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Design Thinking + IT-Mediated Services = Innovation Excellence By Jeneanne Rae Carl Fudge August 2009

Design Thinking + IT Services = Innovation Excellence (White Paper)//Motiv Strategies

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"Design Thinking + IT-Mediated Services = Innovation Excellence" August 2009 White paper from Motiv Strategies CEO Jeneanne Rae and Director Carl Fudge.

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Page 1: Design Thinking + IT Services = Innovation Excellence (White Paper)//Motiv Strategies

           

           

Design Thinking + IT-Mediated Services = Innovation Excellence

By Jeneanne Rae Carl Fudge

August 2009  

   

                       

 

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Design Thinking + IT-Mediated Services = Innovation Excellence  IT-mediated services are becoming increasingly significant in the public and private sectors today. While some examples of high profile successes exist, too many IT projects become high-cost resource drains that disappoint both the organizations that invest in them and their targeted users. A major reason for this is the frequent mismatch of expectations between developers and users. Developers approach these projects as “IT deployments,” focusing closely on technical specifications but not fully taking into account the needs of real users, who expect a quality service to be delivered. The entire notion of creating a service for an end-user is often lost on development teams, resulting in the creation of user experiences that are underwhelming and subsequently fail to capture the results – financial or otherwise – that were projected. Because of this mismatch of expectations and the opportunity to apply design thinking to bridge the gap, the practice of IT-mediated service development (services mediated by electronic technologies) is ripe for change. We propose a new, integrated perspective rooted in design thinking called the “3-D model,” in which all decisions about the development of new IT-mediated services are grounded in the perspectives of real users. Not only will this approach help organizations create new and delightful experiences that impact the bottom line, but it can also enhance organizational culture by providing a framework to achieve continuous improvement of products and services. We describe this new approach and illustrate its effectiveness in a specific case example: the Virginia Employment Commission’s unemployment insurance system. Why IT Projects Fail So Often IT projects do not have a strong success record overall and according to the Standish Group (2006), only 29% succeed, while 53% are challenged and 18% fail. The reality is that they are risky endeavors due to the human and technological complexities involved and the significant financial investment necessary. Failures lead to management frustration and financial loss, notably shown by two examples: the FBI’s Trilogy project to upgrade its computer system, a $170 million “train wreck in slow motion,” and Nike’s inventory glitches after an ERP implementation, about which CEO Phil Knight famously quipped “This is what I get for our $400

million?” Both of these are described in Nelson’s (2007) paper, “IT Project Management: Infamous Failures, Classic Mistakes, and Best Practices.” On the flipside, firms that get it right re-use developed IT platforms and associated data again and again to create new sources of value. They creatively adapt existing functionality to enable new products and services, as described in Kohli and Melville’s (2009) writing on “Learning to Build an IT Innovation Platform.” In the realm of IT at least, the rich do appear to be getting richer. Various explanations for the high rate of IT project failure have been put forward. Technological issues may be in play, such as difficulty choosing an appropriate software development methodology, a belief in technology “silver bullets,” or a management team that is not effectively coordinating internal and outsourced developers. Other reasons include a lack of complementary capabilities, scope creep, insufficient project sponsorship, over promising and under delivering, and poor interface design. Though these reasons do contribute to suboptimal results, many IT project failures are ultimately rooted in a mismatch between what is demanded and what is supplied. The value proposition to users is that of a service, such as an online benefits management tool that provides a human resource service to employees, while developers perceive that what is being delivered is an IT project, a business automation system, a computer system upgrade, or a new database. This difference in perception is a significant hindrance to success and directly inhibits the user’s goal of a delightful and valuable solution, such as Apple’s iTunes music delivery service. While the technical features of an information system are undoubtedly important, the overall experience of the service is paramount. In the era of services, happy users translate to the bottom line as organizations gain competitive advantage through services that make them more “sticky” or allow them to reap cost savings through efficiency gains e.g., by replacing call centers with online, self-service software. The mismatch between a development approach focused on IT specifications and ever increasing user demand for quality services leads to a model that is ripe for an overhaul. An empathic approach rooted in design thinking is a critical missing link in the development of IT-mediated services, which we now describe. Integrating Design and Innovation Using the 3-D Framework The solution that we have developed comprises an integrative process that blends design thinking with traditional innovation and IT system design activities. The resulting fusion provides a framework for

