Design thinking: the next gen apps frontier?

A chance Tweet from my buddy Ray Wang got me thinking more about design thinking and next generation applications:

Very good discussion about the future of customer experience #CXP today. We can start w. design thinking. #SCRM#CRM

Before setting off on this excursion, a little contextual background. As an accountant by training but a social scientist by education I am often torn between the natural caution with which accounting types are imbued and the 'edginess' of exploring the possibilities of change in people that applied social science can bring. Accountants don't respond well to change, are often rigid in their thinking and prefer an ordered existence. Social scientists live in change, operating within competing theories of behavior and whatever constitutes societal norms at points in time.

Agresso has picked up on the ' living in change' aspect of modern business, turning it into a virtue. In contrast it is easy to see how SAP is conflicted with its pace layered approach to software development. Meanwhile, the Enterprise 2.0 mavens throw people into the mix reminding us that it is people who make a difference to business outcomes while casting an eye towards Enterprise 2.0 tools as the means by which we will collaborate and achieve breakthrough value. I argue that's fine as long as it is reflected in the context of process but equally in the knowledge that business environments are notoriously difficult to change. Now we are starting to see the emergence of design thinking, defined in Wikipedia as:

...a process for practical, creative resolution of problems or issues that looks for an improved future result.^[1] It is the essential ability to combine empathy, creativity and rationality to meet user needs and drive business success. Unlike analytical thinking, design thinking is a creative process based around the "building up" of ideas. There are no judgments early on in design thinking. This eliminates the fear of failure and encourages maximum input and participation in the ideation and prototype phases.

With me so far? Hold that thought.

The bias problem

In an article entitled The Case for Behavioral Strategy, McKinsey argues:

Once heretical, behavioral economics is now mainstream...

...Yet very few corporate strategists making important decisions consciously take into account the cognitive biases—systematic tendencies to deviate from rational calculations—revealed by behavioral economics. It’s easy to see why: unlike in fields such as finance and marketing, where executives can use psychology to make the most of the biases residing in others, in strategic decision making leaders need to recognize their own biases. So despite growing awareness of behavioral economics and numerous efforts by management writers, including ourselves, to make the case for its application, most executives have a justifiably difficult time knowing how to harness its power.

The link between design thinking and behavioral strategy may not seem obvious until you read further into McKinsey's argument:

Most executives rightly feel a need to take action. However, the actions we take are often prompted by excessive optimism about the future and especially about our own ability to influence it. Ask yourself how many plans you have reviewed that turned out to be based on overly optimistic forecasts of market potential or underestimated competitive responses. When you or your people feel—especially under pressure—an urge to take action and an attractive plan presents itself, chances are good that some elements of overconfidence have tainted it.

To make matters worse, the culture of many organizations suppresses uncertainty and rewards behavior that ignores it. For instance, in most organizations, an executive who projects great confidence in a plan is more likely to get it approved than one who lays out all the risks and uncertainties surrounding it. Seldom do we see confidence as a warning sign—a hint that overconfidence, overoptimism, and other action-oriented biases may be at work.

Superior decision-making processes counteract action-oriented biases by promoting the recognition of uncertainty. For example, it often helps to make a clear and explicit distinction between decision meetings, where leaders should embrace uncertainty while encouraging dissent, and implementation meetings, where it’s time for executives to move forward together.

Personal bias is an incredibly difficult thing to articulate, understand and then manage or eradicate. I'd go so far as to say that anyone who believes they are unbiased is delusional. Analysts will tell you they are impartial or independent. What they really mean is they are walking a tightrope between different ideas mediated around personal biases which they may not necessarily see. That doesn't mean their thinking is off kilter but that it is constrained. What we have in the current thinking around social business design (a cornerstone for the articulation of design thinking) is an inherent flaw that plays back to bias.

Risk and uncertainty

Going back to McKinsey - the key is that which I have emphasized. I say so because laying out risks and uncertainties used to be my daily stock in trade. Clients arrive with grand plans, some well thought through, others less so. There was almost always a major flaw they could not see but which was apparent to the independent but knowledgeable observer. Most often such flaws were born out of overconfidence and over optimism. I have seen much the same in a lot of Enterprise 2.0 thinking. Looking back over what I've said in the past, I've implicitly or explicitly ascribed those flaws to issues around culture and organization. Considering this in the light of recent experience and McKinsey, I missed the behavioral bias dimension.

Recently, I have heard a moderating of the voices behind Enterprise 2.0 as champions within organizations come forward and explain the issues with which they grapple on a day to day basis. As I suspected, human nature often gets in the way, the 'what's in it for me' problem is common and the all too frequent 'not our way' issue looms large. The risks and uncertainties are surfacing. But as I think more about design thinking, I wonder whether we have recognized how the problem of bias figures in our organizations and individual thinking. Are we too obsessed with the desire to see Enterprise 2.0 deliver that we lose touch with some of the underpinning realities? This isn't a new phenomenon. It feeds back into the more general environment around enterprise software development thinking.

The Next Big Thing?

