Design Thinking - the next methodology for BPO modernization? HfS reports

Den Howlett Profile picture for user gonzodaddy January 25, 2016
Design Thinking is one of the cornerstones of the As a Service economy. How is it going for the business process service providers?

As a service journey

If you've not been introduced to Design Thinking then you're not alone. Today, Design Thinking is a relatively minor sport among buyers and practitioners. The IT services and business process outsourcing community is starting to grab the concepts with both hands as they get squeezed by the twin demons of a downturn in 'lift and shift' operations accompanied by a squeeze on rates. It doesn't help that the once vaunted labor arbitrage advantage coming from the largely Indian based operators is fast evaporating. It is in that broad context, combined with the business shift to an 'As a Service' economy that we see HfS Research deliver its first Design Thinking Services report.

It's important to note this is early days and HfS will say that Design Thinking is but one step in the transition to 'as a Service' operations. Check out the graphic at the top of this story to get a sense of what that means. From the accompanying text:

Design Thinking for outcomes is a real methodology that enterprises can understand and embrace today, as opposed to five years’ time. However, while we believe Design Thinking will firmly take root in IT and business services in 2016 as a methodology to drive genuine collaboration and creative ideas, at the end of the day, it is still just another tool. What you make of it depends on the intent and practices of its users, whether individuals or organizations.

HfS is right up to a point. The IT services and BPO market is well used to Lean and Six Sigma methodologies for the development and execution of best practices but those are really about rear view mirror thinking. Anytime I hear the expression 'best practice' I shudder because I know that in reality, a best practice is rooted in the accumulated knowledge of the past. That's not how today's and the future economy is going to work. Today and into the future, business leaders will need to be looking ahead and this is where Design Thinking has a much better intellectual fit.

Solving for unknowns

While I agree with the report authors that Design Thinking is a methodology, I am equally aware that the concepts that surround it assume that we don't necessarily know what problem we're trying to solve. The business may for example think it has problem X but rather than solving for X, Design Thinking demands that you examine the problem from a different perspective. What do I mean?

Any business problem, whether that is talent acquisition or supply chain optimization usually starts with something like: 'We need to automate X - that's our problem. We need to be more efficient.' Sure, there are plenty of ways in which that can happen but does the obvious solution critically examine the piece parts that are giving rise to [name your problem here]? Do users, who are very often omitted from process design, get consideration around the use of solution X? Does the solution make the best use of available resources? In short - are we truly optimizing or simply squeezing a few bucks per transaction out of the problem?

In the scenarios that I have seen described by practitioners who have reported success, Design Thinking takes a much more challenging approach that you can almost look at as akin to first principles. In some cases, that has led to the development of solutions that answer an entirely different problem to the one the business thought it needed to answer. In other cases, the enhancements have delivered quantum benefit as a direct result of looking more critically at the topic. This does not happen by magic. So to me, while I agree that Design Thinking is a tool, it is one that implies considerable flexibility and malleability. In short, Design Thinking should not constrain the solution in the same way that a rear view, cookie cutter process might imply.

Soft skills needed

The report identifies a number of characteristics that define Design Thinking. The most crucial from tis perch is that Deisgn Thinking is:

An iterative process: Empathy is the cornerstone of design thinking and helps in creating prototype solutions. This becomes more iterative in nature until the right solution is found.

In short, Design Thinking is not a destination but a journey that requires skills which really have not been part of the consultant toolkit of the past. End user engagement? Listening to needs? Hmm - yet that is exactly what Design Thinkers are required to accomplish.

It should therefore be no surprise that the report finds a significant readiness gap among buyers, despite believing joint sessions using design thinking for innovation could have a significant impact on trust and engagement with service providers (63%).

Having said that, the report strikes a hopeful note with 42% of buyers ranking the ability to accomplish creative problem solving as having significant impact after investment in analytic tools.

Runners and riders

design thinking hfs

Inevitably, HfS calls out a group of IT services and BPOs, assessing their ability to deliver (see graphic above.) What's striking is that the report implies a clear divide between those providers HfS believes are on the 'right' path to Design Thinking adoption. Once again, we can infer that it is early days because the most recent crop of business results from the outsourcers tells a different story. We know for example that Cognizant is growing at a faster rate than its immediate competitors and while Infosys recently gave the market something to smile about, IBM has its work cut out to revitalize its services business. It is worth noting that Infosys has done remarkably well according to the report, given that Design Thinking was barely on the company radar 18 months ago. I guess it speaks volumes that an aggressive approach to training internal resources in Design Thinking has a a demonstrable impact on reported outcomes.

My take

Anecdotally, we hear that a growing group of companies are at least curious about Design Thinking but those we have spoken with are skeptical that providers have the creative skills to execute. The common thread? Is it in their DNA to the point where I can say it is more than a fad that sounds cool? The proof as always is in the consumption and outcomes. HfS reports a variety of buyer vignettes that speaks highly of outcomes where they have been successful. Elsewhere. I have seen cases where outcomes have been remarkable and, in some cases, could not have been achieved without a Design Thinking approach.

As I said at the top of this story, Design Thinking is in its early stages of acceptance but the report implies that it is getting plenty of attention. I agree that providers have much work in front of them to convince customers and end users that they are serious about delivering delightful experiences out of digital technologies. It will be instructive to see how the landscape evolves over the next 6-12 months. But in the meantime, the report provides a solid primer for those new to the game and solid encouragement for those that have tasted the fruits and found them to be good.

Graphics by permission of HfS

Disclosure: Infosys is a premier partner at time of writing. 

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