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organizations to complement time-tested development strategies with design thinking and start building an organizational culture of innovation as well. The process involves three phases: Discovery, Development, and Deployment (see Figure 1). We will illustrate the framework by describing a real client project that we worked on with the Virginia Employment Commission (VEC), to develop a new IT mediated service for use in the public sector. 1. Discovery Phase The Discovery Phase is a combination of business and design thinking and includes framing the problem and researching user needs. It kicks off by stating all assumptions about the opportunity’s context, user, and competitor to frame the research needed to prove or disprove the dominant logic of a sector or industry.

The Discovery phase continues with field research in the form of ethnography, latent needs finding, empathy for the end user and user journey mapping which is conducted by objective personnel trained in design research methods. They function as explorers, invested in discovering where information breakdowns occur and seeking to understand the user’s context and state of mind. This information often provides clues for potentially impactful innovation opportunities. To find these clues, an ethnographic model of the user’s experience is generated, noting pain points and emotional wants and needs along the way. This process is referred to as user journey mapping (see Figure 2), and is pivotal in laying the groundwork for creating a customized service innovation that will delight users and anticipate and counteract future information breakdowns.

Figure 1. The 3-D Model illustrates the main steps in IT-Mediated Service Innovation Rather than using deductive logic (reasoning from a general theory to a specific instance) or inductive logic (reasoning from a specific instance to a general law or theory), design thinking uses “abductive” reasoning, drawing on the logic of possibility and exploring alternative world states to reveal the possibilities of what could be. Design thinking is linked

to an improved future and seeks to build ideas up, unlike critical thinking which breaks them down. There are no judgments in design thinking, a core value that eliminates the fear of failure and encourages maximum input and participation. Also, the process is intuitive rather than generative: in brainstorming, for

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example, understanding patterns is almost always more useful than identifying the best ideas. In addition to leaning heavily on design thinking methods, effective IT-mediated service innovation requires the incorporation of traditional strategy and marketing analyses, too. A strategic lens ensures that the work performed moves the organization towards its most important goals, such as improving its user experience and driving loyalty. Marketing analysis is often used as the starting point to seek deeper insight from certain types of customers, e.g., the most profitable, most diverse geographically or segments that are attached to certain channels. While this analysis is indeed necessary, it is not sufficient for effective service innovation: demographic information is no substitute for the contextual inquiry and emotional needs gathering performed during ethnography – the latter directly informs service innovation whereas the former provides boundary conditions. Once both design thinking and strategic analyses have been integrated, the next stage uses convergent thinking to synthesize the initial findings and move towards the design of a new service concept in the Development stage. This culling reigns in the possibilities identified through design thinking and identifies a clear starting point for service design. The goal of the initial discovery process is to articulate what a better service would do and building many

different alternatives while the big picture focus is the overall customer experience. As Consultants, we were engaged by the VEC who needed to create a Request for Proposal (RFP) for potential vendors of a complex service delivery system designed to automate activities such as administration of unemployment benefits. The success of the service depended upon accurately specifying the service needs in an RFP, which proved to be a difficult task for the VEC leadership. Aneesh Chopra, then Secretary of Technology for the State of Virginia (and now serving as the Chief Technology Officer of the White House Office of Science and Technology), described the challenge as one of “maintaining a balance between neutrality towards competing vendors and successfully meeting the needs of the State to acquire a functional yet flexible system.” While a highly structured and explicit definition of requirements is common practice, this unfortunately also serves to restrict potentially creative responses. For example, if the VEC were to specify what technology should be used to achieve certain functionality, this could inhibit a vendor who may have a better, alternative way of solving the problem. Another difficulty with the traditional approach is that the user experience is opaque: “unfortunately, in most government services, its hard to describe the user’s experience,” said Chopra.