Colleagues are waiting for the emergence of the Next Big Thing in enterprise software. I'm not sure we currently know much about what that NBT will look like even if my E2.0 colleagues believe they've already seen the future. Brian Sommer has looked at this through the lens of agility, arguing that:

I’d say the gap between the nimble, fast moving SaaS vendors and the on-premise vendors is widening. Any vendor can claim to be innovative, that only takes a press release to state as much. But, speedy innovation or fast-paced innovation is another thing altogether. SaaS vendors are kicking the on-premise vendors but good in this race.

In a later piece, he hits a brick wall (in my opinion) by arguing that:

...customers will do what customers are wont to do. They will buy suites and the larger the suite, the greater the market appeal. So, in the SaaS world, like the on-premise world, we can expect more customers moving to vendors with larger, pre-integrated suites.

It's an interesting juxtaposition because Brian appears to be drifting towards a market based argument that has less going for it than the innovations we are currently seeing might suggest. I don't see in Brian's thesis how SaaS (or cloud?) vendors will end up substantially different to today's vendors. If I am correct then while we may be seeing innovation today - just as did in the mid-90's - will the end result be traditional process engines merely recast at lower cost? I hope not. And that's where our biases need to be challenged.

I believe instead that if we are to get closer to innovating for breakthrough value then we have to recognize the co-mingling of applications and the reshaping of processes that at first sight will appear horribly confusing and messy. It is vitally important that software vendors get away from functionally siloed thinking in the core apps (something that E2.0 mavens tacitly acknowledge) that make up the business applications landscape. If the notion of the general ledger is at the heart of our deeply held beliefs about what 21st century ERP mean then we are in real trouble. Instead, we should be looking for ways to sweep aside the TLA's except as descriptors of what's needed to get things done, get 'social everything' off the table and take a different tack.

A foretaste comes in what Paul Greenberg reminds us as Salesforce.com's vision of the Business Web. Talking about how FinancialForce.com in partnership with SKYVVA has created a link between Salesforce.com and SAP, Paul says:

What I think makes this important for salesforce.com is that it both dovetails with their strategy to go upmarket - which is where most of SAP’s customers are and it provides an important step forward in the evolution of the cloud - via recognition that on premise applications are not going away any time soon and represent a serious investment for companies - a legacy investment they are not going to scrap wholesale to replace it with pure cloud based services.

It certainly puts FinancialForce on the map and rightfully so. They have been artful since their beginning and have been perhaps salesforce.com’s most important partner when it came to helping salesforce.com realize a strategic objective they set out a decade ago - to become what they called at the time “the business web” for all businesses running all their applications, regardless of who created the application.

Do you see the stepping stone here? On-premise meets SaaS/cloud as the start of break-point integration. It's a challenge to Brian's suite idea but from the logical angle of building to a platform.

The fork in the road

In a conversation last week with Appirio's Narinder Singh, he explained to me how you might co-mingle services like Chatter, Google Apps and Salesforce for professional services organizations. In a post that talks to the issues, Narinder said:

...tying together sales with professional services, providing full end-to-end processes to manage your people, customers, projects and numbers, and ability to easily scale with a powerful underlying platform - resonated with an industry ill-served by traditionally manufacturing-centric enterprise systems.

Check out the demo to see what this means for breakthrough value and decision making while maintaining process continuity. The difference between what Appirio is proposing and what we have thus far seen is that Apprio's focus is on industry specific solutions. And sure - many of us have bemoaned the fact that despite their market reach, vendors such as SAP and Oracle rarely cover more than 30% of industry specific process needs. In this argument, Appirio shows us that by rethinking the problems companies need to solve we don't need to lose sight of the transaction but can quickly reshape processes in such a way that applications deliver what's needed while taking advantage of cloud economics to profitably deliver services that business will happily pay for. That to my mind is the essence of design thinking that crushes bias while overcoming issues that often bedevil collaboration while retaining the creative elements needed to achieve the NBT. It is the fork in the development road.

Expect to hear more about this way of designing applications in the near future.

Wrapping it up

Just as I hit the 'save' button I saw a quote from John Doerr on a guest post at TechCrunch that seems wholly appropriate:

It’s time to move beyond spreadsheets and word processors, beyond web sites limited by browsers… to interactive, connected applications with incredible simplicity, speed, and fluidity.

Design thinking got us to that point as articulated through the iPad.

In the meantime, I'll close out with a thought on Ray Wang's response to me about design thinking in the context of CRM/SCRM because design thinking as a topic is often cocooned in the xCRM silo. Ray thinks design thinking's direction will be determined by the business model that companies choose to adopt. He bases this on an as yet undefined set of interactions between customers, employees and suppliers. I described that as a 'novel concept.' If you believe my vertical market apps line then there is much to commend the trajectory of Ray's thinking.

Much management thinking is currently devoted to creating sustainable business. The more radical think this should embrace behavioral economics. If you agree that this loose collection of ideas coalesces around the need to recognize bias influences as the way to profitably break away from the past then I suggest we ditch SCRM/CRM strategy talk. It's too horizontal. If we can do that then perhaps we can dump the disciplines formerly known as CRM/SCRM/SCM/ERP/3PL/HR/HCM/E2.0....etc and concentrate on what really matters: the Business Web.

Disclosure: FinancialForce.com sponsors my personal weblog and is an occasional consulting client.