A Combination of Design Thinking and Agile Approach for Competitive Advantage
An organization’s business goal is to create a value of competitive advantage by understanding and placing the needs of their customers as a priority. Competitive advantage starts from humans as customers, where being customer-centric has been the mantra in the business world. Design thinking is a methodology that instills innovation with a human-centric design ethos. Innovation by itself is powered by an ability to understand people and their needs through direct observation. Thereby, innovation is considered a principal source of differentiation and competitive advantage, which is achieved through design thinking and agile approach.
Wait, now what is design thinking and agile approach?
According to a study by Hobday et al, design thinking identifies the problem space through observation and finding a new solution space that fits the purpose by developing an innovation perspective on design or design perspective on innovation, where both fields would benefit. However, one of the main issues in a competitive world is to bring change quickly to customers. The speed at which customers’ needs are understood and served establishes a competitive advantage for the organization. Companies working in an agile approach for problem-solving have seen numerous benefits of quickly exploring the solution space. Agile approach and agile teams are best suited for innovation when organizations are confronted with a significant, complex problem that they break into modules to develop solutions through rapid prototyping and tight feedback loops, then integrate the solutions. The question to discuss is whether design thinking, and an agile approach can be integrated for instilling and accelerating innovation by exploring the problem space and building solution space that quickly leads the organization towards gaining a competitive advantage. Also, how this kind of combination acts as a competitive advantage strategy between knowing the customer needs and associated problems to serve a solution for those problems quickly before the competitor does. Now let us focus on the basics.
The Process of Design Thinking
Design thinking is a buzz word used extensively in innovation research these days to discuss and understand human needs and problems, thereby solving them through the application of the design thinking method. It uses the designer’s sensibility and technique to match people’s needs and use a viable business strategy to turn it into customer value and market opportunity. Since most management ideas and practices can be easily copied and exploited, designers are expected to create ideas that meet the needs and desires of the customers rather than developing existing ideas. Therefore, the organization needs to shift its focus towards innovation as a principal source of differentiation to gain a competitive advantage for solving problems. Design thinking is a problem-focused approach rather than a solution-based approach because it begins with searching for the right problem, asking the right questions, and being able to design creative and novel ideas to produce the right solution. Thus, the process of design thinking comprises five stages described by the d.school of the University of Standford (n.d,) which are Empathize, Define, (the problem), Ideate, Prototype, and Test.
The first stage of the human-centric design thinking process is Empathize, which focuses on gaining an empathic understanding of the problem that needs to be addressed. The design team should meet its users, to know their needs and desires. Meeting the users is especially critical so that the design team can empathize through direct observation, be engaged with them to see the real problems hidden and ask them the right question to know where their concerns fall within. Asking the right question helps the team for a deeper understanding of the problems that need to be addressed. The second stage is Defining the problem stage, where the team puts together all the information gathered from the previous step to identify the problem statement. The third stage is to Ideate to generate creative ideas through brainstorming. Ideation stimulates free-thinking among different team members of the design team to expand on their creativity and to come up with innovative ideas and perspectives, far away from obvious or generic ideas. These creative ideas are prototyped in the fourth stage. The team needs to produce inexpensive, scaled-down versions of the product so that they are still able to test the applicability of the idea generated. This stage can either break them or take them forward. If it breaks them, it is essential to retrospect and get a sense of direction so that they keep going than to pause. Retrospective through sense-making can either improve their prototypes or discard them entirely if their prototype failed to serve the purpose and go back to the ideation stage for a deeper understanding of the problem space and solution space. Thereby, it’s evident that design thinking is a non-linear process that requires a deeper understanding of the customers’ problems, and it needs to be addressed through innovative ideas, making it the starting point of competitive advantage to provide real and authentic value.
To create value, the design thinkers should possess specific characteristics and mindset when they work on the design thinking process. The designers should empathize by having the ‘people-first approach’ in mind. They should be optimistic since they need to experiment continuously in a collaborative manner to have integrative thinking. Through working together in a team in a collaborative way, sometimes diverts the designers from the problem space itself. Hence the designers need to keep questioning themselves about the needs of the user, the problems and designing the solutions that serve desirability, feasibility, viability, and keep asking the five-whys which will guide the designers towards the hidden problems.
