Using Design Thinking to make your employees ready for the Internet-of-Things

I think that this article points out something that is really important. Companies risk creating products for which there is no demand if they do not look into the market and what the “value drivers” are for consumers.

Using Design Thinking to make your employees ready for the Internet-of-Things

Recent advances in technology put Internet-of-things (IoT)-innovation on top of the management agenda across industries. It is predicted to increase economic value by $11.1 trillion in 2025 (McKinsey 2015). The Service Science Factory and Noventum collaborated on this article to present a state-of-the art view on the Internet of Things and how to implement this vision within organizations.

What is the Internet-of-Things (IoT) and why is it relevant?

Over the past years, computer technology has increasingly become a commodity as it has become cheaper, faster, more reliable, more efficient, smarter, smaller, portable and more connected. It gave the opportunity to add new capabilities to the things (products and machines) that make up our lives. Consumer focused examples are Philips Hue lights and the Nest Thermostat that receives information via your smartphone about when you are arriving and automatically lights and heats up your home. Furthermore, such systems can learn customer behaviour and act pro-actively, which can provide additional convenience for the customer. However this is only a small part of the opportunities that IoT can bring. There are also examples of fully automated farms, dynamic production lines, smart trains, sustainable offices and examples of IoT implementations in Health Care. IoT-technology is evolving daily and impacting every sector. The basis of all these IoT innovations are the 6 principles listed below and the power of IoT is to combine them in such a way that they provide new services and capabilities that provide value for your customer and your organisation.

How can your organization take advantage of IoT?

“Many executives understand the urgency and know that they have to do something but it often remains unclear what and how” says Hilbrand Rustema, Managing Director at Noventum Service Management. Top management often delegates the development of (IoT) innovation to middle and lower management. Yet new ideas often face skepticism and even opposition across the firm: IoT innovation often disrupts work practices and current product and service portfolios, and can even cannibalize existing revenues, at least in short term. Some employees become worried about their jobs, and can even block innovations. Fresh ideas, awareness for opportunities and positive attitude across the organizations are a crucial breeding ground for such radical innovation. The Service Science Factory (an entity of Maastricht University which combines research, education and practice on service design and innovation) practices a process to develop this positive base for IoT innovation. The process is user-centered, employee-participative, explorative, iterative and routed in (service) Design thinking and its scientific research base.

How to uncover the potential of IoT for your organisation?

The model below can be used by your organisation and its employees to create a practical IoT-understanding by applying the six principles of the Internet of Things to the context of the organization.

1. Set business focus

IoT offers opportunities to realize a firm’s strategy and achieve its goals such as lower cost, customer delight or greater profit. To leverage these opportunities top management does not only need to commit to drive IoT innovation but also clearly determine the strategic goals it wants to reach.

2. Introduce IoT capabilities & Design Thinking

Before further embarking on this explorative journey it is important to recruit an inter-disciplinary team. Having various competences within the team is an essential element of the Design Thinking philosophy and will ensure that you incorporate various perspectives on the business challenge that has been set in the previous step. The team should understand the potential capabilities of smart products and computer technology and the value drivers of their customers and the market they are operating in. Without learning how to think in networks and eco-systems and understanding the value and potential of data, employees will not know how IoT can be applied to the organization they work for. Reflecting on the principles of IoT and best practice cases is a good way to broaden the employees’ perspectives. In addition, without knowing what the value drivers for customers are, or what is happening in their business environment, companies might end up developing services for which there is no demand. Identifying the needs (pains) and ambitions (gains) of your customer should be the base from where you develop your IoT driven innovation, the selection should be based on the alignment with your brand values and business ambitions

3. Ideate IoT innovations

The field of (service) Design Thinking provides various ideation techniques which are used by the interdisciplinary team to spark creativity. This results in ideas that embody both the opportunities that IoT can provide as well as the various perspectives of the market and the organization. Mapping out the value proposition that the IoT innovation provides will help to always incorporate the customer perspective in the idea development.

