• Roland Berger presents innovative approach to make design thinking the fundamental principle behind all corporate decisions
• Innovation method so far used mainly for product and service development
• 81 percent of firms are open to using design thinking for strategic considerations

Munich, November 28, 2016

Rapid technological advances, more demanding clientele and tough competition from innovative start-ups and elsewhere: market incumbents throughout the economy face growing challenges. Companies need to improve the experience they offer their customers by turning digitization to their advantage. At a time when technological developments are challenging many of the familiar business models, it is not unreasonable to wonder how firms can operate successfully in this fast-changing environment. Experts from consultancy Roland Berger believe that the key lies in the way in which companies make decisions – and that a particular innovation method is instrumental here: design thinking. Over the past decade, organizations applying this method have been extremely successful. Compared with all companies in the S&P 500 Index, the valuation of these firms has more than doubled (+219 percent). In their latest study, "Design thinking on every level", Roland Berger presents an innovative approach that can make design thinking the key principle behind all decisions made at all levels and in all areas of any company.

"Design thinking has previously been a method used mainly in product or service development. It involves interdisciplinary teams working together to come up with customer-centric solutions," explained Vladimir Preveden, Partner at Roland Berger. "The idea behind our approach is to get design thinking implemented not only in certain departments but across the entire organization, on the strategic level. That will help firms become more agile and flexible. The principle also places the interests of the customer at the heart of everything the company does. And digital technologies play a crucial role in creating innovations that make the company fit for the future."

Bringing a design thinking mindset into corporate strategy considerations is certainly not falling on deaf ears as a concept: 81 percent of organizations polled by Roland Berger said they would be open to the idea.

Five steps to innovation

What can companies do to get design thinking established as the principle behind all corporate decision-making? The Roland Berger experts have produced a model comprising five main steps that a design thinking project should follow:

• Deframing/reframing: This phase aims at understanding the problem and making sure that both the target group and the goal are clear.
• Gathering insights: This is about examining existing solutions and finding out why no alternative has yet been developed to meet the needs of the target groups.
• Full immersion: The collected insights have to be evaluated and interpreted. This common understanding lays the foundation on which to define the next steps.
• Idea generation and prototyping: New ideas should then be developed based on the information acquired. Once an idea has been selected, rapid prototyping is the next step, and the prototype is presented to a given target group for testing. Their feedback facilitates accelerated learning and successive development.
• Extrapolation: In the final phase it is now time for the process team to look at other potential areas of application. Rival firms' actions and future trends are crucial aspects to consider.

This last step in particular is what enables a team to take the findings of the design thinking process to a higher level. Many market incumbents target predominantly innovation in small steps and work to improve their existing products and services gradually. "Much of the time, they are not thinking about the big picture. In the kind of business environment companies now face, ambitions and goals need to be set high. As a business, if you want to come up with strategic offerings you can actually sell, you need to think big, you need to experiment much more, and you need to allow ideas to fail. Design thinking fosters exactly this kind of paradigm shift toward more of a start-up mindset that even big established companies can develop," explained Steffen Gackstatter, Partner at Roland Berger.

Cultural change, agile processes and fresh competencies put decision-making on a renewed basis

Design thinking projects call for a totally new mentality when it comes to the process of making strategic decisions. What the method also does is usher in a new corporate culture and bring added agility into corporate processes. It's the sheer speed and the multidisciplinary approach that ultimately transform a company's culture. "Start-ups take this kind of extreme variability and speed for granted, whereas organizations that have grown to their current scale over decades find it very hard to deal with," said Preveden. Even so, design thinking still goes down well with the workforce: Providing they have received the appropriate training, 71 percent of employees state that the method enriches their corporate culture. Design thinking also fosters new skills and competencies, in areas like data analysis for example. Because even though today's companies are already collecting and storing huge quantities of data, there is a lot more they could be doing to actually use what this information tells them when it comes to making their next strategic decisions. A process built on design thinking encourages people to draw on all of the findings at their disposal and to tap new sources of information too. "It's only when design thinking penetrates down through all of these factors and levels that the method assumes a strategic dimension," explained Gackstatter. "And when that happens, companies will be taking strategic decisions on a different basis than they did before – which is the whole point of our approach."

• Photos Jezperklauzen / iStockphoto