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GENERATING DIGITAL IMPACT Design Thinking innovation for business processes and operations An overlooked key to growth, not just cost

Despite the innovation promised by digital, many large companies still struggle with realizing its benefits—and for reasons often not related to technology. A human-centered approach focused on external and internal customer journeys that cut through organizational silos, supported end to end by reimagined process operations, can provide an effective and scalable solution suitable for complex enterprise environments.

DESIGN • TRANSFORM • RUN LEAN DIGITALSM TABLE OF CONTENTS

1. Why we need innovation in business processes and operations...... 4

2. Where does Design Thinking add value?...... 7

3. How Design Thinking works in business process and operations...... 8

4. A case in point: designing change management...... 14

5. Design Thinking: a catalyst of change for the digital enterprise...... 15 INDEX OF FIGURES

Figure 1: A more practical approach to designing and transforming is needed...... 4

Figure 2: Most effort in products, evidence shows much value created elsewhere...... 5

Figure 3: Value creation in 10 years—spot the design thinking intensive firms...... 6

Figure 4: Situate the need across the innovation spectrum...... 7

Figure 5: Leverage Lean Digital accelerators...... 8

Figure 6: Enables cross-functional experiments and build, end to end...... 8

Figure 7: Innovative human centered approach for radically new solutions...... 9

Figure 8: Six tenets that enable innovation in large enterprises...... 10

Figure 9: INNOVATION by design—the process...... 10

Figure 10: Research based persona and journey exploration...... 11

Figure 11: A defined set of activities and design framework...... 12

Figure 12: Enabling rapid experimentation and testing...... 13

Figure 13: Organizational development is also part of design thinking prototypes...... 14 Why we need innovation in business processes and operations Innovation’s power is often While some businesses are harnessing digital and reshaping how they engage with their clients, many fragmented, hamstrung large and complex enterprises struggle to adapt to by the disconnect between rising customer experience expectations—whether from external or internal customers. The latest study the modern front end and a by Harvard Business Review Analytic Services1 in association with Genpact Research Institute indicates manual, dated back office that only 21% of companies are truly reaping the transformative value of digital. Making digital work at scale is still a challenge for many. Innovation’s power is often fragmented, hamstrung by the disconnect these challenges. A large part of the issue lies in the between the modern front end and a manual, dated inability to experiment quickly in large operations. back office. As a result it tends to remain reactive Additionally, organizational silos and the risk aversion rather than dynamic and doesn’t scale. of many in operations make cross-functional, creative cooperation a comparatively rare occurrence. This has This problem has stubbornly resisted traditional seriously impacted innovation in process operations transformation methods and is at the root of a as well as enterprises with well-established product “digital divide” between leaders in the adoption of R&D where it has been observed that powerful digital technology and analytics, and the majority technical solutions are often those that elicit superior of enterprises. Figure 1 qualitatively illustrates emotional responses.

because of… inability to experiment quickly 48% change management 41% 21% legacy systems 39% of companies truly reap the risk aversion 38% transformative value of digital organizational silos 38% 53% but only… 17% success rate among those with are in that category good back/middle oce alignment to customer needs

Source: Harvard Business Review/Genpact research, sample of 680 executives, June 2016

Figure 1: A more practical approach to designing and transforming is needed

1 http://www.genpact.com/lp/what-is-holding-back-the-digital-revolution

GENPACT | Article | 4 Part of the problem stems from a fundamental also arguably the design, of much innovation that underestimation of the importance of innovation evolves beyond mere invention. Companies like GE, outside of product design. Figure 2, based on Amazon, ING, and (arguably) Uber and Apple have experience and observations over the last decade, long understood that product innovation requires emphasizes the diversity of innovation value a more holistic focus—a focus that starts and ends sources, and highlights how business processes with customers, and the enterprise processes that are at the core, not just of the scalability, but ultimately impact them.

Product Service Brand Business model Value chain Process* Channel Experience

• New features • Product as a • Extension • Pricing model • Systematic • Outsourcing • Multi • Deliberate service M&A channel orchestration • Aggregated • Co-branding • Pay per • Intelligent of any relevant feature, bundle • Productized outcome vs pay • Strategic process • OEM/ previous service • Private labels per resource alliances automation Partner characteristic to • Ease of use deliver cohesive, • Product/ • Certifications • OEM, licensing, • Supply chain • Crowdsourcing • Flagship designed • Safety service royalty partners stores human-centered platform • Standardiza- experience • Environmental • As a service • Shared/utility tion • Direct to • Financing/ vs product back office consumer • Mass leasing implementation • Radical customization • Organization efficiency • Guarantees • Managed • Product outcome for • Knowledge • Design systems • Personalized client management support • Production • Platform • Distributed/ flow remote organization

