The New Chief Design Officer: Design Thinking is now an Integral Business Strategy

New Content Design Officer - Design Thinking
There’s a new C-level person in town. The chief design officer (CDO) is charged with infusing creativity throughout the customer experience, organization, and strategy process.

So why are companies hiring chief design officers?

The CDO: Expanding Our Organization’s Way of Thinking

When we think of design, we often think of making objects more beautiful or functional, but our notion of design is expanding. Today design encompasses the broader strategic process of need finding and problem solving that tees up great products, services, spaces, and experiences, a discipline known as design thinking.

Tom Kelley, best-selling author and partner at the design and innovation firm IDEO (and author of multiple books on innovation) explains this shift in perspective about design, “We [designers] used to feel as if we were sitting at the kid’s table of the business world. There was serious business going on elsewhere—in the boardroom or a meeting room. The world has changed. Design and creativity are now central to what goes on in business.” 5

Rather than being brought in at the last minute to pretty up an offering, designers are now invited to the strategy table early on to ignite the creative juices of their organizations and enhance their approach to developing strategy. Their customer-focused, bottom-up methodology reaches beyond traditional market research, bringing a new depth of insight to the table.

“In the last decade there has been a realization that our traditional way of developing strategy, which focused on optimizing resources from the company’s point of view, is no longer sufficient in and of itself,” explains Rodrigo Martinez, life sciences chief strategist and senior portfolio director at IDEO. “To be innovative, we have to work harder, taking a human-centered approach to strategy, asking ourselves, ‘What type of experience would it take to really engage our customer? What do we want this specific moment to be like for the people experiencing it?’”

To develop this complementary approach to strategy creation, in addition to collaborating with design-focused organizations like IDEO, companies are hiring chief design officers. PepsiCo hired its first CDO to infuse a design mind-set into the culture of the company and into the success of its top 12 brands. Indra Nooyi, CEO of PepsiCo, explained why she created this role to Fast Company, “Market growth alone doesn’t give you enough tailwind. You have to create your own. The way to do that is by designing products for consumers that wow them.… Not just the way they look but that every aspect of what they buy delights them.” 6

Designers are also running companies. Two young designers founded and are managing Airbnb, the digital marketplace for renting spare rooms, homes, and even private islands in over 34,000 cities and 192 countries. Another two sold their start-up, Pulse, the popular newsreader for web and mobile, to LinkedIn for $90 million. No, designers are no longer sitting at the kids’ table.

Design Matters in the Big Scheme of Things

Design is a key lever for relevance. It drives macro-level innovation, like new value propositions and product lines, as well as more granular customer interactions. At the highest level, the processes associated with design help us uncover and evaluate new ways to create value—and stay in business.

Saul Kaplan, cofounder and chief catalyst at the Business Innovation Factory, a real-world laboratory for exploring and testing new business models and social systems, observes that “the half-life of a business model is declining.” 7 To remain relevant, companies have to move from being “share takers” to “market makers.” In his experience, most companies’ strategy is designed for winning market share rather than creating the type of disruption that builds or transforms industries. Kaplan warns that twenty-first-century leaders will need to be market makers, able to reconfigure the way their businesses create value multiple times throughout their careers, to stay in business.

In Kaplan’s experience, design thinking can help us reach beyond the level of our everyday thinking—survival or problem solving—to be creative and proactive about where undiscovered value lies. It does so by helping us shift our focus from incremental changes to our current business models, to game-changing innovations birthed out of a deep understanding of our customers and their existing, emerging, and latent needs.

Design Matters on the Day-to-Day Level

While extremely useful at the highest level of value creation, design also reaches down to the deepest level of our experiences with our prospects and customers. “We encounter design, good and bad, with everything we see, touch, and use,” explains John Maeda, the former president of Rhode Island School of Design. “It’s invisible to most people because it’s everywhere—much like the proverbial fish that doesn’t know where to find water.” 8

We know when an experience is well designed: it works. It is easy, perhaps even fun. It leaves us confident that we have gotten the best answers to our inquiries and that if for some reason we are not satisfied, we will be able to alter the situation, with the company’s assistance. It engages us, perhaps entertains us, and maybe teaches us something about ourselves. And we really know when an experience is poorly designed: it does not work. We have to wait on hold only to be disconnected. We click on an offer for a free white paper, but then are required to provide an excessive amount of personal data in return. The app does not load, or the website is not optimized for viewing on a mobile device, or the sales clerk stretches the truth to make a sale.

