Designing for Growth

A Design Thinking Tool Kit for Managers

Jeanne Liedtka, Tim Ogilvie

• Publisher: Columbia University Press
• Year: 2011
• ISBN:
  9780231527965
• Topic: Business
• Subtopic: Management
• Index: Business

Jeanne Liedtka and Tim Ogilvie educate readers in one of the hottest trends in business: "design thinking," or the ability to turn abstract ideas into practical applications for maximal business growth. Liedtka and Ogilvie cover the mind-set, techniques, and vocabulary of design thinking, unpack the mysterious connection between design and growth, and teach managers in a straightforward way how to exploit design's exciting potential.

Exemplified by Apple and the success of its elegant products and cultivated by high-profile design firms such as IDEO, design thinking unlocks creative right-brain capabilities to solve a range of problems. This approach has become a necessary component of successful business practice, helping managers turn abstract concepts into everyday tools that grow business while minimizing risk.

S E C T I O N II:
What is?

IN THIS SECTION

As managing director of strategic marketing development at AARP, a nonprofit organization dedicated to serving Americans over the age of 50, Diane Ty faced a common challenge: how to cultivate future members among the next generation while serving current ones. The catch here was that the AARP name was virtually synonymous with “retirement,” a distant concept for many Americans under 50.

Founded in 1947 by a former high school principal who wanted to help retired teachers find health insurance, AARP had grown into an organization of more than 40 million members. Despite dramatic social changes in the second half of the twentieth century, it remained focused on its founding principles: promoting independence, dignity, purpose, and quality of life for older persons. Like any organization with an eye on the future, it was concerned with positioning itself for a new generation of members likely to be quite different from the current one.

Enter Diane Ty, a Wharton MBA with a background in both consumer products and the nonprofit world. Her assignment, dubbed Project Prepare, was to explore this question: What could AARP provide of value and relevance to young people, given the close association of the brand with the over-50 set?

Diane and her team started with the hypothesis that young people—Gen Xers and Gen Yers—would want to receive services over the Internet, but they had no preconceived notions about what services to focus on. Having never served this demographic group, they had little research on it. And so they started their exploration with secondary research. What they learned was sobering:

“We took a snapshot of what today’s gloom and doom looks like through the eyes of young people: They are graduating from college with on average more than $4,000 in credit card debt and over $20,000 in student loan debt, and they are coming into a workplace where there’s been flat wage growth. A large number of them are unemployed or underemployed. Many don’t have health insurance. Defined benefit plans are being replaced by defined contribution plans, and only half of today’s workers are eligible to participate in these. Even if they are, many do not take advantage of the employer match, and many don’t have the financial acumen to even know how to invest on their own. And then look ahead and see the questions around Social Security … This is a perfect storm.”

Diane’s team learned on further investigation that this economic insecurity among the young was having a profound impact on AARP’s current members:

“What we found was astounding. Seventy percent of our members today are still supporting their adult children in some way financially. And we know that our members have not saved enough for retirement. So they’re struggling with their own plans around retirement, they’re struggling with caring for their elderly parents, and then they find themselves still supporting their adult children.”

Diane wondered what AARP could do to get young people on a path toward economic security. “We were open to anything,” she said. “Do they want a membership group? Do they want help getting health insurance? Anything.”

In order to move forward amid all the uncertainty, Diane decided that she and her team needed a much deeper understanding of those in Gen X and Y, “their hopes, dreams, aspirations, challenges, issues, and concerns.”

They started by selecting 30 people between the ages of 18 and 49, asking them to keep a written journal and take photos. The team also took photos and video footage of their home environments and conducted in-depth interviews about their dreams, challenges, and fears. What emerged from this exploration were three distinct segments among the under 50s: 18-to-24-year-olds, whom the team called “finding your bliss”; 25-to-34-year-olds, called “reality hurts”; and 35-to-49-year-olds, whom they termed “maintenance mode.”

Believing that it would be difficult to create a single value proposition compelling to all three segments, the team decided to home in on the “reality hurts” group as an initial target. Diane explained why:

“This group was really interesting to me. They’re emerging from that total dependence on their parents and the artificial environment of school, and they’re coming into the real world. And how do they respond? The decade of 25 to 34 was when most significant life events were occurring. And each life event tended to be a catalyst for a money decision: starting your career, getting married, buying a house, having a child, changing a job, dealing with divorce. It was a huge group of events.”

Within this age group, there were again distinct segments, such as the “achievers,” who were already doing the right things financially and were ready for services like retirement planning, and the “overwhelmed,” who were too focused on getting out of debt to begin thinking about the future.

Diane and her team began looking across the data they had amassed about the needs of people under 50 and considering how AARP could meet them. The team wanted to capitalize on AARP’s capabilities and assets, including its extensive network of financial advisors, who might be willing to donate their services because of AARP’s reputation and nonprofit status.

