Digital strategy for the algorithm economy

Whitepaper
April 2017
Executive Summary
As Apples CEO Tim Cook said, No one likes
rotten milk. It has to be fresh. You cannot wait
years to deliver what your customers and users
want. It is speed that gives a competitive edge.
From manufacturers to technology companies, todays marketplace calls
for every company to be a high-tech company. The evolution of
e-commerce, mobile, cloud, and robots combined with rising wages and
skilled labor scarcity has greatly contributed to technology becoming a
prevalent part of the modern business model.
As mobile device popularity increases, digital experiences are more
important than ever for your customers. Design and user experience now
play a much deeper role in the successful integration of technology into
business. Your customers and users are expecting amazing experiences
quickly and easily and you must understand both the functional and
emotional needs of the user to give it to them.
The proliferation of mobile devices and the need for presenting complex
information on a small screen have accentuated the importance of design
in every software application. Simply dumping what you have in your ERP
systems and databases with lousy user experiences have ended up with
apps that no one wants to use. New business models have been emerging
solely based on design.
On one hand, enterprise IT teams have numerous opportunities to improve
business performance by taking advantage of the latest technologies. On
the other hand, IT executives are struggling to justify the cost of IT
investments. Good design has been a foreign concept so far. In our
conversations with many IT executives, weve observed that IT teams are
facing challenges in understanding the value of design, in laying out a
business use case, and in knowing how to integrate design into their
products and services. In this white paper, we help you understand the
value of design thinking and oer ideas on how enterprise IT teams can
leverage design thinking to spur innovation and give a competitive
advantage to your organization.
Design inspired by observing real people in their real lives is not new.
Fashion designers have long relied on this method to oer what their
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customers really wanted. Now, it is the IT teams turn to embrace design
thinking in their products and services to oer compelling user experience
and customer support. Poorly designed tools have resulted in lost
business. When needs are not met by your company, customers will ock
to your competitor.

As Apples CEO Tim Cook said, No one likes rotten milk. It has to be
fresh. You cannot wait years to deliver what your customers and users
want. It is the speed that gives a competitive edge.

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1. What is
Design Thinking?
Design thinking helps you seek a balance
between intuition and analytics, between
exploration and exploitation, between
reliability and validity, and between art and
science
Roger Martin.
Design Thinking is about achieving a deeper understanding of your users,
of the products and services, and uncovering valuable insights.
Understanding your users and customers functional and emotional needs
is an essential skill to thrive in the digital age.
Before learning about what design thinking is, let us understand the
complexities and challenges faced by businesses. Traditionally, enterprise
software products are built from a business analyst perspective,
engineering perspective, or enterprise software vendor perspective.
In sum, in the world of ERP Software, the user experience part is ignored
at the expense of functionality and features. As a result, multi-year,
multi-million dollar ERP projects have not lived up to expectations. Though
these projects were successful in terms of features and functionality,
theyre a big failure in terms of user adoption and achieving an overall
return on investment (ROI). It is assumed that the user needs to be trained
extensively and master the product. This assumption results in
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 disconnected and disparate workows and poor user experience. Users
try to avoid the new software and nd workarounds with manual steps
leading to poor ROI on software investments.

Design thinking is a paradigm shift in solving problems and innovating.

Your customers are not just looking for a product or a service, but also
expecting amazing experiences along with them. Using empathy to put
users, customers, vendors, employees, and business partners at the
center of problem-solving is the main foundation of design thinking. The
design is more than making buttons pretty. Its about helping users get
things done in the most eortless way possible. Whether it is a software
tool, a check-in process at a hotel, a landing page of a marketing cam-
paign, or optimizing the sale process, design thinking enables you to
transform your organization.

Often times, design is not just about colors, look & feel. The design is not
just limited to websites, products, or fashion. Design extends to how a
customer experiences service or even how a government serves its
citizens. For IT Teams, design is about achieving the full potential of
software applications.
Design thinking helps you seek a balance between intuition and analytics,
between exploration and exploitation, between reliability and validity, and
between art and science Roger Martin.

A New Kind of Leadership

Design Thinking is being used to
create strategic visions,
new markets and
new customers
behavior

Source: McKinsey Digital Labs

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2. How does design
thinking work?

Design Thinking is an iterative (non-linear), collaborative (cross functional)

process and consists of ve main phases: 1. Empathize 2. Dene 3. Ideate
4. Prototype and 5. Test.

Imagine the ideal

Understand the problem space Create the solution

360
Scoping Synthesis Ideation Prototyping Validation Implementation
Research

Problem Definition Data Insights Ideas Low-Fi / High-Fi Blueprint

Project Plan Design Principles Concepts Prototypes

Creating Making Creating Making

Choices Choices Choices Choices

Source: Stanford D.School [7]

Empathize:
Empathy for the end user is at the heart of design thinking. In this phase,
you observe user behavior and context, interact, and immerse yourself.
The primary goal of empathy is to empower the designer to understand
the people who you are designing the software for. In order to create
awesome end-user experiences for your applications, you need to
understand the experience of solving a business problem from a rst-hand
perspective. Whether its a sales representative engaging with a customer
or an executive trying to run the business while on the go, directly

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observing the user has no substitute. By observing rather than asking or
telling, you create a valuable opportunity to learn insights about the
users emotional and contextual needs. You learn what they think and feel.

By interacting with people, you can uncover insights that are hard to
notice otherwise. Usually, people cant express their needs eloquently and
do not even realize that they have a need. These surprising insights will be
the dierence between a solution people would love to use and a solution
to try and bypass at every opportunity they have.

