Friedrichshafen, November 14, 2009

Jan Schmiedgen (1st Semester / M.A.-CME)

Handout
Design Thinking – A »new« (Innovation) Management Approach?
Course: Critical Reflection of Management Theories

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The Process
The typical design thinking process does not exist. Moreover different process models of the same basic
approach are to be found, which are more or less varied in their granulation. Basically all of them consist of
at least four steps: develop Expertise plus Empathy and then proceed to the Exploration and Execution of the
solutions you came up with. In this paper the »d.school« standard process from »Hasso-Plattner-Institut,
Potsdam« (Plattner, Meinel, & Weinberg, 2009) exemplifies in short, how a typical design process normally
is executed. I have chosen this book and process, as you probably will come across it in the near future (in
Germany). However I do not recommend the book. The (mostly) English literature mentioned in the
course and during the presentation is more solid and well founded.
Handout »Design Thinking« | Course: Management Theories

Figure 1: A typical »Design Thinking« Process (Plattner et al., 2009)

The maybe most typical characteristic of all design processes is its non-linear and iterative character. In the
following I'll give just a very brief description of the process without details. Therefore it does not lay claim
to completeness.

Understand

The first step serves to carve out the problem, make sure that everybody (especially in a diverse team)
understood it »right« and then goes further in trying to formulate a useful and »right« research question,
that enables the team to select the appropriate methods for the next step. This step already is important
because usually the first differences between the team members emerge (different mindsets etc.), which can
be a good starting point for later insight generation, problem reframing and the therewith connected
learning processes (Beckman & Barry, 2007).

Further on in this step measurements for success should be developed (if possible) and priorities regarding
the project goals must be set. In addition the team should become aware of available project-time.

Observe

To develop a truly deep understanding of the formulated problem good designers embrace the use of
methods that overcome the limitations of traditional market research (e.g. contextual inquiry focuses on the
‚what’, ethnographical methods focus on the ‚why’ → richer and »valid« data), by getting into all
stakeholders natural life world. This often yields insights that focus groups, interviews and the like cannot.
Insights that uncover meaning, culture, context and practices. Mostly these methods are »borrowed« from
ethnography, anthropology and sociology and then adapted to the particular problem. Very often the initial
problem formulation is reframed in several iterations during this process.

OBSERVE – RESULTS

Methods used
Rapid Ethnography; Visual anthropology; Video ethnography; Non-participant & direct observation; Participant
observation; Formal ethnographic interviews; Intercepts; Informant diaries; Virtual ethnography (netnography);
Story listening and many more …

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Handout »Design Thinking« | Course: Management Theories

Exemplary outcomes
Video- and Photo material; Sketches; Diaries; Day in life Timelines; Era analyses etc.
→ either made by the researchers or the users themselves

Point of View

Having collected all knowledge gained so far, the innovation (or strategy, or whatever ) team has to
develop a common position. This is the point where the problem reframing concerning the initial question
usually ends and where results are prepared in a way that everyone – even persons outside of the team – can
develop a shared understanding.

POINT OF VIEW – RESULTS

Exemplary outcomes
Persona descriptions; mood-o-grams; customer journey analysis;...

Ideate

The ideation starts, when everyone agrees on the common point of view, has reconsidered its own basic
assumptions and in a way has become free of his predetermined predispositions towards the problem and
the therefore deducted questions. In short, when every team member is able to see the problem through
users/customers eyes.

The ideation phase maybe nearly as free-form as the observation stage, but it finally adds the critical element
of synthesis to the process. It starts with the generation of countless ideas. Here apriori the rule of »quantity
prior to quality« applies but in the latter process the ideas are whittled down to a few core [ones]. Those
then start to take form in a process known as »low-res prototyping« (the transition to the »regular«
prototyping is fluid). Often this part of the process is distinguished from traditional marketing-department
brainstorming and R&D prototyping by requiring consumers to be part of the process.

IDEATION – RESULTS

Methods used
All kinds of creative techniques → usually brainstorming / heavy visualization

Exemplary outcomes
Large amount of (temporary imperfect) ideas and artefacts → first low-res-prototypes

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Handout »Design Thinking« | Course: Management Theories

Prototype

The goal of prototyping isn’t to finish. (Brown, 2008, S. 87)

Also in this phase imperfection should be embraced. The most important function of prototypes is to make
the strengths and weaknesses of the solution tangible and drive the process further on:

"When you rapidly prototype, you're actually beginning to build the strategy itself. And you're doing so very early
in the innovation cycle. This enables you to unlock one of your organization's most valuable assets: people's
intuitions. When you sit down with your senior team and show them prototypes of the products and services you
want to put out in two years' time, you get their intuitive feel for whether you're headed in the right direction. It's
a process of enlightened trial and error: Observe the world, identify patterns of behaviour, generate ideas, get
feedback, repeat the process, and keep refining until you're ready to bring the thing to market.

