White Paper 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 oce 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