The Design Thinking Playbook

by Michael Lewrick

  7) (Re)design of the business ecosystem

  In this phase, the business ecosystem is iteratively improved. Actors are added in the iterations or are eliminated. For example, platform providers, hardware vendors, or value-added services can be added that change and improve the existing system. The impact on the individual actors and value streams should be determined for each variant or idea of the new or adapted ecosystem. From our experience, it is important to prove the robustness of the scenarios by means of iterations and experiments.

  What happens in the validation loop?

  8) Look at the decision-makers and potential team members in the business ecosystem

  We designed the system in phases 1 to 7. But only reality shows whether our ideas are really viable. In the validation loop, we consider with what specific actors we initially want to validate and develop our system. The so-called interspecific relationship between participating individuals and teams ensures the existence of a business ecosystem. This involves understanding the personal interests, needs, and motivations of those involved. Especially in a symbiosis (in the wider sense), in which all individuals benefit from the interaction, positive effects are generated, which lead to the growth of the system. Alongside the rational decision to be part of the ecosystem, personal motivation (e.g., from a decision maker) is at least as relevant.

  What happens in the realization loop?

  9) Form a motivated team for the design of the new business ecosystem

  When designing business ecosystems, we have taken into account the needs of customers/users and of the actors. For a successful implementation, we also need the people who create the business ecosystem.

  The decision makers set the framework conditions, such as range of the MVE, budget, time frame, and so on. They are the enablers of the projects. The teams are the actual doers, who contribute positive energy, intrinsic motivation, interest, and skills.

  10) Build the business ecosystem step by step with an MVE

  Use the design thinking mindset and the approaches of lean start-up and agile development to build the ecosystem iteratively and improve it. Create prototypes and test them systematically. The redesign of ecosystems of maturity level 3 (i.e., those that effectuate a radical change in the market and revolutionize entire industries) constitutes a challenge to traditional businesses with regard to digital transformation. The corporate culture, the lived mindset, and the ability to think in business ecosystems are therefore critical to success, alongside the elements already described.

   EXPERT TIP

  Business ecosystem design canvas

  Because in many ways we work with canvas models (e.g., lean canvas or user profile canvas), we have had good experience in using the business ecosystem canvas (Lewrick & Link) for the iterative development of the system. The eight elements will help the design team across the entire design cycle (explore, design, build, test, redesign) in asking the right questions. In principle, the starting point for the design of a new ecosystem can occur anywhere. However, we recommend remaining consistently faithful to our typical starting point in the exploration phase, namely recording the customer and user needs.

  In the ecosystem design canvas, all essential steps are consolidated. It is better we record the working version after each iteration (e.g., with a photo). This way, the considerations can be well documented and made traceable and comprehensible. In general, new systems (greenfield approach) or existing ecosystems can be improved with the business ecosystem canvas. When designing radically new ecosystems, certain actors in the business ecosystem can be eliminated already in the run-up. Another practical approach is first to draw up the business ecosystem predominant today and, in a second iteration, to optimize it (redesign). Especially if existing business ecosystems are to be radically restructured, the second approach makes sense, because in this line of thought, processes, procedures, information, and value streams can be redefined.

   EXPERT TIP

  Factors of success for business ecosystem design

  In order to apply a paradigm based on business ecosystem design successfully, you must keep five factors of success in mind:

  KEY LEARNINGS

  Design business ecosystems

  Reflect on the factors of success of systems thinking for the design of business ecosystems.

  Accept the complexity of ecosystems and always keep the big picture in mind.

  The customer’s daily business and the customer needs constitute an important basis for many business models in an ecosystem-based approach.

  Put the user and the actors in relation to the value proposition, the complementary offerings, and the participants in the network.

  Connect the actors with the value streams, such as information, money, products, or digital assets and cryptocurrencies.

  Also think about how the actors in the ecosystem will earn money and show them possible sources of income in order to make your business ecosystem appear attractive.

  Eliminate specific actors in the business ecosystem design already beforehand (e.g., intermediaries), who on the basis of technology leaps are no longer relevant.

  When developing the business ecosystem further, always focus on the customer experience and the growth of the platform and test the new functions quickly and iteratively.

  Use the business ecosystem canvas in order to document the (re)design and to follow the described procedure.

  Create a minimum viable ecosystem (MVE) and extend it stepwise.

  3.4 How to bring it home

  Design thinking underwent various eras in the past. There was “synthesis” in the 1970s, followed by “real-world problems,” all the way to business ecosystem design. Across all eras, we were faced with the challenge of successfully implementing the solutions in our organizations.

