Friday, May 02, 2014

Applying Design Thinking to Big Data, Uber-fication, The End of Average and The Capitalist’s Dilemma



An overview of some of the compelling ideas and business innovation themes that are influencing my thinking at the moment.


Over the past year I have been investigating the topic of Design Thinking. I have been documenting some aspects of my explorations on this blog. However, I realised that I had only been considering Design Thinking as a theoretical methodology. Organisations can use its methods to address issues at all scales: from small design problems all the way up to large-scale economic and policy issues. I had not considered any potential challenges worth tackling with Design Thinking.

In my readings of the first part of this year, I have noticed some relevant emerging themes.

  1. The Potential of Big Data
  2. The Impacts of Uber-fication
  3. The End of Average
  4. The Capitalist’s Dilemma

I have selected these four themes for this post, as I think they interconnect, build upon, and influence each other. And also because they align with some of my own areas of interest. There are many other related and relevant themes and trends which I have omitted due to constraints of time.

I am interested in whether and how organisations could use Design Thinking and Service Design methodologies to address aspects of these themes. These are all macro trends and their initial connection to Design Thinking can appear tenuous at first. Yet one other key theme from my readings is that many people now believe that the insights and novel combinations delivered by the application of Design Thinking methods – and indeed by bringing the skills and mindset of professional designers to bear on a much broader range of challenges – should, in some part, contribute to the sort of idea generation, realisation, and implementation that can help organisations address today’s big challenges.

1 — The Potential of Big Data

From my perspective, it appear that we are experiencing a time of accelerating exploration and development of novel business models due to many overlapping actors and factors. Big Data is a global macro-trend that is acting as a scene-setting backdrop and enabler to many novel activities and potential innovations. Consider these sample data points.

• Beyond PC
There are already 7 billion mobile connections held by 3.45 billion unique mobile subscribers worldwide. One billion more people will soon own smartphones in the near future. Each of those devices will create extra data and contribute to the global network.
Read: ‘Postmodern Computing’ on Asymco.com.

• The Golden Triangle of Disruption
Social, Mobile, and Real-Time technologies are all aligning to cause far bigger changes than organisations had ever anticipated. These new consumer habits and expectations are outpacing current organisational structures and fractures. So organisations are having to scramble to catch up, or even just to keep up.
Read: Digital Transformation Report 2014 by the Altimeter Group.

• The Internet of Things
Everything is becoming connected. More and more devices are providing inputs into the network. Google recently spent $3.2 billion acquiring Nest which produces data-enabled devices for the home: such as smart thermostats and smoke detectors. Over 11 billion sensors are attached to the global network today, by 2020 predictions are for over 50 billion sensors. What can we do with the new kinds of knowledge arising from the patterns in all this information?
Read: ‘In Praise of Boring Objects’ by Tom Coates.

What is also intriguing is that, up to now, smartphones have only had rudimentary awareness of their surroundings. The ways that low-cost, low-energy iBeacon technologies are starting to provide an API for the offline world and close the physical attribution loop for online services means that business innovation in that area is only in its infancy.
Read: ‘On The New Edge Network and The Future of Local Commerce’ on Stevecheney.com.

Smarter Cities
Everything is becoming connected. IBM are focussing on this aspect of Big Data and public services are very invested. Optimising all aspects of city infrastructure both to bring efficiencies in city management and improvements to citizen's quality of life will only become more important as populations continue to grow.

The Quantified Self
Big Data can also be personal. It can concern our individual health. We can now generate and analyse data that encourages our own behavioural changes. "Big Data is made from Small Data." The Quantified Self is enabled by technologies such as the (just-retired) Nike Fuelband and the iPhone 5S which already has a dedicated motion-tracking co-processor. Indeed Apple are poised to bring take niche activity into the mainstream with talk of dedicated “HealthBook” features coming to all iPhones this year in iOS8 (and with their rumoured wearable product as well).

Big Data is going to spawn many new innovations in business and services. Opportunities that we are only now beginning to imagine. I believe that the Design Thinking mindset will have much to contribute in exploring potential use-cases and implementations, and can provide significant inputs at this inflection point.

But problems and negative reactions also lie ahead when the consequences of hyper-efficiency start to play out in local economies.

2 — The Impacts of Uber-fication

One significant transformative impact on businesses arising from Big Data-related innovations – which we have already entered the early stages of – is the potential for the so-called ‘Uber-fication’ of local-scale economic activities. The new category of On-Demand Mobile Services – apps, such as Uber and AirBnB, that aggregate consumer demand via mobile devices, but then fulfil that demand through offline services – could deliver multi-billion market opportunities.

While this is a technology-driven phenomenon, it would be a grave mistake to view it solely as a technology disruption. This one is going to play out at a societal level. There are two notable effects of this disruption.