4. Share, combine and prioritize ideas

The collective sharing of ideas strengthens the feeling of organization-wide involvement and the collective prioritization drives commitment. It is also an important moment to receive feedback and see if ideas can be strengthened by combining them with other ideas and initiatives that are present within the team and the organization.

5. Map the eco-system of the IoT innovation

IoT innovations typically involve a complex eco-system of actors, components and connections. Visually mapping out eco-systems (e.g. conceptual blueprints), on both macro as well as micro scale, reveals possible challenges and needed resources to realize the IoT innovation. Furthermore such visual blueprints make it much easier to discuss how the IoT will function and look like with team members and other stakeholders.

6. Identify the business implications

Understanding and showing the required investments, risks, and (possible) impact is a crucial part of the development of any innovation. Gate keepers within the organization want to know what the organizational implications are and what they can expect on their ‘return on investment’. Developing and validating the business case is a good way to convince important decision makers in the next step.

7. Pitch to important decision makers

For innovations to be implemented, ambassadors are needed to create internal alignment. Especially in large international organisations with multiple divisions and functions, this is critical to the success of any IoT initiative.  Therefor pitch-like presentations towards (top) management and other parts of the organization are needed to create a coalition of the willing and obtain the funds needed for further development and implementation.

Where are we now?

In summary, the outcomes of the above process are not only great ideas but also cross-functional teams that take ambassadorship for their IoT innovations. The employees are made aware of the opportunities with IoT, will identify opportunities in their regular business and drive the change. Thereby your organisation is prepared for the service transformation. The seven-step process is in essence a process for changing the mindset towards an IoT future. In the end, your employees are the base for designing IoT Innovation – Not the technology.

How to move forward?

Once a new or improved IoT-driven service or business model has been identified, carefully selected and accepted throughout the organisation, the next step is to actually start the development and implementation of the new or improved service system. This usually has far broader implications than defining the value proposition, ecosystem and business case as the disruptive nature of IoT enabled business models often affect all areas of the organisation. The implementation therefore requires a clear strategy and roadmap including the definition of a clear marketing & sales strategy, the design of a detailed delivery model and the development of required human, system and organisational capabilities. Without a well prepared implementation strategy and an agile attitude towards unforeseen events you risk losing not only the momentum you created in the IoT-explore phase but also the return on investment of your new services portfolio.

About the authors

Damien Nunes is project leader and a service designer at the Service Science Factory (SSF). SSF is an important valorisation entity within Maastricht University that focuses on service and business innovation in the form of projects, research and (post-graduate) education. Damien originally has an engineering and design background and developed himself further in the field of service and business innovation from a design thinking perspective.

Dr. Dominik Mahr is Associate Professor at Maastricht University and Scientific Director of the Service Science Factory. The Service Science Factory (SSF) supports companies to identify business challenges and design service innovations. Being a part of Maastricht University SSF combines research, education and practice on service design and innovation.

Rosanne Gresnigt has an MSc in strategy & organisation with a focus on service management. As Consultant at Noventum Service Management she worked on service transformation projects in various manufacturing organisations across Europe. Key specialisations are: advanced service strategies, service life-cycle management and service marketing & sales development.

The 11 Bad Habits Killing Innovation in Your Company

Here is another article that validates some of the reading from this week. On one note, changing the perspective on business within an organization and testing an idea is so important!

The 11 Bad Habits Killing Innovation in Your Company

osterwalder-photoAlexander Osterwalder invented the Business Model Canvas, co-founded and was the lead author of Business Model Generation which sold a million copies in 30 languages.

Alexander and I often collaborate on new ideas for corporate innovation.  Here’s his guest post on what bad habits to avoid inside of a company.

Big companies have great execution habits to manage and improve successful business models and value propositions. But the habits that foster execution can easily kill new growth initiatives inside your company.