This is a high-stakes game. Having had a well-designed experience, our customers are more likely to continue to interact with us. This is good news because returning customers enhance our revenues and decrease our costs. In addition, satisfied customers typically tell their friends. According to the 2012 American Express Global Customer Service Barometer, on average Americans tell 15 people about their positive experiences. It works both ways: People also tell their friends about their negative encounters. The same study found that after a negative experience, Americans are likely to tell 24 people. What is more, negative customer experiences often result in the loss of that customer as 90 percent will not come back or buy from us again. 10 The same study found that most companies will not even know that they have lost a customer until it is too late since only 4 percent of dissatisfied customers complain.

Design + Technology = Digital Experiences

Many factors contribute to the design of experiences. Over the last decade, technology has had a profound impact on customer experiences—where would we be without intuitive websites, smart-phones, and mobile apps? Design has been central to developing these new products, categories, and markets, and to ensuring that technology is intuitive, working on behalf of the people using it, rather than having them be subjugated by it.

Design combined with technology can create remarkable digital experiences. Take Burberry, for example. In a desire to reach out to Millennials, Burberry, the luxury brand that has been around for more than 150 years, worked with Google to explore how it could deliver a beautiful and romantic experience across screens. “We’re constantly thinking about how we translate the emotion of what we create and experience in the real world into the digital space, whether that’s capturing the energy and excitement of a live gig, the hum and buzz of anticipation before a runway show, or just the feeling you get when you pull on your trench coat on a rainy morning,” explains Burberry chief creative officer Christopher Bailey.

The result: sending a letter sealed with a real kiss to anyone in the world, using a smartphone or webcam. Here is how it works. Using facial recognition technology, a kiss planted on a screen can be transformed into a digital kiss print. Before mailing, the sender has the opportunity to write a message and choose a lipstick shade from Burberry’s latest beauty collection. Taking advantage of location data, the sender can watch as their message travels from city to city across a three-dimensional landscape, including local landmarks and street view images. Pretty interesting stuff, no?

Design + Technology = Hybrid Experiences

Design + technology are being combined to infuse analogue experiences with digital capabilities. Visitors to Disney World, for instance, have come to expect apps that help them minimize wait times, facilitate lunch reservations, and find the quickest ways to maneuver through the often-crowded theme park. Now they are able to wear My Magic bands that allow them to accomplish all of the above and be able to unlock their hotel room, pay for park admission, concessions, and meals, arrange encounters with princesses and other characters, and secure fast passes for rides. Testing reveals that visitors to the theme park love the band because it is fun, reduces wait times, and improves their overall experience. Disney loves the band because it allows employees to recognize their guests and personalize their encounters, it generates reams of data about their guests’ visit to the park, and its ease of use has families spending more money on their visits. 12

Strongbow Cider, the leading maker of fermented ciders, is making it possible to set a mood for an entire room by simply opening a bottle. The company has prototyped a bottle cap that allows lights to be dimmed, music to play, and even fireworks to be launched by simply popping the lid on their ciders. The bottle cap is embedded with a radio frequency identification device (RFID) that interacts with sensors in the room, allowing its users to “start the unexpected” once the bottle’s seal is broken. The promise of the Smartcap is a “fresher start to a more original night.”

Similar contactless-connection technology is already being used to facilitate mobile payments. Digital-savvy customers love the ease of being able to pay via a mobile app; it is quick and often facilitates instantaneous coupon redemption and allocation of loyalty points. There are many benefits to retailers as well. At Nordstrom, for example, in addition to accepting credit card payments and sending e-receipts on handheld devices, sales associates can check product availability, place an order for home or in-store delivery, and add customers’ purchases to their client-service system without having to touch a register or leave the showroom.

We are only beginning to scratch the surface of the design + NFC technology opportunity. As Padmasree Warrior, chief technology and strategy officer of Cisco, recently said, “We believe that only 1 percent of what can be connected in the world is actually connected.” 13 Stay tuned.