While observing and engaging with users, it is important to capture user

ease of access to the solution and their experience. For example, a leading
cleaning solutions provider, one of our prestigious clients, asks every
project member to ride along with its service sales representatives for a
full day of immersive experience. They observe, interact and take notes.
This ride-along approach has helped everyone in the project team from
designers, developers, and leadership understand the users context,
behavior, and their needs.

Define:
The dene phase helps you identify the actual business problem. In the
world of IT, you dene the app or the software tool that must be built in
order to solve the business challenge discovered during the empathize
sessions. An unfortunate result of conrmation bias is solving a wrong
problem and providing a wrong solution. With design thinking, you can
avoid this trap by synthesizing the ndings from the empathy phase.

Dene phase is important because it helps you explicitly state the

business challenge that you are trying to provide a software solution for.
This phase enables you to come up with a concrete understanding based
on the observations made during the empathize phase in order to come up
with an actionable problem statement: your point of view (POV).

In our experience of practicing design thinking, in this phase, IT teams

either identify the modules in a software tool or role-based mobile apps
that solve a particular business challenge. Also during this phase, you need
to put together a strategy with a road map of solutions which could

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A picture is worth 1000 words. A Prototype is
worth a thousand ideas.
include mobile apps or tools to develop. As it is not practical to develop all
the solutions right away, you can start with a solution that has the highest
ROI or business need.
Ideate:
In the ideate phase, you need to produce as many ideas as possible to
solve the business problem identied during the dene phase. This phase
is also the time to develop an architecture for the solutions. IT architecture
could involve buy vs build decision, platform to build upon decision, and
assessing the strengths and weaknesses of existing team. In this phase,
ideas should be as wide and as radical as possible. Every idea is worthy to
consider and its too early to dismiss any idea.
We ideate to look beyond what is obvious. Sometimes, you could ask your
users about ideas on how to solve problems. In Algarytms experience, this
has proven to be a powerful method. During our design sessions, power
users or hacker users (users who hack to get things done and do not wait
for corporate IT to give them a solution) who nd workaround apps and
tools to solve their business problem are the best bet to gather ideas.
Prototype:
Prototyping is converting ideas and thoughts from an abstract form to a
concrete form. For Enterprise IT, this could be a wireframe development
using tools such as Axure, iRise and Justinmind. Prototyping allows you to
test the ideas. One of the main goals of the prototype is to make it
interactive, elicit feedback, and quickly adapt the feedback. For example,
you could develop a prototype, simulate it to the end users and ask the
users to use the prototype as though it was a real solution. Though the
prototype would not look like a real solution with all the bells and whistles,
it would still reect the progress you made during the empathize, dene
and ideate phases.
In this phase, you will learn how close the prototype is to the real solution.
Is the user experience close to what users expect? Does the prototype
have all the desired features and functionality? And, are all of the UI elds
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Source: McKinsey Digital Labs.
Prototype as if you know are right, but test as
if you know you are wrong D.School Design
Thinking Philosophy.
in right place? A major benet of prototyping and taking feedback is to
develop successful products with profound empathy for the users.
Developing wireframes for apps using tools such as Justinmind takes just a
few days and costs almost nothing. This way you can fail cheaply and
quickly and deploy lean methodologies in your organizations software
development.
Test:
Design A BRAIDED DESIGN MODEL
Frame
Strategy
Map business opportunity and strategy based on
market and organizational factors.
Technology Trendscape; identify user needs and
dene experience principles.
Identify technology developments; assess current
technology enviroment.
Cocreate
Reframe problem statements based on
customer feedback
Dene value proposition.
Conduct workshops with customers and experts
to cocreate optimal experience
Identify data and technology.
Prototype
Build rapid prototypes
Iterate design as required with customer feedback
Create technology-development (agile) plan
Build business case
Validate
Test usability
Assess technology, process, and organizational
needs for realization.
Validate with overall business strategy
Govern
Role model best-practice innovation process
tied to business strategy
Build governance model for ongoing investment
and evolution.
Testing is the phase where you test the proposed solutions, continue to
gain feedback from users and rene the proposed solutions. Testing does
not need to be the nal phase. Design thinking is a non-linear
methodology and you can go back to any relevant phase to rene the
solution.
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3. How Businesses Benefit
from Design Thinking

Large companies such as Google and Apple have incorporated UX design

as a centerpiece of their successes. Heres why: The Institute of Electrical
and Electronic Engineers (IEEE) released a report in 2005 titled Why
Software Fails. The report notes that up to 15% of IT projects are
abandoned and developers spend approximately 50% of their time on
rework. It is common knowledge that the cost of xing an error after a
product is in the eld is approximately 100 times the cost of xing the
same error(s) before the product is released.

"Chief Information Officer" to "Chief Innovation
Officer".
From startups such as Airbnb to large organizations such as Pepsi and
IBM, all are leveraging design thinking to understand what their customers
truly care about, why they care, and how they want to experience a
product or service. Business benets are myriad from lowering risk in
projects to rethinking corporate strategy.
Design thinking bestows your organization to focus more on problem
nding and less on problem- solving leading to a bounty of innovative
ideas. Technology itself does not lead to the simple customer experience.