Figure 2. A user journey map for an unemployed citizen seeking assistance from the VEC

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To gain more insight into the VEC user experience, field observations were conducted to capture insights from both staff and users regarding their current interactions with the VEC system. The design thinking approach yielded journey maps of user’s experiences, noting aspects such as how often users needed to interact with the system (and for what reasons), and what roadblocks they encountered. The mapping step helped identify when information breakdowns took place, such as when users were unable to understand what documentation was required to interact with the system, usability issues in managing system access passwords, and frustration over what users identified as “wasteful procedures.” The VEC now recognized that understanding user needs was key to developing first a successful RFP and hopefully productivity reform, too. A key first step was grouping users into four distinct scenarios or “archetypes,” based on their needs, an exercise which had never been performed before. At this point, development of the RFP was significantly enriched based on the methods of design thinking. According to Sam Lapica, Director of Technology at VEC, “We had never created specific scenarios before - that was a new idea for us. It was more function specs, design goals, and aspirations. Once we identified the four customer archetypes it became clear to us that we wanted to challenge the vendors to respond to that.” The value here rested in having additional criteria by which to evaluate vendor offerings, and assessing the extent to which vendors’ proposals met the needs of all four user archetypes. Lapica notes that “this is a very specialized area of software development and we didn’t want to foreclose possibilities by being too specific in the RFP. We wanted the vendors to have some latitude.” Design thinking, in this case, was able to accommodate both specificity and latitude by providing a wide range of archetypes to present diverse user needs. According to Lapica, “The process built on what we had already started and gave us a different perspective and the addition of the scenarios was very creative.” 2. Development phase The Development phase begins once a vision for a better service is in place and initial prototypes can be constructed. A key part of this is the ideation and visualization process, where quick, visual representations of services are depicted on paper so that participants can easily understand them and their

reactions can be gauged. Storytelling, vignettes, cartoons, and amateur videos are shown to potential users in order to tap into their emotional response, thus harnessing a unique quality of design thinking, which is turning complex systems into forms that are visible, tangible and accessible to users. When creating these visual representations, it is important to involve end users and front line staff in the conceptualization process whenever possible, and keep the stimulus user-centered. Design thinking is critical during these initial iterations of a prototype and a couple of traditional mindsets will need to be reversed in order for the process to be most effective. First of all, rather than evaluating a service by its technical performance, it should be evaluated by the reaction it elicits from end users and front line staff. Secondly, multiple prototypes should be generated and, while project managers may resist this out of concern that the process will be inefficient, any incremental time investment is outweighed by the fact that prototypes reduce uncertainty and risk. Through prototyping, designers can determine whether users actually want the service, whether the team can deliver it, and whether cost objectives can be met before the initial pilot is launched. In prototyping, the goal is not perfection but rather to learn about the strengths and weaknesses of the concept and to identify new directions that further iterations might take. With real user reactions in hand, the user experience can then be refined even further. This is also an opportune point to study the business case and IT specifications of the service and to document the feasibility, costs and projected efficiency gains associated with the service. It is important therefore to deploy metrics and service standards to provide quantitative measures (i.e., time to completion, percent completion, customer satisfaction) of the productivity enhancements driven by an improved customer experience. The best programs seek to improve some important aspect of the business case such as productivity of the user or the system. And without specified targets, it is difficult to prove that the implementation of an ideal experience meets its objectives. Once the concept and the business case have been developed, a period of iteration and refinement follows where, once again, it is important to involve end users and front line staff whenever possible.

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Figure 3: Design thinking methods used in the Development phase including ideating (left); visualization (center) and concept development (right)

