Three design strategy initiatives every Fortune 500 company should be leading

All around us, there is evidence of how design — particularly user experience design — is shaping the future of business. Human-centered design isn’t purely about aesthetics or asking tactical questions. It’s about thinking systemically to find human-focused solutions to big, complex, interdependent challenges. 

Everyone in the organization, and not just designers, should be paying attention to user insights, and employing iterative techniques. That’s why design strategy has become an imperative in many companies. Things like disruptive growth, brand evangelism, and breaking into future markets are required for every company’s long-term survival.

But how should leaders pursue these complex, lofty goals? 

There are three design strategy initiatives every company should be leading right now…because the future won’t wait.

1. Design and launch your industry’s next disruptor.

This initiative is about getting leadership to fund and incubate the company that will put you out of business. It starts with asking two simple questions:

1. Where is disruption coming from in our industry?
2. What is our biggest vulnerability in the customer journey?

As a user-centered design firm, we’ve conducted research with Fortune 500 and global companies like State Farm, Intuit, Honeywell, REI, and GE Healthcare to ask the above questions. Leaders at these organizations identified disruptors ranging from e-payments and robo-investing to subscription retail and AI-powered logistics in pharma and business services. 

But it’s not enough to identify the disruptions emerging all around. It’s also necessary to connect disruption to the customer experience. After all, the majority of disruptive new companies and start-ups today were born out of identifying a low point in the customer experience. Imagine if the companies they disrupted had been honest with themselves and gotten ahead of the turning tide.

You don’t have to wait for a new business to crop up. You can start building potential disruptions and launching meaningful innovation from within your own company.

Designing for growth and innovation 

Here’s an example of how to incubate and pilot a new business model from within your company —– before someone else does.

We worked with a global logistics company to identify and create a new opportunity/product offering within the lowest point of their customer’s journey: the last mile of delivery. Everyone has been a victim of “door tag” — i.e. “we’ll be here tomorrow, at the same time, when you’re still not home!” As a result, non-traditional competitors have popped up to create a more personalized, “high touch” experience for customers. To guard against disruption for our client, we prototyped a company that would enable them to resolve this specific customer pain point in a differentiated way, at scale, and using experience design coupled with a right-sized business model solution.

The goal of the project was to define business models, user needs, and operational strategies to scale and enable this client to win. In just six months, we launched a pilot in two diverse locations to learn, iterate, and define the model. This included:

• Standing up a fully functional business prototype.
• Developing a digital app experience that started out as low-fidelity and moved to high fidelity as we tested and iterated the UI/UX.
• Concepting identity and brand collateral to iterate messaging and brand intent.
• Creating a website with analytics to establish user-accepted pricing structures and with training models to test the brand’s value proposition.

Then, we isolated the most attractive operating models, prioritized the opportunities, sized key markets, and ran profitability scenarios all through the live pilot. From this, we were able to definitively project platform extensibility to unlock new revenue, customers, and offerings over a five-year time period.

Ultimately, the global logistics company launched the new service offering — now available to more than 34 million people in 1,800 cities — and successfully put its startup competitors out of business.

How to start activating growth and innovation at your company.

To get ahead of potential disruptors and future-proof your business, start by: 

• Identifying your biggest vulnerability, whether that is coming from emerging competitors, new technologies, or better user experiences.
• Conducting human-centered, immersive research to learn your own customer’s workarounds, pain points, anxieties, and unmet needs.

Then, build a better solution from the inside. Prototype new experiences with low-fidelity tools so you can learn, adapt, and iterate. This will allow you to prove the desirability, feasibility, and viability of your offering. From there, pilot your new business offering. Make it real, with real employees and real technology. And use the pilot to learn just how much people are willing to pay and what the market opportunity is.

2. Eliminate bad profits, and replace them with user-centered offerings.

First, let’s level-set. What do we mean by “bad profits”?

Bad profits are money made at the expense of customer relationships. They’re the things consumers are generally annoyed to pay for — things like baggage fees and extra legroom on flights; increased insurance premiums when an accident occurs; and service fees on financial transactions. Bad profits come at a high cost. Psychologically, they erode and destroy brand loyalty over time.

How do you eliminate these causes of ill will? Ask a simple question: What do our customers hate paying for? 

Again, we’ve received a range of answers to this question in our research with top companies.  From late payment fees to digital subscriptions to software, there was no shortage of add-ons customers hate paying for.

Why do bad profits happen so frequently? 

First, it happens from a lack of evolution in business strategy. When markets mature and margins erode, it’s easier to cut costs, add fees, and charge for things that used to be free than to identify opportunities for true growth. 

Second, it happens because there’s a lack of connection with the end user. When companies scale, they often become farther removed from the customers and users they serve. Therefore, it’s the design team’s job to continually stay connected. That’s what the “eliminate bad profits” initiative is all about.

Eliminating bad profits at Dexcom

Dexcom — a startup that has grown into a $6B market cap company — engaged IA Collaborative for help when they needed to eliminate bad profits from diabetes management. In this case, redundant doctor’s visits and unnecessary “pill burden” were the culprits.