3.1 Simplification
In an ever growing complex technology landscape, simplicity is the need
of the hour. Clunky UI, complex instructions and too many clicks are no
longer tolerated by users. Great design reduces the friction between the
user and the application. The user interface becomes simple and beautiful.
By discovering peoples unmet needs through rapid prototypes, you can
oer solutions that are designed by end users. Straightforward and
aesthetically pleasing products are compelling to use and more relevant in
the mobile rst world. Simple solutions are easy to use and get the work
done. For example, a well-designed marketing landing page from your
company could be the dierentiating factor between your rm and the
competition. However, in Algarytms experience, weve found that some

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 enterprise software developers do not even know who the end user is.

3.2 Acute problem identification

The design thinking approach to problem-solving does not jump right into
the solution. It mandates you to determine whether the problem itself
exists to start with and whether it is the right problem to solve. An
in-depth understanding of the problem itself enables you to prioritize the
challenges of the business. Frequent complaints we hear from our
customers are that there are way too many priorities, and software
projects have no clear idea on the ROI. In order to avoid this, embrace
design thinking. The design thinking process does not assume the problem
as given. Instead, you are asking intelligent questions of the user and
ensuring that the correct problems are being addressed with a clear focus.

3.3 Foster innovation

Desirability
What we are People
Innovation
traditionally been
Opportunity
good at

Feasibility Viability
Technology Business

One of the biggest benets of design thinking is fostering an innovation

culture in your organization. At the intersection of peoples needs,
technological feasibility, and business viability, design thinking empowers
you to create innovation opportunities. In order to innovate, it is necessary
to learn what your peoples needs are. You can then satisfy their needs in
Source: Design Thinking public domain
the most innovative way by generating as many ideas as possible.

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 Innovation does not happen in isolation. It is universally known fact that
innovation needs dierent ideas from dierent areas of an organization.
When cross-disciplinary teams collaborate to solve a problem, they tackle
the problem from dierent perspectives leading to an innovative solution.

This not only results in an accumulation of ideas but also sends an

important signal that you are creating an open culture where everyone
could share their ideas without the fear of criticism.

Simple and usable tools and applications improve your customers and
users experience in engaging with your organization. Whether it is
retrieving information for one of your products, placing an order, or
requesting support, true understanding of your customers and users
enables you to win hearts and wallets.

3.4 Higher Profits & Shareholder

Value
Design oriented products and services not only create the amazing
experiences that customers expect, but they also generate higher prots.

A $10.000 investment in our design index of diverse design-centric companies would have yielded returns 228% higher than the same investment in the
S&P over the same amount of time.

$45K
DMI DESIGN CENTRIC INDEX $39.922,89
$40K DESIGN CONSCIOUS
D.INDEX COMPANIES
APPLE
$35K COCA COLA
FORD
$30K
228%
HERMAN MILLER
IBM
$25K INTUIT
NEWELL RUBBERMAID
$20K NIKE
S&P INDEX PROCTER & GAMBLE
$15K STARBUCKS
STARWOOD
$10K STEELCASE
TARGET
$17.522,15
WALT DISNEY
$5K WHIRLPOOL
JUN 03

DEC 03

JUN 04

DEC 04

JUN 05

DEC 05

JUN 06

DEC 06

JUN 07

DEC 07

JUN 08

DEC 08

JUN 09

DEC 09

JUN 10

DEC 10

JUN 11

DEC 11

JUN 12

DEC 12

JUN 13

DEC 13

Source: Design Management Institute

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The companies
comprising our
DESIGN INDEX COMPARED TO S&P INDEX
design index FULL PERIOD BULL MARKET BEAR MARKET CURRENT PERIOD
outperformed the (10/09/02 - (10/09/07 - (03/05/09 -
10/08/07) 03/05/09) PRESENT)
S&P over a 10-year
period encompassing Design-Centric index
a bull market
+299% +112% -28% +222%
(October 9, 2002 - ABSOLUTE
October 8, 2007), a PERFORMANCE S&P index
bear market (October
9, 2007 - March 5, +75% +67% -37% +99%
2009), and the
current period DESIGN-CENTRIC
(March 5, 2009 - INDEX
present). PERFORMANCE +224% +45% +9% +123%
RELATIVE TO S&P

Design Management Institute, in its

Source: Design Management Institute

study on design thinking, discovered

that design oriented firms such as
Apple, Starbucks, Steelcase, and Walt
Disney outperformed S&P index by
224% over a 10-year period from
2002.
"In 2005, the UKs Design Council discovered that every 1 spent on
design led to more than 20 in increased revenue, 4 increased prot and
5 in increased exports. An even earlier study, by Julie Hertenstein and
Marjorie Platt, examined 51 rms in four industries, using 12 dierent
measures of nancial performance across ve years, and concluded that
rms rated as having good design were stronger on virtually all measures."
- HBR.

3.5 Command Brand Loyalty

Design oriented companies with a true understanding of their customers
preferences, tastes, hobbies, and culture are commanding a strong
customer loyalty. It is a well-known fact that emphasis on design was a
signicant factor in Apples success. Needless to say, Apple's products are
of high quality, simple to use and elegant. Apple did not just provide a
product or a service. It created superb experiences for its customers. By

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creating amazing experiences, Apple has created a cult-like fan following
for its design-oriented products.

Strong customer loyalty fetches a premium for the products or services,

which results in improved nancial performance. Whether it's the
company's customer-facing commerce web-site or a customer support
mobile app, Enterprise IT teams have a great opportunity to improve the
design of these products and turn customers and users into loyal fans.