Design + GPS Technology = Location-Based Experiences

Location-aware devices make it possible for us to send highly targeted messaging to customers when they are in relevant geographic locations or when they have conducted searches with location intent. AisleBuyer found that nearly 75 percent of customers would switch brands if offered real-time discounts and promotions on their phones when they were in the store. 14 That is significant. Capitalizing on this behavior, RetailMeNot, a digital coupon provider, alerts shoppers to in-store deals when they are in the vicinity.

GateGuru takes advantage of location-based technology to make traveling easier. The itinerary for today’s trip appears on the home page and is updated in real time to keep us abreast of gate changes, flight delays, and even security-wait times. A map of the airport, complete with a personalized amenity list based on arrival and departure terminals, makes it easy to find food, restrooms, and coffee and to reserve a rental car.

Design + Emerging Technology = Tomorrow’s Experiences

Innovative user interfaces like Omnitouch,15 which turns any surface into a touchscreen, can create a more personal customer experience on phones, tablets, tables, or even windows. Adidas applies touchscreen technology in selected storefront windows, allowing shoppers to explore their products through a life-sized, digitally operated mannequin. Using hotspots located on the glass, shoppers can maneuver the digital model to point out product details and to drag items into a virtual shopping cart. These items instantly appear on their mobile phones, where they can be purchased, saved, and shared with friends. 16

We are even beginning to imagine interactions beyond user interfaces with products like Google Glass. This wearable computer in the shape of glasses overlays personal information onto a small screen. Using natural language voice commands, wearers of the glasses can execute requests such as “Take a picture,” or “Send a message.” It also provides instant access to Google Maps and directions.

Some of the most extraordinary advances in brand experience will come from three-dimensional printing.18 It is hard to grasp what this process can do because the image of printers transferring ink onto paper is so ingrained in our minds. Three-dimensional printing builds physical objects by molding together layer upon layer of materials—paper, liquid, powder, and others. Lamps, spare parts, and even body parts are being manufactured using this additive process.

Nokia made simplified web-based software publicly available that allows anyone with access to a 3-D printer to design and manufacture his or her own cell phone case. Imagine the possibilities for customization, quick prototype building, and onsite manufacturing. To see what is already being created, spend some time exploring the MakerBot and Shapeways communities. 19

Design Transforms Physical Spaces

While digital technology has enabled and multiplied the number of interactions we have with our customers, physical spaces continue to be a vital component of our overall customer experience. Recognizing the importance of its physical spaces, McDonald’s hired former IDEO designer Denis Weil to serve as vice president of concept and design and to oversee the redesign of many of its locations. Weil explains why the company is redesigning many of its restaurants around the world to Fast Company, “If Martians came down to Earth and visited a McDonald’s, a post office, and a bank, they wouldn’t be able to tell the difference. They would just see that everything starts with a line, has a counter that acts as a divider where the money exchanges, and has something hidden going on way in the back.” 20

A visit to one of the updated restaurants in Boston reveals many key changes. Spacious dining-in spaces complete with Wi-Fi and electric outlets reflect the company’s effort to rebrand McDonald’s as a place to eat and work, rather than just get drive-through food. To reduce customers’ waiting times, the company has redesigned the way purchases are made. Rather than waiting in line while their food is being prepared, customers receive a number and are encouraged to get their drinks and settle in at their table until their number is called.

Retail store spaces remain important even in the age of e-commerce. Today’s sophisticated customers toggle back and forth between in-store and digital environments throughout the customer experience journey. Creating a truly integrated shopping experience across channels that is continually informed by customer behavior data is increasingly important.

H&M’s flagship store in Times Square shows what designers can create when they combine fashion, technology, and physical space. A Social Media Lounge creates an inviting environment where shoppers can sit for a spell while enjoying free Wi-Fi access, the chance to listen to music, and even a photo studio. Cash registers and sales advisors are located inside the dressing room area to simplify checkout. One of our favorite features is a virtual runway upon which customers are encouraged to strut their stuff. People on the street can enjoy the show as runway performances are projected onto gigantic outdoor LED screens that face Broadway and 42nd Street.

