Concocting, imagining, inventing, constructing and designing are all part of the innovation journey. Clearly there is not one way to the path of effective innovation, but there are tools and methods that have been proven to drive significant value in the approach to designing innovation. If it is accepted that people are moving more rapidly than organizations then a simple deduction is that organizations must embrace a customer centered service design approach, as opposed to a traditional focus on optimizing a business model that is slowly declining in relevance.
Service Design focuses on efficiency by designing out waste. Studies indicate that 30-70% of internal costs stem from failure demand i.e. what happens when the service goes wrong. Service Design attempts to reduce the cost of getting it wrong the first time and 'systematize' an approach whereby feedback from the process and customer experience is continually evaluated. By focusing on the interaction between people and services rather than service alone, we begin to see new possibilities.
Just like all great inventors, service innovators learn from getting it wrong, and are able to improve quickly thanks to a deeper understanding of the impact of specific decisions and approaches. A formalized service design approach mitigates the risk of failure by managing incremental levels of service prototyping.
Involving users at every stage also enables service designers to spot flaws, not just in terms of operational systems, but more importantly in terms of the experience of users. The better the design, the happier the customer, the more successful the organization.
McKinsey & Company has recently conducted what they believe to be the most extensive and rigorous research undertaken anywhere to study the design actions that leaders can make to unlock business value. Their intent was to build upon, and strengthen, previous studies and indices, such as those from the Design Management Institute.
According to a recent study by the McKinsey Design Index (MDI), the best design performers increase their revenues and shareholder returns at nearly twice the rate of their industry counterparts.
Top-quartile companies make user-centric design everyone’s responsibility, not a siloed function. McKinsey found a strong correlation between high MDI scores and superior business performance. Top-quartile MDI scorers increased their revenues and total returns to shareholders substantially faster than their industry counterparts did over a five-year period—32 percentage points higher revenue growth.
Extracting diverse perspectives and collaborating with external and internal stakeholders is fundamental in the development of design. This engagement is critical in rapidly proving or disproving hunches.
Framing the design challenge through the lens of a customer seeking a goal (journey map) from both the perspective of what is currently being experienced (current state or retrospective) and what is required (future state or prospective) helps companies understand where the design intervention should occur. This approach will help to identify and prioritize opportunities and challenges that provide customers with a great experiences.
Designing for customers with customers is an adrenaline pumping journey, and although it may seem more costly upfront, it typically pays dividends.