3.6 Streamline business processes

Even though frameworks such as Six Sigma could streamline operations
and business processes, by combining technology solutions and insights
learned from users, IT teams could take the eciency of operations to
next level. Streamlining a business process plays a critical role in creating
amazing digital experiences.
With insights and feedback learned from users during design thinking
sessions, you have an opportunity to eliminate manual steps and automate
possible steps. One of Algarytms clients, a wholesale distributor,
transformed its reverse logistics business process by embracing design
thinking.
The distributor discovered that returns are important to its customers and
they expect a smooth and streamlined process when they change their
mind about purchases.

Example:
A leading global mining companys customer support process was
inecient. Mineworkers call the call center, the call center contacts the
engineers and the engineers go to the mining site and x the issues. This
whole process was taking longer than a day and mines were losing $1M to
$2M worth of productivity while critical machinery was down.

By developing a technology solution that automatically routes the calls

from mine workers to engineers, lead time to respond and x customer
issues were cut down to a few hours. With project management
methodologies such as Agile, IT teams have contributed tremendously to
the business transformation. Introducing design thinking and spreading it
to other business functional areas should follow the same approach.

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 3.7 End to End Integration:
Hardware/Software/Service
integration
Customer experience involves hardware, software and service.
Approaching a problem from peoples needs rather than a solution will
help you oer a holistic solution that meets their complete needs.
Alternatively, a solution can be oered from just one perspective that is
truly not integrated. An incomplete solution that does not integrate the
entire workow of the end user will result in a solution that meets the
needs of the user in isolated parts and leave them to complete the
workow on their own. This is risky because some users are tech savvy
and some not. When you focus on experience, you will consider software,
hardware and service and ensure all parts are working together cohesively.

3.8 Gain competitive advantage

The design of business

The Knowledge Funnel

Mystery
It starts with a question, intuition, curiosity

Heuristic
Open-ended rule of thumb, incomplete but
helpful for organizing data

Algorithm
Full description of the observation,
predictive and rational

Source: Roger Martins, The Design of

Business.

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 According to Roger Martin of the Rotman School of Management at the
University of Toronto, businesses have to reconcile the two prevailing
modes of thought: Analytical Thinking and Intuitive Thinking. In his view,
design thinking is a discipline that balances analytical mastery and intuitive
originality. Design thinking is the form of thought that enables fast
movement along the knowledge funnel as shown above. Firms that master
design thinking gain an endless competitive advantage as they move
quickly from exploration to exploitation.

In the rst stage of the funnel above, you explore a mystery. This could
take any form: CFO brainstorming on how to realize a positive return on IT
investments, an IT manager struggling to improve user adoption of the
enterprise applications, or a Marketing executive wondering how the
rms e-commerce website could reduce abandoned shopping carts.

The next stage is heuristics. A heuristic is a rule of thumb that helps

narrow the possibilities and reduce the mystery down to a manageable
size. In this phase, you identify patterns. For example, you could
understand why shoppers are abandoning the shopping carts after they
add products to it. In this phase, you learn about the customers buying
journey and his or her persona.

Developing an algorithm or a xed formula is the next step in the funnel.

This xed formula or an algorithm could be a mobile app to improve
customer experience to the challenge of abandoned shopping carts.

When a rm focuses purely on exploiting its original innovation, it is not

ready to respond when disrupters arise to potentially introduce new
innovative solutions. Either it is too late or the culture of innovation is
simply too hard to nurture. On the other hand, when rms focus solely on
innovation, they do not reap the nancial benets of the innovation. This is
because the rm does not know how to translate the innovation into
prots. Both exploration and exploitation can generate tremendous value
but are harder to pursue at the same time.

At the heart of design thinking is abductive Roger Martin says the answer is design thinking. As he adds, design
logic, which sits squarely between the past
data-driven world of analytical thinking and
thinking is a third form of thinking that combines intuitive thinking and
the knowing-without-reasoning world of analytical thinking. In his book, Roger Martin says, At the heart of design
intuitive thinking.
thinking is abductive logic, which sits squarely between the past

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data-driven world of analytical thinking and the
knowing-without-reasoning world of intuitive thinking. Design thinking
powers the directed movement of a business through the knowledge
funnel from mystery to heuristic to algorithm and then through utilization
of the resulting eciencies to tackle the next mystery and the next and
the next.

3.9 Reduce costs

According to several reports, 50% of developers time is spent on
correcting defects and bugs.

3.9.1 Product development costs

In Design Thinking, users of a product or a service are involved from the
beginning. When a prototype is quickly iterated multiple times and
feedback is gathered from all stakeholders, you are not leaving any chance
for miscommunication. Business requirements need to be changed during
development. Product Managers, Business sponsors, end users, and
Developers have to be on the same page. This results in high-quality
products achieved at a lower cost.
Otherwise, if you gather feedback long after development and testing are
done, costs will be signicantly higher than when you need to change
after the product or service is in the hands of the user.

3.9.2 Reduce risk

Many IT projects do not deliver the ROI as expected. They either fail
because they are late or because they do not meet the end user
expectations.
With design thinking, you develop a prototype that is very close to the
actual product and test it with users.
A well-dened project meets the deadlines and you can deliver the
project on time and on budget.
End user personas, wireframes, and quick iteration of prototypes eliminate
confusion and complexity.

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3.9.3 Smoother change management
transition
For any product or service, adoption is the Holy Grail. After a project is
developed, change management is one of most signicant undertakings
for IT organizations. Eective change management is essential to
transition the stakeholders to new processes and tools. Yet, change is
profoundly hard. Large and transformative projects are very slow to gain
traction because new tools are harder to use, and no amount of training is
sucient to bring people up to speed. With simple to use products or
services that are designed as per the functional and emotional needs of
end users, you could smoothly manage the changes. When the customer
or user is involved from the beginning, he/she shapes the problem
denition, the design, and the destiny.

