Nov 7, 2008

Mktg - Thinking by Design (V.G.Read)

Todd Wasserman

When Whirlpool launched its KitchenAid Series II line of appliances in 2007, the company was taking a bigger-than-usual gamble. Whirlpool's designers didn't just imbue the Series II—a refrigerator, microwave, range, oven and dishwasher—with the kind of sleek, industrial look popularized by TV foodie shows; the appliances shared distinctive design touches like responsive black touch display panels and bow-shaped chrome handles—clear indications that each appliance was meant to be part of a set.

That may sound simple, but in fact it broke with industry orthodoxy. Conventional wisdom holds that consumers buy stuff like this piecemeal, most often as a "distress purchase" when the old one breaks down. So why did Whirlpool spend a lot of its own money to create a uniform look when most consumers wouldn't care? The company's approach to advertising was similarly counter-intuitive: The brand advertised the whole line at once. Usually, ads for refrigerators come in March and campaigns for ovens hit in late summer.

"A lot of folks in our organization had a lot of reasons why it wouldn't work, but we used the customer validation approach to create validation," said Chuck Jones, the vp-global consumer design. "The fact that you can have one handle design that carries across different models makes for a compelling leverage story."

Jones' bet paid off—the company claims the line boosted its wall oven market share by 12% since its May 2007 launch—but this wasn't a case of a marketer "thinking outside the box." Jones' decision was based on design thinking, a paradigm that trades data-based marketing approaches for a more right-brained style rooted in design.

While marketers have appreciated the value of distinctive design for some time now—at least since Apple and Target started making it a key differentiator about a decade ago—design thinking is something else. The premise is that if you tap a designer, or a designer's problem-solving approach, to tackle standard business problems, you will get game-changing results.

That's why Procter & Gamble credits DT for the company's successful turnaround of its Herbal Essences shampoo line. It's also why Bank of America points to DT as the catalyst for its "Keep the Change" program, which automatically entered "rounded up" figures on checks and payments into savings accounts. Ninety-nine percent of customers who opted for Keep the Change stayed with the program, according to BofA.

DT is "something we're doing more and more," said Jim Burdick, svp-innovation and operational excellence at BofA. "In trying financial times, the fact that they continue to be funded does my heart good."

There's no question that, as a branding ethos, DT has arrived. In addition to Whirlpool, P&G and BofA, Kraft, Johnson & Johnson and Kimberly-Clark have all recently embraced it. Still, in a profession as susceptible to fads as marketing, it's worth asking: Is design thinking a genuine challenge to conventional marketing thinking, or just the latest pair of buzzwords? And if designers are such great business thinkers, why did it take them so long to rise to the top of the marketing hierarchy?

DT's Ascendancy
Tim Brown, the godfather of design thinking and CEO of Ideo, an influential Palo Alto, Calif., design consultancy, didn't mince words when he described how designers' traditional role in product development has been peripheral at best. "Historically, design has been treated as a downstream step in the development process—the point where designers, who have laid no earlier role in the substantive work of innovation, come along and put a beautiful wrapper around the idea," Brown wrote recently in the Harvard Business Review.

But around 2000, according to Brown, all that started to change. As marketers began to realize that competition had resulted in comparatively high quality in most every brand in a given category, it no longer made sense for one nameplate to run ads comparing itself to the "other leading brand." The new marketplace reality left only three options: compete on price, innovate faster than the competition or create experiences consumes could have with brands.

Trying to avoid price competition, companies shifted their focus to the other two. The strategic shift let designers argue that companies could benefit not only from more emphasis on product design, but from using the methodology of the designers themselves. In his HBR piece, Brown described that methodology as one that "imbues the full spectrum of innovation activities within a human-centered design ethos" and argued DT was powered by "direct observation, of what people want and need in their lives and what they like or dislike about the way particular products are made, packaged, marketed, sold and supported."

The sudden inclusion of consumers in the R&D process (which happened to dovetail with the craze for consumer-generated media and crowdsourcing), proved irresistible to some marketers. Soon, designers and consumers were working together to answer questions like, "How do we sell more Oil of Olay?"

The process by which designers ascended in influence has a nice logic, but it doesn't answer a key question: Talented as they are, are designers really better at shepherding branding efforts than traditional marketers? Perhaps. With their emphasis on charts and data, marketers often practice inductive thinking ("if X, then Y . . .") Design thinking, by contrast, is more a case of abductive thinking—more a creative leap that attempts to solve a problem in previously unforeseen ways (think of how Steve Jobs created the iPod, for instance).

"It's about creating a hypothesis for what can be," said Tom Burchard, vp of Continuum, a Newton, Mass., design firm that works with American Express, P&G and others. "A good example is flight. Birds can fly, so one can dream humans can fly. We can create a hypothesis for doing it, but the process for getting there isn't necessarily reverse-engineering a bird."

While the design-thinking approach may sound rather seat-of-the-pants, the truth is that it's surprisingly regimented, consisting of three phases: observation, ideation and implementation.

