Design Thinking (DT) is the latest management buzzword, a thinking framework that supposed to “cure all”. In practice, DT is a tool to be used only when it is appropriate. In this article I will explain the signs when DT can help you increasing sales and growing your customer base.
Since the Design Thinking (DT) bug “jumped species” from product / industrial design to business design in the 1990’s – picking up much of the innovation terminology on the way, you can hardly browse your news feed without Design Thinking being mentioned as the next big thing for business.
But how can you use it to grow sales for YOUR business?
If your eyes glaze over at the mere mention of Double Diamond or Radical Collaboration you are not alone. To help you make sense of it all, in this series of blogs I will focus on specific business challenges and symptoms that suggest that DT would be the most effective approach.
Sales, sales and more sales!
Profitable sales are the life blood of any business. Even a small decline can have devastating effect on a business. Fixed costs, admin overhead, excess inventory, working capital and labour costs all combine to wipe out any profit margins when sales fall.
So, when should you bring in DT help to grow revenue profitably?
When the problem is complex
DT is often used to address complex problems, where not enough data or information is available to make decisions. If it was a matter of adjusting pricing or developing better tendering capabilities or more marketing, I assume you would have already tried them.
The DT framework is ideal to understand complex issues such as declining markets, concentration of buyer power, global supply chains, vertical integration, technology disruption, emerging new business models and the like. DT can design effective solutions including alternative revenue streams, servitisation initiatives, new innovative products, more effective sales processes, and relevant, unique and credible competitive advantage.
A great example is Blundstone. This iconic company used DT to redesign its business model from traditional safety focused footwear (a declining, highly competitive market) to “go anywhere, do anything, and look great every step of the way” which opened new markets (fashion/lifestyle) and doubled sales.
When the problem is centred on people
Growing revue (and business in general) is person-to-person (P2P) activity. There are variations of course depending on whether you sell to a user of your product (consumer) or a business in the supply chain (customer). But in all cases, you are exchanging value with another person. You provide value in the form of a product or a service and you receive value in the form of payment.
People perceive value differently pending on what bundle of needs (and to what extend) your offer satisfies. Overt needs are reasonably easy to discover and there are plenty of strategic planning tools available. I am also certain that some of your competitors are have already used these tools.
Real competitive advantage comes from discovering and building a business around satisfying latent needs. Design Thinking is founded on doing just that, by bringing an immediately actionable tool kit to bear to build empathy with your customers and consumers and discover their latent needs.
The often mentioned example is the iPhone that was designed around a latent need of easier user interface while their competitors (Nokia, Blackberry – remember those?) were still focusing on easily identifiable overt needs of more processing speed, storage, better security and corporate network connectivity.
When innovative change is needed
The DT approach is used commonly when there is a radical shift in your industry or market or the economy. When historical data and experience is either less relevant or insufficient to aid resolving business challenges. Using DT can help you redesign your business model and the way you monetise your product or services.
A classic example is Rolls-Royce Aerospace that no longer sells its engines. Rather it supplies and maintains its engines “free” and charges airlines for each engine operating hours. The DT process has revealed the latent customer need to transform fixed costs to variable costs by linking them to flight hours and thus revenue.
Is it right for your business?
Design Thinking is a flexible and modular approach enabling you to dip in and out of the business design process according to your specific circumstances, business challenges and budget. However, it is not the answer to all business challenges, but if you find yourself keep coming up against the same challenges it may worth investigating if a different approach can deliver better results.
Design Thinking Specialist
If you are interested in any of Gabor’s workshops or reading about his background, please visit this link.