Furthermore, with design thinking elements such as day in the life of a

user, storyboards, and personas, users will be eagerly ready for a change.

3.10 Amazing customer experiences

Accentures 2013 Global Consumer Pulse Survey showed that 51% of U.S.
consumers switched service providers in the past year due to poor
customer service, up 5% since 2012.

Amazing customer experience is one of the key dierences between new

generation companies such as Google, Amazon, Starbucks and Nike, and
old guard. In the digital age, how a product or a service helps user achieve
a desired result is more important than a pointed solution that is superior
is one aspect but overall experience is inferior. Design thinking helps you
approach a business challenge holistically.
For example, e-retailers such as Amazon are not only known for their
order fulllment and delivery but also known for their easier and
integrated reverse logistics. Designers could create amazing customer
experiences by bringing together interdisciplinary teams such as sales,
marketing, customer support, IT and user experience. An end to end
workow involves all these departments and could result in a complete
experience for the user.

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 3.11 Build high quality software and
eliminate technical debt
Sucient amount of messy code may bring whole engineering
department to a stand-still, Sven Johann & Eberhard Wol, INFOQ.
In our decade long careers, we have observed that it is very rare that a
development team has a deep understanding of the users true needs.
Many times, we developers do not know who the users are. Concepts
such as storyboards and personas are foreign, especially in ERP projects
that follow waterfall methodology. In this process, development teams
accumulate huge amounts of technical debt that cripples them later
during maintenance and scaling of the apps. The design thinking process
enables you to have a deep understanding of the user by leveraging
storyboards, personas and wireframes. When you rapidly iterate the
wireframes with the users, you are taking your understanding to a next
Sufficient amount of messy code may bring
whole engineering department to a stand-still,
level.
Sven Johann & Eberhard Wolff, INFOQ

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4. Case Studies

Airbnb- From near collapse to

conquering the market
From a near collapse to conquering the market, Airbnb attributes its
market dominance to user-centred design.

The accommodation sharing start-up is now valued at $20 Billion. But, in

2009, this start-up was about to go bust at $200 revenue per week with
the founding team maxing out their credit cards. This start-up did not see
any light at the end of the tunnel.

As the Airbnb team was trying to gure out what went wrong, they
discovered that all of the photos for their listings were low quality and
unattractive. There was a similar pattern across all rental property
postings. Potential renters were not booking the properties because they
were not sure what they are paying for from the poor quality photos.

To x the problem, Airbnb decided to spend time with customers posting

Going out to meet customers in the real world
is almost always the best way to wrangle their the rental properties. They replaced the amateur photos with high-quality
problems and come up with clever solutions
photos and a week later results were in. Just by improving the pictures
Joe Gebbia of Airbnb in an interview with
FirstRound. quality revenues doubled to $400 per week. The Airbnb team declares
this was a turning point for their edgling start-up.

Hyatt Hotels - Transforming the Guest

experience
Hyatt Hotels Corporation is an American hotel operator with 627 hotels
worldwide and around $4B annual revenue. When Hyatt decided to stand
out in the crowded luxury hospitality industry, it realized it could achieve
this goal only by creating amazing experiences for its guests. As a rst
step, Hyatt determined it needs to be more approachable to guests and
not hide behind the desks.

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In an interview with Computer World, John Prusnick, Director of IT
Innovation and Strategy, explained how Hyatt Hotels outlined design
thinking that was embraced by the whole company to achieve its goals.

When they were pondering over how the guest experience could be
transformed, they set up eight lab hotels around the world. At Chicagos
Ohare Hyatt hotel, they equipped hotel agents with iPads to nish the
check-in and check-out process. This has improved the processes but was
not as transformational as Hyatt expected. Guests were congregating at
the front desk and queuing up to check-in. During the design thinking
process, Hyatt gured out that guests were actually waiting at the airport
to catch a shuttle bus. So, Hyatt moved its agents from the hotel to the
airports shuttle bus lines and processed the check-ins there. At rst,
customers thought this was unbelievable and wondered whether they
were some sort of VIPs. Guests were amazed and thrilled that they were
given the hotel keys right at the airport and could just walk in straight to
their rooms, upon hotel arrival.

To transform the guest experience further, Hyatt taught all its sta, from
CEO to cleaners, the process of empathizing with guests by learning how
to better communicate with them and what motivates them to fully
understand their expectations and complaints.

Through design thinking, they were able to come up with a more

approachable, less hiding approach of interaction between guests and
hotel sta. In doing so, theyve succeeded in keeping the hospitality
aspect alive in the hospitality industry, which has given them a step up on
the competition.

VMware/Citrix - Innovating through

Virtualisation
In an interview with McKinsey, Catherine Courage says she championed
user-centric design not just for the companys customers but also for its
internal employees. As a VP of customer experience at Citrix systems, she
says they are in the 5th year of spreading design thinking to its products,
and internal business functions such as IT, sales and marketing.
According to Courage, Design thinking is about constant innovation,

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 simplicity and delighting users. It is about the absolute focus on the end
user.

We were not surprised when she echoed our views on traditional product
development: Usually, product organizations start with a problem and,
based on intuition about what the customers want, they race towards a
solution. One of the goals for Citrix was to ensure they were creating
delightful experience across all customer and end user touch points from
the use of their website to trying products, to using the products, and all
the way to customer support and contract renewal.