Watch Closely
Focus groups have their place, but in design thinking, observation means ethnography: Noting how consumers behave in their natural retail habitats the way Margaret Mead once analyzed the tribes of Samoa. The use of ethnography as a primary tool in product development has gained widespread favor during the past decade. Ask Becky Walter, who serves as Kimberly-Clark's director of innovation, design and testing. Fifteen years ago, Walter said, K-C might have employed observational research but once or twice a year. No longer. "One thing that's certainly changed is the prevalence of the use of ethnography," she said. Today, "it's more integrated into the product-development phase. To do great design, you have to figure out how people interact with the product. This is almost mandatory now."

Fortunately, technology has served as ethnography's great facilitator, not only for those taking notes, but for the subjects themselves, who can more freely record and transmit information about how they conduct, organize and prioritize their daily lives. Cameraphones and Web 2.0 make it nearly effortless for consumers to capture their lives in granular—often, bordering on tedious—detail, while social networking sites like Facebook have furnished a platform to share those details with strangers.

Mobile technology has also let companies tap ethnography to cull data from what amounts to a global laboratory. Jan Chipchase, a "human behavior researcher," travels the world on behalf of his employer, Nokia, to observe how people actually use cell phones. Sometimes he'll watch, anonymously, as a peripheral bystander; other times he'll approach users and question them about what they like and don't like about their phones.

Last summer, while observing a family whose home was a one-room hut in the Dharavi slum of Mumbai, he noticed that the patriarch, a shoe salesman, stashed his cell phone in a plastic bag to keep it dry during monsoon season. Chipchase also noticed that the family kept most of its possessions on wall hooks because water often seeped onto the floors. Later, reporting back to Nokia headquarters, Chipchase suggested the company market a phone with a rear-mounted hook for easy hanging. (While Nokia has not yet adopted the hook suggestion, "almost all our models have support straps, which make hanging that much easier," Chipchase said in a recent e-mail.)

If the Nokia scout's global wanderings seem rather aimless, that's actually part of why ethnography is thought to work. Build in too many restrictions on the research, and you might miss something crucial. It's why many ethnography projects often start with fairly vague goals. When Ideo was called in to help PNC, a Pittsburgh-based bank that was looking to connect with Gen Y consumers, its ethnography module stretched into three months.

During that time, researchers and designers followed about 30 young consumers on their daily living paths and quizzed them on how they use their money, where they kept it, what did they think about it? Which mobile and online banking programs did they already use and what did they think of them? The idea was to look for new ideas, not to try to validate existing hypothesis.

When it was all over, Ideo was able to tell PNC that young, would-be bank customers expect seamless, constant access from digital platforms. Observations also uncovered two primary archetypes: Those who embrace technology but are selective on how they use it and those with a voracious appetite for digital content

Group Think
Phase two of design thinking—ideation—is nearly as free-form as the observation stage, but adds the critical element of synthesis. Returning to the PNC example, after researchers identified the key users of digital technology the bank was interested in targeting, Ideo convened discussion groups made up of both consumers and company employees. "They brainstormed hundreds of ideas," said Michael Ley, PNC's e-business vp, "whittling them down to a few core [ones]." Those then started to take form in a process known as "low-res prototyping." In PNC's case, that meant solutions that were designed to be online were shown as hand-sketches on paper.

P&G employed a similar tack for Olay, a heritage brand that over the years had spawned an unwieldy array of product extensions, ones that proved confounding to some consumers.

During the low-res prototyping of the ideation stage, a team led by Cindy Tripp, marketing director at P&G Global Design, produced paper mockups of what would eventually become The Web site features a female voice that uses goal-driven questions ("I want to see visible improvement in my skin," for example) to lead visitors to the corresponding formulation of Olay. Today, Tripp said, P&G frequently makes use of such prototyping for many of its brands: "It could be pipe cleaners and paper plates."

Skeptics of design thinking could well argue that prototyping and marketing-department brainstorming have been part of R&D from the dawn of time. But DT's method distinguishes itself by requiring that consumers be part of the process.

"I find it very beneficial to have people in the target market involved with the creation of ideas," said Jeanine Rae, co-founder of Peer Insight, Alexandria, Va., and a former member of Ideo. "It's great to get real-time feedback to what you're doing in an iterative way."
That level of consumer involvement is still relatively new at P&G. "Ten years ago we cared about what consumers thought, but we observed them behind a glass mirror," Tripp said. "In the last few years the design thinking approach has been an evolution. It wasn't heresy [to have consumers involved in product creation] but it wasn't common."

Thought into Action
In implementation, the final phase of design thinking, low-res prototypes go high-res and then become actual products. In the case of PNC's quest for Gen Y customers, the teams of researchers, designers and consumers decided the best play the bank could make was to offer an intuitive digital product. Eventually known as the Virtual Wallet, it was a widget that let consumers not only access their accounts and pay bills, but organize their finances and start a savings plan. In a nod to Gen Y's disdain of standard formal business speak, the savings component is called "Punch the Pig" and a feature warning of overspending is called "Danger Days."

