In a Word The need for twenty-ﬁrst century mindsets and protocols has sparked
interest in design thinking. That is a human-centered, prototype-driven process for
the exploration of new ideas that can be applied to operations, products, services,
strategies, and even management.
A Design for Life
In a world of continuous ﬂux, where markets mature faster and everyone is affected
by information overload, organizations regard innovation, including management
innovation, as the prime driver of sustainable competitive advantage. To unlock
opportunities, some of them use mindsets and protocols from the ﬁeld of design to
make out unarticulated wants and deliberately imagine, envision, and spawn futures.
Design is more important when function is taken for granted and no longer helps
stakeholders differentiate. In the last ﬁve years, design thinking has emerged as the
quickest organizational path to innovation and high-performance, changing the way
creativity and commerce interact.
In the past, design was a downstream step in the
product development process, aiming to enhance the appeal of an existing product.
In truth, companies such as Apple in particular, but also General Electric, Levi Strauss, Nike, and
Procter & Gamble, to name a few, pioneered the notion some time ago.
©Asian Development Bank 2017
O. Serrat, Knowledge Solutions, DOI 10.1007/978-981-10-0983-9_18
Today, however, organizations ask designers to imagine solutions that meet explicit
or latent needs and to build upstream entire systems that optimize customer
experience and satisfaction.
Therefore, although the term “design”is commonly understood to describe an
object (or end result), it is in its latest and most effective form a process, an action,
and a verb, not a noun: essentially, it is a protocol to see, shape, and build. Lately,
design approaches are also being applied to infuse insight into the heart of cam-
paigns and address social and other concerns.
The proper study of mankind is the science of design.
deﬁned design as the changing of existing conditions into preferred
Design thinking, then, is about using the sensibilities and methodologies that
characterize designers to create new ideas, new alternatives, new choices, and new
viabilities that satisfy stakeholder desires. It is fundamentally abductive,
designers still induce patterns and deduce answers.
Stemming from abductive reasoning, design thinking is empathic, personal,
subjective, interpretive, integrative, experimental, synthetic, pictorial, dialectical,
See, for instance, Brown and Wyatt (2010). In 2007, Oxfam approached IDEO, a global design
consultancy, with a brief. How might the charity better educate people to understand climate
change? How might Oxfam translate that understanding into a better relationship with donors?
Herbert Simon (1916–2001) was an American political scientist, economist, and psychologist
whose research ranged across the ﬁelds of cognitive psychology, computer science, public
administration, economics, management, philosophy of science, sociology, and political science.
Herbert Simon saw that the rationality of individuals is limited by the information they have, the
cognitive limitations of their minds, and the ﬁnite amount of time they have to make decisions.
“Bounded rationality”leads them to “satisﬁce”, that is, choose what might not be optimal but will
make them sufﬁciently happy.
Abduction is the process of inference to most likely, or best, explanations from accepted facts.
Deduction means determining the conclusion. For example: “When it rains, the grass gets wet. It
rains. Thus, the grass is wet.”Induction means determining the rule. To illustrate: “The grass has
been wet every time it has rained. Thus, when it rains, the grass gets wet.”Abduction means
determining the precondition. For instance: “When it rains, the grass gets wet. The grass is wet, it
must have rained.”Abductive thinking is very close to the concept of lateral thinking, for which
numerous tools exist.
130 18 Design Thinking
opportunistic, and optimistic. It is a frame of mind for problem solving that can
balance legitimate needs for stability, efﬁciency, and predictability with the
requirement for spontaneity, experimentation, and serendipity. In the conceptual
it is a “people ﬁrst”approach to the full spectrum and minutiae of innovation
activities that has applications in operations, products, services, strategies, and even
If I’d asked my customers what they wanted, they’d have said “a faster horse”.
Inside the Design Thinking Process
Design thinking revolves around three key phases: inspiration, ideation, and
During these phases, problems are framed, questions—also about
questions—are asked, ideas are generated, and answers are obtained. The phases are
not linear; they can take place concurrently and can also be repeated to build up ideas
along the continuum of innovation. The design thinking process allows information
and ideas to be organized, choices to be made, situations to be improved, and
knowledge to be gained as depicted in Roger Martin’s three-stage funnel.
Design thinking is, inherently, a prototyping process powering deep under-
standing of what people want in their lives as well as what they like (or not) about
the way that is made, packaged, marketed, sold, and supported. To this end,
Pink (2005) has identiﬁed six high-concept, high-touch abilities that have become crucial in the
conceptual age. (The term “conceptual economy”describes the contribution of creativity, inno-
vation, and design skills to economic competitiveness, especially in the global context.) The six
abilities are design, story, symphony, empathy, play, and meaning. By high-concept, he means the
ability to detect patterns and opportunities, to shape artistic and emotional beauty, to craft satis-
fying narratives, to fuse apparently unrelated ideas into an invention. By high-touch, he connotes
the ability to understand the subtleties of human interaction, empathize, and ﬁnd happiness in the
pursuit of purpose and meaning. Design is one profession that relies on all six abilities.