On the buy-side, the levels of customisation and optimisation of services for the users is compelling and has delivered competitive advantage. This has already started to re-set customer expectations for many other services. People are becoming accustomed to buying services in ways that the end-supplier may have difficulty transitioning to. Push-back against this disruption ranges from the street level: protestors attacking Uber taxis in France and picketing Google buses in San Francisco, up to formal regulatory and governmental responses.

On the sell-side, certain services are becoming markets. Hailo’s CEO spoke at last year’s Dublin Web Summit alluding to the broader scope of the Hailo/Uber resource allocation business model. In effect, this model is accelerating the migration of many new categories of service providers to more of freelance-based, gig economy. So these models are disrupting the fundamental nature of many occupations. It may be taxi drivers and B&B owners today, but it may well be white-collar professional careers next.

Ring-fencing existing business models, and wishing things would stay the same is never a successful long-term solution. The fact that these dramatic changes to the ways that services and markets relate, and to the ways that people think about services and interact with services, are all happening right now provide many challenges and opportunities for leveraging Design Thinking.

Moving on from the disruption of service markets, let us consider the future of white collar professions and knowledge workers.

3 — The End of Average (or the Death Of The Middle)

One thing the Internet does particularly well is disseminate knowledge. In all markets the addition of knowledge allows for more discernment: we know who is the best and who merely claims to be the best. So the Internet begets Power Law differentiations. Sure, there is a long tail, but influence accrues at the head of the curve. We are only beginning to experience the fallout from the collision of society’s normal Bell curve with the Internet’s Power Law curve.

The global newspaper industry is a topical example. What is happening there is a clarification between ‘news’ and ‘newspapers’, which are not the same thing. (Although for the majority of their existence up to now they had seemed to be.) The previous economic constraints of time and place that always supported mid-tier newspaper titles have fallen away now that everyone more-or-less has access to the best of journalism. Those businesses are failing one after another. We need new business models for new entities – not revised business models for out-dated entities.


So what careers lie ahead for the tens of thousands of journalists who used to occupy the middle of that bell curve? This has huge implications for economies and societies in the long-term.

“Then think about the millions of others in all the other industries touched by the Internet who are perfectly average and thus, in an age where the best is only a click away, are simply not needed?” “The challenge of our time is figuring out what to do with a population distribution that is fundamentally misaligned with Internet economics.”
Read: ‘Fivethirtyeight And The End Of Average’ on Stratechery.com.

Design Thinking is associated with dealing so-called ‘wicked problems.’ I think these themes fall within that category. Addressing issues of those magnitudes needs new thinking. They will requires cross-disciplinary thinking and no single actor will resolve them. So the next question is: has anyone started to chart to path forward? 



4 — The Capitalist’s Dilemma

I think that businesses and policy makers could investigate and engage with Clayton Christensen’s thesis of ‘The Capitalist’s Dilemma.’ He identifies three types of innovations and observes that we are focusing on creating the wrong sort of innovation.

• The first type are ‘Empowering’ innovations. These transform complicated, expensive products that had been available only to a few people before, into simpler, cheaper products available to many. The Ford Model T was an empowering innovation, as was the PC. What is important is that these innovations create many direct and indirect new jobs for the people who will build, distribute, sell and service these products. 


• The second type are ‘Sustaining’ innovations. These replace old products with new. They are necessary to remain competitive against competitors.They keep economies vibrant, but they have a neutral effect on jobs.


• The third type are ‘Efficiency’ innovations. Efficiency innovations almost always reduce the total number of jobs within an industry, by allowing fewer people to complete the same amount of work (or even more work). The problem is that we have become so good creating at such optimising efficiencies without balancing them with new empowering innovations.


(Guess which type of innovations we focus on most within this country?)


Organisations have relied on measures of efficiency that focused on the short term, which leads them to invest in sustaining and efficiency innovations instead of funding the big ticket empowering innovations that pay off over long time frames. 


Over the long-term this pattern is problematic for many reasons. Christensen posits that, to avoid the twin perils of trapping capital in silos and decreasing employment we need to get far better at creating empowering innovations. Easier said than done.


Read: ‘Christensen: We are living The Capitalist’s Dilemma’ on CNN.com.


Aside: while we may not be kickstarting the next Manhattan Project or moon-shot anytime soon, we do need to explore some longer term projects. (What about colonising Saturn anyone?)


The way forward involves innovating our way to growth. Innovation has become a somewhat redundant term through overuse. Horace Dediu has provided us with a useful critical lens through which to parse real innovation from mere novelty.

Read: ‘Innoveracy: Misunderstanding Innovation’ on Asymco.com.

In conclusion

Global, societal, economic and cultural challenges are complex and multi-faceted. They have no single source of solutions. Design Thinking is another toolkit people can draw upon to tackle such looming, large-scale, intractable problems. Its methodologies have application to many relevant and pressing areas of investigation. Organisations, in both the commercial and the public sectors, could benefit by using Design Thinking methodologies and practices to generate and explore new empowering innovations.