[It] rapidly accelerated the development of a potential [...] strategy, because the company could instantly give us
even sharper feedback and help us refine it. Rapid prototyping helps you test your progress in a very tangible way
and ultimately makes your strategic thinking more powerful." (Brown, 2009)

PROTOTYPING – RESULTS

Methods used
Charettes, Role play, Lego, Computer simulation and the like → again, without any limitations

Exemplary outcomes
Customer video journey, Product prototype, Business Model Prototypes → no limitations

Test

The last step includes the customers again. Here iterative improvements of the prototypes are performed.
Therefore the process jumps back to the observation step to fathom out how the developed solution will be
embedded in the practical use and daily life routines of its users. If necessary, the whole process could iterate
again. If the solution was successful and user acceptance is guaranteed, the solution/strategy is ready for the
market.

IDEATION – RESULTS

Methods used
Besides qualitative methods here quantitative measurements as well come into play

Exemplary outcomes
See »Observation«

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Handout »Design Thinking« | Course: Management Theories

Designers Attitude – Points of Difference to

Traditional Management Practice
Why is this process and its way of problem solving different from traditional business?

Mode of Thinking

Figure 2: Reliability vs. Validity (R. L. Martin, 2009)

THERE SEEMS TO BE A TRADE-OFF BETWEEN RELIABILTY AND VALIDITY IN TODAYS BUSINESS CONTEXT.

Reliability → Result of a process, that produces a consistent and predictable result over and over. In order to
enhance reliability you have to reduce the number of variables considered and you should use bias-free
measurements.

Validity → The extent to which a measure accurately reflects the concept that it is intended to measure. In order
to increase the validity of any process you must consider a wide array of relevant variables (as done in the
observation phase of the design thinking process)

→ they seem to conflict.

"The marketplace tends to discipline corporations so biased toward reliability that

they produce mediocre products or services [because] buyers choose not to buy [their products].
This keeps reliability and validity at least reasonably in balance. (R. L. Martin, 2009)"

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Handout »Design Thinking« | Course: Management Theories

Logical Reasoning

Because of its hypothesis driven character (cf. the iterative loops in the process), design thinking heavily uses
a method of reasoning, that often seems »unaccepted«: abductive thinking (a logical operation first coined by
Charles Sanders Peirce). According to Pierce abduction is the only logical operation, that introduces
something new.

DIFFERENT TYPES OF REASONING

Induction
Inductive logic — the logic of what is operative — reasons from the specific to the general . 1

→ prove through observation, that something actually works...

Deduction
Deductive logic — the logic of what must be — reasons from the general to the specific . 2

→ prove – trough reasoning from principles – that something must be...

Abduction
→ Abductive logic – the logic of "what might be" → Kind of inference characterized by probability.
→ A conclusion reached by abduction is conjectural, and therefore only probable → but to the researcher or
designer the conclusion seems totally plausible (knowledgeable intuition → Higgs Boson → LHC-CERN, Geneva).

Without the logic of "what might be" a corporation can only refine its current heuristics or algorithms →
leaves it at the mercy of competitors → Embracing abduction as the coequal of deduction and
induction!

Figure 3: The Cycle of Design thinking (Dunne & R. Martin, 2006, p. 518)

1
If I study sales per square foot across a thousand stores and find a pattern that suggests stores in small towns generate significantly higher sales per square foot
than stores in cities, I can inductively declare that small towns are my more valuable market.
2
If the general rule is that all crows are black, and I see a brown bird, I can declare deductively that this bird is not a crow.

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Handout »Design Thinking« | Course: Management Theories

Handling of Constraints

A non-integrative thinker/manager (R. L. Martin, 2009) readily accepts unpleasant trade-offs (seems we
select between predetermined alternatives), while the integrative thinker/designer seeks creative resolution of
the tension (think outside the existing alternatives and create new by the use of all modes of reasoning).

