Launch Your Disruptor, Eliminate Bad Profits,
and Break Out of Your Business Model
All around us, there is evidence of how design is shaping the future of business. Design isn’t purely about aesthetics or asking tactical questions – it’s about thinking systemically and answering big, complex and interdependent challenges. “Design thinking” has risen to prominence – and become an imperative in many companies – because things like disruptive growth, brand evangelism, and breaking into future markets are required for every company’s long-term survival.
But how do you achieve these complex and lofty goals? There are 3 Design Thinking initiatives I believe every company should be leading right now…because the future won’t wait.
Initiative #1: Launch Your 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:
First, where is disruption coming from in your industry? We conducted research with Fortune 500 and global companies like State Farm, Intuit, Honeywell, REI and GE Healthcare, and we got responses ranging from e-payments and robo-investing to subscription retail and AI-powered logistics, pharma and business services. It’s clear that organizations can readily recognize the disruptions around them. But how many are taking action right now to future-proof their organization?
Second, what is your biggest vulnerability in the customer journey? 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 it yourself. From within your own company.
How it Works
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 a door tag (“we’ll be here tomorrow, at the same time, when you’re still not home!”), and non-traditional competitors were popping up to create a more personalized, “high touch” experience for customers. To guard against disruption, we prototyped a company that would enable us to learn more about how resolve this specific customer pain point in a differentiated way, at scale, through experience design and a right-sized business model solution.
The goal of the project was to define business models, user needs, and operational strategies to scale – and win. In just 6 months, we stood up a fully functional business prototype, and launched a pilot in two selected diverse locations to learn, iterate and refine the model. Key to developing the business prototype was a digital app experience, which at first was very low fidelity but moved to high fidelity as we tested and iterated the UI/UX; identity and brand collateral to iterate messaging and brand intent; a website with analytics to iterate pricing structures; and educational and training modules to test the value proposition. Then, we isolated the most attractive operating models, prioritized the opportunities and 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 5-year time horizon.
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 Get Started
Identify your biggest vulnerability, whether that is coming from emerging competitors, new technologies or better user experiences. Conduct human-centered, immersive research to learn your own customer’s workarounds, pain points, anxieties and unmet needs.
Build a better solution from the inside. Prototype new experiences with low-fidelity tools at first, and learn, adapt and iterate to the point that you can prove the desirability, feasibility and viability of your offering. 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.
Initiative #2: Eliminate Bad Profits
First, let’s level-set. What do I mean by “bad profits?” When a company makes money at the expense of customer relationships. Think about it: bad profits are all around you. It’s things that you are annoyed to have to pay for, like baggage fees and extra legroom on flights; increased insurance premiums when you have an accident; service fees on your financial transactions. Psychologically, this erodes and destroys brand loyalty over time.
Eliminating bad profits starts by asking a simple question: what do your customers hate paying for? Again, we received a range of answers in our research with top companies: everything from late payment fees to digital subscriptions to software. There was no shortage of things people wished they could stop making customers pay 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, its easier just to cut costs, add fees, and charge for things that used to be free. Second, it happens because there’s a lack of connection with end user: When companies scale, it’s easy to lose connection with customers and users. It’s design’s job to continually stay connected. That’s what the “Eliminate Bad Profits” initiative is all about.
How it Works
Here’s an example of how to identify and eliminate bad profits within your organization.
We helped Dexcom—a startup that has grown into a $6B market cap company—eliminate bad profits from diabetes management: specifically, redundant doctor’s visits and unnecessary “pill burden.” 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 for, and pay for, a different appointment. It happens far too often. Unnecessary pill burden is caused by over-medicating, vs. addressing lifestyle management: most diabetics are paying for and taking way more drugs than they need. In fact, a recent American Diabetes Association study states: High pill burden results in poor adherence, morbidity and pre-mortality.
Dexcom invented a tiny electrode, inserted under the skin, to measure glucose and other biometrics. Wirelessly, it collects blood glucose data including levels, speed and direction. Before we engaged with Dexcom, the data was meant to help you adjust your diet, making you less reliant on medication. But there were two challenges: #1—he data were too complex for patients to decipher. Certainly, doctors could translate the data for patients, but that leads to problem #2: most patients only meet with their doctor a couple times a year—and yet, most patients eat every day.
We had to create actionable data to help users make smart, in-the-moment decisions about what to eat and when; therefore eliminating redundant doctor visits and unnecessary pill burden.
To design a more desirable experience for Dexcom, we became the users; implanting sensors, injecting placebos, observing ecosystems of care, between patient, doctor and caregiver. We found bright spots that inspired our design: folded up pieces of paper – “love notes” – written by a patient’s husband as a reward for taking her medication.
Ultimately, we co-created with doctors and patients to deliver a new, “positive profit” experience for the company: 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, Dexcom achieved YOY revenue growth of 42%, and reached $600M in sales.
How to Get Started
Figure out what your customers would be happy to pay for. Become your user. Do what it takes to live their experience. But don’t just look for pain points, look for the bright spots. Discover what is motivating your users to act the way they do, as an indicator of what solution will best channel and amplify that motivation.
Determine how you’ll make money from the new experience, and prioritize positive impact. Build out the business model, and test and iterate to determine what – and how much – people will actually pay for the new experience before broadly launching.
Initiative #3: Break Out Of Your Business Model
Oftentimes, organizations become so engrained in their existing business model that they can’t imagine any other way – or don’t see a reason to change course. But this is a costly mistake; continually re-evaluating who your most important customer is, and who influences their choices, can lead you to unexpected shifts in how you go about reaching those audiences.
In our research, when we asked, “Who is your most important customer?” everyone answered without hesitation. But when we asked them, “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.
How it Works
This initiative starts with identifying your most important customer – the one that is crucial to the future growth of your business. For example, take Nike. For them, a crucial target audience is the teen athlete. Nike wants to supply all of their uniforms, gear, and shoes. It’s a small industry, but during this formative time, if you put a swoosh on every teen athlete, you’ll see a swoosh on every adult athlete. High school is the key to brand loyalty.
In Nike’s high school business, the model is that local dealers sell uniforms to coaches, and booster clubs raise money to buy them. In this model, dealers have control over how Nike’s brand is presented, and Nike isn’t able to engage directly with high school athletes, fans, and boosters. Nike broke out of their business model and is driving brand loyalty by building a creative 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 delivering a branded experience that makes teen athletes feel like the pros. In the future, a logical extension of the platform could include individual school-branded store portals on Nike.com, where players and fans can design their own uniforms aligned with Nike’s brand standards, vote on them, and directly purchase gear. Other future 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 Get Started
Determine who your most valuable customer is for long-term business growth, and identify who influences their choices. Create new platforms for engagement and commerce.
Determine who stands between you and your customers. Eliminate interference and take control of your brand.
Take Action & Lead Your Industry
These three initiatives will help your organization stay at the forefront of your user’s needs, your competition and your capabilities. As you seek to lead, champion or sponsor these initiatives, keep in mind the most powerful way to achieve “buy-in”: capture and document user-centered insights, interviews and observations through highly visual mediums: video, images and compelling storytelling. Create an irrefutable narrative and build a network of internal evangelists that will support your case for bold new direction.