It can, for instance, be used to develop and drive strategy, open new markets, fashion new
offerings, formulate new business models, identify new applications for technology, articulate new
ways of connecting to customers, and forge new partnerships.
Some articulate these further into seven: deﬁne, research, ideate, prototype, choose, implement,
The ﬁrst stage of the knowledge funnel is the investigation of a mystery (that may have several
forms). The second is the delineation of a heuristic, viz., an educated guess, intuitive judgment,
rule of thumb, or simple common sense, that narrows the area of inquiry so that it may be
managed. The third is the creation of an algorithm, viz., a formula. As one moves down the funnel,
one creates efﬁciency but must necessarily leave things out (Martin 2009).
Deﬁning Design 131
multidisciplinary teams of T-shaped individuals
are encouraged to fail often to
succeed sooner through trial and error: innovations do not arise from incremental
Design is not just what it looks like and feels like. Design is how it works.
By the same token, design is never done: a market is always changing, least of
all because good ideas are copied, and design must change with it. Design success
is the integration of design thinking into an organization: at that level, it becomes a
powerful tool to solve unpredictable problems.
To Heather Fraser, the greatest payout of design thinking lies in the design of
strategies and business models for organizational performance that creates both
economic and human value. Broadening the deﬁnition of design, she argues that it
can be the path to understanding stakeholder needs, the tool for visualizing new
solutions, and the process for translating cutting-edge ideas into effective strategies
(Fraser 2009). Heather Fraser, from whose work the following draws, sees three
iterative gears in business design. Anchored in the needs of stakeholders, they apply
deep user understanding to stimulate high-value conceptual visualizations and
extract from these the strategic intent needed to reform business models.
•Gear One: Deep User Understanding The ﬁrst step is to turn the telescope
around to reframe the organization and view its business entirely through the
eyes of the customer (and, of course, other critical stakeholders). It is necessary
to look beyond the direct use of an organization’s products or services to the
contexts in which they are located, in terms of the activities surrounding their
utilization, to gain deeper insight and broader behavioral and psychographic
perspectives. It is also critical to understand the “whole person”engaged in any
given activity—not just what they do, but how they feel and how their needs
surrounding their activities link to other parts of their life.
T-shaped individuals possess deep knowledge in a core area of expertise as well as broad
knowledge in disciplines such as management, ﬁnance, and business operations. Kelley (2008)of
IDEO has also observed a number of roles that people can play in an organization to foster
innovation and new ideas and offer an effective counterpoint to naysayers. They are the anthro-
pologist, the experimenter, the cross-pollinator, the hurdler, the collaborator, the director, the
experience architect, the set designer, the caregiver, and the storyteller.
132 18 Design Thinking
•Gear Two: Concept Visualization With renewed empathy and a broader set of
criteria for innovation serving as springboard, creativity can be unleashed and
move through multiple-prototyping and concept enrichment, ideally with users.
It is vital to look beyond what is to what could be, using imagination to generate
altogether new-to-the-world solutions. At this stage, there are no constraints,
only possibilities. Engaging all functions and disciplines on the team infuses
ideas into the process, fortiﬁes team alignment, and prepares the traction that
will lock down strategies and activate them later.
•Gear Three: Strategic Business Design With well-deﬁned, user-inspired
solutions at hand the third gear aligns broad concepts with future reality. This
entails prototyping business models to integrate their parts and assess the impact
of the activity system as a whole. It is imperative to identify what will drive the
success of the solutions; prioritize what activities an organization must under-
take to deliver related strategies; deﬁne relationships strategically, operationally,
and economically; and determine what net impacts the new business models will
Brown T, Wyatt T (2010) Design thinking for social Innovation. Stanford Social Innovation
Fraser H (2009) Designing business: new models for success. Design Manage Rev 20(2):55–65
Kelley T (2008) The ten faces of innovation. Proﬁle Books Ltd
Martin R (2009) The design of business: why design thinking is the next competitive advantage.
Harvard Business School Publishing
Pink D (2005) A whole new mind: why right-brainers will rule the future. Penguin Books Ltd
Simon H (1969) The sciences of the artiﬁcial. Massachusetts Institute of Technology Press
Dunne D, Martin R (2006) Design thinking and how it will change management education: an
interview and discussion. Academy of Management Learning & Education 5(4):512–523
Designing Business 133
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134 18 Design Thinking