• Open innovation/ social network

• SAP • GE • Virgin • GE pay-per-use • Oracle • GE Capital • Amazon • Apple Maintenance models Services • P&G • Nike • Amazon (1995-2005) • ING direct • Tesla • GE Capital • SFDC.com • Intel • Google • Uber

Figure 2: Most effort in products, evidence shows much value created elsewhere

GENPACT | Article | 5 Against this backdrop, Design Thinking should not be perceived as a “soft” concept better suited for marketing or user-interface teams. While these Part of the problem stems groups have indeed been the first to harness its power, Design Thinking has been at the core of the from a fundamental success of some of the most valuable companies in the world. Figure 3 illustrates how, over the past ten underestimation of the years, companies rooted in engineering and Lean importance of innovation Six Sigma have been surpassed in value by firms which embraced digital practices and routinely use outside of product design Design Thinking practices to drive the design of their solutions.

Market capitalization of the world’s most valuable public companies

Tech Oil/Energy Financial Services Conglomerate

2006 2016

ExxonMobil 363 Apple 571

General Electric 349 Alphabet 531

Microsoft 279 Microsoft 446

Citigroup 231 Amazon 362

BP 226 ExxonMobil 356

Royal Dutch Shell 204 Facebook 356

US$ billions

Figure 3: Value creation in 10 years—spot the design thinking intensive firms

GENPACT | Article | 6 • Reimagining account payables for the North American Where does Design Thinking business of a multinational food and beverage add value? conglomerate to address delayed vendor payments • Redefinetransitions and change management In our experience, Design Thinking practices can be processes, a critical transformation component, into a harnessed from Finance through to Supply Chain and desirable and value-add experience Operations. A range of examples are presented below: • Reinvent remote communications/collaboration- making distances irrelevant, using all people resources • Redesign the future state process and delivery for the seamlessly, “reimagining meetings” end customer journey for a multinational credit card and payment services provider In general, Design Thinking is most powerful when: • Reimagine new operations being set up and (a) the nature of the problem is somewhat unclear and new products launches to rationalize costs and the range of solutions not known in advance (i.e., no optimize potential business impact for a Fortune 500 insurance company obvious “best practice” exists); • Reimagine the planning, forecasting and campaign (b) the challenge can be meaningfully addressed by management processes, as well as operations for a reimagining the role of people (external and internal global manufacturer and direct selling company in customers, as well as employees); beauty, household, and personal care products (c) the process of finding a solution requires iterative • Reimagine revenue and asset utilization management “tinkering” across a group of diverse stakeholders for a diversified multinational mass media and entertainment conglomerate who iterate their way agilely to a solution by obtaining meaningful feedback through methodical • Reimagine the process of setting up promotional events for an American consumer goods corporation storytelling; and with retail partners (d) the problem has resisted conventional approaches, • Reimagine how to execute regulatory reporting for and management is open to try disruptive, less risk-related reports for the consumer division of a traditional approaches that may yield a very high leading financial services multinational return but whose risk profile is less predictable than • Redesign the IT procurement experience for one of the standard projects. world’s largest pharmaceutical companies In figure 4, where some examples are presented, • Reimagine the book closing process to optimize time, those conditions are prevalent on the left side of resource intensity, and risk the spectrum.

Client situation and nature of the approach

• Exploratory. Customer • Normative. Best practice, tool, experience driven domain experience driven “unknown unknowns” “known unknowns” “known knowns”

1 2 3

CPG leader wants to create Industrial asset operator needs 10X effectiveness on its order Industrial Internet of Things Insurance leader wants to transform management function. data-insight-action to boost the Finance & Accounting operating Automotive leader wants to productivity of its wind turbine model for efficiency, effectiveness, reimagine customer experience for farm and generate machine-to-P&L and control. consumer finance. impact.