Citrix applied design thinking principles to its product development teams.

For design thinking to succeed, it needs to be
part of all company processes. Employees Next, they realized design thinking and empathy for users is applicable to
across the organization must consider how they
every aspect of the business. Theyve scaled these principles across the
can contribute to the customer experience.
Catherine Courage company and have currently trained over half of its 9,800 employees in a
customer/user-centric way of problem-solving.

Mint's Story: Money make sense made

simple
Mint would not have been launched had it not embraced design
thinking.

Mint is an online personal nancial management portal that helps its users
track their bank accounts, credit cards, investments and loans. Mint
connects to over 16,000 nancial institutions across US and Canada and
has over 17 million customers using its service. During its lifetime, Mint has
won numerous awards for its innovation and design. In 2009, the company
was acquired by Intuit.

Similar to Airbnb, Mint also faced an existential crisis in the beginning. But,
Mints travails were far more insurmountable. Unlike Airbnb, Mint was
asking for peoples personal bank accounts, usernames, and passwords.
This kind of nancial aggregation service from Mint was unprecedented.
Naturally, people were reluctant to give away their nancial account
information for an unknown start-up. For this same reason, many Venture
Capitalists in Silicon Valley had originally passed on the idea.
To overcome this challenge, Mints primary objective was to establish

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credibility with users through trustworthy visuals, copy writing, and
making people feel comfortable through the whole signup process.
Building trust was the name of the game.

Some of the principles Mint institutionalized were simplicity and

responsiveness. While the at design was trendy at that time, Mint used
3D designs to put special focus on important content and to reduce the
number of erroneous clicks on its app.

Furthermore, Mints designers went on to spend countless hours to create

the emotional experience for the user. These tasks included airbrushing
design elements and choosing the right color scheme to make everything
precisely right for the user. To make sure skeptical customers feel
comfortable to provide their bank information, Mint designers used
iconography related to login buttons that demonstrated a strong sense of
security.

Mints design job was not done yet. People could log in to Mint website to
give it a shot. But, the process of adding all the bank accounts at that time
was laborious and manual. It was clunky and confusing. This was a big
hurdle for the team. So, in a typical silicon valley fashion, the company
designed a way for all accounts to be synced in real-time and made the
whole process eortless by leveraging technology. This was a
transformational design decision and Mint prevailed.

IBM's Blue Mix Development

IBMs revenue was down 14% year over year and it was the 14th
consequent quarter of losses for this 100-year-old technology behemoth.
In its long history, IBM has faced many hardships, but every time, Big Blue
has successfully rebounded. IBMs main sustenance is still the traditional
software products such as WebSphere as well as hardware and consulting
services, which generate about 60% of the companys revenue. However,
this business model is vulnerable to competitors such as Amazon in the
areas of SAAS, cloud and digital platforms.

While IBM was transitioning from old economies to the new digital
economy, the challenges it faced were signicant. However, this time

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design thinking was implemented, which helped them to expedite the
transition. IBMs CEO, Virginia Rometty, said in an interview with New York
Times that people always ask, is there a silver bullet? She went on to say,
The silver you might say is speed, this idea of speed. Ms. Rometty is
pulling other levers to accelerate the pace of change at IBM, but she
asserts, Design thinking is at the center.

IBM has used design thinking to spur innovation and has bet the ranch by
investing in training almost all of its employees on how to shed old ways of
product development and to embark on the new way of user-centric
thinking.

IBM has hired more than 1,000 professional designers and much of its
leadership is going through user-centric and customer centric thinking
training. Historically, for IBM design meant creating eye-catching
products, but the denition has broadened now. It means looking at
problems through the lens of users by showing empathy for them,
researching the customer needs with real people, and building rapid
prototypes. IBMs executives were the rst to get trained on design
thinking and, per The New York Times, the company has trained over
8000 employees so far.

As one example, IBM worked with GameStop, the worlds largest video
game retailer, to build a cloud-based customer service app for their
customers. The results were stunning. GameStop has now re-invented the
retail experience in their industry with cutting-edge technologies that
allow users to purchase and download games online with a rst-class user
experience. The project was delivered in a few months and GameStop
believes IBM has exceeded their expectations.

One of the biggest successes for IBMs design thinking journey is its cloud
application platform Bluemix, a PaaS which allows to DevOps to build, run,
deploy and manage applications on the cloud. This platform went from an
idea to several thousand developers in a year, which is something that
usually takes several years. IBM attributes this success to design thinking.
IBM made developers part of the entire journey of product development.
They built rapid prototypes, tested with users, and rened the platform.
IBM now has a long list of success stories and happy Bluemix customer
testimonials.

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Disasters:
Avon CRM implementation
Avon, the beauty company has taken a $125 million loss when it imple-
mented an ERP system for its salespeople who sell beauty products
door-to-door. The predominant reason the project was failed because the
software was too dicult for the salespeople to use. It was so frustrating
that salespeople would rather quit than use the software. Although the
software worked as designed from a functionality perspective, it lacked
the usability quotient and became totally disruptive to salespeoples daily
routines. Avon lost mobs of their sales representatives and the project was
a complete disaster. While it is easy to blame the ERP software, the blame
should actually go to the people who designed the project for ignoring
users and therefore not truly understanding their daily routines and needs.
The sorry tale of Avon illustrates the importance of design. If you make
your users jump through hoops with cumbersome software tools, it drains
their energy and motivation. This leads to complete loss of productivity
and loss of people, too!

