Peter Thomas, chief operating officer of the Leasing Foundation, gives an overview of new technologies that will impact the leasing industry. This month’s focus is design thinking
In the previous six columns of ‘What it is’ for Leasing Life, I have focused on information technology, and how those technologies have the potential to shape the asset finance industry.
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One thing I discussed in the previous column on digitalization is how new technologies need to be considered in the context of the whole business model, and of a digitalization strategy, if they are to be used effectively.
So, for the next columns in this series I am going to look at some new thinking – all containing elements of new technology – that can help businesses be more effective, creative and competitive. This month’s topic is design thinking.
What is it?
Design thinking is an approach that uses imagination, intuition and reasoning to explore problems, develop solutions and deliver products that better meet the needs of users.
Problems can be anything from how to ensure customers can complete online applications more easily, through how to create a more effective sales process, or how to provide clean drinking water; solutions can be anything from developing a new web-based system, through developing new customer experiences, to designing a new business process.
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By GlobalDataIt does not matter what the industry or problem is, design thinking aims to try and arrive at the best understanding of the problem, and then work out the most effective solution.
Why is it called design thinking? It is because what designers do is to generate creative solutions that expand the range of possible solutions. They do not, as many people believe, just come along and make something look beautiful. How designers think, and what designers do, can be used to solve business problems very effectively.
How does it work?
Design thinking is a simple process with powerful outcomes. It does not have to be done only by those who have trained as designers – although having trained designers on a team is useful – and can done by anyone who understands the process and is guided through it by an experienced coach or facilitator.
It has five stages, usually carried out as an interactive set of discussions, workshops or practical design sessions with a team of stakeholders. Their aim is to identify, explore and solve a problem. The stages are:
1. Empathize: Understand a problem by focusing on it from the perspective of the people involved – employees, customers or users of technology, for example. This involves researching in depth what people want and need, and will involve talking to real users or stakeholders.
2. Define: Bring together what has been learned to generate a simple problem statement that summarises all the issues that are important. The team will integrate everything they have learned in the ‘empathize’ stage to do this.
3. Ideate: Generate new ideas that reveal new solutions or alternative ways of viewing a problem. Typically this stage takes the form of brainstorming sessions or a similar process, and as is usual in brainstorming, no idea is ruled out.
4. Prototype: Build inexpensive, scaled-down versions of a product or solution to investigate the how those solutions work. Products can have prototypes – a new web-based lending service, for example, or processes – a process for applying for funding. Prototypes are shared and tested by the team, with other parts of an organisation, and with real users. The aim of his phase is to identify the best possible solution for each problem.
5. Test: In this final phase, a complete product or process is tested, ideally with real users or stakeholders. And as design thinking is an iterative process, the testing process will usually lead to new definitions of the problem, new ideas or even new prototypes to build, and the process can continue.
A simple example from Toyota shows how design thinking works in practice.
Toyota’s call centres were reporting that customer satisfaction was down and waiting times averaged 20–40 minutes. To find answers to customers’ questions, representatives were using as many as 13 different applications and needed to walk to filing cabinets for hard-copy information, or ask colleagues for answers to customer questions.
Using the kind of design-thinking process described above, representatives were first asked what their frustrations were and what they needed to do their jobs effectively. Following a prototyping and testing phase, this led to new training materials, changed internal processes and new software tools. These allowed customer problems to be solved with an average of two fewer calls, and with faster response times, saving millions of dollars.
Design thinking has been used in lots of situations: by AirBnB to redesign its service; to help find ways to deliver clean drinking water in rural India; and to design cost-effective ways to provide meal services for the elderly in Denmark.
Design thinking is not, of course, new. Thomas Edison is always cited as one of the pioneers of design thinking. He did not just create the electric lightbulb, he brought into life an entire industry. The lightbulb on its own is a just a curiosity; placed inside a system of power generation and distribution at a price point that customers would accept, it created immense value.
Why is it important?
In a business world that is volatile and unpredictable, and where competition and disruption can appear anywhere – in not just products or services but also disruptions in channels to market, brands, partnerships or supply chains – organizations need to be creative. They need to generate new ideas and test them and then rapidly execute on them to remain relevant, competitive and profitable. Design thinking is a process that can help do this.
In the case of asset finance, there are many opportunities to apply design thinking: how to build online lending products that best combine the speed of automated processes with the human feel of face-to-face interactions, how to redesign the equipment finance process around emerging SME customer needs, how most effectively to digitalize parts of the asset finance process for improved customer experience, how to create training and development processes that maximize talent and retention, and how to design products that SME customers will understand and use – and that address their needs better than the competition.
But beyond using design thinking in specific problems, products or services, it is important that leaders of organisations think like designers: They need to have a curious mindset that can unlock the creative potential of their organization by setting the conditions for generating and embracing new ideas and then executing them.
In a rapidly evolving industry where technology and customer needs are changing quickly, organisations without creative, curious leadership – and which do not embrace design thinking – can fall behind quickly.