Figure 4: Situate the need across the innovation spectrum

GENPACT | Article | 7 Client situation and nature of the approach

Exploratory. Customer Normative. Best practice, tool, experience driven domain experience driven

“unknown “known “known unknowns” unknowns” knowns”

Classic/ Digital SEPSM Operational Consulting Design Thinking Practices

High velocity + engineering Digital assets Digital Tech + Analytics Consulting Digital immersion

Figure 5: Leverage Lean Digital accelerators

Design Thinking is typically, although not exclusively, experiments—and ultimately builds—end to end, used by digital or creative professionals, but it can across the enterprise, processes that serve a specific also complement and enhance a number of other business outcome. methods, from “digital immersions” into ecosystems of startups to pre-existing digital assets and best practices frameworks (e.g., digital Smart Enterprise Processes—SEPSM).2 Customer emotion and empathy How Design Thinking works in Design thinking is a human centered Possibilities of business process and operations approach to digital tech and innovation that analytics Design Thinking is a human-centered approach integrates… to innovation that integrates customer emotion Requirements for business success and empathy, the possibilities of digital tech and analytics, and the requirements for business success. It crystallizes customer experiences into an executable prototype, and enables cross-functional Figure 6: Enables cross-functional experiments and build, end to end

2 http://www.genpact.com/why-genpact/smart-enterprise-processes

GENPACT | Article | 8 A common mis-perception is that Design Thinking innovation processes—and indeed an innovation is commonsense—that most engineers (or process culture—able to harness both engineering and human engineers) would be able to master it easily. RIM centered design. (Blackberry), Nokia, and other companies that Figure 7 shows how the approach followed by Apple have fallen from seemingly uncontested leadership for its iPhone was elusively simple, but required a positions offer clear examples of how design-driven subtle yet pervasive change of perspective, tied to engineering firms often miss a crucial point: powerful a culture that obsessed over how things feel, not technical solutions are often those that elicit superior just what they do. The same lens can be applied to emotional responses, and it isn’t trivial to build process design.

Typical approach solve Best approach understand bottoms up at individual the client/user experience, solution level first and iterate cheaply first

NOT “how to build the best mobile with best combination of best equipment” BUT “How to connect people to the world (beyond people), and increase their self confidence through a stylish device that extends them”

Figure 7: Innovative human centered approach for radically new solutions

GENPACT | Article | 9 Place customer Suspend Keep it “Lean Look to Focus on reaching Continuously emotion— judgement and Agile” – competitors and the fastest path iterate designs identified through and generate aim for smallest new technologies/ to experience based on customer customer unconstrained viable solution startups for to enable rapid feedback and experience/ ideas that create that generates inspiration and testing with increasingly journey, at the the best experience customer value direction as well customers refine solutions— heart of the design for customers as for potential experiment process and don’t partners and before freezing just use customers providers of services requirements as starting point

Figure 8: Six tenets that enable innovation in large enterprises

While Design Thinking requires far more than product (MVP). In very simple situations, such as template checklists, some principles are often those related to the creation of quick standalone applicable and worth remembering—six of them are applications (especially mobile), a good prototype listed in figure 8. is achievable in a matter of weeks. However, in Generally, the path to field test is fairly fast. Figure 9 process operations that impact multiple groups of illustrates the Genpact Innovation by Design (IbyD)3 stakeholders and hinge on pre-existing legacy systems approach that delivers a high-fidelity prototype able and processes, a more thorough and methodical to be translated into functional, minimum viable approach is required.

MVP to product discovery synthesis to prototype / UI (out of IbyD scope) Preliminary Landscape Design Hypothesis MVP Field Stage assessment test test V 1.0 ► ► ► ► ►

“SPRINT” 2 weeks (remote) 2 days Palo Alto TBD TBD

2 2-4 +1 +2-3 +5-10 +6-16 weeks weeks week weeks weeks* weeks* PROGRAM Scoping Refinement Co-Innovation Alignment Workshop Workshop Workshop Workshop

Figure 9: INNOVATION by design—the process

3 www.genpact.com/lp/design-thinking

GENPACT | Article | 10 Discovery phase The discovery phase, explained in some detail in Design Thinking is a human- figure 10, helps teams “fall in love with the problem” before “falling in love with the solution,” countering centered approach to innovation the typical bias of experts. Despite a very qualitative streak and deliberate focus on people and their that integrates customer emotion, this phase often includes the analysis of emotion and empathy, the quantitative fact bases that are the typical precinct of business analysts, management consultants, or possibilities of digital tech and Lean/Six Sigma black belts. The process allows the participants to get up-close and personal with the analytics, and the requirements change challenge by using the lens of “personas” to for business success represent those impacted by the change. Personas can help illuminate issues, opportunities, and ultimately action plans and interventions to address The outcome of this process culminates in a fast the change—to design those interventions with prototyping session to determine how much change representatives (or proxies) of those personas, and the organization can absorb, and how to administrate strive for delight, not burden. that change.