Bad Habit #1: The current business model dominates the agenda
In most companies the future suffers at the expense of the present. Companies are great at improving their existing business model and value propositions, but fall short when it comes to inventing entirely new business models, value propositions, and growth engines. In fact, by the time a company realizes it needs to reinvent itself for future success, it’s often too late. This happens because managing the present often takes oxygen away from inventing the future. Rita McGrath, a Columbia Business School professor says, “there’s pleasing today’s customers and there’s developing tomorrow’s business.” You need to be excellent at both.

Remedy: Create a protected space in your org chart where you invent and test new business models and value propositions. Equip this “space” with power and prestige. Become an ambidextrous organization — one that is excellent at managing and improving your existing business, alongside inventing new ones.

Bad Habit #2: One-size-fits-all decision making hurts speed & inventiveness
Companies that grow in size and scale proven products and services can quickly fall into a trap of slowness, unthoughtful risk aversion, and failure to experiment. As Jeff Bezos puts it, one-size-fits-all decision making “hurts speed and inventiveness” inside large organizations. In fact, Bezos constantly adjusts Amazon’s culture to ensure that the company never slows down and loses its entrepreneurial and nimble approach to finding future business success.

Remedy: Amazon distinguishes between non-reversible decisions with substantial sunk costs (like e.g. investing in a new warehouse in Amazon’s case), and reversible decisions like experimenting with a new offer. The former requires slow and careful decision making. The latter requires speed and agility.

Bad Habit #3: Insisting on untested and detailed business plans
Most established companies require detailed business plans for new ideas. This results in carefully crafted and thought-through documents with detailed spreadsheets and a great focus on how an idea will be implemented. However, the first goal of an innovator should not be to think hard about an idea and describe its implementation. First and foremost, an innovator’s job should be to rapidly, cheaply, and continuously test and adapt ideas until there’s enough evidence from the field to prove they will work. Only the latter helps avoiding big flops because it systematically reduces the risk and uncertainty of new ideas. Business plans actually maximize the risk of failure because of the focus on executing an unproven idea rather than testing it.

Remedy: Use business plans only for execution of existing businesses. Don’t ask innovators for business plans. Instead, implement processes that force innovators to systematically prototype and test ideas, reduce risk and uncertainty, and ultimately provide the evidence that an idea will work and is worth doing.

Bad Habit #4: Opinions matter more than evidence
Senior leaders acquire a lot of knowledge and experience about their business over the course of their  career. Unfortunately, this knowledge may be irrelevant when it comes to new value propositions and new business models. For example, the knowledge that Kodak’s leaders acquired during their successful decades in analog film didn’t equip them for digital photography. Quite the contrary. The rules to compete in the digital age are completely different. That’s why it’s so important for companies to “get out of the building” and interact with customers. Steve Blank, father of the Lean Startup movement, stresses that you will never know enough about your customers if you are holed up inside a boardroom. A good idea might still be a bad idea because customers don’t care about it. Michael Schrage, a research fellow at MIT, emphasizes that “a testable idea is better than a good idea”.

Remedy: Educate leaders that judging ideas for new value propositions, business models, and growth engines requires evidence from the field rather than just “expert opinion” from leadership. Implement processes that judge ideas based not on how they look, but based on the evidence from the field that support them.

Bad Habit #5: Outsourcing customer discovery and testing
Large companies have a habit of hiring outside agencies to do market research and customer discovery. That’s dangerous when it comes to developing new value propositions, business models, and growth engines. You can’t hire outside professionals to test and learn from customer interactions and make decisions for you. New ideas require many rapid iterations between prototyping, immediately testing with customers, and then deciding how to adapt your idea based on the acquired insights.

Remedy: For radically new ideas you should defer hiring outside agencies until you’ve found product/market fit. Instead, roll up your sleeves and internalize the hard work of rapid prototyping, testing, learning, and deciding. Third parties can help you with the process, but they can’t do the work for you.

Bad Habit #6: Senior leadership too busy for hands-on innovation
Senior leaders are very busy and time pressed people. Typically, they see the “getting out of the building” to test ideas with customers as a task to be performed by subordinates. But leaders have to be more than just sponsors of new business ideas. Decision makers are the ones who can make things happen. They are the ones who need to feel the market and talk to (potential) customers to learn that some of their initial assumptions or strong opinions might be completely wrong. Equipped with these market insights they can help move things faster.

