand for Instacart is highest in urban areas. In the suburbs, people
can’t go out without having a car. This means that when they have to go
somewhere they can use it as an opportunity to pick up items from stores,
which is more difficult for people living in cities. There are also difficulties
regarding traffic and parking in cities. In the next 5 to 10 years customers in
these areas want to be able to have all of their purchases delivered to them,
without having to go to stores.
Instacart’s Personas
Instacart actually visited customers’ houses to perform surveys regarding
food items etc. This has allowed them to build up a customer personas. For
example their “Robin” persona is a working mother who doesn’t have time to
plan meals, and so has to go out shopping frequently. Their “Eric” persona is
an engineer type, who doesn’t like to go shopping. Victoria is a mother who is
busy raising her children. She decides all of her meals a week in advance.
George likes to save money and places a lot of importance on saving money.
Maggie places importance on food quality.

32. Survey Details: Pivotal Labs
Pivotal Labs,
San Francisco
Business Overview
Pivotal Labs has the words “We Transform How the World Builds Software”
on the top page of its website. For the past 20 years Pivotal Labs has offered
an environment where enterprises and start-ups are supported in their
efforts to learn agile development.
Pivotal Labs’ agile development is performed by teams consisting of
customers and employees from Pivotal Labs. These project teams fully
incorporate customers in a process known as “pair programming”. Each role
- designer, product manager, and developer, has one member who is from
Pivotal Labs and one member who is from the customer’s company. In other
words, these two individuals form a pair, and these pairs form the project
team. For example if there is one designer from the customers’ company, there
will be one designer from Pivotal Labs, with the same applying for product
managers. In the same way, if there are 2 developers from the customers’
company, there will be 2 developers from the Pivotal Labs team, for a total of
8 project members. Regardless of how many members there are on the
customers’ side, there is always the same number on Pivotal Labs’ side.
These pairs come together to identify the challenges in the project, come up
with solutions, and develop a solution in an extremely short period of time.
By going on to test these solutions in the market place, they are able to
develop revolutionary products and services that have the ability to change
the world. Pivotal Labs focuses purely on agility, and all of its processes are
based around efficiency. The company is fascinated by revolutionary ideas,
and finds itself motivated by the latest technologies. By breaking away from
silo-ing ideas and working as one with its customers, it builds up energetic
and transparent partnerships. This is how it realizes its agile development
methods.

33. Breakfast and Morning Meetings
Every morning starts at Pivotal Labs with the Pivotal Labs employees and
customers coming together to eat breakfast together. Serving breakfast is a
way to ensure that everyone arrives on time. Breakfast involves everyone,
including members from other project, allowing for discussion regarding the
current status of projects, events at the company, as well as personal
discussions. This process allows all members to get to know each other better.
This breakfast is completely free of charge. The idea of providing a free
breakfast came about due to managers wanting teams to be able to work as
efficiently as possible from first thing in the morning, and from team
members wanting to be able to transition directly from meetings to
performing work. There is no distinction between customers and employees
at the office. That is the extent to which they have incorporated Silicon
Valley’s culture.
Breakfast is cleared away at 9:05. All members, whether they are customers
or employees, put the plates and cups into the dishwasher and throw away
the garbage, before coming together for the morning meeting. The members
here include all of Pivotal Labs’ employees, as well as employees of customers,
and other visitors who have come to either tour the offices or come for
meetings.
Morning meetings involve the following:
Firstly, all new members are introduced. This does not just include customers
who will participate in a project for the first time, it also includes the
previously mentioned visitors. Secondly, different information is introduced
and shared. This can include items such as interesting events that are
occurring in San Francisco city, or interesting news. It's a place for
participants to introduce and share information with other participants.
Anyone can speak, and the content is varied. Thirdly, requests for assistance
are made. Project members can talk about whatever they’re having problems
with, and ask for help. This may involve information or knowledge, or

34. assistance in the form of actual equipment. Members from other projects tend
to gladly help out where they can if they have the knowledge or experience
needed. The morning meeting ends with a single clap. This is a Japanese-
style way of indicating the end of a meeting.
Development Projects
The morning meeting tends to take around 5 minutes, following which the
members break off into their separate teams to begin work. Firstly, each team
has its own meeting to report on the progress of its project, and confirmation
is made regarding what needs to be done that day and what goals need to be
achieved.
All of the project teams work in an open space office, as opposed to individual
rooms. Entirely different customers may be working on completely separate
projects next to each other, but there are no walls, or even any partitions.
Looking out over this open space, it’s impossible to tell who is a customer and
who is a Pivotal Labs employee. This is another trait of Pivotal Labs. Pivotal
Labs does not distinguish between customers and employees. The customers
and employees are seen as the same, and work as a single team. Pivotal Labs’
development methods have 3 primary traits. The first is pair programming.
The second is TDD (test driven development) and the third is CDCI
(continuous delivery, continuous integration).
Pair programming involves 1 customer and 1 Pivotal Labs employee working
together, as mentioned previously. TDD involves ensuring that tests are
performed before any code is written. CDCI involves the pair completing user
story computing, before pushing that behavior into an actual production
environment. Byperforming this push work, tests are automatically executed,
and programs that have passed the tests are pushed out into a production
environment. This allows for developers who are in the middle of moving

35. forward with a project to frequently test their program in a production
environment as they move forward towards completion.
Design Projects
As mentioned previously, pair programming involves 1 customer and 1
Pivotal Labs employee working together. TDD involves ensuring that tests
are performed before any code is written. CDCI involves the pair completing
user story computing, before pushing that behavior into an actual production
environment. Byperforming this push work, tests are automatically executed,
and programs that have passed the tests are pushed out into a production
environment. This allows for developers who are in the middle of moving
forward with a project to frequently test their program in a production
environment as they move forward towards completion.
There are also situations when the user hasn’t clearly defined what they need
developed. If this issue arises, a design research approach is used with the
customer. The customer may not be sure what they want, but do understand
the function it would have in their daily lives, and do know what they want
to achieve. Pivotal Labs’ product managers and designers draw this
information out of customers, and use a variety of methods to draw out the
actual meaning contained within it. This takes a project from “good” to “great”.
It is also the most difficult aspect. What people say and do are two different
things. It’s for this reason that the questions are designed to dig down. It’s
important to be able to clearly answer “Why” something is needed.
For example, the customer says they want a fast car. Asking why may reveal
that the customer wants to see their parents because their parents are sick
etc. If that is the case, maybe what the customer needs isn’t a car, but is
instead a way to communicate with their parents. This leads to a situation
where understanding the function behind the need of the car leads to a
different solution. It’s also necessary to examine from a surface perspective
what the customer’s higher level expectations are. This includes hunting for

36. the hidden meanings in their answers to questions. Depending on the
complexity of the project, it may take 4 - 6 weeks.
Pivotal’s Pair Programming
Pair programming involves 2 programmers. Their monitors are separate, but
both are mirroring the same information. One developer writes some code,
and the other developer reviews that code, checks whether it is correct, and
confirms its quality. Either the employee or customer can be in either of these
roles. This is because there is no distinction between them.
If there are more than 4 members in the development team, these roles are
rotated daily. This is to help share team knowledge. If only one person
performs a role, it’s not possible to gain an understanding of how the other
thinks, acts, and works. If one developer has a lot of experience but none with
Android, they’re paired with an individual that has a lot of skill with Android.
This also allows the other developer to learn about working with iOS. Both
can expand their knowledge, and all are able to improve their skills.