Research based analysis

Customer Personas journeys

Figure 10: Research based persona and journey exploration

GENPACT | Article | 11 The biggest challenges in this prototyping step A significant pitfall in synthesis phase stems from relate to the inability of many operational and other the inability to focus on the most important problem, “left-brained” executives to let go of their bias for as opposed to uncritically accepting the pre-existing logical, process-oriented thinking, and embrace a description of the problem—which may inhibit the shift of perspective that turns the spotlight on human generation of breakthrough perspectives. emotions. The consequences of failing to do so can be severe: the depth of human exploration achieved is typically directly correlated to the originality of the solutions designed at the end of the effort. A common mis-perception Synthesis phase is that Design Thinking is Discovery phase gives way to a synthesis period where the objective is to “design for desirability, not commonsense–that most viability,” so that unconstrained ideas can emerge and engineers (or process engineers) help the teams stretch their thinking. Figure 11 shows a typical approach (in this case, utilizing some of the would be able to master it easily methods of the LUMA Institute4).

PRE-WORK DATA CAPTURE/GATHERING CONSOLIDATE DESIGN WORKSHOPS

What’s on Your Interviewing Radar? Critique LOOKING LOOKING

LOOKING Affinity Clustering

Experience Rose, Thorn, Importance/ Concept Stakeholder UNDERSTANDING Mapping Mapping Diagramming Bud Difficulty Matrix

UNDERSTANDING UNDERSTANDING UNDERSTANDING UNDERSTANDING UNDERSTANDING Statement Starters

UNDERSTANDING System Usability Contextual Scale Inquiry Creative Matrix Concept Poster

LOOKING LOOKING MAKING MAKING

Figure 11: A defined set of activities and design framework

4 https://www.luma-institute.com/

GENPACT | Article | 12 One now-famous example5 that illustrates this pitfall occupants, reducing the sensitivity to the passing of is the “engineering bias” that many experts and time, and ultimately making the time feel shorter. professionals have. Challenged to make elevators in tall buildings faster, a constructor would typically After the synthesis phase, the prototype step starts, turn to the elevators’ manufacturer, whose engineers’ enabling rapid experimentation and testing as first reaction would be to try and increase the quality illustrated in figure 12. Prototypes are essentially of the machine’s component—typically resulting stories: initially simply narratives sketched on in significant additional cost and complexity. But a deliberately scrappy flipcharts, they can be design thinker might instead reframe the question increasingly refined through user interface (UI) away from the pre-defined frame of reference to ask, “How might we reduce the time perceived by mock ups. They’re critical, because they enable team the passengers?” This in turn quickly leads to the members to expose the concepts to a variety of commonly adopted and extremely cost-effective people, facilitating the gathering of useful feedback solution: placing a mirror in the elevator. A mirror that can be quickly injected into the next iteration of serves the purpose of distracting the attention of the the story.

Figure 12: Enabling rapid experimentation and testing

5 https://hbr.org/2017/01/are-you-solving-the-right-problems

GENPACT | Article | 13 The biggest challenge in prototyping part of the project A case in point: Designing is often the frequent lack of a truly cross-sectional set of people, which is necessary for sketching unusual change management solutions and eliciting incisive critique. Additional The application of Design Thinking for change problems may arise from team members’ poor management is worth reviewing in detail. While storytelling abilities, as these abilities are foundational change management is often considered an ancillary to receiving meaningful, accurate feedback. part of every enterprise transformation solution—a kind of “necessary evil”—it shouldn’t be: human The last phase of the synthesis—especially important interaction lies at the heart of successful business in large and complex operational change efforts— change and indeed failure to drive appropriate change relates to the planning of the organizational change management lies at the core of many failed or delayed necessary for the prototype solutions to be effective. transformation initiatives. That process is also a crucial part of the solution to be tested, and is often given too little attention, Anyone who’s experienced the ease of signing up for especially considering the importance it has in financial services provided by “fintech” disruptors complex enterprise environments. (e.g., Mint, Personal Capital, Rocket Mortgage,

Heat map for all prioritized Transformation opportunities that are roadmap identified as a part of the transformation roadmap

Global Process Project charters for Blueprint for selected few projects each process in that will need to be scope at Level 3 implemented in the with embedded first 3-6 months revised controls environment to enable SOX compliance