At this point, the focus shifts from quantity to quality concerns. Contrary to traditional approaches which lay out specifications for IT functionality early on in a project, design thinking methods involve crafting informed technical requirements later in the process, once a clear vision for key requirements can be articulated. At the VEC, Sam Lapica described the visualization phase as “exercises with the project team to arrive at a unified vision for the project,” as these exercises were used to develop a service prototype for use in the RFP. Part of the difficulty in developing the RFP lay in the complexity of the service, which was intended to satisfy a variety of user needs e.g., business owners researching incentives for opening a new branch in Virginia or individuals navigating the state’s unemployment registration procedures. The services in question were entirely intangible, requiring conceptual rather than physical prototypes. Using a prototype allowed the Vendors to gain a much clearer and more granular understanding of user needs. During the VEC project, the iteration and refinement process culminated in a two-day workshop involving consultants, the technology team at the VEC, and senior VEC leaders. Consultants presented the user profile archetypes and guided discussion of their findings to determine whether user needs could realistically be met through the system. This process shifted the focus of the RFP process from identifying desired information technology specifications, to exploring how they would address the problems of a wide range of users. According to Lapica: “It became possible to identify not just information technology barriers, but business process and policy restraints that were obstructing the process.” Chopra stated that the workshop was, “The most impactful moment. We listened to the customer experiences and allowed VEC leadership to listen to the outcomes and see if they found them realistic or unrealistic. This changed the nature of the discussion away from ‘what IT requirements do we want from the IT vendor?’ to ‘how will we address the needs of user A, B, and C?’”

3. Deployment phase The strength of the final prototype and its business case determine whether and how big of an investment the organization should make in the potential service. Just as it would with a physical product such as a medical device or laptop computer, the design thinking process ends with a final specification for what should be built. In the product development world, it is well known that organizations are far more efficient at producing a product efficiently if both the developer and the users agree that the final prototype represents cost, margin, and timing expectations. This is not necessarily common practice in the IT world, where projects are often funded lavishly before the final outcome is known and are not necessarily subject to user scrutiny during development. In fact, many of the disasters mentioned at the beginning of this article occurred because there was no final prototype or business case prior to the beginning of the implementation phase of the work. This area holds one of the strongest opportunities for IT-mediated service design to learn from product development processes. The techniques now used in product development in most industries include parallel development, rapid prototyping, and most recently, co-creation with users. Finally, incorporating an element of storytelling helps sell the concept to leadership. All of these methods should be used in IT-mediated service innovation to reduce the risk of failure. A common practice for many would-be innovators faced with developing IT-mediated services has been to go straight from concept generation to a pilot phase. Often these efforts require significant investment and have been known to fail because they do not meet user needs or their service expectations. This is most likely due to several reasons, including inadequate understanding of the problem to be solved, a solution fraught with shortcomings, a system that is too costly, or all of the above. The protocols outlined during the development phase, especially prototyping and iteration, help the development team

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get the technical specifications into the success zone because of their heavy user focus. Because services need to be experienced in order for judgments of quality to be made, there is no better way to mitigate the risk of possible failure than to deploy prototypes. It is therefore in the best interest of any organization to build in the requisite protocols for continuous improvement upon launch whether the IT-mediated service is internal or external to the provider. Conclusion No one argues that IT projects have a very high failure rate. The question is why, and what can be done about it? We submit that there are two main learning points for organizations as they seek to develop IT-mediated services that delight users and customers. First, IT projects should be reframed as IT-mediated services so that the user experience is front and center in all aspects of design and execution. Second, service innovation methods based on design thinking methods should be applied. As emphasized by Tim Brown, CEO of IDEO, in his 2008 HBR article, design thinking is a “discipline that uses the designer’s sensibility and methods to match people’s needs with what is technologically feasible and what a viable business strategy can convert into customer value and market opportunity.” In the VEC engagement and others with which we have been involved, we observed that there are both direct and indirect benefits of using a design thinking approach to IT-mediated service innovation. The primary direct benefit is a better service design in terms of effectiveness, usability, and efficiency. The key to achieving better service design is elevating the user needs so they become central to all aspects of the process. At the VEC, the project started off as an exercise in IT specification setting, but after going through the design thinking process, it became more important to examine the IT barriers, process barriers, and policy barriers that are obstructing the process. In the words of Chopra, “What we’ve learned through this process is a far clearer path from IT investment to citizen improvement. In the past, IT investments were largely back office and internal in their focus, citizen benefit often indirect and secondary.”