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5. How to get started
with Design Thinking?

To understand your customers, employees and vendors better, Corporate

IT must incorporate analytics into applications and measure them.
Valuable insights into users functional and emotional needs can be realized
through the analysis of demographics, usage patterns, app downloads and
other data.

Based on our experience of working with small to large companies, we

suggest you need to take a crawl, walk and run approach to getting
started with your software application design. Also, it is important to note
that you dont need to re-design all the applications that are currently
running.

Establish a Design Center of

Excellence:
If you have researched enough about design thinking and are convinced
that design could add value to your digital portfolio, you could start with
setting up a design center of excellence that is led by an experienced
designer. Your design center leader needs to have a tremendous amount
of experience in designing business processes and digital solutions.

Three required components for implementing a successful and

sustainable design CoE (Centre of Excellence) are a solid foundation of
Technology, People, and Process. When considering hiring a professional
designer, you want to nd a team with much experience in software apps
design as well as having expertise in business processes.

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Partner with Design Firms:
Reputable design rms work with organizations from all around the world
and, therefore, are exposed to a variety of dierent business challenges.
This kind of design expertise helps you hit the ground running on day one.
The frameworks and tools carried by an experienced design rm add
tremendous value.
For complex and high-stakes business challenges, design rms are
indispensable. Some of the downsides of working with pure design rms
for software projects, however, are that they are not familiar with systems
such as ERP, and they do not have a deep understanding of business
processes such as inventory management and logistics.
Its better to partner with consulting rms that provide comprehensive
services which include strategy, technology, user experience and design
thinking.

Active Feedback Loop:

Needless to say, that customer is always right. The ultimate goal of UX
designer is to provide simple solutions that customers love to use.
Contacting all customers through workshops is impossible.
Nowadays, app stores, social media, and forums open very eective
channels to connect with your customers.
Creating an active feedback loop with your customers, employees and
vendors is a non-risky approach to design thinkings way of discovering
customer insights. In this approach, you do not need to invest much and
most of the rms already have tools to gather feedback.
You can leverage existing channels such as app stores, portals, and
websites to learn more about what experiences your constituents care
about and what problems they are facing.

A few suggestions:
Monitor app stores for customer reviews.
Create dedicated websites where customers can submit ideas, discuss
features, and engage with customer support.
Reward those helping you nd bugs and submitting great ideas.
For internal apps, monitor portals such as Microsoft SharePoint and ask
your internal users to review the tools.

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 Connect with your customers by actively seeking feedback from them
through reviews, feedback on your web site, forums, and personal visits.

Measure User Experience:

Incorporate user experience analytics into all the apps. You can use 3rd

Build. Measure. Learn. You cant learn if you

party platforms such as Flurry or custom frameworks to measure success
cant measure. criteria such as user adoption, demographics, and performance.
With UX analytics, you have all the necessary information at your disposal
to prove the ROI: geographic locations, the frequency of the app usage,
what features are getting the most and least clicks, where do users get
stuck, and are they going through the process as expected?
User experience analytics enable you to understand what applications are
successful, what is the user adoption, and where features and
functionality are working.
Another major benet of having sophisticated UX analytics is to empower
IT Support teams to x production issues easily and quickly as they arise.

Work closely with Marketing & Sales:

Marketing and sales people are the front line of people who closely
interact with your customers. In these day-to-day actions, they begin to
deeply understand the important details such as what target market your
organization serves, the customers buying journey, and the intimate
dynamics between customer and organization.

Embrace Agile Project Management

Methodology:
Agile Project Management is an iterative process that focuses on custom-
er value rst, team interaction over tasks, and adapting to current business
reality rather than following a prescriptive plan.
Discover the problem, evolve quickly, and adapt are key principles of this
ideology. Outputs such as prototypes and story maps help to move quickly
towards a solution with this methodology.
It is an universal truth that technology is becoming ever more complex,

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and companies do not know how they get disrupted, or from where they
gain new competition. Rapid testing of new ideas is critical for maintaining
a competitive edge.
One of the things that design thinking enables you is to do is fail quickly
and fast, and not to be fearful of it. The more experimentation you can do
the better -Melody Dunn, IBM Design Studio

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6. How to measure Design
Thinking ROI

In the modern world of business, it is useless to be a creative original

thinker unless you can also sell what you create. Management cannot be
expected to recognize a good idea unless it is presented to them by a
good salesman, - David M Ogilvy.

Is your CFO asking you why you are spending so much money on
designing the software? If you cant quantify the benets and measure the
ROI, it is challenging to get a budget allocated to design and innovate.
One day, we all have to be accountable to the budgets we spend and
show a solid ROI. Measuring how design thinking impacts your
organization is vital to getting continued support. Although it is
challenging to measure a creative eort right after the implementation,
there are several direct and indirect ways that helps us understand
whether design thinking will yield any positive results. Anything that is not
tied to the bottom line is doomed.

New ideas: One low hanging fruit in measuring design thinking eorts is
the number of new ideas generated. While not every idea is useful and
ready for implementation, if your rm is attracting several dierent
creative ideas to solve a business problem, the sheer number of ideas
alone are a testament to the ourishing creativity in your organization.

Customer support costs:

A clunky and confusing software tool causes headaches for customers
and results in low return on your IT investments. For example, a customer
trying to place an order may get stuck and call the call center for help. If
your goal was complete self-service, these additional customer support
costs eat into your margins and could be completely avoided, not to
mention the less than favorable user experience for your customer, which
can result in reduced future revenues. We suggest you measure how

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many customer support calls you receive because of the hard to use
software tools. One useful measure would be to compare the customer
support costs before design thinking concepts were applied and costs
after products were built using design thinking.