Why Agile Approach for solving innovative ideas quickly
At the business practice levels, there is hardly any research on how designers should work together creatively to develop solutions to solve complex problems. Besides, most of the business these days are adopting an agile approach for complex problem solving and teaming the employees in small groups who are designed to stay close to the customers and adapt quickly to a rapidly changing environment. However, only if the approach is implemented correctly, the team results in higher productivity and faster problem-solving. When agile teams work closely with customers, the responsibility of innovation is in the hands of these teams closest to them. Thereby, it reduces layers of control and approval since it follows the bottom-top approach of solving problems, resulting in speeding up work and increase the teams’ motivation. In the agile method of problem-solving, there is a taxonomy of opportunities on the way the team approaches the problem and solution space. Taxonomy intends to engage the right people to the proper work avoiding confusion. Agile teams are suited to innovation for the profitability application of creativity that can improve products, services, processes, and business models. It especially works best when there is a significant, complex problem. The team breaks the problem into smaller components and develops solutions through rapid prototyping and tight feedback loops and integrating the solutions quickly through rational decision making. Rational decision making is a fact-based decision which is a product of the mind and the choice between alternatives available. The selection made between the options available is based on an intended and careful consideration of the expected outcome. Rational decision-making follows specific steps like defining the problem, developing alternatives, evaluating alternatives, and selecting the best alternative. These steps lie within the design thinking process when addressing the problem and solution for it. Deciding between many alternatives and selecting the best innovative choice is the one that will be prototyped and tested in the design thinking process.
Now let us look at integrating Design Thinking and Agile Approach
Design thinking is an essential tool for exploring the new problem and coming up with innovative solution space. On the other hand, the agile approach is best used to accelerate innovation because it helps the team guide and explores solution space quickly and efficiently through collaboration. Change can be a principal source of competitive advantage. Still, at the same time, timely implementation of the solution space by the design team will potentially lead to a thriving sustained competitive advantage for the organization over the competitors. The design thinking and agile methods have frameworks and principles that have a defined set of roles and activities. Design thinking addresses the “why” of a problem. It takes an empathetic approach to address the needs of the users by asking questions and using user-focused innovative designs to solve and satisfy the needs of the customer.
On the other hand, the agile approach addresses “how” to deliver the solution by working in smaller groups and quickly bringing innovation to use. Finding the right balance between the discovery of the problem and delivery of the solution is crucial because it is the most frequently overlooked segment since, on the one hand, there are pain points felt by the customers that need to be addressed. On the other hand, it depends on the organization’s capabilities and constraints. Hence there should be the right balance between how quickly the rollout progresses and proceeds to know how teams are handling this. However, when thoughtfully applied, can help the organizations to align and deliver innovative solutions that bring value and growth to the customers.
Problem-solving is the main crux and goal of the organization, and agile approach provides a way to solve problems. But how do organizations know which is the right problem that needs to be solved to address the customer needs? This is where design thinking comes into the picture and plays a vital role in finding problem space. Combining the two approaches is not an easy task, it requires a cultural shift, and the user needs to get accustomed to a new way of thinking and doing. Once the team gets accustomed to combining the two approaches, the organization can see the benefits because both approaches have a constant feedback loop that measures the progress and adapts together to maximize value creation. Simultaneously, Design thinking allows the designers to come up with problems, while the agile approach allows the designers to collaborate to solve the problem quickly and implement them. However, for the agile approach to work, seven agile principles need to be applied to benefit from it. The agile principles given are short development cycles, small, efficient teams, close contact with customers, engaging in a planning game, daily stand-up meetings, test-driven and pair programming, and retrospective reflection. This process is useful when, for example, engineers enter the agile part of the process, designers iterate with the problem space to solve the user problem. Whereas the engineers can provide feedback to the designers during the agile process on the constraints they face while trying to implement the solution that the designers have outlined through retrospective reflection.
A combination of these approaches has benefited Ikea, a Swedish furniture company. Ikea, one of the world’s largest furniture companies, is the best example of the combination of design thinking and agile approaches that gained sustained competitive advantage and is still successful. Ikea’s design manager, Marcus Engman, describes how a small team of in-house designers at the company manages to create 2,000 affordable products each year. Ikea designers who work in small groups travel to customers’ homes around the world and understand the requirements to develop the new innovative products, accordingly, keeping in mind the human-centric approach. They create products that are cost-effective and currently operate in 351 stores across 46 countries. The success lies behind the approach that they have adopted, which has created a sustained competitive advantage.
Conclusion
Conclusively, technology, and globalization are creating disruption rapidly. Hence, most modern organizations like Apple, Samsung, Saab, Airbnb, and Tesla are turning to design to better comprehend and connect with their customers and lead by being agile to connect faster with customers. Thereby, companies could integrate design thinking and agile approach to instill and accelerate innovation by exploring the problem space and building a solution space quickly, leading the organization towards gaining a competitive advantage. However, sustaining a competitive advantage is hard for companies to achieve. They need to continuously strive to solve user problems in a better and faster way. To do this, design thinking is required as a practice amongst all the teams in a company to be focused on creating solutions. Concurrently, to be able to move fast and implement, they need to be agile and follow the processes and principles to realize the gains over their competitors quickly. To sum up, the combination of design thinking, and agile approach is one of the many effective ways for an organization to achieve a competitive advantage. Besides, the never-ending feedback loops of both the methods help towards creating innovative ideas that act as an add-on feature for an organization to sustain competitive advantage over their competitors.