  How do we overcome the hurdles in implementation?

  We know from experience that various stakeholders in the company want to have their say. The process toward the solution is often scrutinized. The colleagues from the Legal department already raised objections to our very first prototype; the experts from Technology are generally not open to solutions they haven’t developed themselves (“Not invented here” syndrome); and the hip ones from Marketing are bound by strict specifications for the branding of the new solution.

  In addition, there’s the opinion of Management, the concerns of the Product Management Board, and all the other countless committees who question our ideas and block implementation. In most large enterprises, we will encounter resistance of a similar kind, not least because a rather traditional innovation and organization approach dominates most organizations. It is characterized by minimization of errors and maximization of productivity, the desire for reproducible processes, elimination of uncertainty and variation, and the need to increase efficiency with best practices and standard procedures.

  Design thinking as such offers a great basis for initiating transformation and innovating in an agile way. We consciously bank on interdisciplinary teams and radical collaboration, promote an experimental process through iterations, and thus maximize the learning success.

  Nonetheless, many of our ideas fall by the wayside and never get to market. As mentioned, one of the core problems here is that the stakeholders in the company are not part of the creative nucleus and often act within the structures and mindset of yesteryear. The style in which leadership is lived is frequently resistant to change in implementation projects. Even at a late stage—just before the market launch—willingness to change is greatly in demand. Just prior to the launch, we might realize that others were faster at bringing the solution to market. This is the point at which we ought to ask ourselves a number of important questions, because the answers to them will ultimately decide if our idea is on top or a flop:

  How can we nonetheless achieve a market success with other approaches?

  Have we thought through all types of business models?

  What value proposition creates a “market buzz” on t
he part of the customer?

  Are there any possibilities of partnership projects in the ecosystem so that our solution gets scaled?

  As described in earlier chapters, collaboration with partners is becoming more and more vital for success in the digitized world. Many components can be provided by companies in the business ecosystem, in particular when it comes to technologies that we don’t master ourselves. Collaboration can be stimulating for the development of the actual idea. The advantages are obvious: We boost speed and efficiency, participate in new trends and technologies, and reduce development costs. As a company, however, we need the ability to deal with open innovation models for this, especially in the form of collaboration, and explorative/exploitative skills. With regard to the latter, we are swiftly confronted with the problem of intellectual property (IP). But what seems to be even more important today are aspects such as who owns the data of digital solutions and the question of usability.

  How can we, as an “oil tanker,” act like a speedboat?

  In the collaboration of traditional businesses with start-ups, two cultures clash, each of which follows different rules and has different hierarchies. Companies that are open to a so-called intrapreneur approach have the opportunity to develop a corporate culture in which higher risks are taken. Such approaches benefit from the fact that autonomous teams develop their ideas independently and with an entrepreneurial spirit, scale existing innovations, or establish themselves on the market as a spin-off. This approach is antithetical to the idea of central decision making etched in the DNA of traditional companies; in addition, it holds the risk that the skills provided and limited resources will not be able to scale the idea successfully on the market.

  How do the developed solutions get to the market?

  For Lilly, her work at the university was usually over once the participants had presented their results. The implementation of the solution was not a major issue for her. Yet the feedback from industry partners and participants on the implementation made her think. Most celebrated opportunities do not find their way to market maturity.

  In the case of rather simple market opportunities, the approach discussed before, namely to implement the idea with a start-up, is probably the simplest. You equip the teams with financial resources for one year, support them with coaching, and try to develop the opportunity to market maturity during this time. For one, this minimizes the risk; you also avoid all those hurdles that are simply written in the DNA of traditional enterprises. Such implementation variants have unfortunately been chosen only rarely up to now. This is because, among other things, it requires the willingness of the team to carry forward the idea in a venture for a while.

  Execution is the key!

  But Lilly also knows very well that implementation will be one of the most important factors of success in the future. From a study jointly conducted by HPI and Stanford in 2015, Lilly knows that design thinking brings forth many positive aspects in the field of work culture and collaboration. What is conspicuous, though, is that the top 10 effects of design thinking do not include an increased number of innovative services and products that were launched on the market. In our opinion, this is because implementation is not supplemented as the last and crucial phase in the process. As a mindset, design thinking must be established in the company holistically for it to be successfully implemented. Unfortunately, the reality is that the majority of responding organizations (72%) use design thinking in a more traditional way, namely in isolated areas of the “creative folks” in the enterprise—a fact that Jonny unfortunately observes at his employer as well. So we should not be too surprised that ideas are nipped in the bud of implementation.

  We asked 200 people...