Mid-term transformation plan

Figure 13: Organizational development is also part of design thinking prototypes

GENPACT | Article | 14 Lemonade) intuitively understands how the process whose job will change, new employees, and their of “switching” can be made easy (e.g., auto-transfer supervisors and executives. of financial transactions notifications from the bank’s system to the new service), and even pleasurable. The major benefit is that the process of designing the Anyone who’s upgraded from an old to a new iPhone change solution, because it requires co-creation with knows that changing phones is an elating experience some of the people who might have initially opposed these days—even though, in the past, this was not the change, may in time turn those same people into the case. We can also think about how theories converts and even evangelists. from behavioral economics, plus “flow experience” concepts6, have shaped our understanding of how Conclusion: Design Thinking is a people make initially painful decisions, such as commencing training for a half marathon. catalyst of change for the digital enterprise The same can happen with enterprise change, as it is ultimately about each person’s individual change. By taking customer journeys as a lens when aligning Today, Design Thinking is increasingly used for the the organization from end to end, Design Thinking design of that change. Any large-scale, complex processes and operations combine human-centered transformation should include Design Thinking design principles—often well understood by marketing practices and sessions to help keep the customer groups, yet largely foreign to mid- and back-office (internal and external) front and center. The objective operations executives—with operational savvy. is to design the change itself as a solution, aiming at ensuring that the participants feel thrilled about Design Thinking instigates deep understanding of it, countering “resistance to change” with steps that the human side of the people involved in the flow of make people “long for change.” To do so, teams must work required to create superlative client experiences harness the ideas of a range of stakeholders through and facilitate quick iteration of ideas. This is made a facilitated process using workshop-type sessions in possible through a holistic approach—such as purpose-built environments. Genpact’s Lean DigitalSM—that harnesses digital technology and analytics through a business-domain For instance, one can solicit unusual solutions by lens, and uses Lean and human-centered Design thinking about how to form connections between Thinking principles to identify solutions which are two new organizations that are forced to work practical and effective to implement7. together—say, a business unit and a shared service or outsourced provider. Another source of radical The fundamental advantage of such a method is that inspiration could even be drawn from the work of it helps craft radically creative solutions—solutions many people and organizations during the Cold War, that are often less complex to integrate with the or by methodically identifying the informal network existing legacy operations, easier to adopt for the of people who participate in the process above and individuals impacted, and easier to implement. beyond what is visible in workflows or org charts. These are important aspects in a world where digital transformation will require a continuous state of The key is to step away from a mechanistic process change for many functions, and a radical openness to view, and engage in a human-centered exploration the advances of new technology. of the emotions underpinning the capability and willingness of people to embrace an inflection in their The main limitations to the deployment of Design lives. The use of personas can help focus on people Thinking efforts in end-to-end operations are twofold. being displaced by the new ways of working, staff Firstly, the scarcity of individuals able to lead such

6 https://en.wikipedia.org/wiki/Flow_(psychology) 7 www.genpact.com/leandigital/

GENPACT | Article | 15 projects, who must possess both Design Thinking chances of digital transformation success—as a skills as well as a good understanding of business recent study found.8 processes and operations. Secondly, many enterprise sponsors, accustomed to the relatively lower risk of The opportunity however is very significant. Just more incremental Lean Six Sigma or IT projects, are as Lean and Six Sigma principles reinvented how reticent to embark in efforts that aim for disruptive large enterprise processes work, Design Thinking solutions with somewhat less predictable outcomes. has started to empower middle and back offices, together with front-office operations, to harness A careful assessment of the pros and cons is a the power of digital and ultimately deliver not prerequisite for a successful Design Thinking effort just on the traditional cost-reduction agenda, but in process and operational areas. Companies that rather on organizations’ new mission to deliver collaborate with external partners to complement superior customer experiences while achieving their capacity and capabilities increase their unprecedented growth and agility.

8 http://www.genpact.com/lp/what-is-holding-back-the-digital-revolution

About Genpact Genpact (NYSE: G) is a global professional services firm focused on delivering digital transformation for our clients, putting digital and data to work to create competitive advantage. We do this by integrating lean principles, design thinking, analytics, and digital technologies with domain and industry expertise to deliver disruptive business outcomes – an approach called Lean DigitalSM. We deliver value to our clients through digital-led, domain-enabled solutions that drive innovation, and digital-enabled intelligent operations that design, transform, and run clients’ operations. For two decades we have been generating impact for clients including the Fortune Global 500, employing 77,000+ people in 20+ countries, with key offices in New York City, Palo Alto, London, and Delhi. For additional information, contact, [email protected] and visit, http://www.genpact.com/lp/design-thinking Follow Genpact on LinkedIn, Twitter, YouTube, and Facebook. © 2017 Copyright Genpact. All Rights Reserved.

118066_A_DesignThinkingInProcessOperations_US_071718 GENPACT | Article | 16