“Business schools tend to focus on inductive thinking (based on directly observable facts) and deductive thinking
(logic and analysis, typically based on past evidence). Design schools emphasize abductive thinking – imagining
what could be possible. This new thinking approach helps us challenge assumed constraints and add to ideas,
versus discouraging them.” A.G.Lafley, CEO of Procter&Gamble

Summarization and further Differences

Feature From Traditional Firm . . . To “Design Shop”

Mode of Thinking Deductive Deductive

Inductive Inductive
Abductive

Dominant Attitude We can only do what we have budget to do Nothing can’t be done
Constraints are the enemy Constraints increase the challenge
→ Decision Attitude and excitement → Design Attitude

Flow of Work Life Ongoing tasks Projects

Permanent assignments Defined terms

Style of Work Defined roles Collaborative

Wait until it is „right“ Iterative

Source of Status Managing big budgets and large staffs Solving “wicked problems”

Table 1: Points of Difference to »Traditional Management Practice« (Dunne & R. Martin, 2006) in Brief

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Handout »Design Thinking« | Course: Management Theories

Notes
Your notes here 

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Handout »Design Thinking« | Course: Management Theories

References
Beckman, S. L., & Barry, M. (2007). Innovation as a Learning Process: Embedding Design Thinking.
California Management Review, 50(1), 25-56.

Brown, T. (2008). Design Thinking. Havard Business Review, (June 2008), 84-92.

Brown, T. (2009). Change by Design: How Design thinking Transforms Organizations and Inspires Innovation:
How Design thinking Can Transform Organizations and Inspire Innovation. New York: Harper Business.

Dirk, K. (2008, April 12). Defining Experience: Clarity Amidst the Jargon. UXmatters. User Experience
Community, . Retrieved October 20, 2009, from
http://www.uxmatters.com/mt/archives/2008/04/defining-experience-clarity-amidst-the-jargon.php

Dunne, D., & Martin, R. (2006). Design thinking and how it will change Management Education: An
Interview and Discussion. Academy of Management Learning & Eduction, 5(4), 512-523.

Hasso-Plattner-Institut Potsdam. (n.d.). HPI School of Design Thinking. HPI School of Design Thinking.
Retrieved November 12, 2009, from http://www.hpi.uni-potsdam.de/d-school

Herrmann, C. (2004, October 20). Strategic Design: Warum die Designtheorie und die Designausbildung in
Deutschland eine strategische Neuausrichtung brauchen. Unveröffentlichtes Manuskript, Vortrag an der
Bergischen Universität Wuppertal.

Kimbell, L. (2009, September). Beyond Design Thinking: Design-as-practice and designs-in-practice.

Presentation Paper presented at the CRESC - European Academy of Management Conference 2009 -
Manchester, Saïd Business School, University of Oxford.

Liebl, F. (2003). Do Placebo Products Dream of Electric Sheep? Approaching “Strategic Design.” Do
Placebo Products Dream of Electric Sheep? Approaching “Strategic Design.” Retrieved October 26, 2009,
from http://paradox.verhaag.net/fartikel.php?ID=13&lang=e&version=lang

Liedtka, J. (2004). Design thinking - The Role of Hypotheses Generation and Testing. In R. Boland Jr. &
F. Collopy (Eds.), Managing as Designing (1st ed., pp. 193-197). Stanford: Stanford Business Books.

Martin, R. L. (2009). Design of Business: Why Design thinking Is the Next Competitive Advantage. Mcgraw-
Hill Professional.

Martin, R. L. (2009). The Opposable Mind: How Successful Leaders Win Through Integrative Thinking.
Mcgraw-Hill Professional.

Mintzberg, H. (1990). The design school: Reconsidering the basic premises of strategic management.
Strategic Management Journal, 11(3), 171-195. doi:10.1002/smj.4250110302

Oster, G. W. (2008). Derailing Design Thinking. International Journal of Leadership Studies, Regent
University, 4(1), 107-115.

Plattner, H., Meinel, C., & Weinberg, U. (2009). Design-Thinking. mi-Wirtschaftsbuch.

Saffer, D. (2007). Design Schools: Please Start Teaching Design Again. Blog, . Retrieved November 6,
2009, from http://www.adaptivepath.com/blog/2007/03/06/design-schools-please-start-teaching-
design-again/

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Shove, E., Watons, M., Ingram, J., & Hand, M. (2007). Design of Everyday Life (illustrated edition.). Berg
Publishers.

Simon, H. A. (1996). Sciences of the Artificial (3rd ed.). The Mit Press.

Squires, S., Byrne, B., & Sherry, J., Jr. (2002). Creating Breakthrough Ideas: The Collaboration of
Anthropologists and Designers in the Product Development Industry. J F Bergin & Garvey.

Whyte, J., Ewenstein, B., Hales, M., & Tidd, J. (2008). Visualizing Knowledge in Project-Based Work.
Long Range Planning, 41(1), 74-92. doi:10.1016/j.lrp.2007.10.006

van Zyl, R. (2008). Buchanan’s Design thinking Matrix: Implications for SMMEs. Design Thinking: New
Challenges for Designers, Managers and Organizations. Presented at the International DMI Education
Conference, ESSEC Business School, Paris.

