Design Thinking and Corporate Strategy

Forward-thinking companies generally have a clearly defined corporate strategy to help inform and guide their business activities. A corporate strategy takes the abstract WHY of the company vision and translates it into an actionable HOW. A corporate strategy can be as much about choosing which business activities to reject as it is about choosing which business activities to embrace. And an effectively designed corporate strategy will ultimately drive a firm’s pricing strategy and price management.

Design thinking has become increasingly popular within the last few years, and it recently popped up on my radar. Learning about the various applications of design thinking led me to ask whether design thinking can assist in the creation of corporate strategy. Before we tackle that question, let’s start with a clear definition of design thinking.

What is design thinking?

Design thinking is a problem-solving approach that uses a repeatable, iterative, and collaborative process to systematically find human-centered solutions that may not be obvious at the onset of the process. Design thinking has been applied to everything from product development, to creating a business model for selling solar panels in Africa or operating Airbnb.

Although design thinking has been used by designers in one form or another for decades, Tim Brown’s 2008 article in Harvard Business Review introduced the term to the business mainstream. Brown’s formulation included three main steps: Inspiration, Ideation, and Implementation. Another popular design thinking model was proposed by the Hasso-Plattner Institute of Design at Stanford University (d.school) in five stages: Empathize, Define, Ideate, Prototype, and Test. Because of its popularity, I will focus on the five-stage d.school model.

First, empathize with the users. These users could be the users of your product (or service) in the case of product development, or it could involve company stakeholders from each department in the case of corporate strategy development. Bring anyone who is in any way involved in any aspect of your project into a single room.

Empathy is such an incredibly important step in the design process that the d.school made it an individual step. You must see the world from the perspective of your users to successfully design a solution for them. This step can include common marketing tools like ethnographic studies and customer journey maps.

Second, use your empathy to define the problem. Guide your team through discussing the problem. Have them define what their understanding of the problem is. However, you do not necessarily accept the initial explanation. Just record the conversation on a whiteboard or post-it notes. And then keep digging. Keep talking through the problem.

You may use reframing techniques to generate new perspectives on the problem. Maybe you need to take 3 steps to the left, and look at the problem from a different vantage point. Design thinking places great emphasis on properly defining the problem before attempting to answer it. Do not let your precognitions of a problem interfere with properly understanding the problem.

Third, ideate solutions for your problem statement. Design thinking practitioners may use divergent or lateral thinking techniques to brainstorm as many solutions as possible, including unorthodox solutions. All solutions can be entertained, even extreme solutions. And practitioners will push their team to generate additional solutions even after the team believes that their intellectual well has run dry. This could provide the space for true innovation.

Fourth, prototype a solution. The prototype should not be perfect. Its purpose is merely to facilitate feedback on your solution from your users. The prototype will undergo numerous iterations as your team learns what does and does not work. It will be a work in progress.

Fifth, test your prototype, and collect feedback. Then be prepared to revisit any of the previous steps of your process with your newfound learnings. Keep in mind that these steps are not necessarily linear (as Brown documents in an infographic in his article). You may revisit previous steps of the process as new discoveries are unearthed. During the testing phase, your team may find that your prototype does not actually solve the user’s true underlying problem, which causes you to return to step 2 to more clearly define the problem.

As Bason and Austin (2019) point out, effective management is necessary to shepherd teams through projects that aspire to use design thinking. These projects inhabit an ambiguous environment in which teams mull over possibilities instead of racing to execute the first good solution. Many corporate teams struggle with this change of pace and perceived lack of direction. Additionally, management needs to communicate that teams should not be afraid of failure, because even failures teach you something about the problem.

Design’s roots go back to at least the 1960s. The broad steps of a design thinking approach to problem-solving are not new or unique. They will look familiar to anyone who has used the Lean Startup methodology (substitute the prototype for a minimum viable product and iterating for pivoting) or used lean software development. There are also similarities with instructional systems development (ISD) models, the Toyota production system (TPS), total quality management (TQM), and the continuous improvement cycle popularized by W. Edwards Deming.

However, just because some basic concepts of design thinking share similarities with paradigms from other disciplines does not mean that design thinking lacks value.