Redundant doctor visits happen because of billing codes. Each doctor visit is billed to a specific code. So if you’re at a “disease management” appointment and you want to discuss “prevention,” you’ll be asked to come back—and pay—for a separate appointment. 

Unnecessary pill burden is caused by over-medicating rather than addressing lifestyle management. And in fact, most diabetics are paying for and taking many more drugs than they need. A recent American Diabetes Association study shows that high pill burden results in poor adherence to doctor recommendations, morbidity, and pre-mortality.

To address these concerns while also innovating their product and services line, Dexcom invented a tiny electrode, which is inserted under the skin and used to measure glucose and other biometrics. This electrode wirelessly collects blood glucose data, including levels and rates of change.

Before we engaged with Dexcom, the data was intended to help patients adjust their diets in order to become less reliant on medication. 

But there were two challenges preventing the data from being truly useful: 

1. The data points were too complex for patients to decipher on their own.
2. Doctor visits tended to occur only once or a few times per year, which meant patients weren’t able to benefit from the data-driven insights the electrode produced on a daily basis.

Our approach focused on creating actionable data to help users make smart, in-the-moment decisions about what to eat and when, thereby eliminating redundant doctor visits and unnecessary pill burden.

To design a more desirable experience for Dexcom:

• We became the users by implanting sensors, injecting placebos, and observing ecosystems of care between patients, doctors, and caregivers. 
• We found bright spots that inspired our design such as folded-up pieces of paper that were love notes written by a patient’s husband as a reward for taking her medication.
• We co-created with doctors and patients to deliver a new, “positive profit” experience for the company.

The result was the successful Dexcom CLARITY diabetes management software. A quick scan of the hashtag #DexcomClarity on social media illustrates the enthusiasm people have for the tool. The financial results are strong, too. Following the launch of Dexcom Clarity, the company has achieved a compound annual growth rate of 40% and reached over $2.9B in annual sales.

How to trade bad profits for human-centered design

To achieve similar results at your organization, first figure out what your customers would be happy to pay for. Become your user, and do what it takes to live their experience. However, don’t just look for pain points — look for the bright spots as well. Discover what motivates users to act the way they do and let that insight inform the solution that will best channel and amplify that motivation.

Then, determine how you’ll make money from the new experience and prioritize positive impact. Before you launch a new business model, build it out, test it extensively, and iterate as needed to determine how much people will actually pay for the new experience.

3. Break out of your old business model, and design a new one.

Organizations often become so entrenched in their existing models that they can’t imagine any other way of operating, and see no reason to change course. That’s why it’s so important to continually reevaluate who your most important customers are and make sure you understand what influences their choices. Doing so can lead you to unexpected shifts in how you go about reaching those audiences.

In our research with Fortune 500 companies, everyone knew exactly who their most important customers were. But when we asked, “Are you in complete control of how those customers engage with your brand?” almost everyone said no. Figuring out how to gain more control can help you break out of your business model.

Designing a long-term growth strategy

This initiative starts with identifying your most important customer: the one that’s crucial to the future growth of your business. For example, one of Nike’s crucial target audiences is the teen athlete. In sports apparel especially, the high school years are key to building brand loyalty. To attract these emerging consumers, Nike wants to supply all uniforms, gear, and shoes for their school sports teams. Their thinking is that if they put a swoosh on every teen athlete, they’ll continue to choose the swoosh when they become adult athletes. 

In Nike’s previous business model, local dealers sold uniforms to coaches, and booster clubs raised money to buy them. This gave dealers total control over how Nike’s brand was presented. Nike wasn’t able to engage directly with high school athletes, fans, and boosters. 

We helped Nike break out of this business model and drive brand loyalty by building a unique digital solution that enables teams to build and create their own uniforms, keeping Nike’s brand at the forefront of the action.

From uniform customizers to completely tailored marketing communications, Nike is now delivering a branded experience that makes teen athletes feel like pros. In the future, a logical extension of the platform could include individual school-branded store portals on Nike.com, where players and fans could design their own uniforms aligned with Nike’s brand standards, vote on them, and purchase gear directly. Other future-focused features could include sales tracking and fundraising platforms for coaches and boosters, custom booster campaigns, and robust back-end sales data and analytics.

How to design a user-centered business model 

To break existing molds, you have to take yourself out of them intentionally. Start by identifying your most valuable customers and putting yourself in their shoes. Think about who influences their choices. And from there, begin creating new platforms for engagement and commerce.

Once you determine who (or what) stands between you and your customers, you can eliminate interference and take control of your brand.

Take action now to design your company’s future.

As a Fortune 500 leader, it’s incumbent on you to help your organization evolve its capabilities and stay at the forefront of your users’ needs, while simultaneously leapfrogging the competition. 

The three design strategies outlined here will help you do just that. 

As you seek to lead, champion, and/or sponsor these initiatives, keep in mind that the most powerful way to achieve buy-in is to capture and document user-centered insights, interviews, and observations through highly visual mediums. Use compelling video, images, and storytelling to create an irrefutable narrative, and build a network of internal evangelists that will support your case for your bold new direction.