Application Maintenance Costs:

One of the major benets of design thinking is the number of reduced
bugs and change requests. When your systems are designed using a
360-degree perspective, chances for temporary stop-gap xes are low. By
addressing all possible requirements and usability issues, the chances of
developers coding a fool-proof solution is high. As a result, a
well-designed system reduces the maintenance costs of production.

Employee engagement:
It is an IT development teams dream come true when all the users love to
use the applications and improve productivity. In fact, higher user
adoption is one of the major benets of embodying design thinking into
your software applications.
By measuring user adoption, you get an idea of design thinking impact.
Things to consider: How many users use the application? How many times
did they use a solution that was developed using design thinking vs
alternative solutions? Is the design thinking enabled solution their rst
choice?

Sales:
If you are oering an e-commerce solution to your customers, vendors, or
dealers, measuring the increased or decreased volume of sales orders
coming from the eCommerce site before and after the design is a good
measure to understand the ROI. If you are in the B2C market, you could
measure a number of clicks such as the time it takes to complete a
workow like as a sales order creation or returning an item. Telling your
CFO that sales has increased by 10% after the latest design is more
powerful than sayingusers love the e-commerce tool.

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Risk:
Many enterprises leverage waterfall project management methodology
and, more often than not, business requirements change long before the
end user uses the product. In the design thinking way of dening system
requirements, chances are high that we capture emotional and business
needs. As we have learned in the business benets section above, design
thinking reduces a projects risk signicantly and ensures the success of
large business transformation projects. By measuring how many times
requirements get changed, you can get an understanding of the +ve
(positive/negative) outcome of design thinking.

OCM: Measuring and quantifying change management eorts is hard and

tricky. Still, you can compare the amount of change eort it took with an
old tool or application versus with a new tool for which design thinking
was applied. A tool that is well designed would take signicantly less
change eort, saves money, and increases adoption.

Conclusion
Software needs design thinking. In this digital age, many people think that
software can create miracles. But, the reality is that the magic only
happens when the right relevance and usability are factored into the
programming. Asking the right questions and solving the right problems is
at the core of design thinking and at the core of the eective software.
When design thinking is part of the discovery process as well as the
development process, user-experience is elevated as well as functionality.
These all translate into competitive advantages and increased revenue.

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About Algarytm

Algarytm is an award winning mobile solutions provider trusted by

companies like ABB, Medtronic, Tennant Co, Kraft (Mondelez), Hallmark,
and Hunter Douglas, with simple yet transformational solutions that
people love to use. By combining ORACLE ERP software and mobile
solutions with over 100+ mobile app project implementation experience,
Algarytm helps organizations redene and reinvent business processes
across the wholesale, retail, manufacturing, nance, transportation and
logistics industries. Focusing on enterprise mobility with a heavy emphasis
on design thinking, performance, and security, Algarytms complete suite
of 100+ mobile solutions help customers lead the algorithm economy.
Algarytm is a proud partner of Capriza, Microsoft/Xamarin, Airwatch,
Ionic, GOOD, Oracle, and SAP.

Testimonials/Case Studies
Are you ready to put design thinking to work in your business to create
more delightful user experiences, solve problems, increase ROI, and up
your digital game? email us at sales@algarytm.com so that we can share
some ideas on how these strategies can be implemented into your
business model to help you gain competitive advantage.

"The information provided within this eBook is

for general informational purposes only. While
we try to keep the information up-to-date and
correct, there are no representations or
warranties, express or implied, about the
completeness, accuracy, reliability, suitability
or availability with respect to the information,
products, services, or related graphics
contained in this eBook for any purpose. Any
use of this information is at your own risk."

Visit us:
www.algarytm.com

Algarytm 33
About the Author

Raj Peddisetty is a Digital Transformation advisor at Algarytm. Raj is a

seasoned practitioner of Design Thinking, User Experience in Mobile,
e-commerce, Cloud and Marketing automation.

Raj brings 11 years of experience in SAP, Oracle for industries ranging from
Wholesale, Retail to Manufacturing and Healthcare.
Raj has worked as a consultant, architect, developer for system integrators
such as IBM, Accenture, Capgemini, SAP, CSC. Raj has helped global
business transformation projects for Fortune 500 clients such as Wyeth
Pharmaceuticals, The Dow Chemical Company, Colgate Palmolive,
National Gypsum, Medtronic, The Patterson Companies, Harland Clarke.

Raj has an MBA from the University of Chicago Booth School of Business
and is certied in Design Thinking by IDEO.

References:
https://www.youtube.com/watch?v=zmmXZyge3SU
http://firstround.com/review/How-design-thinking-transformed-Airbnb-from-failing-startu
p-to-billion-dollar-business/
http://firstround.com/review/Head-Designer-of-Mint-on-Why-Great-Design-isnt-about-Ma
king-Things-Pretty/
http://www.nytimes.com/2015/11/15/business/ibms-design-centered-strategy-to-set-free-
the-squares.html?emc=edit_tu_20151116&nl=bits&nlid=65983784&ref=img&_r=0
http://www.computerworld.com/article/2486278/it-management/how-to-balance-mainte
nance-and-it-innovation.html
http://andrewchen.co/product-design-debt-versus-technical-debt/
http://creativecommons.org/licenses/by-nc-sa/3.0/

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