Design as business change agent

Starting points for the DesignersDNA Community Think Tank

by Mark Hartevelt & Hugo Raaijmakers, Philips Design

Today’s large corporate companies provide more value to their customers by offering complete eco-systems of products, content, and services. While typically Design contributes to this with service design deliverables, stronger impact opportunities come from utilizing Design as a strategic partner. Here Design brings Design Thinking to a company’s business innovation. By articulating innovation strategy, initiating business pilots and organizing company enablers, Design can help corporates transform into experience providers.

The silent move towards eco-systems

Today’s access to content and services has significantly increased. Also physical products are increasingly complemented with services. Large corporate companies are providing more value to their customers by offering complete and highly accessible eco-systems of products, content, and services. This trend has accelerated exponentially over the last few years, driven by developments in technology, in end-users expectation and in business.

Technology

An increasing number of products, from smart phones to internet fridges, have become network enabled through various technologies such as GSM,UMTS, Wi-Fi, Bluetooth, Zigbee, cable, Ethernet, etc. The coverage of all these networks has grown exponentially, they have become interconnected, have got an increasing number of touchpoints and have led to an extensive development of services. As a result, service companies extend their services through new networks and include connected products to their portfolio. Product manufacturers are increasingly inclined to provide network access for their new products.

End-users

User expectations are changing. Service subscribers expect customization and higher access levels. Consumers owning products expect that their products are network connected to receive extra functionality for their product, to have access to value-add services and even to pay for the product per use. They expect products from the same brand to connect seamlessly. Through social media services, and thus through networked products, many
end-users want to be always visible, always accessible, always on.

Business

Product manufacturers are beginning to see the value of adding services to their products. Service
providers increasingly exploit the opportunities of new networks and service access points. And both
are increasingly developing integrated “eco-systems”, consisting of connected products, services, content, social media, etc.. They do so, because product-service eco-systems are hard to copy, often lock-in the consumer with extra value, provide a sustainable stronghold against competition, provide better value and thus allow for higher margins.

The corporate’s challenge

Time is tight

The competition model for product service eco-systems is different from that for traditional products or services. Value spaces can only be taken once. For example, Apple tries to cover the complete value space of “enjoying music” with a comprehensive product-service eco-system. Competition has to battle against this complete set of valuable components simultaneously. In addition, some services from this eco-system, like Apple’s AppStore, can be hard to duplicate because its resources (like trained programmers) are scarce. For this reason, product manufacturers often have only a limited time window to successfully occupy a brand new value space.

Change the DNA

Today most of the corporate companies just have started their transformation towards experience provider, focusing on real end-user needs through multiple touch points and offering complete product-service eco-systems. This transition requires a complete change of the company DNA; the mentality, culture and approach throughout the entire company. Many large corporate companies have started to engage Design to address this challenge for change. Of course here Design directs the concepting of the new product-service offering, based on ethnographic research on end-user needs and issues. But Design is also well positioned to support in changing the company DNA by organizing strategy platforms, initiating pilot businesses and starting to coordinate company-wide enablers for eco-systems development.

Design as business change agent

On project level, i.e. creating the eco-system touchpoints, Design brings-in the end-user perspective in concepting and creating the product-service offering. Here Service Design tries to uncover the customer’s deepest motivations and needs, and uses this as a starting point for business modeling and disruptive innovation. The concept for product service offering is preferably realized through a highly iterative process in which rough prototypes are created and validated by users already in the very first development stages. There is a number of specific Service Design processes, methods and tools that Design applies in its more traditional design role.

On company level however, Design is well positioned as a change agent to facilitate business innovation and organizational change. A large corporate company can use Design to prepare the company as a whole for creating, developing and exploiting product service eco-systems on large scale. For this, Design should act on three company levels simultaneously: articulating innovation strategy, initiating business pilots and organizing company enablers.

Design has started to adopt its new role in the paradigm shift that large corporates are facing. In order for Designers to embrace this new role, they need to invest in new competences like strategy consultancy, business modeling and organizational change. They need to develop thought leadership inside and outside the companies they work with in order to be a credible partner in providing consultancy on business innovation. And they need to really be entrepreneurial in proposing and developing intra-company partnerships.

The urgency for large corporate companies to transform into experience providers offers an excellent opportunity for Design to become truly instrumental in this important transformation.

The DesignersDNA platform brings together design professionals who adopted this challange and who want to share best practices, discuss possible solutions, exchange thoughts corporate enablers and identify opportunities for collaboration.