Design thinking is the customer-centric problem-solving approach best suited for addressing wicked challenges. Digital transformation is the wicked challenge of adapting business models to the digital future by focusing on customer needs first. By understanding how design thinking and digital transformation complement each other, firms can maximize the value they can appropriate from adapting their business model to the digital age.
When searching for the terms design thinking and digital transformation together, the Google search engine returns 1.25 million matches and Microsoft’s Bing finds over 400’000 entries. When browsing through the highest-ranked results, one can identify a trend to applying the five design thinking steps—empathize, define, ideate, prototype and test—to the problem of using technology to improve existing or create new business models. Design thinking is presented as the solution to the digital transformation challenge, reinventing business practices by applying digital technologies. For example, Jesse Himsworth titles his post for the Forbes web site “Five steps to accelerate digital transformation with design thinking.” Similarly, Clint Boulton, a senior writer for the CIO web site, sees design thinking as the secret to digital success.
To successfully apply the design thinking way of solving the wicked problem of digital transformation, it is important to understand how these two concepts complement each other. Only focusing on tweaking design thinking to digital transformation is insufficient. Design thinking is a problem-solving approach centered around human needs that puts a strong emphasis on understanding the root cause of the challenge at hand—by empathizing and defining—and using iterative steps—ideate, prototype, and test—to move toward a sound solution. Although there are numerous definitions of digital transformation, they all share the commonality that digital transformation is the sought-after outcome that adapts an existing or invents a new business model to the digital age by leveraging technology to improve value creation for both the customers and the focal firm.
There are five key complementarities that strongly favor using design thinking to solve the digital transformation problem.
1 CUSTOMER-CENTRIC
Design thinking is driven by human needs, rather than the preferences of commercial enterprises. To succeed, digital transformation requires companies to focus on creating value for customers, instead of solely looking inward at business process optimization. It is that complementarity around customer centricity that makes design thinking-driven digital transformation undertakings so successful. This does not mean that digital transformation is only about customer experience or developing apps for interacting with customers. It is about immerging the mindset of the company with the customer’s needs and way of thinking. Technology must remain a means to an end—customer value creation and firm value appropriation—rather than the end itself. Design thinking provides the process and digital transformation the capabilities to jointly create the sought-after value.
2 PROBLEM RATHER THAN SOLUTION-FOCUSED
Design thinking is successful in solving wicked problems because it forces its users to start by understanding the problem—the root cause of the challenge at hand—by immerging into the human mindset. Digital transformation, as anyone who has encountered it can confirm, is a wicked problem that lacks clarity in its formulation—what the digital transformation problem is—and is subject to real-world constraints that hinder finding simple solutions. Design thinking helps to focus any digital transformation initiative on the right challenge—on how to serve customers in the digital age–rather than on how to apply technology as a solution.
3 CHANGE DRIVEN
Design thinking is an integrative approach to designing the future by understanding the challenges of the present. Similarly, digital transformation requires adapting existing business processes to future needs by using technology. Being centered on transformational change, design thinking and digital transformation complement each other in a natural way. Through prototyping and testing, design thinking supports identifying business-model changes that matter and work in the real world. The focus is on deriving value from change rather than implementing change for its own sake. In addition, the fallacy resulting from technology in search of a problem is avoided.
4 AGILE
Design thinking supports creative problem-solving by offering a systematic, five-step-process approach. In contrast with more traditional, so-called linear, problem-solving approaches, iterating and incrementally improving feasible solutions is at the core of the method. This helps avoid non-value-creating activities. It fits well with the needs of digital transformation, where linear approaches fail to comprehend the overall complexity of the problem. The last two steps―prototyping and testing—in particular ensure that the digital business transformation creates value for the customer by sensibly applying technology.
5 VALUE FOCUSED
The fifth and most important complementarity is the focus on creating value for customers first, ahead of appropriating value for the focal firm. It can be seen as the roof that covers the other four complementarities. Successful digital transformation is about using technology to create value by putting the customer center-stage. Only when value is created for customers can the focal firm appropriate value too. Through its customer-centricity, design thinking ensures that value is created by applying technology to drive business model changes.
Design thinking and digital transformation work hand-in-hand to approach the challenge of identifying and implementing those business-model changes that best exploit technologies to create value for customers and subsequently make the focal firm ready for the digital future.