“What is design thinking and what does it mean to organizations?” I get this question a lot, and my answer is often received with a blank stare. Much of the problem is that people don’t really understand what design is. How many times have you seen design left out of the conversation? Design and creativity are intangible skills that are difficult to explain, but it’s become increasingly necessary to interject them into business strategy.
Apple’s recent quarterly earnings announcement is a good place to start this conversation.
On January 26, 2016, Apple announced its quarterly numbers. It had beat earnings projections, but iPhone sales expectations had come up short. Indeed, Apple shares have fallen 20% over the past six months. This drop is based on fears related to the slowdown of the Chinese economy and that iPhone sales are decreasing. The perception that the current iPhone 6s is only an incremental evolution is dampening the Apple forecast as well. These are all key to Wall Street’s expectations of Apple.
In the lead-up to the announcement, Philip Elmer-DeWitt , Senior Editor at Fortune, posted on Fortune.com, some interesting thoughts about Apple. The post, titled “Here’s What Wall Street Doesn’t Get About Apple” gets to the heart of the misunderstanding of design. “There are two Apples: AAPL, the stock, and Apple, the company.” While Wall Street numbers may show a decline, Apple’s growth is clearly expansive and its products are reshaping the way we communicate and live. The issue here is that Wall Street considers Apple a technology company and is focused solely on the quarterly statements. Wall Street is concerned that the iPhone market is reaching its peak, but look at what Apple released in 2015: the Apple Watch, Apple TV, Apple Music, and iPad Pro. HomeKit, CarPlay, Apple Pay, Siri and HealthKit are part of the system as well. With almost half a billion iPhone users, Apple is well positioned to expand this ecosystem into every corner of our lives and technology-created experience. Its fundamental experience is centered on the iPhone, focused on designing a user experience that integrates the technology into services. The reality is that Apple is a design-oriented lifestyle company.
Another example for this discussion comes from reviewing “The (New) Unicorn List” in the February 1, 2016 issue of Fortune. The largest unicorn on the list is Uber: It’s placed in the software category. However, Uber’s primary business is transportation. Software has allowed them to rapidly scale up and grow—and Wall Street loves them for that—but it is not their core product and service.
Another way to view this is to look at Uber’s challenges. These issues are not connected to software, but to human touch points, such as taxi companies, legislation, and trust.
Uber recently unveiled a new logo, which has fallen under great scrutiny. The new logo does not differentiate Uber from it’s competition, nor does it create a meaningful connection to its customers. Whether Uber will find long-term success is still to be seen, but the disconnect between Wall Street’s perception and the intent and value of their primary service is apparent.
On one side you have Apple. Apple’s success and growth has been built on creating a designed human-centric platform, but Wall Street doesn’t fully acknowledge that achievement. Uber’s success comes from the adoption of their software. They are a disruptive force on transportation, but the platform has trust, regulator and litigation issues. These are two sides of strategic design that create two types of reactions from Wall Street.
What Wall Street Does Not Understand.
According to an interview that Gary Cohn, President and COO of Goldman Sachs, gave on Bloomberg TV, we are in a period of technology revaluation. Growth within technology industries is slowing down, and the market is looking for proof of long-term viability for shareholders. This shift in the market perception from quarterly growth to long-term sustainable growth requires a revaluation of the business opportunities. This is the gap between Wall Street and design.
In his bestselling book, A Whole New Mind: Why Right-Brainers Will Rule the Future, psychologist Daniel Pink shares the importance of right-brain thinking. He calls this period of time “high concept.” This is a period in which we have become “a society of creators and empathizers, of pattern recognizers and meaning makers. We’ve moved from an economy built on people’s backs to an economy built on people’s left-brains to what is emerging today: an economy and society built more and more on people’s right-brains.” Pink feels that this can be accomplished with six concepts or senses, design (emotionally engaging), story (narrative), symphony (understanding the big picture and connecting dots), empathy (human emotions), play (have fun) and meaning (purpose and fulfillment). Pink’s concepts touch upon the fundamentals of creativity and design thinking. Pink discusses how the linear, analytical left-brain thinker is being replaced by the empathy and creativity of the right-brain thinker. This is certainly apparent at Apple as we watch them grow towards a trillion dollar market size.
If you follow Wall Street’s principles, the iPhone market is nearing the saturation point and Wall Street is looking for Apple’s revaluation point. Wall Street, which is primarily focused on financial analytics and data, does not identify with the design-led strategy of Apple. It’s worried that Apple is not enough of an innovative technology company or that the iPhone market cannot grow any further. China, whose economy is teetering, was once seen as a huge growth opportunity for Apple. Wall Street is not connecting all the dots and not seeing the lifestyle platform that Apple is designing.
Revaluation Reimagined
Our world is not organized into clear categories, especially with technology allowing us to expand how we communicate, connect and solve problems. We need to change the perception of how technologies that creates human-centric solutions and experiences are valued. It’s difficult to commoditize these platforms. Past industrial revolutions were focused on machines that dictated the relationship between humans and technology. The paradigm has shifted to where the expectation of technology is now integrated into our daily tasks and thus a different conversation needs to be created. One in which design thinking can focus on creating measurable solutions and analytical thinkers can find trust in the creative process. Once this happens, designed platforms can be put into their proper context and the revaluation of an organization can be reimagined.
In order to look beyond the boundaries that Wall Street constructs around organizations, we need to connect right- and left-brain thinking. Design thinking seeks to do just that. To be successful, designers need to present the value of design thinking in a way that people can understand. This requires change in the way they talk.
A good place to start is the Design Management Institute’s Design Value Map. This is a tool that focuses on creating a conversion around four basic business fundamentals: Revenue, Customer Experience, Organizational Learning and Process. Stop using intangible words like “design” and “innovation.” Instead, talk about problem solving and stay focused on tangible value and measurable data and milestones. What scares analytical thinkers is the vagueness of design and creativity. This causes feeling of ambiguity and risk.
Change is hard, but to begin to see opportunity beyond the immediate financial quarter, it requires that you look past the category boundaries. Steven Johnson sums this up in his book, How We Got to Now: Six Innovations That Made the Modern World: “Stay within the boundaries of your discipline, and you will have an easier time making incremental improvements, opening the doors of the adjacent possible that are directly available to you given the specifics of the historical moment. (There’s nothing wrong with that, of course. Progress depends on incremental improvements.) But those disciplinary boundaries can also serve as blinders, keeping you from the bigger idea that becomes visible only when you cross those borders.”
How can you change the discussion around design thinking? Sit in a room with a group of people, and talk about Apple. Don’t leave until everyone understands that the company’s growth will come from the lifestyle platform it’s building. If you need a numbers comparison to feel comfortable, pull up the revenue numbers on Samsung’s mobile phones. Samsung creates great mobile devices that fit a lifestyle. Apple is creating a lifestyle platform for its mobile devices.
“We want one, seamless kind of life.”
—Tim Cook, Apple CEO