AARP had other strategic objectives, as well. First, the organization wanted to be seen as an unbiased, trusted advisor to this demographic—this meant, Diane’s team learned, avoiding the appearance of “selling” anything. In addition, the organization did not want to replicate or compete with services that already existed in the marketplace. Finally, AARP wanted to focus on those who needed help the most, rather than serving those who were already in good financial shape.

We believe that this initial phase of AARP’s Project Prepare conveys what a well-constructed What is stage looks like. The team began with a design brief (project management aid 1) that clarified the scope of the project, its intent, the questions it hoped to explore, and the target market it wanted to explore them with. We talk more about the components of a good design brief in the Appendix, but—for now—check out page 46 to see what Project Prepare’s starter design brief might have looked like.

Team members also remained focused on AARP’s business objectives and the strategic opportunities and vulnerabilities the project was meant to address. In fact, you might argue that their lack of prior knowledge about the under-50 set was a plus—it encouraged them to jump into the study with questions instead of answers.

They then gathered a lot of data from various sources, including the people they wanted to serve. They took an ethnographic approach to their target customers, digging deeply into their lives. And they were willing to live with the uncertainty and the challenge of making sense of all they learned, translating it into insights that allowed them to identify design criteria for the next stage: idea generation. Their patience in the face of not knowing brings to mind one of our favorite quotes, which comes from Tim Brown, CEO of IDEO:

“The biggest barrier is needing to know the answer before you get started. This often manifests itself as a desire to have proof that your idea is worthwhile before you actually start the project … The assumption that you’ve got to have a business case … before beginning to explore something kills a lot of innovation.”¹

Of course, AARP’s in-depth study of the 30 Gen Xers is just the beginning of the Project Prepare team’s customer research. This deep qualitative research into a small number of potential customers’ lives sets the foundation for the broader, larger scale research that will come later.

Since the goal of design is to envision and implement an improved future state, it is always tempting to jump right to it—to the future, that is. Indeed, many people believe design thinking starts with brainstorming; some even think it ends there! But as Diane Ty’s story illustrates, the design process starts squarely with the here and now. Innovative ideas are generated from insights about current reality. Without those insights, the imagination starves. What ideas would a band of AARPers, uninformed by the kind of research Diane Ty and her team conducted, have come up with if they had started with brainstorming? We can’t know for sure, but we suspect the kind of ideas that have given brainstorming a bad name in management circles.

There is a lot packed into the What is phase. This is where the framing takes place and, in fact, where most design thinking projects are won or lost. Think of the frame as the foundation of a house. Every elegant flourish on the upper floors depends on it. When you stop to ask, “What is?” you may find that you can look at the problem through an entirely new lens. What you thought customers truly wanted turns out to be less attractive. And so you must reframe your project.

By taking the time to develop deep insight into the problem or opportunity and its context, design thinking establishes the reference point for change, the constraints that shape it, and the criteria for what success looks like.

Tools in This Section

What is starts with the creation of the design brief and ends with the identification of design criteria. Between those two project management aids are four design thinking tools: visualization, journey mapping, value chain analysis, and mind mapping.

DESIGN BRIEF We can imagine that AARP’s Project Prepare design brief would have looked something like this:^*

Project Description		AARP may be able to improve relevance to its core market (Americans 50+) by helping adult children (Gen Y and Gen X ) achieve financial independence and “PREPARE” for their futures.
Intent/Scope		The initial scope will focus on better understanding the needs of Gen Y and Gen X. AARP will then explore both for-profit and nonprofit approaches to meet their needs—with the project’s primary goal being positive social impact. AARP will pursue a for-profit approach if and only if AARP can use its resources to create a new market space that will serve the public good. Opportunities for AARP may include: health insurance challenges, college debt burden, retirement planning, building credit, and/or improving credit card habits.
Exploration Questions		The project will inform key strategic questions including: 1. What is the demographic/psychographic with the greatest need? What do these needs look like? 2. Can AARP provide services to Gen Y and Gen X in a way that reinforces its mission to make life better for Americans over 50? 3. Should AARP provide services to the public or only to the adult children of AARP members?
Target Users		At project kick-off the target audience includes all Gen Y and Gen X. We intend to align on a more focused target based on ethnographic research and strategic discussion.
Research Plan		We will screen Gen Y and Gen X research participants, in order to select the 30 most relevant subjects to follow up with an in-home interview.
Expected Outcomes		We expect to discover several high-potential opportunities for AARP PREPARE to: 1. Ensure Gen X and Gen Y have the resources to age and retire with dignity 2. Build AARP’s relevance to 50- to 65-year-old Americans by serving their children 3. Build AARP’s relevance to younger Americans to ensure future membership levels.
Success Metrics		1. Did we discover a compelling reas...