Remedy: Distinguish between senior leaders who manage the present like running factories, and senior leaders who are involved in creating the future and need to “get out of the building”.

Bad Habit #7: Obsessing about competitors rather than customers
Unfortunately, many companies are more obsessed by their competition than their customers. Your customers are far more important than your competitors. Your (potential new) customers can tell you how to beat your competitors. Customer have the evidence your organization needs to validate or invalidate new business ideas and potential growth engines. That doesn’t mean you should completely ignore the competition. After all, business models and value propositions aren’t designed in a vacuum. However, competitors should not be your primary focus. As Steve Blank says, “You can’t drive forward by looking in the rear view mirror.”

Remedy: Obsess over your customers first when developing and testing new value propositions, business models, and growth engines. Then, evaluate how these new ideas perform in the competitive landscape.

Bad Habit #8: Focus on technology risk at the expense of other risks
New business ideas face many different risks. The California design firm IDEO distinguishes between three types of risk when they assess prototypes: desirability, feasibility, viability. Desirability is about the risk of your customers not being attracted by your new value proposition. Feasibility is about technology and infrastructure risks. Viability is about financial risks. We added a fourth risk, adaptability. Adaptability is about the risk of a business model and value proposition not being fit for evolving external factors, like competition, technology change, or regulation (risk: external threats).

Remedy: Make sure you test all four types of risks: desirability, feasibility, viability, and adaptability.

Bad Habit #9: Innovation is career limiting
In many companies being an innovator is not an attractive career path. First, in most organizations any type of failure is seen as a negative for your career. Yet good innovation processes require rapid experimentation and failure to gain insights, adapt, and ultimately succeed. Second, corporate incentives are geared to rewarding execution, where failure is not an option. Third, in most companies, innovation is still seen as a department for pirates and “the crazy ones” who really add no value to revenue and profit. And finally, prestige in companies is measured by who commands the largest budget and staff. But great innovation programs always start small.

Create different incentive systems for the people focused on execution, and the people focused on innovation. Make innovation a prestigious job in your company. After all, the innovators are ensuring your organization’s survival in an age of constant change.

Bad Habit #10: Innovation is siloed from Execution
Companies struggle to get the “execution engine” and “innovation engine” to collaborate, rather than to compete. Rather than realizing that managing the present and inventing the future are equally important and should be equally resourced, they often fight for the same resources. Often the execution engine deprives the innovators from access to valuable resources like customers, brand, or skills. That means the innovators end up competing without any competitive advantage against the more nimble and agile startups.

Remedy: Create a culture where executors and innovators collaborate because they understand each other’s value to the organization. Create processes and incentives that grant innovators access to customers, brands, and skills so they can outcompete the more nimble and agile startup ventures.

Bad Habit #11: Integrating new ideas into the execution engine too quickly
New ideas are fragile and they need to be carefully nurtured and scaled before they are integrated into the execution engine with its rigid processes, key performance indicators rules, and procedures. If you integrate new ideas before they fully mature you might kill them. For example, Nespresso, the successful daughter company of Nestlé, only survived and thrived because they were physically distant from Nestlé’s headquarters.

Remedy: Protect new ideas until they fully mature; for example, like in Nestlé’s case, by locating the project outside of the company’s headquarters.

Join Alex Osterwalder at the Business Model Canvas Masterclass in San Francisco, Nov. 3 – register here

12 things that kill innovation in your organisation

In line with the reading for this week, here is an interesting article on how innovation gets killed in businesses. Issues concerning management is one reason that is featured.