Appendix
Points of Difference General Management
Dominant Attitude Decision Attitude
Assumes it is easy to come up with
alternatives to consider, but difficult to
choose among them →
Solve, existing stable problems with clearly
specified alternatives (usually through the use
of analytical decision tools).
Interpersonal Aspects Often uncomfortable with interferences from
outside. Also with working styles, that could
question your own world view. Typical
»Schmidt sucht Schmidtchen«-Problems.
Traditional Firms (Oster, 2008)
Flow of work life Ongoing tasks and permanent
assignments. → Daily routines focus upon
regularly planned tasks
Design Thinking
Design Attitude
Assumes that it is difficult to design a good
alternative, but once you’ve developed a truly
great one the decision about which
alternative to select becomes trivial. →
Problem as opportunity for invention that
includes questioning basic assumptions. →
Strive after improving the state of the world
because:
The cost of not conceiving of a better course
of action than those that are already being
considered is often much higher than making
the “wrong” choice among them. (Liedtka,
2004, p. 50)
Emphasis of empathy
1) understand users perspectives/needs,
2) collaborate with peers and expand
perspectives by collaborating with individuals
unlike oneself.
Design firms (Oster, 2008)
Work flows around (temporary) projects
with defined terms. → „People are judged
by their ability to add value to it.“ (Roger
Martin in Oster, 2008, p. 109)

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Handout »Design Thinking« | Course: Management Theories
Source of Status Managing big budgets and large staff. →
Size = Status = High reward
Style of work Clear defined roles and responsibilities →
„Individuals are typically much more adept at
describing ‘my responsibilities’ than they are at
describing ‘our responsibilities’.“ (Oster, 2008,
p. 110) → Economic incentives are often
linked tightly to these responsibilities.
Mode of Thinking Two most common kinds of logic are
(cognitive aspects) rigorous inductive and deductive thinking.
→ Reasoning or arguing outside of these two
usually is discouraged by: „Can you prove
that?“
Dominant Attitude Constraints are the enemy, budgets are
drivers of decisions. → We can only do what
we have budget to do. → „So much more
would be possible if we had no budget
constraints.“ →
Constraints therefore are an undesirable
barrier to the generation and implementation
of ideas.
My own findings Shareholder first
Take the first-best solution, that meets all the
requirements.
Table 2: Points of Difference to »Traditional Management Practice« (Dunne & R. Martin, 2006) in Detail
1
The French word "Charrette" means "cart" and is used to describe the final intense work effort expended by art and architecture students to meet a project
deadline. At the École des Beaux Arts in Paris during the 19th century, proctors circulated with carts to collect final drawings while the students frantically
put finishing touches on their work.
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Status derives from building a track record of
finding solutions to wicked problems.
Projects are assigned to teams rather to
individuals. → Charettes1 and constant
dialogue with clients
Use inductive and deductive logic
complemented by abductive thinking.
Inductive → Induce patterns through the
close study of users.
Deductive → Deduce answers through the
application of design theories.
Abductive → Logic of ‚what might be’ →
‚Designers may not be able to prove that
something „is“ or „must be“, but they
nevertheless reason that it „may be“’ (Oster,
2008, p. 110)
Constraints are typical prerequisites of the
work process. → „[...] the dominant mindset
is, “there is nothing that can’t be done. ”If
something can’t be done, it is only because the
thinking around it hasn’t yet been creative and
inspired enough.“ (Oster, 2008, p. 110) →
Constraints therefore are embraced as the
impetus to creative solutions. They increase
the challenge and excitement level of the task
at hand. (Dunne & R. Martin, 2006, p. 519)
End-user first
Generate new alternatives, even when an
apparently viable one has been found. →
‚make world better-attitude’
Handout »Design Thinking« | Course: Management Theories

Glossary
Abduction → the process of forming an explanatory hypothesis
→ only logical operation, that introduces any new idea
Rule: All the beans from this bag are white;
Result: These beans are white;
Case: These beans are from this bag

Deduction → from the general to the specific

Rule: All the beans in the bag were white;
Case: These beans were in the bag;
Result: These beans are white

Induction → from the specific to the general

Case: These beans were in this bag;
Result: These beans are white;
Rule: All the beans in the bag were white

Reliability → see above

Validity → see above

Wicked problems → characterized by their level of interconnectedness, by the presence of amplifying loops
that produce unintended consequences when interfered with, by the presence of trade-offs and conflict
among stakeholders, and by the nature of their constraints. (Liedtka, 2004) → each problem formulation
corresponds to a different solution (context) → none is »optimal« (potential solutions are neither true/false
or good/bad) → strategy is a matter of choice rather than »truth« → all solutions are contestable

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