These five influential CEOs are leveraging design thinking to encourage innovation and creativity.
In the 45-plus-years since IBM CEO Thomas John Watson Jr. presciently said “good design is good business,” design thinking has become a pillar principle of most successful companies around the world.
According to the Design Management Institute’s Design Value Index, design-driven companies have maintained a significant stock-market advantage, outperforming the S&P 500 by 211 percent between 2005 and 2015.
We’ve covered how to incorporate design thinking into your business. Here are some examples of how design thinking has lifted companies across a diverse array of industries.
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The Hospitality Industry
You could travel the globe and still be hard-pressed to find a company with a deeper commitment to design thinking than Airbnb.
Two of the startup’s three Co-Founders are Rhode Island School of Design alumni, and the company’s experimental product development team, Samara, has even seen Airbnb branch beyond hospitality into the realm of urban planning.
The company empowers its employees to get creative by testing out small new changes that can sometimes lead to the development of major new features. In fact, during the onboarding process, Airbnb suggests new employees ship new features on their very first day to encourage creativity.
The results can be surprisingly profound; once, a new designer was asked to reevaluate the “star” function that allowed users to earmark properties on a wishlist. The designer suggested changing the star to a heart – and that simple switch increased engagement by over 30 percent.
In fact, Co-Founder Joe Gebbia – who serves as Head of Samara – says that it was design thinking that helped the company grow from a struggling startup to a $38 billion company (that is also one of the most-anticipated IPOs on the horizon).
“The good news is that there has been an incredible shift in investors’ mindset on the value of design,” he said. “And so even the people that leaders are sometimes beholden to, they are now getting it in a way that 10 years ago, trust me, they didn’t. Because we met with them and they rejected us, because they didn’t understand the value of design.
“But I feel like we, along with many of our contemporaries, have proven that design is a differentiator, that design can help you expand your business, that design is a critical component.”
Airbnb’s more traditional rivals in the hospitality industry might not have been quite as fast to incorporate design thinking into their core philosophies, but they’re making progress now.
In 2011, Hyatt Hotels connected with the Design School at Stanford University to explore how human-centered innovation concepts could improve the organization. They sent senior company leadership to Stanford’s three-day course, “Human Centered Design,” and, as the company’s vice-president of global innovation Jonathan Frolich explained, out of that came a new focus on creating caring experiences for guests and employees alike. They also turned 10 of their properties into innovation labs, where they experimented with lighting, furniture, and rooms.
And Crowne Plaza teamed with the design firm IDEO to improve the experience of its business travelers. The outcome? Ignition, a free-to-use new meeting and working experience housed in Crowne Plaza lobbies that includes meeting spaces, food, and beverage options, full service, and digital features. Also included are single-person “Pods,” “Nooks,” and “Huddles” that seat four, or a 10-person “Apartment” bookable by the hour. The spaces even offer food that is specifically intended to be eaten in meetings – in other words, non-messy meals that can be eaten with one hand that arrive on square plates meant to fit neatly next to laptops.
Meanwhile, NH Hotel Group – which operates more than 350 hotels in 28 countries – recently conducted a 24-hour “design thinking hackathon” as part of its management development program, another example of a company ensuring that all levels of leaders can learn the importance of design thinking.
The Automotive Industry
When it comes to an openness and flair for big, bold, and even sometimes bizarre ideas, few can match the audacity of Elon Musk and Tesla Motors.
So it’s not surprising that the company that made electric cars cool has been a longtime champion of the importance of design. Its industry-shifting innovations are many: showrooms in malls that resemble Apple stores rather than traditional dealerships; cars that function almost like software, with system updates beamed aloud for drivers; and, of course, sleekly designed vehicles that look like they were dropped from the future.
Much of that magic owes to Franz von Holzhausen, a graduate of the Art Center College of Design’s transportation design program. When he joined Tesla in 2008, the company’s future didn’t look particularly promising. His mission was to create a “world-class design competency” for Tesla, starting from scratch to replace the single vehicle the company sold at the time – the Roadster – with an all-new design.
The sleek and luxurious-looking Model S was revealed in 2011 and went on sale the following year. Since then, its design has barely changed. Meanwhile, the Model 3 was widely hailed upon its 2017 unveiling as another triumph, with its minimalist interior – featuring only an LCD touchscreen – gorgeous exterior, and high safety scores. In February 2019, the Model 3 passed the Chevrolet Volt to become the all-time best-selling electric car in the U.S.
And to von Holzhausen, the car’s design is crucial to its appeal.
“(The car had to be) beautiful and alluring, like a moth attracted to a flame,” he said. “You’re drawn to it although you don’t know anything about it.”
Even so-called “traditional” car companies are prioritizing design thinking.
Look no further than Ford, which hired Designer Jim Hackett as CEO. He made headlines by announcing his intention to use design thinking to keep the 100-plus-year-old automaker relevant. Among their plans, the company announced a billion-dollar-plus project to transform the dilapidated Michigan Central Station and make it the centerpiece of a local revitalization.