The implementation phase also addresses a a common question about DT: If designers are really such great business thinkers, why has it taken several hundred years of free-market capitalism to discover the fact?
According to Roger Martin, dean of the Rotman School of Management at the University of Toronto (and a longtime consultant to P&G), the answer lies in the blindness of business conformity. Designers, he argues, have traditionally "had no training whatsoever in [DT's] third piece: How to convert ideas into a viable product." Fortunately, Martin added, that's changing. Business schools are starting to teach design thinking and design schools are putting students through more rigorous business training.

New Paradigm or Fad?
For all the emergent evidence that DT is a business ethos whose time could be nigh, it remains to be seen whether—and to what extent—it will inform the development of brands. And the current state of the economy is not likely to make the picture clearer. DT's proponents insist that the practice is recession-proof. While calculating the ROI on DT is all but impossible, designers argue that DT is actually a conservative way to innovate because its rooted, after all, in deep consumer insight.

"If we find out something's not going to work, we know it faster than if we rushed out an expensive prototype," said Burchard, who nevertheless admitted that he still has to sell a lot of marketers on the idea. "Enlightened companies understand [its importance,]" he said. "But we are still doing some evangelism to convert a lot of people who see it as frivolous."

One of those people is Livingston Miller, president of New York ad shop Seiter & Miller, who believes that DT is little more than a catchy way to describe the creative process.

"There are many things like this that are old ideas packaged with new phrases," he said. DT, Miller continued, reminded him of a concept created by defunct ad agency D'Arcy called "the emotional hard sell" that straightjacketed creatives into a rigid format for idea generation. "Our landscape is littered with these ideas," he said. "It's what happens when the research department runs amok." Design Thinking, Miller added, "looks to me like instructions on how to take a dump."

Similarly, Tim Leberecht, vp of marketing and communications at Frog Design, San Francisco, said he believed there was nothing new about DT. "Doing in-depth research, that's what marketers have done for decades," he said. Leberecht conceded that having customers along for the ride during the creative process is new, but is more the result of the craze over crowdsourcing than for DT, per se.

Miller and Leberecht aren't alone. DT's defenders, though, are quick to remind skeptics that it's not meant to be a miracle, but merely a process. The thinking has to be done by seasoned marketers, who ultimately make the "go with your gut" call that they always have. DT may lead them to new ideas, but ultimately marketers need to make the calls on whether those ideas are worth pursuing.

In Whirlpool's case there was justification independent of DT for believing that Series II would work: In 1998, Duet, the company's popular matching washer/dryer combo, defied prevailing wisdom that consumers bought the two appliances separately. So, the company's decision nine years later to try a similar tack with Series II was based in part on design thinking, but it probably wouldn't have happened without some good, old fashioned deductive thinking as well.

Ethnography in (Mostly) Real Life

A key operative component of design thinking is ethnography which, for a relatively new theoretical approach, has grown up very quickly. Want proof? Look no further than a recent (and much-reviled) ad from Microsoft featuring Bill Gates and Jerry Seinfeld.

In the spot, which clocks in at 4:30 and was created by Crispin Porter + Bogusky, Miami, the two multimillionaires are shown slumming with a putative average family to see what makes them tick (the kind of carpet-level observation that, in essence, ethnography is all about.)

"Why are we doing this again?" Gates asks, woodenly, at one point.

"Why, Bill?" Seinfeld replies. "'Cause, as we discussed, you and I are a little out of it. You're living in some kind of moon house hovering over Seattle like the mothership. I got so many cars I get stuck in my own traffic." The comedian is sitting on a girl's pink bed as he says this, bounding a ball off the wall. "We need to connect with real people!"

Right on cue, the grandmother of the house appears outside the room ambling through the hallway on her walker. "Who took my teeth outta the freezer?" Pause. "See?" Seinfeld says, "that's real!"

Actually, it wasn't real. The man playing the father of the house is actor David Costabile, who played the managing editor of the Baltimore Sun in season five of the HBO show The Wire and the pacing was more sitcom than reality show.

Patronized as many viewers felt about what they were watching, what Gates and Seinfeld were portraying is real. Microsoft itself is a big proponent of ethnography. Most recently, the company executed a project with Nielsen Life 360 (which, like Brandweek, is owned by Nielsen Co.) that required about 110 consumers to use their cell phones to check in every hour (except when they were sleeping) to explain what they were doing. Such consumers, which got paid between $50 and $150, were also encouraged to use their phones to photograph various scenes in their lives.

Karen Benezra, vp and exec dir Nielsen Trend, which ran the program, said such results are truer than what you'd get if you were to visit the familes รก la Gates and Seinfeld. "If you're coming for two hours a day, the house may be a little bit cleaner," she said. "Here, you get the unvarnished look."

Microsoft uses the results to create composite sketches of users—personas with names like Abby, Nicholas and David—on which it bases its marketing. "I was a little surprised that 10 days every hour on the hour we got data," said Cheri Marine, research product planner at Microsoft's eHome team. "People really wanted to share their lives."

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