There may also be an unexpected indirect benefit of deploying the process we describe: a subtle shift in culture of the organization applying the design thinking process to IT-mediated service innovation is very likely, too. At the VEC, Chopra believes that design thinking indirectly shifted the overall approach to business improvement. In discussing his perspective on business improvement strategies using previous approaches, he indicates that: “I would have emphasized Six Sigma, lean, or some other performance improvement process that is a well-known manufacturing strategy used for process improvement. Now I would say design thinking is far better suited for a services environment. We hope design thinking might be the platform on which we build a culture of continuous performance improvement throughout our organization.” As organizations grapple with the twin challenges of ever-demanding users and ever-increasing resource scarcity, new approaches will be required. Simply applying new technologies to new problems using the same methods is a prescription for mediocrity and preservation of the status quo. We urge organizations to consider design thinking as an innovative new approach to designing compelling IT-mediated services.

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   Bibliography    Brown,  T.  Design  Thinking.  Harvard  Business  Review  (2008).  Hartmann,  D.  Interview:  Jim  Johnson  of  the  Standish  Group.  InfoQueue,  2006.  Kohli,  R.,  and  Melville,  N.  Learning  to  Build  an  IT  Innovation  Platform.  Communications  of  the  ACM,  52,  8  (2009),  

122-­‐126.    Nelson,  R.R.  IT  Project  Management:  Infamous  Failures,  Classic  Mistakes,  and  Best  Practices.  MIS  Quarterly  

Executive,  6,  2  (2007),  67-­‐78.    Further  Reading    “IT’s  Star  Turn”  by  Jeneanne  Rae  in  BusinessWeek  online  http://www.businessweek.com/innovate/content/jul2007/id20070718_340679.htm   “Seizing  the  White  Space:  Innovative  Service  Concepts  in  the  United  States.”  Prepared  by  Peer  Insight  for  Tekes,  the  Finnish  Funding  Agency  for  Tehnology  and  Innovation    http://www.peerinsight.com/docs/tekesreport.pdf    

 Top  Tips  from  the  Authors  for  Building  Innovative  IT  Services  

 1. Hold   on   to   the   notion   of   creating   a   service   for   an   end   user   rather   than   a   new   systems   deployment.  

Forgetting  this  often  results  in  user  experiences  that  are  underwhelming  and  fail  to  capture  results.  2. Ground   all   development   decisions   in   the   perspectives   of   real   users,   by   gaining   their   insights   and   letting  

them  co-­‐create  the  new  service.  3. Try  to  match  user  and  developer  expectations  and  remember  that  the  value  proposition  to  users  is  that  of  

a  service  and  not  a  set  of  technical  specifications.  4. Market  analysis  is  necessary,  but  not  sufficient  for  innovation:  demographic  information  is  no  substitute  for  

the  contextual  inquiry  and  emotional  needs  gathering  performed  during  ethnography.  5. Ensure   there   is   a   final   business   case   and   prototype   in   place   before   implementing   the   new   IT-­‐mediated  

service.  This  practice  reduces  uncertainty  and  therefore,  risk.    

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 Author  Biographies    Jeneanne Rae Jeneanne is a nationally recognized thought leader on innovation management and design strategy. Rae was hailed as one of Business Week's "Magnificent Seven Gurus of Innovation" in its cover story on the creative corporation. After receiving an MBA from Harvard Business School, Jeneanne has now spent twenty years mastering the art and science of innovation, including spending seven years on the senior management team of IDEO. A columnist for Business Week online, Jeneanne writes on cutting-edge innovation topics. As an adjunct professor for nine years, she taught new product development and service development at Georgetown University's McDonough School of Business and currently teaches executive education through various top ranked programs. Jeneanne can be contacted at: [email protected]; 703-778-1051. Carl Fudge Carl is an Innovation Program Leader with Motiv, focused on design capability building and service innovation projects within leading international corporations. With a background in organizational change, Carl is a firm thought leader on subjects including organizational design, leadership and talent management. He holds a Masters degree from Columbia University in Organizational Psychology and a B.S. in Psychology from University College London. Prior to joining Motiv he was a Management Consultant with McKinsey & Co., in Houston, TX. While at McKinsey he worked on topics such as growth strategy, operational efficiency and performance management in the beverage, foodservice, media and energy industries. Carl can be contacted at: [email protected]; 703-778-5543.