“Design thinking is about addressing a number of layers in a problem,” he said. “We can improve the environment and get vehicles to orchestrate and harmonize.”
Meanwhile, Audi and Hyundai are among the automakers to recently open spiffy new design studios.
The World of Retail
At Swedish furniture giant Ikea, design is obviously integral to the appeal of the company’s products and stores – but it’s also deeply intertwined with their ethical and environmental mission statement.
As outlined in their annual sustainability report, all of Ikea’s products are designed according to the five dimensions of their “Democratic Design” principle: form, function, quality, sustainability, and affordability. The company even defines its nine principles of “circular design,” where goals include designing for an emotional connection, designing for an expected lifespan, and designing for adaptability.
Further, the company clearly understands a core feature of design thinking: storytelling.
“It’s like with people, the more you know each other the more attached you are. It’s the same with design,” said creative leader Maria O’Brian. “The story behind a product can be fundamental in the decision in keeping something or letting go.”
Design thinking is also assuming a more prominent role in fashion. Take Nike, whose CEO Mark Parker began with the company in 1979 as a footwear designer and product tester.
Now, the company has a team of more than 1,000 Designers. They also remain innovative and experimental with design. The company partnered with DreamWorks to build a 3D digital design system and its Nike By You Studio, which uses augmented reality, object tracking, and projection systems to allow users to make custom shoes they can then pick up just an hour later, has won over customers with its “live-design experience.”
“The intention of the project is to bring to life the collaborative design experience that we offer our athletes,” said Mark Smith, VP of Innovation Special Projects. “They love products that tell their story, so we wanted to combine that idea with a new process of live design and manufacturing that allows our guests to come into the space, work collaboratively with us, and leave with a special product in less time than ever before.”
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The Banking Industry
The financial sector isn’t always associated with free-thinking problem-solving, but in fact several of the world’s biggest banks have come to understand that design thinking makes sense.
In 2004, Bank of America asked IDEO to look at how to inspire people to open bank accounts, and after their research, IDEO’s team came up with a project that would meet the needs of people who were having trouble taking control of their finances.
The result was the Keep the Change Savings Program. Essentially, the program allows customers to round every purchase up to the nearest dollar and deposit the difference in a savings account.
The project was a hit – in fact, of all new customers, 60 percent enroll in the program.
“There was an almost unexpected and very emotional effect from this new service… people who previously never had savings suddenly did,” said Faith Tucker, Senior Vice-President and Product Developer at Bank of America during the project.
“It wasn’t the account that mattered; even a small amount of money in their savings account gave them a sense of power and control over their finances.”
Others in the industry are similarly shifting their emphasis to design. Capital One acquired design firms Adaptive Path and Monsoon, then rolled out a series of new digital features, including an emoji-enabled chatbot and GPS-tracked transaction histories, and in 2018 the company launched a 42,000-square-foot Innovation Center complete with an experience design research lab. And JPMorgan Chase hired former Yahoo design executive Tim Parsey then soon afterward updated its app with features meant to improve the mobile banking experience by weaving in local imagery.
“(We) wanted to create an experience that starts (with) emotion,” Chase’s Digital Chief Gavin Michael said. “We’re humanizing the user experience.”
The Food and Beverage Industry
When Indra Nooyi took over the role of PepsiCo’s CEO, she saw a need to shake up the sagging soda company – whose top brands were losing market share – and she said design thinking was at the core of her strategy.
One unorthodox method she employed was to give her direct reports a camera and an empty photo album she wanted them to fill with anything that represented good design. She was unimpressed by the results, and found that any time she tried to talk about design, her employees thought she was talking about packaging.
It was time to hire a Designer.
“It’s much more than packaging,” she said. “We had to rethink the entire experience, from conception to what’s on the shelf to the postproduct experience.”
“Now,” she added, “our teams are pushing design through the entire system, from product creation, to packaging and labelling, to how a product looks on the shelf, to how customers interact with it.”
The company’s sales grew 80 percent during the 12 years she served as CEO. And PepsiCo continues to prioritize design. Consider the award-winning rollout of its LIFEWTR premium bottled water brand, which launches a new series every few months featuring the work of new artists. In just over a year, the brand was valued at $200 million.
Design has always been an essential part of Starbucks’ success as well.
Although many of us probably think of the company’s growth as being continuously upward, Starbucks had to close around 600 shops in 2008 after the economy dipped and the company changed senior leadership.
After polling their customers, they discovered that many now viewed the chain as being ubiquitous in a less-than-flattering way. The company realized they needed their stores to better reflect their local environments, which posed a problem considering their Designers were all based at their Seattle headquarters.
“We couldn’t design locally relevant stores, stores that would resonate with our customers, from Seattle,” said Bill Sleeth, the company’s Vice-President of Design for the Americas.
The company now has Designers stationed around the world. They’ve also launched a series of impressive design studios to further show their commitment to design innovation.
“The push for innovation and design is just starting,” Sleeth said. “This is the tip of the iceberg.”