   EXPERT TIP

  Working like a create-up

  Create-ups are young enterprises that act as research laboratories. Behind these experimental labs, there is usually a strong entrepreneurial personality such as Marc and his co-founders. The founders often come from elite universities and bring in-depth knowledge from their studies as well as the capability of programming. Their intention is mainly to design new business models. They live a culture that is characterized by:

  a clear vision,

  a long-term strategy,

  a strong personal commitment on the part of the founder, and

  a high level of risk tolerance.

  A typical approach for a create-up is to turn existing business models on their head and thus rock the market. They create a value proposition, for instance, that offers added value at better price/performance conditions or disrupts an existing business ecosystem. The employees in a create-up are passionate about the vision of the enterprise. Instead of power games, hierarchies, and rigid structures, the prevailing culture is one that aims at solving problems. Paired with a positive mindset, they are focused on realizing market opportunities. In so doing, they make intense use of the network that was already built up and cultivated at the elite universities. See Chapter 2.2, where we described the Connect 2 Value framework.

  Established companies can learn a great deal from the create-up mindset. It starts with a clear vision, continues with a network-oriented way of thinking, and is expressed in the fact that all actors are involved in the problem solution as well as in agile and flat organizational structures.

   EXPERT TIP

  Involvement of all participants—working with stakeholder maps

  Since we are often far removed from the create-up mindset in large organizations, it is all the more important to involve the relevant actors outside the company as well as the stakeholders within the company actively in the problem-solving process. The motto is: Turn the parties affected into participants. If we get the relevant stakeholders on board in the initial phases of the design process, they will understand much better why a problem statement has changed, which needs potential customers have, and what functions are important to a user. As soon as this understanding is given, all stakeholders will usually help proactively to bring the solution to the market. We will still sense resistance, but it will be far less than it would be were the stakeholders involved only late in the process. We have found the lean canvas approach to be a good way to do this (see Chapter 3.2). Within the company, Marketing can be included in the development of customer profiles, company strategists are closely involved in working out the financial aspects of the business model, and product managers see their responsibility in formulating an excellent value proposition. Thus all participants can identify more strongly with the development process when the solution is implemented later.

  Just before the end of the design thinking cycle, it can be useful to take time again to draw up an implementation strategy. And it is even better to expend some thought on it a lot earlier. Especially in traditionally managed companies, a stakeholder map is very helpful for overcoming the many hurdles in such organizations in the best possible way. A stakeholder map helps to identify the most important actors and their relationships with one another. They are our internal customers to whom we need to sell the project. The key questions we have to ask ourselves:

  What are the current challenges from the CFO’s point of view?

  How can the CMO best distinguish himself on account of our initiative?

  What does the product management board get from favoring our idea?

  How does the idea fit the grand vision of the CEO?

  How does the idea match the corporate strategy?

  Who is blocking the idea, and for what reasons?

  The procedure for creating a real stakeholder map is simple. We take a good two dozen game pieces. Pieces that already have a certain character work very well from our experience. The pieces of Lego “Fabuland” are ideal. Then we need a large table that we cover with a sheet of paper. We put out Post-its and pens, a couple of ribbons, Lego bricks, and strings. The latter are used to create and visualize connections between the stakeholders. The discussion should be very open. In the end, the required measures are defined
in order to approach the individual stakeholders in a targeted way.

   EXPERT TIP

  Flat and agile organizations

  Every large enterprise dreams of the flat and agile organizational structures of a create-up that allow for the quick piloting and implementing of market opportunities. Transforming an entire organization is a longer task, so a step-by-step approach is advisable.

  Based on our observations, we recommend starting small and banking on a gradual transition. Ideally, we begin with a team that tries out agile working and experiments with it (first level of maturity). The focus is on learning how to work agilely. In a second step, we extend this approach to a second team that has characteristics similar to the first. These teams develop, for example, new functionalities for existing products in relatively short cycles, ultimately making customers happier with their ideas; or they experiment with a new business model for an existing solution. In a third step, you start to scale the agility to the entire organization. Multiple teams autonomously develop a complete business model, a product, or a service. A clear and unambiguous strategy helps the teams orient themselves and align their activities to corporate goals. It is important that these teams establish collaboration beyond the organizational units and that middle management is willing to cede responsibility. Agile program management constitutes the basis for a lean governance of projects. In a fourth step, we can replicate the approach further into the organization with the result of transforming the existing organization into an agile organization. The best indicator for the hoped-for goal is when the agile organization innovates from inside out. In the last step, the teams act autonomously, launch new initiatives within the set mission, and implement them “on the fly” (i.e., in short cycles) on the market.