Design thinking and wicked strategy problems

John C. Camillus (2008) outlined how corporate strategy can be thought of as a “wicked” problem. “Wicked,” in this sense, does not mean evil or merely difficult. Rather, a wicked problem is a problem for which typical solutions and problem-solving processes do not work.

Specifically, a wicked problem is one that is hard to define, doesn’t have a single, correct answer, and has multiple, interlocking causes. Camillus’ article borrows from the original definition outlined in 1973 in a Policy Sciences article by two Berkeley professors of design and urban planning, Horst W.J. Rittel and Melvin M. Webber. Richard Buchanan (1992) points out that Rittel argued that most of the problems that designers face can be considered wicked problems. Thus, it follows that design thinking can be applied to wicked problems in general and wicked strategy problems in particular.

Rittel and Webber identified 10 potential properties that separate wicked problems from hard but ordinary problems. Camillus further refines these properties to suggest that a strategy problem is a wicked strategy problem when 5 properties are present:

1. The problem involves many stakeholders with different values and priorities
2. The issue’s roots are complex and tangled
3. The problem is difficult to come to grips with and changes with every attempt to address it
4. The challenge has no precedent
5. There’s nothing to indicate the right answer to the problem

Obviously, the design thinking process can help surmount these properties of wicked strategy problems. Merely bringing all the stakeholders together in a single room and empathizing with them can help address property 1. Forging through the problem definition and ideation of solutions can help address properties 2 and 3. And the iterative nature of prototyping and testing (and the associated possibility of revisiting any prior steps) can help address properties 4 and 5.

Tim Brown and Roger Martin (2015) argue that design thinking and “iterative rapid-cycle prototyping” can be just the tool to overcome doubts about a new corporate strategy, and achieve buy-in from stakeholders. The traditional approach of a consultant determining the problem, creating a solution, and then presenting it to the client is replaced with “iterative interaction with the decision maker”. The strategy designers involve the responsible executive early in the process to confirm that their definition of the problem matches the executive’s.

Furthermore, the strategy designers ask open-ended questions. Later, the designers touch base with the executive on possible solutions they can explore for the previously agreed-on problem to ensure alignment (once again using open-ended questions). Finally, the designers engage the executive to approve the analyses on the possible solutions and ensure that they haven’t missed anything.

Brown and Martin advise that introduction of the strategy is practically a formality when using this process. The key decision maker was consulted on defining the problem, identifying actionable solutions, and confirming the pertinent analyses. Buy-in from the decision maker was achieved throughout the creation process. (They also point out that for making changes to an existing system, it would be prudent to involve all stakeholders in the iterative interactions.)

Empathy is necessary for success

I can speak first-hand to the fact that the creation and implementation of corporate strategy requires securing buy-in from all stakeholders. Securing buy-in requires adequately addressing stakeholder needs and concerns. And adequately addressing stakeholder needs and concerns requires a high level of empathy. Recall that empathy is the starting point of design thinking.

If you don’t take the time to listen and empathize, how can you expect to adequately solve anyone’s problems? Design thinking hits the nail on the head by putting empathy first, and my own experience certainly backs that notion up. Empathy is necessary to facilitate organizational alignment. And since corporate strategy impacts all levels of a business, if you don’t have alignment, you are essentially building a house of cards that will eventually come crashing down.

I have personally seen strategic initiatives get delayed or falter due to a lack of buy-in by all departments. In hindsight, more effort could have been spent getting everyone on the same page. Instead, a few people defined the problem, pulled the pertinent data, conducted the analysis, and then pitched the solution to everyone else.

Unfortunately, all stakeholders did not participate in the co-creation of the problem definition, ideation of solutions, and prototyping of solutions. A better approach would have involved using empathy to view the problem through the lens of all stakeholders, agreeing on a problem definition, collaboratively brainstorming possible solutions, testing those solutions, and adjusting the analysis until all parties felt ownership of the results.

It bears repeating that the foundation of a successful design project must be empathy, even if you are designing a corporate strategy.

So, design thinking most definitely has something to offer to the creation of corporate strategy. The design thinking method’s emphasis on empathy, clearly defining the problem, creatively ideating solutions, collaboratively prototyping those solutions, and gathering feedback during testing can help to generate a quality corporate strategy. I think more companies can better create or improve their corporate strategy by borrowing elements of design thinking.