Design Includes Event Making

Sometimes design is about creating physical events, short-term encounters when we invite customers into our world for a first-hand experience with our brands. Red Bull, which makes energy drinks, has made a name for itself by creating adrenaline-pumping extreme-sports events.

As part of its Red Bull Cliff Diving Worldwide Series, every year, some of the world’s best high divers come to Boston to jump off of the Institute of Contemporary Art building into the Charles River below. These divers are flipping, twisting, and folding from heights that are equivalent to an eight-story building at speeds of between 53 and 62 miles per hour before impacting the water. The event is a major touchpoint for Red Bull fans in Boston, for fans located near the tour’s event locations across four continents, and for anyone tuning in digitally. If you missed it, no worries. Google it.

Armed with a better understanding of how critical design is to our ability to offer excellent customer experiences, the rationale for appointing a chief design officer is clear.

Next week, we’ll talk about another change to the C-suite: the morphing CIO title.

 

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About the Authors

Larry Weber and Lisa Leslie Henderson are the cowriters of this Digital Marketing guide. Larry is the CEO of Racepoint Global, an advanced marketing services firm. A globally known expert in public relations and marketing services, Larry has successfully built companies and brands and is passionate about the future of marketing. Lisa is an observer, synthesizer, and writer who draws extensively from her background in marketing and consulting. Lisa and Larry have collaborated on two guides to date, The Digital Marketer, and Everywhere: Comprehensive Strategy for the Social Media Era. To stay current on their thinking, frequent www.racepoint.com/thedigitalmarketer and follow them at @TheLarryWeber and @ljlhendo.

Buy on Amazon: The Digital Marketer: Ten New Skills You Must Learn to Stay Relevant and Customer-Centric

Notes:
5. “Media Lab Conversations Series: IDEO’s David and Tom Kelley,” MIT Media Lab, www.media.mit.edu/events/2013/07/23/media-lab-conversations-series-ideos-david-and-tom-kelley.
6. Linda Tischler, “Dynamic Duos: PepsiCo’s Indra Nooyi and Mauro Porcini on Design-Led Innovation,” Fast Company, http://www.fastcodesign.com/3016310/pepsico-indra-nooyi-and-mauro-porcini.
7. Saul Kaplan, The Business Model Innovation Factory , (New Jersey: John Wiley & Sons).
8. John Maeda, “How to Design a Better World.” CNN Opinion, http://www.cnn.com/2012/12/16/opinion/maeda-good-design.
10. Jay Arthur, “Turning Dissatisfied Customers into Evangelists,” KnowWare.com, http://www.qimacros.com/knowware-articles/dissatisfied-customer-evangelist.
12. Brad Tuttle, “Give Disney Visitors Hi-Tech Wristbands and They Spend More Money,” Time Magazine , http://business.time.com/2013/07/19/give-disney-visitors-hi-tech-wristbands-and-they-spend-more-money/.
13. “Connecting Everything: A Conversation with Cisco’s Padmasree Warrior,” McKinsey Insights & Publications , www.mckinsey.com/insights/high_tech_telecoms_internet/connecting_everything_a_conversation_with_ciscos_padmasree_warrior.
14. Steve Olenski, “Is Brand Loyalty Dying A Slow and Painful Death?” Forbes, www.forbes.com/sites/marketshare/2013/01/07/is-brand-loyalty-dying-a-slow-and-painful-death/.
15. Chris Harrison, “OmniTouch: Wearable Multitouch Interaction Everywhere,” www.chrisharrison.net/index.php/Research/OmniTouch.
16. Om Malik, “Now That’s What I Call Window Shopping,” Gigaom (blog), http://gigaom.com/2012/10/01/now-thats-what-i-call-window-shopping/
18. For a listing of seven TED talks on 3D printing, see http://blog.ted.com/2013/02/07/7-talks-on-the-wonder-of-3d-printing/.
19. For more information see Lisa Harouni’s TED talk, A Primer on 3D Printing available at https://www.youtube.com/watch?v=OhYvDS7q_V8. Create and share designs, or just see what’s cooking, at www.shapeways.com, www.makerbot.com, and www.thingiverse.com.
20. Ben Paynter, “Making Over McDonald’s,” Fast Company, www.fastcompany.com/1686594/making-over-mcdonalds.

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