5 min read

Can Design-Thinking Increase ROI by 300%?

IBM seems to think so.

What is design thinking?

We are all familiar with design thinking. Put simply, design thinking is an iterative process for creative problem solving that is user-centric. This means that it focuses on people’s needs and comes up with innovative ways to meet those needs. Although it is based on methods and processes traditionally used by designers, it can be applied in any field including architecture, engineering, and business.

 The five phases of design thinking include:

  1. Empathize – get to know the user and understand their wants and needs. This means observing and engaging with users and putting aside any assumptions you may have.
  2. Define – you define the problem the user is facing. What difficulties do your users come up against when trying to fulfill their needs? What patterns do you observe in all your collected data? At the end of this phase, you should have a clear problem statement in your own words.
  3. Ideate – you work in teams with people from different backgrounds to come up with a portfolio of different solutions. There is no judgment involved in this phase and different team members bring their different processes.
  4. Prototype – This stage involves experimentation and tests the potential solutions. The proposed solutions can then be accepted, improved, redesigned, or discarded.
  5. Test – This step involves user testing and will often lead to a new set of problems that will require more ideation and prototyping. This is why design thinking is more of a cyclical loop than a linear process.

What was the IBM design thinking study?

IBM-design-thinking-study

IBM uses their own tailor-made design thinking framework to align its diverse teams around the needs of its users. Five years after launching their design thinking program, IBM has more than 1,600 formally trained designers, a global network of 50 studios for their design teams, and has awarded 114,000 employees from all disciplines and backgrounds a design thinking certification through IBM’s Enterprise Design Thinking program. That means nearly 1/3rd of IBM’s global workforce uses design thinking to put users first and apply design thinking methodologies on a daily basis. This collaboration of designers and their cross-disciplinary teammates on human-centered design thinking is a clear winner.

Forrester Research conducted an extensive study on IBM’s design practices using their Total Economic Impact™ methodology, surveying more than 60 senior executives from Fortune 1000-sized global enterprises, and conducting intensive interviews with IBM clients from a variety of geographies and industries. They determined that IBM’s unique approach to design and design thinking has resulted in a dramatically faster and more efficient workflow, yielded a massive return on investment for IBM and its clients, and made IBM an industry leader in enterprise design thinking. 

The results of the Forrester report can be broken down into three key takeaways: alignment, speed, and value.

Alignment

With a globally expanding enterprise comes the risk of increasing business complexity and things getting lost in translation. Companies need all their cross-disciplinary teams to align around a common mission. The companies that used IBM’s design thinking approach saw better collaboration, more aligned teams, and a clearer prioritization of business strategy. This increased alignment ultimately lowered the risk of project failure.

Speed

Today all industries have to move rapidly or they will be left behind in the era of swift transformation and disruption. It is critical for a company to get from new ideas to market delivery as fast as possible. The Forrester study determined that teams that applied IBM’s design thinking practice and were adequately staffed with design talent got to the market twice as fast as teams that did not apply design thinking principles. These teams saw up to a 75% reduction in design and development time. In most cases, release times decreased from six to eight months to three to four months. 

Value

value-in-design-thinking

As a result of better alignment and a faster pace of work, the study found that teams were consistently cutting costs, reducing risks, and ultimately increasing profitability. This more efficient workflow is resulting in a calculated ROI of more than 300%! 

To sum up, the Forrester study concluded that IBM’s design thinking strategy resulted in:

  • 2x faster to market
  • 300% return on investment
  • 75% increased team efficiency

So what are IBM’s Design Thinking Principles?

IBM’s three basic design thinking principles are:

IBM-design-thinking-principles
  1. A focus on user outcomes – An organization is not measured by the features and functions it delivers. It is measured by how well it fulfils its users’ needs. When the focus shifts from features to users, companies deliver more desirable solutions. And more importantly, they earn the trust, respect, and repeat business of the users. As the users’ needs grow and evolve, they expect company offerings to grow and evolve too. So it is more important than ever that every aspect of a company’s work be user-centered.
  2. Restless invention – The solution to any user problem is dependent on the technology, resources, and consumer expectations of the era. Thus, a company must keep engaging with its consumers and iterating the next generation of its offerings. But the problem is that there will always be a better solution than the one you come up with because, with time, technology will keep improving. However, if you do not commit to an idea, you risk missing the window of opportunity as the market evolves. So, although no solution is perfect, in Enterprise Design Thinking, the bias is toward action, and everything is considered a prototype.
  3. Diverse empowered teams – While it’s important to focus on user outcomes, it’s equally important to design teams to achieve those outcomes. To ensure the teams’ ability to generate better ideas consider two important team factors: diversity and empowerment. Diversity is fundamental to the success of our teams because each team member brings their unique perspective and expertise to the team, widening the range of possible outcomes. Diverse teams see the same problem from many angles and deliver breakthrough ideas. Empowerment enables teams to turn these breakthrough ideas into outcomes. A design team can quickly deliver mock-ups only if it doesn’t have to wait for a separate engineering team to implement the work or wait for client agreement for every little operational decision. Empowered teams move fast because they have the agency to make everyday operational decisions on their own. 

Why these results are important for all designers?

why-are-results-important-for-designers

While it is focused specifically on IBM’s enterprise design thinking, this research is good news for any designer whose clients want their help in making strategic decisions and validating a larger investment in design. For designers, this report provides a framework to discuss design work in a way that resonates with business leaders. Plus it is proof that teams of formally trained designers are elevated when they collaborate with their non-designer colleagues. This study on design thinking proves without question that design, designers, and the collaborative, human-centered practice of design thinking can add substantial business value to any organization.

Published by Antara Bhargava

Sr. UX Designer

Antara Bhargava Sr. UX Designer