12 things that kill innovation in your organization

There are 12 key innovation killers, and having a culture of fear is one of them. <img src=”/content/dam/images/1/m/1/l/v/g/image.related.afrArticleLead.620×350.gkkoeh.png/1449808889482.jpg” alt=”There are 12 key innovation killers, and having a culture of fear is one of them. ” width=”620″ height=”350″ class=”lazy620x350″>
There are 12 key innovation killers, and having a culture of fear is one of them. Karl Hilzinger

by Shaun McCarthy

Innovation – the word that’s on everyone’s lips right now as organisations grapple with the realities of volatility, uncertainty, complexity and ambiguity in today’s somewhat turbulent world. But innovation doesn’t just happen by “being more innovative” or hiring creative types and putting them in special “innovation” teams. For innovation to happen, a considerable body of research shows that there are certain organisational conditions that must be tackled.

Through Human Synergistics’ work with clients, which is based on research into the organisational factors that influence organisational performance by our chief executive, Dr Robert A. Cooke, we’ve discovered there are 12 key innovation killers in organisations.

1. A culture of fear

Your culture either works for you or against you in your search for innovation. If your organisation’s culture causes people to be concerned with keeping themselves safe (e.g. make sure you follow the process), then innovation will never happen.

2. Lack of a meaningful mission and vision

For people to think in an innovative manner, they must see that the organisation is striving to achieve a higher purpose, not just aiming to be good at making money.

3. Too much hierarchy

Structures that create hierarchical and centralised decision making limit opportunities for people to have influence and innovate.

4. Old-school HR practices

Diversity and flexibility in hiring, promoting, training, developing and performance appraisal (and not just in gender terms) promotes non-traditional thinking.

5. The blame game

Not rewarding effort but focusing on blame and “punishment” for errors is guaranteed to kill innovation.

6. Overly prescriptive job design

Specialisation, standardisation and compartmentalization reduces autonomy, variety and meaning in jobs, causing people to focus on “just doing the job”, not

“thinking outside the box”.

7. Filtering

For organisations to innovate there has to be a free flow of information up and down the organisation that stimulates discussion. Information that is filtered on the way up and meaningless on the way down makes innovation very difficult.


An emphasis on control and micromanagement, rather than seeing managers as facilitators and coaches is a great way to kill off innovation.

9. Lone wolf thinking

Very few ideas come from just one person. They come from people building on one another’s ideas. Teams that find fault, criticise ideas and compete rather than cooperate will almost certainly limit innovation.

10. Silos

It’s hard to innovate when people work in silos. There are several examples of organisations that have created seemingly innovative products only to have to recall them, create fixes or repair bugs, because inside the organisation the left hand did not know what the right hand was doing.

11. Low autonomy

People working in jobs with low autonomy and few opportunities for development leads to boring, unchallenging, unfulfilling jobs. And little, if any, innovation.

12. Dissatisfaction

Disengaged people become disinterested in the organisation’s future and lack willingness to think creatively.

Put it into practice

Whilst this all sounds quite straightforward and the research has been around for years, many organisations still let these 12 innovation killers thrive. A recent analysis of 740 Australian organisations in Human Synergistics’ database shows that 62 per cent of businesses rate below the global average for innovation and only 14 per cent rate at a level of global excellence.

Shaun McCarthy is chairman of performance and business consultancy Human Synergistics Australia and New Zealand.

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Bold Strategy, Cuban!



Mark Cuban is coming in hot with a bold prediction for the next decade: Liberal Arts is the future! According to Cuban, finance is “the easiest thing” and in the very near future data will be spit onto us at such a rate that the greatest demand will be for those in the workforce who can view the data most uniquely… Or something like that.

I usually like Cuban’s antics (when he’s not grooming America for his inevitable and probably short-lived 2020 presidential run) and hesitate to second-guess the business savvy of a man who cut his teeth as a bar owner on a Big Ten college campus, but this prediction made me scoff.

Of course interpreting massive amounts of data will be an important task of the future workforce, but to predict that market demand for “free thinkers” will outpace demand for engineers and programmers is wild. I think Cuban has been drinking the entrepreneurial Kool-Aid for too long.

Or has he? As technology advances and jobs become automated, it’s plausible that our human elements, or the “soft skills” this article mentions, may be what keeps us valuable. If Cuban means that we now have enough computer scientists and engineers making the technology and we need more people “free thinking” ways to best apply it to our problems, then that sounds like a job for entrepreneurs.

The impact of disruptive technology: A conversation with Eric Schmidt

Here is a video of Google’s executive chairman Eric Schmidt on disruptive technology. I found it fascinating, because here was an executive of a giant corporation, the kind that Christensen was referencing in his piece, yet he was completely aware of the burgeoning disruptive technologies. I think this is evident by Google’s approach to the market and its focus on technological innovation. Google is an industry leader but it is still on the forefront  of commercializing new technologies that don’t initially meet the functional demands of mainstream customers and appeal only to small or emerging markets. Innovations such as driverless cars, Google glass, and others show that Google has learned from the Innovator’s Dilemma. While no company is immune, I believe Google is more prepared than most of its predecessors to deal with disruption.

Innovation Under the Law?

The traits listed as characteristic of “design thinkers” are similar to, but not identical to, our in-class list encompassing typical traits of entrepreneurs. For example, author Tim Brown describes design thinkers as “collaborative,” a trait that may not come to mind when referring to a traditional entrepreneur. (Brown 87).

It’s interesting to read Brown’s description of the design process: “a system of spaces rather than a pre-defined series of orderly steps. The spaces demarcate different sorts of related activities that together form the continuum of innovation.” (Brown 88). The three stages of design thinking—inspiration, ideation, and implementation—can most likely be applied to many fields and industries. (Brown 89).

Even in the traditional legal market, for example, seemingly mundane services like Electronic Bluebook presumably went through this process, where lawyers saw a need, sought to fix it in a palatable, accessible, and understandable way, and then worked to implement it in a way that perhaps benefitted students or was made available for firm purchase. Certainly, this example is less exciting or large-scale as the creation of “coasting” bikes—which sold an idea, as well as a product, to a large number of people—as well as Aravind eye camps—which became “a systemic solution to a complex social and medical problem”—but it nonetheless shows how the design thinking process can be applicable to a range of projects and industries. (Brown 90-91). These are also all examples of what Tom Kelley describes as “being left-handed.” (Kelley 33).

Each of the aforementioned projects had to finagle around legal complexities before it could get off the ground. Still, law and innovation can often go hand in hand; patents, for example, offer protection over innovative ideas. Perhaps the law also helps further social innovation, through, for example, the benefits afforded to non-profits.

There might exist an unpopular argument that the law should not try to further innovation. Tom Kelley argues that customer feedback should not be the driving force behind business operations. He states: “Customers mean well—and they’re trying to be helpful—but it’s not their job to be visionaries.” (Kelley 27). Similarly, perhaps the law should not be too flexible. If it were ever-changing, it might actually do more harm than good, as it would no longer serve the benefits of predictability and notice. Perhaps there is a happy medium. The law should change to respond to systemic changes and reflect paradigm shifts in social norms, as well as be tweaked slightly to sharpen and perfect an existing law. The legal profession itself does not have to be internally, actively looking to make change—but, just as innovators believe “it’s critical to watch people in motion to fully understand a problem,” the legal profession should watch for trends in client needs (is there a repeat problem?) as well as trends in the law itself. (Kelley 49). The profession should, as Kelley puts it, “keep a good eye” for the “what’s” and “how’s” and “why’s” that come before them, and then make change accordingly. (Kelley 33).

UC Berkeley Offers Free Education In Social Entrepreneurship

I found this concept interesting when looking at it from a perspective of someone interested in applying to the program. Obviously, social entrepreneurs want to be efficient with their capital and want to find the most efficient ways to accurately place themselves and their business in the best position possible. Assuming that the program is marginally beneficial, it seems as if this model would undoubtedly become the best option for social entrepreneurs.

I guess my question is more directed at Professor Hollis: Do you think a free education like this is beneficial enough to deter social entrepreneurs from receiving their MBAs or will the stigma of a free, online education turn people away from the program? Additionally, is it unrealistic to think that a free online education in social entrepreneurship could be a viable replacement for receiving a traditional MBA?